Market likely to open higher

Trading for the week is likely to begin on firm note on positive Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 17.50 points at the opening bell. Asian markets were trading higher on Monday, 10 September 2012, with expectations rising that weak US jobs data would prompt the US Federal Reserve to announce fresh stimulus this week. Jindal Steel & Power turns ex-dividend today, 10 September 2012, for dividend of Rs 1.60 per share for the year ended 31 March 2012 (FY 2012). ONGC Videsh (OVL) has signed definitive agreements for the acquisition of Hess Corporation's 2.7213% participating interest in the Azeri, Chirag and the Deep Water Portion of Guneshli Fields in the Azerbaijan sector of the Caspian Sea (ACG) and 2.36% interest in the Baku-Tbilisi-Ceyhan Pipeline (BTC), for $1 billion. The acquisition is subject to relevant government and regulatory approvals and is expected to close by the first quarter of 2013, OVL said after trading hours on Saturday, 8 September 2012. ACG, which is located in the south Caspian Sea about 95 km off the coast of Azerbaijan, is the largest oil and gas field complex in Azerbaijan and is one of the largest producing oil fields in the world. BP operates ACG and is partnered by State Oil Company of Azerbaijan Republic (SOCAR), Chevron, Statoil, ExxonMobil, Inpex, Turkish NOC - TPAO and Itochu. Average daily production from the field is around 700,000 bopd of crude oil. The 1,768-km BTC Pipeline is one of the main export routes for Caspian crude oil production with a capacity of around 1.0 million bopd to the Ceyhan terminal in the Mediterranean Sea in south east Turkey. The acquisition would mark OVL's entry into oil rich Azerbaijan and is consistent with its stated strategic objective of adding high quality international assets to its existing E&P portfolio, OVL said. The acquisition would bring 9% additional proved reserves to OVL portfolio and also bears significant strategic importance to India in terms of contributing towards India's energy security, OVL said. ONGC has recently formulated its Perspective Plan – 2030 envisaging that the oil and gas production of OVL would increase from the current level of 8.75 MMTOE to 20 MMTOE by FY 2018 and 60 MMTOE by FY 2030. Mr. Sudhir Vasudeva, CMD, ONGC said that the current transaction is the first step towards achieving this goal. The production from this asset during 2011-12 was about 15% of OVL's crude oil production during the same period. The primary business of OVL is to prospect for oil and gas acreages abroad including acquisition of oil and gas fields, exploration, development, production, transportation and export of oil and gas. OVL is a wholly-owned subsidiary of ONGC. Gold jewellery retailer Titan Industries will be focus as gold rallied to all-time high of Rs 32,450 per 10 gm in the national capital on Saturday, 8 September 2012, on aggressive buying by stockists sparked by strong global cues amid seasonal demand. Key benchmark indices edged higher on a special live trading session on Saturday, 8 September 2012, to attain their highest closing level in more than two weeks with market sentiment boosted by provisional data showing that foreign institutional investors (FIIs) remained net buyers of Indian stocks on Friday, 7 September 2012. The BSE Sensex jumped 65.92 points or 0.37% to settle at on that day 17,749.65, its highest closing level since 24 August 2012. The stock exchanges conducted a special live trading session for 1-1/2 hours on Saturday, 8 September 2012, as the Bombay Stock Exchange was testing its disaster recovery site. Foreign institutional investors (FIIs) bought shares worth a net Rs 19.40 crore during the special trading session held on Saturday, 8 September 2012, as per the provisional data from the stock exchange. FIIs bought shares worth net Rs 502.17 crore on Friday, 7 September 2012, as per the provisional data from the stock exchanges. FIIs bought shares worth net Rs 137 crore from the secondary equity markets on Thursday, 6 September 2012, as per data from Securities & Exchange Board of India (Sebi). Advance tax data for the 2nd installment due on 15 September 2012 could provide cues on the likely corporate earnings for Q2 September 2012. Finance Minister P. Chidambaram early this month said that India is making consistent efforts to check the abuse of a double-taxation-avoidance pact it has with Mauritius. India has in the past said it is considering a review of the treaty in an effort to boost tax revenue. An India-Mauritius joint working panel was set up in 2006 to put in place adequate safeguards for preventing the misuse of the double-taxation-avoidance agreement between the two countries. India, in the past, has said that Mauritius was unwilling to cooperate on this issue. Mauritius says it has taken India's concerns seriously. Traditionally, Mauritius has accounted for nearly 40% of India's foreign investment. Under the avoidance of double taxation treaty, companies that invest through Mauritius do not have to pay tax in India but only have to pay tax in the island. But capital gains tax is close to zero in Mauritius, making it a popular investment hub. India wants to renegotiate the double taxation treaty with Mauritius to check round-tripping, in which money is moved out of one country to another and brought back under the garb of foreign capital, taking advantage of tax