Market snaps six-day winning streak

Key benchmark indices edged lower in choppy trade, with investors worried about US and European fiscal health. United States is the world's biggest economy. The barometer index, BSE Sensex, lost 56.15 points or 0.3%, up close to 110 points from the day's low and off about 20 points from the day's high. The market breadth was negative. Index heavyweight Reliance Industries (RIL) cut intraday losses in late trade. Index heavyweight and cigarette major ITC edged lower in choppy trade. Indian stocks today, 8 November 2012, snapped six-day winning streak. The Sensex had jumped 471.56 points or 2.55% in six trading sessions to settle at 18902.41 on Wednesday, 7 November 2012, from a recent low of 18,430.85 on 30 October 2012. The Sensex has surged 3,391.34 points or 21.94% in calendar 2012 so far (till 8 November 2012). The Sensex has gained 340.88 points or 1.84% in first six trading sessions of November month. From a 52-week high of 19,137.29 on 5 October 2012, the Sensex has declined 291.03 points or 1.52%. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 3,710.40 points or 24.51%. Coming back to today's trade, Sun Pharmaceutical Industries dropped after reporting a sharp fall in net profit in Q2 September 2012 as the company set aside Rs 583.58 crore towards a possible compensation in a patent dispute case related to drug Protonix. Ranbaxy Laboratories dropped after announcing Q3 September 2012 results. Capital goods pivotals saw divergent trend. Tata Motors surged on high volume after the company said at the time of announcement of Q2 September 2012 result after trading hours on Wednesday, 7 November 2012, that its British luxury car unit Jaguar Land Rover (JLR) will continue to focus on profitable volume growth, managing costs and improving efficiencies to sustain the growth momentum. Mahindra and Mahindra fell after declaring Q2 consolidated result. The market was volatile. Key benchmark indices cut initial losses triggered by fears about upcoming fiscal challenges for the United States, the world's biggest economy. Key benchmark indices traded off initial lows in morning trade as concerns about India's fiscal and current account deficit eased after a sharp slide in crude oil prices on Wednesday, 7 November 2012. The intraday recovery gathered steam in mid-morning trade. Intraday recovery witnessed in mid-morning trade proved short lived as the market weakened again in early afternoon trade. Weakness continued on the bourses in afternoon trade. The market once again trimmed losses in mid-afternoon trade. Volatility continued in late trade. The BSE Sensex lost 56.15 points or 0.3% to settle at 18,846.26, its lowest closing level since 6 November 2012. The index lost 165.96 points at the day's low of 18,736.45 at the onset of the trading session. The index fell 37.20 points at the day's high of 18,865.21 in mid-morning trade. The S&P CNX Nifty was down 21.35 points or 0.37% to 5,738.75, its lowest closing level since 6 November 2012. The index hit a low of 5,693.95 and a high of 5,744.50 in intraday trade. The BSE Mid-Cap index rose 0.13% and outperformed the Sensex. The BSE Small-Cap index fell 0.21% and outperformed the Sensex. The market breadth, indicating the overall health of the market, was negative. On BSE, 1,462 shares declined and 1,366 shares advanced. A total of 133 shares were unchanged. From the 30-share Sensex pack, 20 stocks declined while the rest of them rose. The total turnover on BSE amounted to Rs 2593 crore, higher than Rs 2329 crore on Wednesday, 7 November 2012. Index heavyweight Reliance Industries (RIL) lost 0.49% to Rs 796.55. The stock hit a high of Rs 798.35 and low of Rs 790.25. Oil exploration firm Cairn India dropped 1.01% to Rs 328 after crude oil prices dropped sharply on Wednesday, 7 November 2012, as the conclusion of the presidential election stoked fears about upcoming fiscal challenges for United States, the world's biggest economy. A block deal of 78.54 lakh shares was executed in the Cairn India counter on BSE at Rs 320 per share at 10:47 IST today, 8 November 2012. Data showing a bigger-than-expected increase in last week's US stockpiles also helped fuel Wednesday's selloff in crude. Lower crude oil prices will result in lower realization from crude sales for oil exploration firms such as Cairn India. US crude oil futures for December delivery fell $4.27 a barrel -- a drop of 4.8% -- during Wednesday's New York Mercantile Exchange floor trade to settle at $84.44 a barrel, the lowest settlement since July 10 and the largest one-day dollar and percentage decline since Dec. 14, 2011. Crude-oil futures traded higher in electronic trade on Thursday, paring some of their heavy losses in US session. Benchmark US crude for December delivery rose 60 cents, or 0.71%, to $85.04 a barrel on Globex during Asian hours. PSU OMCs rose as crude oil prices dropped sharply on Wednesday, 7 November 2012, as the conclusion of the presidential election stoked fears about upcoming fiscal challenges for United States, the world's biggest economy. HPCL (up 2.57%) and Indian Oil Corporation (IOC) (up 0.86%) gained. But, BPCL fell 0.15%. The Ministry of Petroleum & Natural Gas on 1 November 2012 said that the under-recovery on High Speed Diesel (HSD) applicable for the 1st fortnight of November 2012 remains at a high level of Rs 9.84 per litre. In case of PDS Kerosene and Domestic LPG, the under-recoveries are Rs 31.30 a litre and Rs 478.50 per cylinder, respectively, for November 2012, according to a review from the Petroleum Planning and Analysis Cell (PPAC). PSU OMCs are currently (effective 1 November 2012) incurring daily under-recovery of about Rs 421 crore on the sale of Diesel, PDS Kerosene and Domestic LPG. Their under-recovery totaled Rs 85586 crore during the period April-September 2012. Their under-recovery totaled Rs 138541 crore for the year ended 31 March 2012 (FY 2012). ONGC declined 0.53%. The company's net profit fell 31.77% to Rs 5896.57 crore on 9.44% decline in total income to Rs 21786.22 crore in Q2 September 2012 over Q2 September 2011. The result was announced after market hours today, 8 November 2012. Aditya Birla Nuvo fell 0.76%. The company's consolidated net profit jumped 42% to Rs 304 crore on 12% growth in revenue to Rs 5992 crore in Q2 September 2012 over Q2 September 2011. The result was announced after market hours today, 8 November 2012. Index heavyweight and cigarette maker ITC shed 0.55% to Rs 288.20. The stock hit a high of Rs 291 and a low of Rs 287.30. The Ministry of Health and Family Welfare last month notified new pictorial health warnings to be depicted on tobacco product packs which will come into effect from 1 April 2013. The Ministry of Health and Family Welfare said in a statement on 22 October 2012 that three sets of warnings each have been notified for smoking as well as smokeless forms of tobacco product packages. The well-designed health warnings and messages are part of a range of measures to communicate health risks due to tobacco use. Pictorial health warnings communicate health risks in a visible way, provoke a greater emotional response and increase the motivation of tobacco users to quit and to decrease their tobacco consumption, the ministry's statement said. Graphic warning labels have a greater impact than text-only labels and can be recognized by low-literacy audiences and children, the statement added. Shares of ITC had hit record high on 19 October 2012 after the company announced strong Q2 results during trading hours on that day. The stock had hit record high of Rs 299.20 in intraday trade on 19 October 2012. ITC's net profit jumped 21.27% to Rs 1836.42 crore on 18.65% growth in income from operations to Rs 7226.58 crore in Q2 September 2012 over Q2 September 2011. Telecom stocks rose across the board. Reliance Communications, Idea Cellular, Bharti Airtel, MTNL and Tata Teleservices (Maharashtra) rose by between 0.73% to 3.72%. The Union Cabinet today, 8 November 2012, decided that no one time charges will be levied on GSM cellular services providers for spectrum holding upto 4.4 MHz. For all spectrum holdings beyond 4.4 MHz (GSM), a onetime charge will be levied prospectively on the existing operators at 2012 auction determined price. The date of applicability of the charge shall be the date of commencement of the first quarter following the date of the Cabinet decision, the government said in a statement. For spectrum held above 6.2 (GSM), a one-time charge would be levied from July 2008 onwards. There will be two prices. The price, pro-rated for the period July 2008 upto the date of applicability of auction determined price, would be the 2001 entry fee divided by 6.2, duly indexed using State Bank of India Prime Lending Rate (SBI PLR). With effect from the date of commencement of the first quarter following the date of the Cabinet decision the auction determined price would be levied. The government said the licensees will be given the option to surrender spectrum beyond 4.4 MHz (GSM) if they do not wish to pay this charge to the government. The licensees will be allowed equated annual installments for the balance number of years of license (such that the last installment is payable not later than 12 calendar months prior to expiry of the license) considering interest rate at 9.75% as approved by the Ministry of Finance in the case of new successful bidders for deferred payment. The licensees will also have the option of full upfront payment or pre-payment of one or more installments. Sharing of spectrum, without any additional one-time spectrum charge, will be permitted between TSPs that have both paid for spectrum beyond 4.4 MHz (GSM) as recommended above without any change in the terms and conditions of licence for use of spectrum including the carrier size indicated therein. Both TSPs would have to pay spectrum usage charge at the slab rate applicable on the entire combined spectrum holding. In case where a transferor (acquired) company holds spectrum against the entry fee paid, the transferee (acquiring) company (i.e. resultant merged entity), would be required to pay to the government, the differential between the entry fee, and the current auction determined