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 that the Nifty could fall 5.50 points at the opening bell. 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. The Kelkar Committee (KC) set up by the government to outline a roadmap for fiscal consolidation released its report Friday, 28 September 2012. The KC recommends four pillars under which the government can lower its deficit to 5.2% of GDP in FY13, and further to 4.6% and 3.9% in FY14 and FY15, respectively. The KC states to review introduction of the direct tax code since that could lead to considerable revenue losses, penalize non-compliance on tax payments, review commodities that attract excise tax duty of 6% or lower and prune the negative list on services tax. The KC suggests the government should consider disinvesting through multiple routes, including the exchange traded fund (ETF) route, sell minority stakes in private entities and calls for a special dividend from the central public sector enterprises (CPSE). It also suggests that the government could consider monetizing its land resources. It said government should raise prices of diesel (Rs4/litre), LPG cylinder (Rs 50/cylinder) and kerosene (Rs 2/litre), cap the number of LPG cylinders per consumer (already implemented) and hike urea (fertilizer) prices by 10% in FY13. Ensure better efficiency in food grain distribution and raise Central Issue Price to contain the food subsidy. The KC suggests regular revision of fuel and fertilizer prices to reduce the subsidy bill from 2.2% of GDP in FY13 to 1.5% by FY15. The KC states that the increase in Plan expenditures (funding for five year plans) has seen a very rapid growth (of 26% y-o-y) in FY13. Reallocation of resources can lead to a saving of INR200bn in FY13 on plan expenditure. Further, it states that plan expenditures should rise at a slower pace of 15% and 18% y-o-y in FY14 and FY15 respectively, helping to create additional savings. Among corporate news, Automobile and cement stocks are likely to be in focus as companies from these two sectors will start unveiling monthly sales volume data for September 2012 from today Colgate Palmolive (India) turns ex-dividend today, 1 October 2012, for interim dividend of Rs 13 per share for the year ending 31 March 2013 (FY 2013). NTPC said that the Unit 4 of 500 mega watts (MW) of Simhadri Super Thermal Power Station is declared under Commercial Operation from September 30, 2012. With this the commercial capacity of Simhadri STPP will reach 2000 MW and that of NTPC Group will be 37174 MW, it added. The board of directors of Gujarat NRE Coke in its board meeting held Friday, 28 September 2012 post the 25th AGM of the company, has decided to amalgamate Bharat NRE Coke (BNCL) with Gujarat NRE Coke (GNCL), the flagship company of the group. As per the scheme of amalgamation, BNCL shareholders would receive 2 shares of GNCL for every share held by them in BNCL. This would result in increase of paid up capital of GNCL by approximately 8.8%. Speaking on the occasion Mr Arun Kumar Jagatramka, CMD, Gujarat NRE Coke said, "This amalgamation would help in improving the organizational capability and leadership. We aim to achieve greater integration coupled with financial strength and flexibility for the amalgamated company that would finally result in maximising shareholder value. This arnalgamatioii will bring administrative as well as orgonisational efficiencies leading to economies of scale as well as optimal utilization of available resources. " .We also expect that we will be able to minimize costs due to more focussed operational effort, standardization and simplification of business processes, thereby enhancing productivity", he added. 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 tomorrow, 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 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 today, 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, 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 on 21 September 2012 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 had 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 recently 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 in its last monetary policy review 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. Asian stocks dropped a second day on Monday after Japan's largest manufacturers became more pessimistic China's manufacturing shrank for second month amid a global economic slowdown that has sapped export demand. Key benchmark indices in Indonesia, Japan, Singapore and Taiwan shed by between 0.44% to 0.8%. 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 this week for the Golden Holiday week running from September 30 to October 7. Data from China and Japan added to signs of deepening global economic slowdown. China's purchasing managers' index was 49.8 in September after a 49.2 reading in August, a government survey indicated. A reading below 50 indicates a contraction. Japan's Tankan index for large manufacturers fell in the third quarter to minus 3, the fourth negative reading, the Bank of Japan said today. US stocks closed its best third quarter since 2010 after a wave of central bank actions sparked a dramatic reversal in equity markets, but signs of weakness in the economy drove stocks lower on Friday. Chicago-area business activity fell more than expected in September and contracted for the first time in three years, the Institute for Supply Management-Chicago reported. U.S. consumer spending outpaced wage gains in August, in part because of higher prices, the Commerce Department said, a downbeat sign for faster economic growth. 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.