breaks. Meanwhile, a committee appointed by the government to review the controversial general anti-avoidance rules (GAAR) early this month suggested deferring the implementation of anti-avoidance rules by three years. "Where Circular No. 789 of 2000 with respect to Mauritius is applicable, GAAR provisions shall not apply to examine the genuineness of the residency of an entity set up in Mauritius," the committee said. The committee has also recommended that the government should abolish the tax on gains arising from transfer of listed securities, whether in the nature of capital gains or business income, to both residents as well as non-residents. The panel has said the government might consider increasing the rate of Securities Transaction Tax (STT) appropriately to make the proposal tax neutral. At present, short-term capital gains on equities are taxable at the rate of 15%. Holding period of less than one year is considered as short term. There is no long term capital gains tax on sale of shares. Business income is taxed at 30%. Distinguishing capital gains and business income depends on several factors, and disagreements have resulted in numerous litigation cases between the Revenue Department and taxpayers, the committee said in its report. India's annual exports fell 14.8% to $22.4 billion in July, while imports fell 7.6% to $37.9 billion, leaving a trade deficit of $15.5 billion, the trade ministry said in a statement early this month. India's gross domestic product (GDP) rose 5.5% in Q1 June 2012, data released by the government on 31 August 2012 showed. The services sector grew 6.9%, industry grew 3.6% and agriculture sector grew 2.9%. Manufacturing output rose 0.2% while mining sector grew 0.1% in Q1 June 2012. India's economy has slowed sharply over the past year due to weak industrial activity as high interest rates crimped demand and made it hard for corporates to finance expansion plans. Global rating agencies Standard & Poor's and Fitch Ratings cut their outlooks on India's ratings to negative from stable earlier this year and warned that unless the government takes concrete action to improve the macro-economic environment, the country may lose its investment-grade status. The month-long Monsoon session of Parliament that ended on Friday 7 September 2012, was one of the least productive sessions by far with protests over Assam violence, CAG report on coal blocks allocation and finally the Bill over SC/ST quota in job promotions stalling the proceedings. No business could be transacted for days due to the daily ritual of slogan shouting and rushing to the Well of the House finally resulting in the Lok Sabha and the Rajya Sabha being adjourned sine die on Friday, 7 September 2012. Only four bills including the Protection of Women Against Sexual Harassment at Workplace Bill and the AIIMS Amendment Bill were passed during the Monsoon session, that had 30 bills pending. Of 15 bills listed for introduction, just five were introduced. It now remains to be seen whether Parliament will be able to pass the pending bills in the Winter session. Slamming the Opposition as Parliament adjourned sine die on the last day of the monsoon session on Friday, 7 September 2012, without conducting any major business, Prime Minister Dr. Manmohan Singh said that the regular disruptions by the Opposition were a negation of democracy and a violation of norms of Parliament and the Constitution. "We have great respect for the CAG. However, if we respect it, we should be willing to discuss its reports in the House and at the PAC. This is negation of democracy, violation of norms of Parliament and the Constitution as we have understood it," Dr. Singh said on Friday, 7 September 2012. He said that the time wasted by Parliament could have been better utilised in discussing more crucial problems grappling the country like terrorism and Naxalism. "On the economic front too we face major challenges. The world is passing through an exceptionally difficult phase. Our economy is also experiencing problems. We must work hard to ensure that the Indian economy returns to high growth. I have no doubt we can do it. We can rebuild our growth momentum and encourage entrepreneurship by stimulating investment in infrastructure, in power, in roads, ports, railways, and telecommunications. This will send a clear signal to the world that India is on the road to recovery. This in turn will bring back the momentum of growth, generate productive employment and also enable us to direct more resources to help the poor and weaker sections," Dr. Singh said. The Prime Minister said that the government must act wherever it can without the benefit of Parliamentary guidance. "I am instructing all Ministries to accelerate their consideration of critical issues where decisions are needed to get the economy moving again," Dr. Singh said. The Central Bureau of Investigation (CBI) early this month registered five separate cases against certain private companies, their directors and unknown public servants in connection with the allegations related to getting coal blocks allocated on the basis of misrepresentations and false claims in the applications, presentations and connivance/lack of due diligence on part of public servants. Promoters of some of these companies have allegedly sold their stakes in an irregular manner after allocation of coal blocks, CBI said in a statement