price, on a pro-rata basis for the remaining period of validity of the license(s); On the issue of allotment of initial spectrum to licensees who have paid the requisite fee but have not been allotted spectrum so far, the Cabinet decided that the claim of such company for allotment of 4.4 MHz of spectrum in such case will be considered after completion of the auction process, subject to availability of spectrum. The above decisions are expected to result in further efficient utilization of the scarce natural resource of spectrum facilitating proliferation of telecom services in the country, the government said in a statement. Decision regarding charging for CDMA spectrum holding beyond 2.5 MHz will be taken separately, the statement added. Steel Authority of India (Sail) shed 1.44%. The company reported 11.92% growth in net profit to Rs 543.11 crore on 3.7% decline in total income to Rs 11,045.71 crore in Q2 September 2012 over Q2 September 2011. The result was announced during market hours today, 8 November 2012. Sun Pharmaceutical Industries fell 0.89% after consolidated net profit fell 46.53% to Rs 319.64 crore on 40.36% increase in total income to Rs 2833.13 crore in Q2 September 2012 over Q2 September 2011. The result was announced during trading hours today, 8 November 2012. With respect to patent infringement litigation related to generic versions of 'Protonix', the company believes that it has a sound reasons to disagree with the overstated claims of Wyeth. The company also believes that the patent is invalid and unenforceable and will pursue all available legal remedies including appeals. However, as a matter of prudence and as estimated by the management on a consolidated level a sum of Rs 583.58 crore has been provided towards potential damages in this regards in the above results, the company said in footnotes to its results. Consolidated R&D expense for Q2 September 2012 was Rs 145 crore or 5.5% of sales. For April-September 2012, R&D spend was 5.3% of sales. Sun Pharma has revised upwards its sales growth guidance for the year ending 31 March 2013 (FY 2013). The company said it now expects 20-22% growth in sales in FY 2013. Commenting on the second quarter results, Dilip Shanghvi, Managing Director, Sun Pharma, said: "All Sun Pharma businesses -- India, US and Rest of the World -- continue to demonstrate good growth, in line with our expectations. As a company with proven development capabilities in complex products and technologies, and with world class manufacturing, we are well positioned to make the best of opportunities in worldwide markets. We shall strive to remain focused on execution and building a business with consistent performance." Ranbaxy Laboratories lost 0.25% after the company reported consolidated net profit of Rs 754.20 crore in Q3 September 2012, compared with net loss of Rs 464.60 crore in Q3 September 2011. The company announced the results during trading hours today, 8 November 2012. Ranbaxy Laboratories' consolidated sales rose 31% to Rs 2651.40 crore in Q3 September 2012 over Q3 September 2011. The company's earnings before interest, taxation, depreciation, and amortization (EBITDA) jumped 215.63% to Rs 417.90 crore in Q3 September 2012 over Q3 September 2011. The EBITDA margin was 16% of sales in Q3 September 2012. Ranbaxy Laboratories said that the profitability below the EBITDA line in Q2 September 2012 was favourably impacted largely by mark-to-market (MTM) gain on long dated derivatives contracts and foreign currency loans owing to a stronger rupee. The impact of this was adverse in Q3 September 2011, Ranbaxy added. Commenting on the Q3 performance, Mr. Arun Sawhney, CEO & Managing Director, Ranbaxy Laboratories said, "Ranbaxy's business performance continued to strengthen as planned even in a volatile regulatory and business environment as our focus on key markets, improvement in manufacturing, R&D productivity and heightened level of cost consciousness helped our strong performance. We are confident that these measures will help further strengthen our base business". Tata Motors surged 5.53% to Rs 284.15. The stock rose on high volume of 39.93 lakh shares, compared with average daily volume of 11.93 lakh shares in the past one quarter. Tata Motors' consolidated net profit rose 10.5% to Rs 2075 crore on 19.9% growth in revenue (net of excise) to Rs 43403 crore in Q2 September 2012 over Q2 September 2011. Tata Motors' profit before exceptional item and tax rose 14.4% to Rs 3099 crore in Q2 September 2012 over Q2 September 2011. Profit before tax jumped 36.1% to Rs 3089 crore in Q2 September 2012 over Q2 September 2011. Tata Motors attributed revenue growth to growth in volumes and favourable market mix for the company's British luxury car unit Jaguar Land Rover (JLR). Tata Motors announced the second quarter results after trading hours on Wednesday, 7 November 2012. JLR's revenue rose 12.8% to GBP 3,288 million in Q2 September 2012 over Q2 September 2011. JLR's earnings before interest, depreciation, taxation and amortization (EBITDA) rose 15.7% to GBP 486 million in Q2 September 2012 over Q2 