Sensex vaults 7.64% in September as Govt kickstarts economic reforms

Key benchmark indices edged higher on last trading session of the month and the quarter, with market sentiment was boosted by data showing that foreign funds remained buyers of Indian stocks on Thursday, 27 September 2012. The 50-unit S&P CNX Nifty attained its highest closing level in more than 14-1/2 months. The barometer index, BSE Sensex, attained its highest closing level in more than 14 months. The Sensex jumped 183.24 points or 0.99%, off close to 105 points from the day's high and up about 65 points from the day's low. The market breadth was positive. From a recent high of 18694.41 on 25 September 2012, the Sensex had lost 114.91 points or 0.61% in two trading sessions to settle at 18,579.50 on Thursday, 27 September 2012. The Sensex advanced 1,333.18 points or 7.64% in September 2012 as government initiated economic reforms. The barometer index advanced 1,332.76 points or 7.64% in Q2 September 2012. The Sensex has jumped 3,307.82 points or 21.4% in calendar 2012 so far (till 28 September 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 3,626.88 points or 23.96%. Coming back to today's trade, index heavyweight and cigarette maker ITC edged higher. Another index heavyweight Reliance Industries (RIL) trimmed intraday gains in late trade. L&T reversed direction after hitting 52-week high. Auto stocks rose as auto companies will start unveiling sales volume data for September from Monday, 1 October 2012. Hospitality shares rose expectations of higher occupancy during the upcoming holiday season during Diwali and during the year-end holiday season. The market surged in early trade on firm Asian stocks. The market extended initial gains in morning trade. The uptrend continued in mid-morning trade. The 50-unit S&P CNX Nifty hit its highest level in more than 14-1/2 months. The Sensex hit its highest level in more than 14 months. Firmness continued on the bourses in early afternoon trade. The Sensex traded off intraday high in mid-afternoon trade. The market further cut intraday gains in late trade. The market sentiment was boosted by data showing that foreign institutional investors (FIIs) remained buyers of Indian stocks on Thursday, 27 September 2012. FIIs bought shares worth a net Rs 635.10 crore from the secondary equity markets on Thursday, 27 September 2012, as per data from Securities & Exchange Board of India (Sebi). The BSE Sensex jumped 183.24 points or 0.99% to settle at 18,762.74, its highest closing level since 25 July 2011. The index jumped 290.44 points at the day's high of 18,869.94 in mid-morning trade. The index rose 119.01 points at the day's low of 18,698.51 at the onset of the trading session. The S&P CNX Nifty jumped 53.80 points or 0.95% to 5,703.30, its highest closing level since 7 July 2011. The index hit a high of 5,735.15 and a low of 5,683.45 in intraday trade. The BSE Mid-Cap index rose 1.14% and outperformed the Sensex. The BSE Small-Cap index gained 0.85% and underperformed the Sensex. BSE clocked turnover of Rs 2669 crore, lower than Rs 2756 crore on Thursday, 27 September 2012. The market breadth, indicating the overall health of the market, was positive. On BSE, 1,606 shares rose and 1,286 shares fell. A total of 151 shares were unchanged. From 30-share Sensex pack, 23 stocks rose and rest of them fell. Index heavyweight Reliance Industries (RIL) gained 0.78% to Rs 836.70, off the day's high of Rs 848. RIL has purchased 3.9 crore shares and spent Rs 2794.73 crore (excluding brokerage, service tax, Securities Transaction Tax, Stamp Duty, Exchange Transaction Charges and Sebi fees) till 18 September 2012 under the company's ongoing share buyback program. RIL has set maximum buyback price of Rs 870 per share. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013. RIL chairman Mukesh Ambani said at the company's Annual General Meeting in June 2012 that the company's buyback program represents a highly accretive use of cash by the company and it will supplement earnings growth from operations, for higher EPS (earnings per share), in the near future. Index heavyweight and cigarette maker ITC rose 2.03% to Rs 271.90. The stock's intraday high matched a record high of Rs 272.50 hit on 14 September 2012. L&T fell 0.25% to Rs 1605.45. The stock reversed direction after hitting a 52-week high of Rs 1619 in intraday trade today. The company said during market hours today that its construction division secured further new orders valued Rs 1744 crore across various business segments in September 2012. Earlier, during market hours today, L&T had said that its