issued on 4 September 2012. A preliminary enquiry to examine the irregularities, if any, in the allocation of coal blocks during the period 2006-09 was registered on a reference from CVC, in June this year. The Comptroller and Auditor General of India last month issued a report that said the government had lost as much as Rs 1.86 lakh crore in potential revenue because it awarded 57 coal blocks to private companies between 2004 and 2011 without competitive bidding. The report has created a furore, with opposition political parties stalling proceedings of the Parliament and demanding the resignation of Prime Minister Dr. Manmohan Singh. Dr. Singh has denied allegations of impropriety in coal-block allocations and termed "clearly disputable" the Comptroller and Auditor General of India's (CAG) observations that the process followed to allot them deprived the government billions of dollars in revenue. In its report on the allocation of coal blocks, CAG said the government lost a maximum of Rs 1.86 lakh crore by allocating licenses for 57 coal-mining blocks between 2004 and 2011 to state-owned and private companies without a transparent auction. Dr. Singh on 27 August 2012 said the CAG's calculation of about Rs 1.86 lakh crore of financial gain to private parties can be questioned on a number of technical points. Dr. Singh also said since that the coal blocks were allocated to private companies only for captive purposes for specified end-uses, it will not be appropriate to link the allocated blocks to the price of coal set by CIL. The government has very limited time to take economic reform measures given that assembly elections in Gujarat and Himachal Pradesh (HP) are scheduled in December this year. It will difficult for the government to enact controversial measures close to the assembly polls. After elections in Gujarat and HP, assembly elections are planned in a total of 10 states during the period from March 2013 to January 2014. The next general election is due in May 2014. Reserve Bank of India (RBI) governor D Subbarao last month said India's inflation is still a challenge, but its growth story remains intact. "India has no space for a policy response to a crisis, we are more vulnerable," Subbarao said at an event in Cornell University in the United States. The country, he said, had room to react through monetary policy to the 2008-09 crisis, but this time around a litany of challenges--including moderating growth, persistent and high inflation, stress on balance of payments and twin deficits in the country's current account and fiscal budget--have left the central bank little room to negotiate the global slowdown. He noted that despite the depreciation of the Indian rupee by nearly 20% since last August, there has been no improvement in the country's current account deficit. He blamed the government's policy of fuel subsidies for protecting consumers from the effect of global commodity price rises. He noted despite higher prices, imports of oil into the country continue to increase due to rise in consumption, as consumers are protected from these price hikes. He added investors still should be confident of India's growth story and look at the positives including its attractive demographics, its growing middle-class and high savings rate. But he acknowledged there was a lot left to be done by various stakeholders to make the growth story happen. "India needs to grow at 10% for the next 15 years just to catch up," he said. RBI last cut rates by 0.5 percentage point to 8% from 8.5% in April, its first move to reverse a 20-month rate-tightening cycle. It then held rates steady in June and at its last rate-setting meeting on July 31, saying that a cut would exacerbate inflationary pressures. The RBI is scheduled to undertake a mid-quarter review of the monetary policy on 17 September 2012. A late pick-up in monsoon rains in August month will lead to a recovery in yields in summer-sown crops including rice and oilseeds, lessening the severity of a drought in several parts of the country following scanty rains for much of this year's June-September monsoon. Prolonged rains would also improve the prospects for winter-sown crops due to better soil moisture. An El Nino weather event, which usually disrupts rainfall, is expected to emerge at the tail-end of the monsoon in September. Farm Secretary Ashish Bahuguna late last month said the El Nino may not impact rainfall in September due to build-up of another weather phenomenon called the Indian Ocean Dipole. The monsoon rains--which make up around 70% of India's annual rainfall--are crucial to the nation's agriculture sector and broader economy. More than 60% of the country's farmland is rain-fed. The timing, distribution and quantity of rainfall are all important for crops. The four-month southwest monsoon season that starts from June accounts for almost 70% of total annual moisture that Indian soil receives in a year. Finance Minister P. Chidambaram last month said that the goods and services tax (GST) is a more effective and efficient substitute for a plethora of indirect taxes. The Finance Minister said that he is hopeful that the GST Bill would be passed before the end of the current financial year. The Finance Minister further said that though there are still some issues relating to GST and its Network (GSTN) to be resolved, yet they are not insurmountable. Union Minister of