September 2011. At JLR, continued strong revenue and operating performance were supported by favourable market mix, exchange rate environment which was partially offset by the model mix, Tata Motors said in a statement. JLR's profit before tax (PBT) for the quarter ended 30 September 2012 was GBP 431 million, higher than GBP 216 million in Q2 September 2011. PBT for Q2 September 2012 included GBP 67 million of foreign exchange gains on revaluation and hedging. Profit after tax (PAT) for Q2 September 2012 was GBP 305 million, higher than GBP 172 million in Q2 September 2011. JLR wholesales for the quarter ended 30 September 2012 grew 13.9% over corresponding period last year to 77,442 units. Of this, the Jaguar volumes for the period stood at 9,832 units and Land Rover volumes at 67,610 units. Growth in volumes was driven by continued strong demand from China region and by sales of the Range Rover Evoque. Sales in the China region represented 21.1% of sales for the quarter ended 30 September 2012, as against 16.3% for the corresponding period last year. Tata Motors said sluggish economic activity, uneven monsoon, weak external environment and excise duty and fuel price increases have adversely impacted the overall demand for medium and heavy commercial vehicles (MHCV). For Tata Motors, ICV trucks and buses are expected to support volumes in the MHCV segment, Tata Motors said. Any improvement of the customer sentiment with the upcoming festive season could aid MHCV demand in the second half of the current financial year, Tata Motors said. Tata Motors said its light commercial vehicles continue to grow in both the haulage and passenger applications. Tata Motors further said its strong understanding of the domestic market along with a wide and compelling product portfolio and customer support is expected to enable the company to grow the market size for commercial vehicles (CV) India and its position in the Indian CV market. With regard to passenger car segment, Tata Motors said that the competitive intensity poses significant challenge to the passenger vehicles industry in India even as higher inflation, interest costs, fuel price increases dampen demand. The company said that customer preference is expected to continue to tend towards diesel vehicles. The company said it will continue its cost and expense optimization focus in the passenger car business. The company also said that several initiatives are under aggressive implementation in the passenger car business to achieve performance improvement. Tata Motors' British luxury car unit Jaguar Land Rover (JLR) said the management will continue to monitor economic and sales trends closely to balance sales and production. JLR will continue with planned investments in future new products and technologies to meet customer aspirations and regulatory environmental standards. The focus is on generating strong operating cash flows to support the planned future investments. JLR will continue to focus on profitable volume growth, managing costs and improving efficiencies to sustain the growth momentum. Tata Motors on Wednesday, 7 November 2012, said that Mr. Cyrus P. Mistry, Deputy Chairman of Tata Sons, has been appointed as Deputy Chairman of Tata Motors. He will take over as Chairman of Tata Motors from Mr. Ratan Tata after the latter's retirement in December 2012. Meanwhile, Mr. Ravi Kant has stepped down as director of Jaguar Land Rover (JLR). India's largest utility vehicle maker by sales Mahindra and Mahindra fell 0.53%. The stock had hit record high of Rs 926 in intraday trade Wednesday, 7 November 2012. The company during trading hours today, 8 November 2012, said its consolidated net profit rose 17.1% to Rs 798.70 crore on 17.7% increase in the gross revenue plus other income to Rs 17973.40 crore in Q2 September 2012 over Q2 September 2011. In view of the disposal of shares by a joint venture partner, Tech Mahindra became an associate of the company with effect from 1 September 2012 and its Gross Revenue and Other Income have been included in this consolidation only up to 31 August 2012. Hence, the Consolidated Revenue for the current quarter and half year are not strictly comparable with that of the corresponding periods in the previous year. In Q2 September 2012, some of the major group companies like Mahindra Finance, Mahindra Satyam and Mahindra Holidays significantly improved their performance over Q2 September 2011. Mahindra Finance grew its consolidated revenue by 46% and its profit by 42%. Mahindra Satyam's consolidated revenue grew by 23% with a 17% increase in its profits and Mahindra Holidays operating revenue grew by 11% with a profit growth of 12%. As on 30 September 2012, the group comprised of 118 subsidiaries, 5 joint ventures and 12 associates. Car major Maruti Suzuki India fell 0.74% to Rs 1,457.10. Shares of Maruti had scaled a 52-week high of Rs 1,488 in intraday trade on Monday, 5 November 2012. The company early this month said its total sales jumped 85.5% to 1.03 lakh units in October 2012 over October 2011. Maruti Suzuki India said total passenger car sales surged 93.8% to 