construction division secured new orders valued Rs 2130 crore across various business segments in September 2012. India's largest power equipment maker by sales Bhel declined 0.58%. Hospitality shares rose expectations of higher occupancy during the upcoming holiday season during Diwali and during the year-end holiday season. Indian Hotels, EIH Associated Hotels, EIH and Hotel Leelaventure gained 0.57% to 5.85%. Auto stocks rose as auto companies will start unveiling sales volume data for September2012 from Monday, 1 October 2012. India's largest car maker by sales Maruti Suzuki India rose 1.89%. India's largest commercial vehicle maker by sales Tata Motors advanced 2.91%. The company's global wholesales, including Jaguar Land Rover, rose 13% to 97,225 units in August 2012 over August 2011. Cumulative wholesales for the fiscal are 475,381, higher by 11%, compared to the corresponding period in 2011-12. Global wholesales of all commercial vehicles - Tata, Tata Daewoo and the Tata Hispano Carrocera range – rose 4% to 50,084 units in August 2012 over August 2011. Cumulative wholesales for the fiscal were flat at 228,785 units. Global wholesales of all passenger vehicles rose 23% to 47,141 units in August 2012 over August 2011. Cumulative wholesales for the fiscal are 246,596 units, higher by 20%. Global wholesales of Tata passenger vehicles rose 35% at 23,081 units in August 2012 over August 2011. Cumulative wholesales for the fiscal are at 112,163 units, higher by 10%. Global wholesales of Jaguar Land Rover in August 2012 rose 13% at 24,060 vehicles in August 2012 over August 2011. Cumulative wholesales of Jaguar Land Rover for the fiscal are 134,433 units, higher by 31%. Jaguar wholesales for the month were 2,960 vehicles and cumulative wholesales were at 18,798 vehicles, while Land Rover wholesales in August 2012 were 21,100 vehicles and cumulative wholesales were 115,635 vehicles. Tractor major M&M edged higher on favourable outlook for Rabi or winter crop following wide-spread rains in August and September. The stock was up 1.58%. Winter crops will gain from high soil moisture and brimming water reservoirs, which have filled up in the past four weeks after dipping to alarmingly low levels following a prolonged dry patch at the start of monsoon season. Shares of two-wheeler makers were mixed. India's biggest bike maker by sales Hero MotoCorp (HMCL) declined 0.27%, with the stock reversing initial gains. Bajaj Auto gained 0.75% to Rs 1830. The stock hit a record high of Rs 1850 in intraday trade today. PSU OMCs rose after the Ministry of Petroleum & Natural Gas today, 28 September 2012, denied reports that there is a ban on release of new LPG connections. Indian Oil Corporation (IOC) and HPCL rose 0.38% to 0.46%. But, BPCL fell 0.17%. The Oil Marketing Companies (OMCs) serve around 14 crore customers and deliver over 100 crore cylinders per annum across the length and breadth of the country. These cylinders are subsidized by the Government of India up to a limit of 6 domestic cylinders per annum with effect from 14 September 2012. To ensure that subsidized domestic cylinders are available to genuine customers, new connection requests will be accepted by all LPG distributors, and the connections will be released on completion of KYC (Know Your Customer) formalities and de-duplication of the applicant across all the three PSU OMCs to ensure that multiple connections are not released, the Ministry of Petroleum & Natural Gas said. The Centre on 21 September 2012 had removed all taxes on non-subsidised LPG cylinders. The Ministry of Petroleum & Natural Gas on 17 September 2012 said that PSU OMCs are currently (effective from 16 September 2012) incurring daily under-recovery of about Rs 498 crore on the sale of Diesel, PDS Kerosene and Domestic LPG. The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas reviewed international prices of crude oil and petroleum products during the 1st fortnight of September 2012. The under-recovery on High Speed Diesel (HSD) applicable for 2nd fortnight of September effective 16 September 2012 remains at high level of Rs 13.86 per litre despite last week's price hike, the Ministry of Petroleum & Natural Gas said in a statement. In case of PDS Kerosene and Domestic LPG the under-recoveries are Rs 32.70 a litre and Rs 347 per cylinder respectively for September 2012 as the same are reviewed on monthly basis, the Ministry of Petroleum & Natural Gas said. State-run oil marketing companies (PSU OMCs) incur under recoveries on domestic sale of diesel, LPG and kerosene at government controlled prices. The government has already freed pricing