Commerce, Industry & Textiles Mr. Anand Sharma said 16 August 2012 that the government will come out with announcements pertaining to industrial environment that will address the subdued sentiment in the industry. Speaking after the fourth meeting of the Government-Industry Task Force Mr. Sharma said that there is a shared concern over the declining industrial production, particularly the manufacturing sector. Asian markets were trading higher on Monday with expectations rising that weak US jobs data would prompt the US Federal Reserve to announce fresh stimulus this week. Key benchmark indices in China, Hong Kong, Indonesia, South Korea, Singapore and Taiwan rose by between 0.08% to 0.65%. Japan's Nikkei 225 fell 0.13%. Japan's central bank, Bank of Japan, next meets on Sept. 18 and 19 to review monetary policy. China sounded the alarm about the state of the global economy on Saturday and urged countries gathering at an Asia-Pacific summit to protect themselves by forging deeper regional economic ties. Chinese President Hu Jintao said his country would play a role in helping deepen cooperation between the 21 members of the Asia-Pacific Economic Cooperation (APEC) by rebalancing its economy to improve the chances of a global economic recovery. Russian President Vladimir Putin had also expressed concern about the world economy on Friday, and particularly about Europe's debt crisis, as he prepared to host the annual APEC summit in the Pacific port city of Vladivostok. China's top economic planners last week approved major infrastructure-investment projects, bolstering the more than two dozen subway and urban-rail initiatives announced a day earlier. The National Development and Reform Commission gave the go-ahead to 13 highway projects and other municipal and port projects, according to reports. The measures follow announcement on 5 September 2012 of 25 new rail projects worth an estimated 800 billion yuan ($127 billion) over the next three to eight years South Korea today, 10 September 2011, announced a five-billion-dollar economic stimulus package to support Asia's fourth-largest economy, which has been badly hit by the global downturn. The 5.9-trillion-won ($5.23 billion) package -- 4.6 trillion won of stimulus support for the remainder of this year and 1.3 trillion won for next year -- doesn't require a new national budget, the Ministry of Strategy and Finance said. The stimulus will take the form of reducing taxes on individual incomes and on purchases of homes or cars, and expanding state-funded social welfare programs. The new plan follows a stimulus package of 8.5 trillion won announced in June to boost the economy for the second half of 2012. The combined stimulus of 13.1 trillion won for this year equates to 1% of the country's gross domestic product. South Korea's export-led economy has been severely hit by shrinking overseas demand amid the prolonged euro-zone sovereign-debt crisis and weakened global economy. US equities finished modestly higher on Friday, 7 September 2011, with major indexes scoring gains for the week to end at their highest levels in years as lackluster August jobs data fueled speculation that the Federal Reserve may start another round of monetary stimulus. Payrolls rose less than projected in August and the unemployment rate was unexpectedly driven down by Americans leaving the labor force, boosting the odds of additional Federal Reserve easing to spur a faltering recovery. The economy added 96,000 workers after a revised 141,000 increase in July that was smaller than initially estimated, Labor Department figures showed on Friday in Washington. It came as a disappointment after data released Thursday showed a drop in initial jobless claims last week, as well as the biggest jump in private-sector employment in five months. The Federal Open Market Committee (FOMC) holds a two-day meeting on US interest rates on September 12-13. Federal Reserve Chairman Ben S. Bernanke pledged in an Aug. 31 speech to promote growth with "additional policy accommodation as needed." Among US data this week, a July reading on consumer credit is set for release today, 10 September 2012 and readings for consumer sentiment and core consumer prices will arrive on Friday, 14 September 2012. Election for a new president in the United States, the world's biggest economy, is scheduled on 6 November 2012. ECB President Mario Draghi on Thursday, 6 September 2012, said policy makers agreed to an unlimited bond-purchase program as they try to regain control of interest rates in the euro area. The program will target sovereign bonds with maturities of one to three years in its most ambitious plan yet to save the euro. The central bank also forecast a deeper economic contraction for 2012 than it did three months ago. Euro-area gross domestic product will drop 0.4% this year compared with an earlier 0.1% projection, it said. The results of a detailed audit on the capitalisation needs of Spain's banks are expected in mid-September 2012. Germany's constitutional court will decide on 12 September 2012 whether the European Stability Mechanism (ESM) -- the proposed permanent successor to the euro-zone's current emergency lender viz. the European Financial Stability Facility (EFSF) -- violates German law and the Maastricht Treaty's 'no bailout' clause. The EFSF is a temporary bailout fund and the ESM is the euro zone's permanent-rescue fund.