79,811 units in October 2012 over October 2011. Total domestic sales jumped 86.6% to 96,002 units and total exports rose 71.8% to 7,106 units in October 2012 over October 2011. The sharp surge in sales in October 2012 was due to base effect. Maruti's sales in October of 2011 were hit adversely due to labour unrest at the company's Manesar and Gurgaon factories in Haryana. Motorcycle major Bajaj Auto shed 0.91% to Rs 1,841. The stock had hit a record high of Rs 1,905 in intraday trade on 2 November 2012. The company on 2 November 2012 said its total sales rose 4% to 4.11 units in October 2012 over October 2011. Three-wheeler sales jumped 14% to a record 50,316 units in October 2012 over October 2011. Exports declined 4% to 1.26 lakh units in October 2012 over October 2011. Bajaj Auto's motorcycle sales rose 3% to 3.61 lakh units in October 2012 over October 2011. Bajaj Auto said its domestic motorcycle clocked record monthly sales of 2.62 lakh units in October 2012. The company also said that sales of its Discover brand of motorcycles clocked record sales of 1.55 lakh units in October 2012. Hero MotoCorp declined 1.27%. The company's total motorcycle sales rose 3.31% to Rs 5.29 lakh units in October 2012 over October 2011. Hero registered its highest ever sales for scooters in a single month in October 2012. Scooter sales crossed the 50,000 mark for the first time in the company's history. Encouraged by the strong sales of its scooters Maestro and Pleasure, the two-wheeler giant has increased its scooter production to over 60,000 units a month. Bank pivotals were mostly lower on profit booking. Private sector banking giant ICICI Bank fell 1.58%. ICICI Bank's net profit jumped 30% to Rs 1956 crore in Q2 September 2012 over Q2 September 2011. Net interest income jumped 35% to Rs 3371 crore and non-interest income jumped 17% to Rs 2043 crore in Q2 September 2012 over Q2 September 2011. Net interest margin improved to 3% in Q2 September 2012 from 2.61% in Q2 September 2011. Cost-to-income ratio reduced to 40.9% in Q2 September 2012 from 44.4% in Q2 September 2011. The result was announced on 26 October 2012. India's second largest private sector bank by net profit HDFC Bank shed 0.05% to Rs 639. The stock had hit a record high of Rs 645.05 in intraday trade on Wednesday, 7 November 2012. HDFC Bank's net profit jumped 30.06% to Rs 1559.98 crore on 24.47% growth in total income to Rs 9869.8 crore in Q2 September 2012 over Q2 September 2011. HDFC Bank announced the second quarter results on 12 October 2012. India's largest bank by branch network State Bank of India (SBI) gained 1.27% Capital goods pivotals saw divergent trend. Engineering and construction conglomerate Larsen & Toubro (L&T) fell 2.07%. L&T early this week said its construction division has bagged an order worth Rs 1252 crore from Delhi Metro Rail Corporation (DMRC). The order will be executed as joint venture with Shanghai Urban Construction Group (SUCG), L&T said in a statement during market houses on Monday, 5 November 2012. The joint venture will design and construct a tunnel between Shankar Vihar and Hauz Khas as well as underground stations at Vasant Vihar, Munirka, R.K. Puram, IIT and Hauz Khas. L&T's share in the project is Rs 852 crore. L&T also said it had recently won an order Rs 644 crore contract for construction of a permanent campus facility for IIT, Hyderabad. So far in November 2012, L&T's construction division has bagged orders valued at over Rs 1496 crore, L&T said. India's largest power equipment maker by capacity Bhel rose 0.08%. NTPC fell 0.29%. During market hours today, 8 November 2012, the company said its board of directors at a meeting held on Wednesday, 7 November 2012 has accorded the investment approval for the Lara Super Thermal Power Project, Stage-I (2 X 800 megawatt) to be implemented in the state of Chhattisgarh at an appraised current estimated cost of Rs 11846 crore subject to environmental clearance of Ministry of Environment and Forests (MOEF). During market hours today, 8 November 2012, the company also said that the Unit-III of 500 megawatts (MW) of Indira Gandhi Super Thermal Power Project at Jhajjar of Aravali Power Company (APCPL), a joint venture of NTPC, Haryana Power Generation Corporation and Indraprastha Power Generation Co., was commissioned on Wednesday, 7 November 2012. With this, the total capacity of NTPC group has become 39,674 MW. With the commissioning of Unit-III, the total installed capacity of Indira Gandhi Super Thermal Power Project has become 1,500 MW Infosys lost 1.01%. Infosys last month said it has completed the acquisition of Lodestone Holding AG, a leading management consultancy based in Switzerland. The acquisition is in accordance with the terms set out in the agreement announced on September 10, 2012. The deal strengthens the management consulting capabilities of Infosys around the world, adding more than 750 experienced consultants and 200 clients in wide-ranging areas such as manufacturing and the automotive and life sciences industries, Infosys said in a statement. Interest rate sensitive realty stocks rose on expectation of rate cut from the central bank in the first quarter of 2013. Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance. Realty major DLF rose 1.32% in choppy trade. DLF last week said it has received the entire amount from Lodha Developers on sale of a land parcel in Mumbai. DLF on 1 November 2012 said that in August 2012, DLF along with its three wholly-owned subsidiaries -- DLF Cyber City Developers, DLF Universal and Jawala Real Estates had entered in to an agreement with Lodha Developers for divesting DLF's group's entire stake in Jawala Real Estates, which owned the land, for an enterprise value estimated to be Rs 2700 crore, subject to final adjustments at completion. Upon fulfillment of all conditions by the parties and receipt of payment of all amounts under the agreement totaling to Rs 2727 crore from Lodha, Jawala has ceased to be as subsidiary of the company, DLF said in a statement. The transaction is in line with the company's objective of divesting its non-strategic assets, DLF said. Among other realty stocks, Unitech, HDIL and D B Realty gained by between 0.48% to 5.46%. NMDC rose 0.88%. The stock reversed initial losses triggered by weak Q2 results. NMDC today, 8 November 2012, said that the Department of Disinvestment, Ministry of Finance, Government of India, has appointed five merchant bankers for divestment of government's 10% stake in the company through "Offer for Sale by promoters through the stock exchanges" (OFS) method. The government currently holds 90% stake in NMDC. NMDC's net profit fell 14.49% to Rs 1678.62 crore on 10.35% fall in total income to Rs 3195.06 crore in Q2 September 2012 over Q2 September 2011. The result was announced after market hours on Wednesday, 7 November 2012. Foreign institutional investors (FIIs) bought shares worth a net Rs 728.45 crore on Wednesday, 7 November 2012, as per provisional data from the stock exchanges. The second quarter September 2012 earnings season is drawing towards a close. Tata Steel, Jindal Steel & Power, Coal India, State Bank of India and BPCL unveil Q2 results tomorrow, 9 November 2012. DLF and Jaiprakash Associates unveil Q2 results on 12 November 2012. Siemens will announce its results for the year ended 30 September 2012 (FY 2012) on 23 November 2012. India's bourses are working with the country's stock-market regulator to prevent a recurrence of the "flash crash", National Stock Exchange (NSE) Chief Executive Ravi Narain said in an interview to international daily newspaper on 14 October 2012. Erroneous orders placed by a single brokerage firm on 5 October 2012 sent the NSE's main index, the 50-unit S&P CNX Nifty, falling a massive 899.40 points or 15.5% in just a few seconds. Although most of the stocks recovered soon after a 15-minute trading halt, the incident created panic among traders, highlighting concerns that high-speed traders have brought instability to the markets. The Cabinet Committee on Economic Affairs today, 8 November 2012, approved divestment of 10% government stake in Hindustan Aeronautics (HAL) out of its holding of 100% through an Initial Public Offer (IPO) in the domestic market as per the Securities and Exchange Board of India (SEBI) Rules and Regulations. Five percent discount on the issue price will be allowed for retail investors as well as to eligible employees of HAL applying under the employees reservation portion. After the divestment of 10 percent, Government of India's shareholding in the company would come down to 90 percent. Reserve Bank of India governor D Subbarao said in an interview to a news agency early this week that the central bank takes the economic impact of government policies into account in its decisions on monetary policy, but its actions aren't dependent on any specific reforms. "It's not that we'll be tying down our policy stance to specific action by the government; we're tying down our policy stance to growth and inflation dynamics, which would be a function of the government's reform agenda," Mr. Subbarao said. The RBI governor said recent figures showing annual infrastructure output growth of 5.1% in October compared with 2.3% in September was encouraging, as it was a good leading indicator of overall industrial production. "Some other indicators are also showing that the rebound has started, but it's too early to say whether that will be sustained," Mr. Subbarao said. "We're hoping that it will be", Subbarao said. The RBI governor rebutted criticisms from some in the banking sector that higher provisioning needs on restructured loans offset the benefit of the recent CRR cut. While the CRR cut released Rs 17500 crore into the banking system, the cost of the provision requirement is likely to be around Rs 2500-Rs 3000 crore, he said. However, he acknowledged that some individual banks may face constraints. After Second Quarter Review of Monetary Policy 2012-13 late last month, the Reserve Bank of India kept its key policy rate viz. the repo rate unchanged at 8% citing high inflation. The central bank cut the cash reserve ratio (CRR) requirement of scheduled banks by 25 basis points to 4.25%. The