of petrol. The Cabinet Committee on Political Affairs (CCPA) raised price of heavily subsidised diesel by Rs 5 per liter on 13 September 2012 and restricted the supply of subsidized LPG cylinders to each consumer to six cylinders (of 14.2 kg) per annum to balance government's fiscal deficit situation. The CCPA kept kerosene prices unchanged. Idea Cellular lost 0.7% after Telecom Secretary R. Chandrashekhar said Department of Telecommunications is likely to issue notices to wireless operators today, 28 September 2012, asking them to immediately stop offering third-generation roaming services in areas where they don't hold bandwidth. The operators will be asked to stop services immediately, while they will be given 60 days to respond on the reasons for the breach of licensing terms, he said. Idea Cellular, Bharti Airtel and the local unit of UK-based Vodafone Group PLC had in July 2011 signed agreements between them that allowed their customers to avail 3G services in areas where at least one the companies has bandwidth. In late December, the telecom department asked the companies to stop the services, saying the terms of their 3G licenses don't allow such pacts. Bharti, Idea, and Vodafone India then went to the Telecom Disputes Settlement and Appellate Tribunal, which initially stayed the ban. However, a two-member bench of the tribunal in July gave a split verdict on whether or not operators could continue providing services in areas where they don't hold 3G bandwidth. Shares of Bharti Airtel rose 1.3%. The company after trading hours on Thursday, 27 September 2012, announced restructuring of its board of directors and that of its subsidiary Bharti Infratel. The changes have been effected in view of the proposed IPO of Bharti Infratel, which is a leading provider of passive telecom infrastructure in India, Bharti Airtel said in statement. Mr. Manish Kejriwal and Ms. Obiageli Katryn Ezekwesili are the new appointees on the board of Bharti Airtel. Commenting on the restructuring of the board of the two companies, Mr. Sunil Bharti Mittal, Chairman and Managing Director, Bharti Airtel said, "These changes have been effected in line with our strong corporate governance culture and will ensure that Bharti and Singtel have distinct representatives on the boards of Bharti Airtel and Bharti Infratel. I am confident that these two world-class boards will continue to guide these companies to greater heights. I would also take this opportunity to thank the outgoing directors for their contribution to the Board of Bharti Airtel." Media shares rose after the government last week notified rules for greater foreign investment in some sections of the broadcasting sector. Zee Entertainment Enterprises, Zee News, NDTV, TV Today Network, and Sun TV Network gained by between 0.49% to 10%. Among cable TV and direct-to-home (DTH) service providers, Dish TV India, DEN Networks and Hathway Cable & Datacom rose by between 0.78% to 7.08%. The Cable Television Networks (Regulation) Amendment Act, 2011 has made it mandatory for switchover of the existing analogue Cable TV networks to Digital Addressable System (DAS) by December 2014 in the entire country in four phases. In the first phase, four metro cities of Delhi, Mumbai, Kolkata and Chennai are to be covered by 31 October 2012. Tata Global Beverages jumped 8.3% to Rs 142.80 after Tata Starbucks, the 50:50 joint venture between Tata Global Beverages and Starbucks Coffee Company confirmed that the first store in India will open in the Horniman Circle area of Mumbai by the end of October 2012. The stock hit a record high of Rs 144.30 in intraday trade today, 28 September 2012. The store will also be the first Starbucks location to feature espresso sourced and roasted locally from India through the coffee sourcing and roasting agreement with Tata Coffee, Tata Global Beverages said after trading hours on Thursday, 27 September 2012. Shares of Tata Coffee rose 1.56% to Rs 1,004.65. The stock hit 52-week high of Rs 1,029.40 in intraday today, 28 September 2012. Espresso sourced from India will be a hallmark feature of all Starbucks stores in the market, highlighting the quality espresso available in India and Tata Starbucks's commitment to delivering a truly unique and authentic Starbucks Experience to customers throughout India, Tata Global Beverages said on Thursday, 27 September 2012. Tata Starbucks will own and operate Starbucks cafés in India. Tata Global Beverages holds 57.48% stake in Tata Coffee (as per the shareholding pattern as on 30 June 2012). Titan Industries rose 2.91% to Rs 261.55. The stock scaled a record high of Rs 262.80 in