Market may open lower on weak Asian stocks

The market may open lower on weak Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 28 points at the opening bell. Asian stocks slid Wednesday with declining commodity prices and fresh signs of weakness in the U.S. economy hitting stocks ahead of key events later in the week. On domestic macro front, Markit Economics will unveil HSBC India Services PMI for August 2012 today, 5 September 2012. Tata Consultancy Services said that Mr. S. Mahalingam was appointed as the Executive Director and Chief Financial Officer of the company for a period of five years from September 06, 2007 to September 05, 2012. The company has further informed that the board of directors of the company has re-appointed Mr. S. Mahalingam as the Executive Director and Chief Financial Officer of the Company for the period September 06, 2012 to February 09, 2013, subject to the approval of the shareholders. ACC after trading hours on Tuesday, 4 September 2012, said its cement dispatches declined 6.91% to 1.75 million tones in August 2012 over August 2011. Cement production also declined 6.91% to 1.75 million tones in August 2012 over August 2011. United Spirits after trading hours Tuesday, 4 September 2012, said that the media reports that the company is planning to sell its stake in Whyte & Mackay is speculative information and it would not be appropriate for the company to comment on market rumours. Container Corporation of India turns ex-dividend today, 5 September 2012, for final dividend of Rs 9 per share for the year ended 31 March 2012 (FY 2012). Indian Oil Corporation (IOC) turns ex-dividend today, 5 September 2012, for dividend of Rs 5 per share for FY 2012. Power Finance Corporation turns ex-dividend today, 5 September 2012, for final dividend of Rs 1 per share for FY 2012. Power Grid Corporation of India turns ex-divined today, 5 September 2012, for final dividend of Rs 1.31 per share for FY 2012. Key benchmark indices snapped two day losing streak on Tuesday, 4 September 2012 as the market sentiment got a boost after a panel appointed by the government to review the proposed General Anti Avoidance Rules (GAAR) recommended in a report submitted to the government on 1 September 2012 that the government should abolish the tax on gains arising from transfer of listed securities, applicable to both residents as well as non-residents. The BSE Sensex advanced 56.47 points or 0.32% to settle at 17,440.87 on that day, its highest closing level since 30 August 2012. Foreign institutional investors (FIIs) bought shares worth net Rs 304.40 crore on Tuesday, 4 September 2012, as per the provisional data from the stock exchanges. Earlier, FIIs had sold shares worth Rs 228.80 in two sessions on 31 August 2012 and 3 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. A panel appointed by the government recommended that the implementation of a much-debated rule introduced to fight tax evasion be deferred by three years. "It needs to be realized that GAAR (General Anti Avoidance Rules) is an extremely advanced instrument of tax administration—one of deterrence, rather than for revenue generation—for which intensive training of tax officers, who would specialize in the finer aspects of international taxation, is needed," the panel said while submitting a draft report on the rule. The committee headed by Parthasarathi Shome, the chief of a government body on international economic relations, said that the government should announce the implementation date immediately to remove uncertainty from the minds of stakeholders. This would help taxpayers plan for a change in the "anti-avoidance regime," it added. The panel has sought comments from various sections of the government and the general public by Sept. 15, before it submits its final recommendations by Sept. 30. The so-called GAAR provisions and a retrospective tax amendment were proposed by the government in March and since then have hurt investor sentiment and been met by strong criticism in India and overseas. "GAAR has been received poorly in India due to the somewhat more stringent versions put out by government," as well as the perceived lack of adequate consultation with stakeholders, the panel said in its report. The sharp criticism had forced the government to defer implementation of GAAR by a year to April 1, 2013. The expert panel suggested GAAR be implemented from 2016-2017. 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. Growth in India's manufacturing sector eased to a nine-month low in August as export orders fell for a second month, underscoring the risks to the wider economy from Europe's debt crisis, a business survey showed early this. The HSBC manufacturing Purchasing Managers' Index (PMI) eased for the second month to 52.8 in August, its lowest level since November, from 52.9 in July. However, it has kept above the 50 mark that divides growth and contraction for more than three years. 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 on Monday. India's gross domestic product (GDP) rose 5.5% in Q1 June 2012, data released by the government last week 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. Finance Minister P. Chidambaram said after the first quarter GDP growth data that after the continuous reduction in the growth rate in successive quarters beginning in the fourth quarter of 2010-11, this is the first time when quarterly growth rate has exceeded the growth rate in the previous quarter. The decline in the growth of fixed investment (0.7% in Q1 of 2012-13 as against 14.7% in Q1 of 2011-12) is a source of concern to government, Mr. Chidambaram said. It emphasizes once again the need to take quick decisions to accelerate investments, especially removing all bottlenecks to investments in the manufacturing sector, the Finance Minister said. At the same time, there are also encouraging signs such as the growth of the construction sector at 10.9 per cent (Q1 of 2012-13) as against 3.5% in Q1 of 2011-12, Mr. Chidambaram said. Continuing protests by the Bharatiya Janata Party (BJP) over coal block allocations forced the Lok Sabha and Rajya Sabha to adjourn for the day on Tuesday, 4 September 2012, but not before the respective presiding officers quickly ensured the passage of a bill in each house. In the Rajya Sabha, which met after repeated adjournments at 4 p.m., the house passed The All India Institute of Medical Sciences (Amendment) Bill, 2012, within a few minutes as the BJP kept up its protests. Health Minister Ghulam Nabi Azad introduced the bill that seeks to establish similar premier medical institutes in six cities. Deputy Chairman P.J. Kurien, who was presiding, ensured that the bill was passed and then adjourned the house for the day. Earlier, at 2 p.m. when the minister had tried to introduce the bill, the