reduction in the CRR is intended to pre-empt a prospective tightening of liquidity conditions, thereby keeping liquidity comfortable to support growth, RBI said on 30 October 2012. It anticipates the projected inflation trajectory which indicates a rise in inflation before easing in Q4 March 2013, RBI said. While risks to this trajectory remain, the baseline scenario suggests a reasonable likelihood of further policy easing in Q4 March 2013, RBI said. RBI said its latest policy guidance will, however, be conditioned by the evolving growth-inflation dynamic, RBI said. Although inflation has remained persistently high over the past two years, it is important to note that during the 2000s, it averaged around 5.5%, both in terms of WPI and CPI, down from its earlier trend rate of about 7.5%, RBI said. Given this record, the conduct of monetary policy will continue to condition and contain perception of inflation in the range of 4% to 4.5%, RBI said. This is in line with the medium-term objective of 3% inflation consistent with India's broader integration into the global economy, RBI said. A news agency quoted Finance Minister P. Chidambaram as saying on 4 November 2012 that the government will borrow more to fund a fiscal deficit that is now estimated at 5.3% of GDP this fiscal year. Previously, the government had pegged gross market borrowing for the current fiscal year at Rs 5.7 lakh crore to finance a fiscal deficit that was originally projected at 5.1%. Chidambaram said last week that the best efforts would be made to contain fiscal deficit at 5.3% during the current financial year. Addressing the 4th meeting of the Consultative Committee attached to his Ministry on the issue of "The Economic Impact of Internal and External Debt", Chidambaram said the strategy to achieve the 5.3% fiscal deficit target would be to maximize revenue collections and control expenditure. Chidambaram further said that serious efforts would also be made to bridge the gap in the Current Account Deficit (CAD) which presently stood at $70.3 billion. He said there are mainly three major heads to do the same viz. through FDI, FIIs and ECBs (External Commercial Borrowings). In this regard, he mentioned that capital inflows through FDI and FIIs are vital in meeting the current account deficit. He said that the FDI is not an option, but an imperative. He sought the support of members of all the political parties in strengthening the government's efforts to contain both the fiscal deficit and current account deficit. The Members of the Consultative Committee representing different political parties participated in the discussion and gave various suggestions including following the credible path of fiscal consolidation, framing of debt and fiscal management policy, and keeping debt to GDP ratio at a low level among others. Many members suggested that there is as a need to review the functioning of various Central Sponsored Schemes (CSS) which are not able to deliver the benefits. The Finance Minister said that the Finance Ministry is in favour of fewer CSS with larger amount so that desired objectives and targets are achieved. The Finance Minister has laid out a roadmap to put the government's fiscal house in order, stressing the need to control expenses and generate more revenue as it targets fiscal deficit of 5.3% of gross domestic product this fiscal year and 4.8% next year. The fiscal deficit stood at 5.8% in the year ended 31 March 2012. Chidambaram's plan envisages bringing down the fiscal deficit to 4.2% of GDP in the fiscal year ending March 31, 2015; 3.6% in fiscal 2016 and 3% in fiscal 2017. The fiscal consolidation plan comes at a time when there are concerns that the government may increase its expenditure on social-sector programs in its budget for the next fiscal year through March 2014 as it prepares for next general elections, due before May 2014. The Ministry of Agriculture early this month said that as per reports received from different states, sowing of Rabi or winter crops has begun in some parts of the country. Preliminary data shows that pulses have been grown in 18.79 lakh hectares (LHa) so far. This acreage is more than double the average area under pulses at this time of the year (9.08 LHa) but is lower than the acreage of this time last year (27.23 LHa), a statement from the ministry said. The outlook for Rabi or winter crops has improved following wide-spread rains in August and September. 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. Winter crops will gain from high soil moisture and brimming water reservoirs. 