intraday trade today. Exide Industries jumped 3.68% to Rs 153.35. The stock scaled a 52-week high of Rs 156.50 in intraday trade today Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange gained 1.01% on Thursday, 27 September 2012. Bhushan Steel, JSW Steel, Tata Steel, Hindalco Industries, Hindustan Zinc gained by between 1.17% to 3.87%. Jindal Steel & Power (JSPL) rose 0.33%. Jindal Steel & Power (JSPL) after trading hours on Thursday, 27 September 2012, clarified that it had met the minimum networth criteria while applying for a Coal to Liquid (CTL) block project in 2008. The company issued the clarification after media reports recently said that the company was allotted the CTL block without meeting the minimum networth criteria in violation of the guidelines of the government. JSPL said it had applied for the CTL block in 2008 in consortium with three other group companies and the total aggregate networth of the consortium was Rs 5390 crore, thereby meeting the guidelines of the Ministry of Coal for CTL blocks. JSPL has also denied a report that the JSPL group had used fake addresses of 4 group/associate companies for application of coal blocks between 2006 and 2009. The JSPL group is a law abiding corporate citizen and it follows rules and regulations properly and maintains highest standards of moral and ethical conduct, the company said in a statement. Cement shares extended their recent rally triggered by on hopes construction activity will pick up as the southwest monsoon started withdrawing from some parts of the country. ACC rose 1.85% to Rs 1,469.20. The stock hit a record high of Rs 1,474.50 in intraday trade today. Shree Cement surged 5.62% to Rs 3989, which was also a record high of the stock. Among other cement stocks, Ambuja Cements, Madras Cement, J K Cement, JK Lakshmi Cement, Birla Corporation, Kakatiya Cement, Prism Cement and Shree Cement rose 0.27% to 19.68%. UltraTech Cement rose 0.92% to Rs 1,967.55. The stock hit a record high of Rs 2,004.75 in intraday trade today. UltraTech Cement and Lupin have entered the coveted 50-unit S&P CNX Nifty today, 28 September 2012. These two stocks have replaced Steel Authority of India (Sail) and Sterlite Industries (India) in Nifty. Lupin rose 0.21%. Steel Authority of India (Sail) fell 0.64%. Sterlite Industries (India) gained 1.64%. Grasim Industries rose 2.04% to Rs 3320. The stock hit a 52-week high of Rs 3,346.60 in intraday trade today. Bank stocks were mixed. India's largest private sector bank by net profit ICICI Bank rose 0.24% to Rs 1057.25. The stock had hit a 52-week high of Rs 1,086.75 in intraday trade Monday, 24 September 2012. India's largest bank by branch network State Bank of India (SBI) declined 0.39%. The bank on 22 September 2012 said it has cut its benchmark prime lending rate by 25 basis points to 14.5% per annum with effect from 27 September 2012. The announcement came close on the heels of the bank cutting its base rate by 25 basis points to 9.75% with effect from 20 September 2012. India's second largest private sector bank by net profit HDFC Bank fell 0.14% to Rs 628.70. The stock had hit a record high of Rs 639.25 in intraday trade Wednesday, 26 September 2012. Oil exploration stocks rose along with crude oil prices. Cairn India, ONGC and Oil India rose by between 1.27% to 2.48%. Crude oil futures rose in electronic trading on Friday, 28 September 2012, extending sharp previous session gains amid heightened geopolitical concern over Iran's nuclear intentions. US crude futures for November delivery were up 47 cents, or 0.51%, to $92.32 a barrel. Oil jumped 2.1% in Thursday's North American session after a speech from Israeli Prime Minister Benjamin Netanyahu at the United Nations General Assembly inflamed fears about Iran's nuclear plans. Tehran has maintained its nuclear program is peaceful and has threatened more than once to close down key global oil shipping lines in the Strait of Hormuz. An embargo by the US and Europe on Iranian-produced oil has been in effect since July. Oil price have risen more than 13% in the past three months. Tata Consultancy Services (TCS) rose 1.95% after company after trading hours on Thursday, 27 September 2012, announced the launch of Firebird Plus -- a new rapid implementation offering for Oracle Fusion Human Capital Management (HCM). A Diamond level partner in Oracle PartnerNetwork (OPN), TCS will leverage its Firebird/Firebird Plus solution along with its proven experience in Oracle Fusion HCM to deploy best-in-class human resource functionality within a fixed scope, TCS said in a statement. The Q2 September 2012 earnings season