BJP had drowned out his speech in loud protests, forcing Kurien to adjourn the house for two hours. The bill has already been passed by the Lok Sabha. Earlier, the Lok Sabha was adjourned for the day amid continuous din after it met at 12 noon after one adjournment. The BJP members kept up their chant demanding Prime Minister Manmohan Singh's resignation over the government auditor's report alleging large scale irregularities in allocating coal blocks. Ignoring the shouting, Congress MP P.C. Chacko, who was in the chair, got passed the National Institute of Mental Health and Neurosciences, Bangalore, Bill 2012. With this, both houses of parliament have cleared the bill, which was earlier passed by the upper house. The Central Bureau of Investigation (CBI) on Monday, 3 September 2012, 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 Tuesday, 4 September 2012. Searches are being conducted Tuesday, 4 September 2012, at 30 locations in 11 cities including Nagpur, Kolkata, Bhilai, Yavatmal, Raipur, Dhanbad, Ranchi, Hyderabad, Mumbai, Delhi (NCR), among others, CBI said. 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. Further investigation on the matter is continuing, CBI said. 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 last week 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 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. Dr. Singh said it is true that the private parties that were allocated captive coal blocks could not achieve their production targets. This could be partly due to cumbersome processes involved in getting statutory clearances, an issue which the government is addressing separately, Dr. Singh said. Dr. Singh said that the government has initiated action to cancel the allocations of allottees who did not take adequate follow-up action to commence production. Moreover, CBI is separately investigating the allegations of malpractices, on the basis of which due action will be taken against wrongdoers, if any, Dr. Singh said. Trade Minister Anand Sharma on 23 August 2012 said that a deadlock in parliament over allegations of irregularities over the allocation of coal blocks is delaying the government's move to push ahead with reforms to stimulate economic growth. 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 week 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. Rice sowing picked up in August 2012 following revival of monsoon rains. According to data released by the Ministry of Agriculture, rice was sown in a total area of 347.10 lakh hectare (lh) till 31 August 2012, compared with 329.19 lh as on 24 August 2012. Rice sowing has exceeded the normal area of 331.85 lh for the summer sown crop by this time of the year. Cumulative sowing of oilseeds totaled 167.15 lh till 31 August 2012, compared with 164.29 lh as on 24 August 2012. Sowing of oilseeds remains lower than the normal area of 168.36 lh by this time of the year. Sowing of cotton totaled 112.83 lh till 31 August 2012, compared with 111.53 until 24 August 2012. The normal cotton sowing area of 106.91 lh for the cotton crop by this time of the year has already been surpassed. Cumulative sowing of coarse cereals totaled 167.87 lh till 31 August 2012, compared with 165.34 lh until 24 August 2012. Sowing of coarse cereals remains lower than 196.77 lh of normal area for the crop this time of the year. Sowing of pulses totaled 97.70 lh till 31 August 2012, compared with 88.30 lh until 24 August 2012. Sowing of pulses remains lower than 101.31 lh of normal area for this time of the year. Sowing of jute and mesta totaled 8.78 lh until 31 August 2012. Sowing of jute and mesta remains lower than 9 lh of normal area for this time of the year. 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 week said that the proposed direct-tax code (DTC) may require a fresh look. The DTC, which aims to simplify tax procedures and improve compliance, was placed in parliament more than a year ago, and the government had earlier said it would implement it on April 1, 2013. The DTC has already undergone several changes. Mr. Chidambaram also said tax laws needed to be friendly but firm. Mr. Chidambaram said the government will be able to achieve its indirect tax revenue target of Rs 5.05 lakh crore for the current fiscal year that began April 1. Meeting the target is crucial for the government, which is struggling to control its fiscal deficit as heavy spending is straining its finances. Weakening tax revenue amid a sharp slowdown in the economy has put further stress on the government's financial health. Authorities will also begin a campaign to improve compliance to tax laws and widen the service tax net, Mr. Chidambaram said. Mr. 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 stocks fell Wednesday, 5 September 2012 as U.S. manufacturing contracted for a third month and Australia's economy grew at a slower pace. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan shed by between 0.42% to 1.19%. Japan's central bank, Bank of Japan, next meets on Sept. 18 and 19 to review monetary policy. Australia's economy grew 0.6% in the second quarter of 2012, according to data compiled by the Australian Bureau of Statistics. First-quarter gross domestic product growth was revised up to 1.4%, from a previous reading of 1.3%. US stocks closed mixed Tuesday as investors continued to await clarity on European Central Bank plans to shore up heavily indebted countries, but the market ended off its lows on a rally in Apple Inc. U.S. manufacturing contracted for a third straight month in August while firms in the sector hired the fewest workers since late 2009, according to an Institute for Supply Management survey. Separate data showed U.S. construction spending in July fell by the most in a year as both the private and public sectors cut back on investment, according to a report that could dampen hopes of a pick-up in economic activity in the third quarter. The Federal Open Market Committee (FOMC) holds a two-day meeting on US interest rates on September 12-13. The August US non-farm payroll report will be released on Friday 7 September 2012. Election for a new president in the United States, the world's biggest economy, is scheduled on 6 November 2012. European Central Bank (ECB) holds its monthly policy meeting on euro area interest rates on 6 September 2012. The ECB slashed its interest rates to an all-time low in July. The ECB is expected to continue its easing cycle, probably as soon as in September, to help the economic recovery of recession- and crisis-ridden members of the euro zone. UK's central bank -- the Bank of England -- holds its monthly meeting on interest rates on 6 September 2012. 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 Mechanism -- violates German law and the Maastricht Treaty's 'no bailout' clause.