will begin around mid-October 2012. Investors and analysts will closely watch the management commentary that would accompany the results which could cause revision in their future earnings forecast of the company for the current year or the next year. Software major Infosys and private sector bank HDFC Bank unveil Q2 September 2012 results on 12 October 2012. Bajaj Auto unveils Q2 results on 20 October 2012. HDFC announces Q2 results on 22 October 2012. Ranbaxy Laboratories unveils Q3 September 2012 results on 8 November 2012. The stock market remains closed on Tuesday, 2 October 2012, on account of Mahatma Gandhi Jayanti. The Reserve Bank of India (RBI) in consultation with the Government of India after trading hours on Thursday, 27 September 2012, announced the government's borrowing programme for the second half of the current financial year. As per the plan, the government will borrow Rs 2 lakh crore during the period from 1 October 2012 to 31 March 2013. As hitherto, all the auctions covered by the calendar will have the facility of non-competitive bidding scheme under which five per cent of the notified amount will be reserved for the specified retail investors, RBI said press release. Like in the past, the Government of India/RBI will continue to have the flexibility to bring about modifications in the above calendar in terms of notified amount, issuance period, maturities etc. and to issue different types of instruments depending upon the requirement of the Government of India, evolving market conditions and other relevant factors after giving due notice, RBI said. The eight core industries, which have a combined weight of 37.9% in the Index of Industrial Production (IIP), registered a growth 2.1% in August 2012, compared with 3.8% growth in August 2011. The moderation in growth was on account of decline in production of natural gas, cement, fertilizers and crude oil and also due to decline in the growth rate in production of steel and electricity generation during the month, the Ministry of Commerce & Industry said in a statement today, 28 September 2012. During April-August 2012, the cumulative growth rate of the core industries was 2.8% as against their growth at 5.5% during the corresponding period last year. Finance Minister P. Chidambaram Thursday, 27 September 2012, said the recent pro-business measures that the government took to rein in its gaping fiscal deficit and attract investments were necessary and unavoidable. While speaking to reporters after a meeting the UPA co-ordination committee, Mr. Chidambaram said the government is considering more economic steps. The need to do more reforms was discussed at the meeting, he said. The specific measures will come before the cabinet (for approval), he said. The prime minister has underlined the need for a number of measures that will ensure that there is no volatility in the rupee, and that investment will continue to flow into India as well as stimulate domestic investors so that they will also invest in the economy, Mr. Chidambaram said. Markit Economics will release the HSBC India Manufacturing PMI for September 2012 on Monday, 1 October 2012. Grid failures in the beginning of August and shrinking export orders saw manufacturing HSBC India Manufacturing falling to a nine-month low 52.8 points in August 2012 from 52.9 in July 2012. Markit Economics will release HSBC India Services PMI and HSBC India Composite PMI for September 2012 on Thursday, 4 October 2012. The HSBC India Services PMI had risen to a six-month high of 55 in August 2012 from 54.2 in July 2012. Services, including government services like railway transport, make up nearly 60% of India's economic output. Moody's Investors Service on Wednesday, 26 September 2012, said it will retain its 'stable' outlook on India, expecting economic growth to improve on the back of consumer demand, although the country is still constrained by its fiscal deficit. Recent actions by the government to undertake key reforms showed some determination to take unpopular steps, Atsi Sheth, vice-president of the sovereign risk group at Moody's Investors Service, said in a conference call with reporters. Sheth added Moody's still expected the country to overshoot a fiscal deficit target of 5.1 percent of gross domestic product for 2012/13 fiscal year ending March. "A credit challenge for India is its fiscal positions," Sheth said, adding Moody's will wait to see more efforts towards ensuring that India's fiscal position is less vulnerable to slowdown in economic growth. Moody's currently has Baa3 rating on the sovereign. On the political front, Trinamool Congress (TMC) chief Mamata Banerjee has announced a strike on 1 October 2012 at Jantar Mantar against the recent government policy decisions hiking diesel prices and allowing 51 per cent foreign direct investment in retail. With the TMC's 19 MPs withdrawing support to UPA last week, the UPA has been reduced to a minority in the Lok Sabha. The TMC withdrew support from the UPA to register its protest against the reformist decisions like allowing 51% FDI in multi-brand retail, increasing the diesel price by Rs 5 per litre, and imposing a cap on the number of subsidized LPG cylinders per family at six. Prime Minister Dr. Manmohan Singh last week said that the time has come for hard decisions. Explaining the rationale for the government's recent measures viz. hike in diesel price, capping of subsidised LPG cylinders per household per year and allowing foreign direct investment in multi-brand retail trade, Dr. Singh said that rapid growth in the economy is necessary to raise the government's revenue for financing its programmes in education, health care, housing and rural employment. Dr. Singh said that India must avoid high fiscal deficit which could cause a loss of confidence in the economy. The government last week braved intense political opposition to notify the rules for allowing 51% foreign direct investment (FDI) in multi-brand retail. The government also notified the relaxed conditions for single brand retail as well as the norms for allowing 49% investment by foreign airlines in Indian carries and permitted greater foreign investment in some sections of the broadcasting sector. The finance ministry last week announced reduction in the tax rate on the interest paid to overseas lenders by local companies to 5% from 20%. The rate is applicable from July 2012 until June 2015. The tax reduction will encourage corporates to borrow more for funding expansion projects. Over the past few weeks, the Reserve Bank of India has eased curbs on overseas borrowing for companies in the manufacturing and infrastructure sectors to boost growth. The outlook for Rabi or winter crops has improved due to the annual monsoon rains' delayed withdrawal, which has provided crops with badly needed moisture after months of insufficient rainfall. The monsoon rains usually leave India by 1 September, but this year rainfall began to pick up in late August, after insufficient rain in preceding months forced four major agricultural states to declare a drought. 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. The Centre has advised state government to go for early sowing of Rabi crops, especially in rainfed areas to make use of the moisture available in the soil due to wide-spread rains in August and September. State-run India Meteorological Department (IMD) on 24 September 2012 said that the southwest monsoon has started withdrawing. The government has set food grain target for 2012-13 at 249.52 million tonnes. The Ministry of Agriculture on 24 September 2012 said as per the first advance estimates of production of Kharif crops, 117.18 million tonnes (MT) foodgrains is likely to be produced in the current Kharif season. The Reserve Bank of India last week announced a reduction of 25 basis points in the cash reserve ratio (CRR) of scheduled banks to 4.5% of their net demand and time liabilities (NDTL) effective the fortnight beginning 22 September 2012 from current 4.75% after mid-quarter review of monetary policy. The reduction in CRR will inject around Rs 17000 crore of primary liquidity into the banking system, RBI said in a statement. The RBI kept its policy rate viz. the repo rate unchanged at 8%, stating that inflationary pressures, both at wholesale and retail levels, remain strong. As inflationary tendencies have persisted, the primary focus of monetary policy remains the containment of inflation and anchoring of inflation expectations, RBI said. The Reserve Bank of India (RBI) is scheduled to undertake Second Quarter Review of Monetary Policy - 2012-13 on 30 October 2012. The Cabinet Committee on Political Affairs (CCPA) raised price of heavily subsidised diesel by Rs 5 per liter on 13 September 2012 to balance government's fiscal deficit situation. The CCPA also restricted the supply of subsidized LPG cylinders to each consumer to six cylinders (of 14.2 kg) per annum. European shares reversed initial gains on Friday, 28 September 2012, as investors worried Moody's Investors Service may cut Spain's credit rating to junk. Key benchmark indices in France and Germany were down by 0.12% to 0.53%. UK's FTSE 100 rose 0.13%. The Moody's Investors Service had said in August 2012 that its review on Spain's Baa3 rating would continue through the end of September. At that time Moody's had also said it was waiting on more information on recapitalization needs of Spanish banks. A move below Baa3 would drop Spain debt into junk. The Spanish government will today, 28 September 2012, announce the results of a review of the country's banking system, which will also include how much the European Stability Mechanism needs to recapitalize those banks. Spain on Thursday announced a crisis budget for 2013 based mostly on spending cuts. Ministry budgets were slashed by 8.9 percent for next year and public sector wages frozen for a third year as Prime Minister Mariano Rajoy battles to trim one of the euro zone's biggest deficits. Cristobol Montoro Romero, budget minister, said Spain will see a "soft recession in 2013," with gross domestic product expected to fall 0.5%. He said the government will meet its 2012 budget deficit goal of 6.3% for this year. For 2013, a budget deficit target of 4.5% is predicted. Commenting on the budget, European Union's commissioner for economic and monetary affairs Olli Rehn said the reforms are clearly targeted at some of the most pressing policy changes. Meanwhile, in London, Martin Wheatley, head of the Financial Services Authority, recommended a reform of the London interbank offered rate, or Libor—the method by which banks determine interest rates to lend to each other—and said in a review that he will implement a 10-point plan to overhaul the rate, according to media reports. Asian stocks today, 28 September 2012, extended previous session's gains triggered by reports of a large liquidity injection from the People's Bank of China this week. Key benchmark indices in Hong Kong, China, Indonesia, Singapore, Taiwan and South Korea were up 0.03% to 1.45%. Japan's Nikkei Average fell 0.89%. The Hong Kong stock market is closed on Monday, 1 October 2012 and Tuesday, 2 October 2012, while mainland Chinese markets are shut the whole of next week for the Golden Holiday week running from September 30 to October 7. Fitch Ratings on Friday lowered its 2012 growth target for China to 7.8% from 8% and said it does not expect a hard landing as authorities have the scope to use fiscal and monetary policies to ward off a harsh downturn. The ratings agency acknowledged that slowing exports were dampening China's growth, but said the cooling underway was also a product of the central government's effort to squeeze consumer and house price inflation out of the system. Markit Economics will release the HSBC China Manufacturing PMI for September 2012 on Saturday, 29 September 2012. The HSBC Flash China manufacturing purchasing managers' index (PMI) had showed activity stabilized in September after hitting a nine-month low in August, with the headline reading ticking up to 47.8 from 47.6 last month. But, it remained below 50 -- the value that separates contraction from expansion. Weak economic data released by the government on Friday, 28 September 2012, showed that the Japanese economy may be slowing more than expected amid headwinds from overseas, and could possibly move into a recession. Japanese industrial production fell a steeper-than-expected 1.3% in August from a month earlier, the fourth fall in the last five months. The core consumer price index was down 0.3% in August from a year earlier, the fourth straight month of decline, as deflationary pressures continued to act as a drag on the economy. Trading in US index futures indicated the Dow could fall 35 points at the opening bell on Friday, 28 September 2012. US stocks edged higher on Thursday, supported by the Spanish government saying it expected to meet its 2012 budget deficit goal of 6.3%, with a deficit target of 4.5% for 2013. On Friday, 28 September 2012, the US Labor Department will unveil data on personal income and consumer spending for August 2012. On the same day, the Institute of Supply Management will release Chicago PMI report on business activity for September 2012. Election for a new president in the United States, the world's biggest economy, is scheduled on 6 November 2012. Investors are worried about US fiscal cliff. The "cliff" refers to the year-end deadline for the expiration of hundreds of billions of dollars worth of tax cuts and the triggering of $109 billion in across-the-board spending cuts. The non-partisan Congressional Budget Office has said the scenario could throw the country into recession. Congress created the hazardous deadline of 31 December 2012 in August 2O11 when it agreed to a deficit deal as a way out of a deadlock over raising the US debt ceiling.