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. On the political front, Prime Minister Dr. Manmohan Singh announced a major reshuffle of his Council of Ministers on 28 October 2012. In the biggest reshuffle of the Congress-led United Progressive Alliance Cabinet, Dr. Singh inducted 17 new faces and a total of 22 ministers giving several new and young faces a chance to prove their mettle as his government tries to remove the taint of scams and non-performance from its progress report. The Congress has also shown that it is the big brother in the UPA by having 69 of the 79 ministers, including the Railways. On the occasion of taking additional charge as Minister of Parliamentary Affairs, Union Urban Development Minister Mr. Kamal Nath said on 29 October 2012 said that he will attempt to bring consensus among all political parties on national policies that are formed in the national interest that is dear to all parties. Answering queries from the media persons how he intends to face the challenge of running a smooth winter session of parliament starting next month, the minister highlighted the prominence of the parliament in the democratic system of the country and expressed desire that all political parties will discuss and debate the issues of national interest without resorting to politics of disruption rising above narrow political interests. Bahujan Samaj Party's (BSP) chief Mayawati on 10 October 2012 said she has not taken a decision yet on whether or not to continue support to the UPA. Mayawati said that her party has left the final decision on her and she will soon take a decision. The BSP chief said the BSP is ready for early Lok Sabha elections. Attacking the UPA over corruption, Mayawati said that the government has not taken any strong steps to control corruption. BSP provides outside support to the Congress led UPA government at the Centre which has been reduced to a minority government after Trinamool Congress (TMC) withdrew support to the UPA in September 2012. The TMC withdrew support from the UPA to register its protest against the reformist decisions viz. 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 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 braved intense political opposition and initiated economic reform measures in September 2012, by 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 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. The Union Cabinet on 4 October 2012 approved a long-pending proposal to raise the foreign investment limit in insurance companies to 49% from 26%. It also approved a plan to open up the pension sector to overseas investors, allowing them to own stakes of up to 49% in local companies. Both the proposals viz. the increase in foreign investment ceiling in insurance sector and opening of pension sector to overseas investors will require Parliament's approval. Assembly polls will be held in Gujarat in two phases on 13 and 17 December 2012. Counting of votes of assembly elections in Gujarat and Himachal Pradesh (HP) Pradesh will take place on the same day on 20 December 2012. Assembly polls were held in HP on 4 November 2012. European stock markets edged higher on Thursday, in an attempt to climb back from prior-day losses, helped by well-received results from a number of companies. Reports that the Greek parliament passed a further set of new austerity measures late Wednesday also provided support. Key benchmark indices in UK, Germany and France were up by 0.3% to 0.49%. Greece's government voted by a razor thin margin on Thursday to approve an austerity package needed to unlock vital aid and avert bankruptcy, despite an internal rift and violent protests at the gates of parliament. Despite the abstention of their junior ruling partner the Democratic Left, Prime Minister Antonis Samaras's New Democracy Party and its Socialist PASOK allies passed the 500-odd page bill shortly after midnight. They mustered 153 of parliament's 300 seats, with New Democracy and PASOK expelling seven deputies from their ranks for not backing the measures. The situation on financial markets has improved since last year, but a deepened sovereign-debt crisis in Europe is still the biggest risk to Sweden's financial system, the country's Financial Supervisory Authority said Thursday. Underlying structural problems remain in some European countries, although the unease on financial markets subsided somewhat during 2012 thanks to support measures from central banks, the regulator said in a report. Sweden's banks are well-capitalized with strong buffers and robust resilience, the FSA said. However, they are reliant on market funding, and this makes the banking system vulnerable if the debt crisis should intensify, it said. The Swedish life insurance industry has been pressured by a low-interest-rate environment for some time, and there is a risk that consumers end up with lower returns when the life insurers review their business models, the FSA said. Data on Wednesday, 7 November 2012, showed German industrial production fell sharply in September. The European Commission on Wednesday slashed its 2013 euro-zone growth forecast to 0.1% from 1%. The European Central Bank holds its policy meeting on euro zone interest rates later in the global day today, 8 November 2012. The ECB is expected to keep interest rates unchanged. Asian stocks fell on Thursday, 8 November 2012, as the conclusion of the US election stoked fears about upcoming fiscal challenges for Washington. Key benchmark indices in Hong Kong, Singapore, South Korea, Japan, China, Taiwan and Indonesia were down by 0.52% to 2.41%. China's week-long conference to usher in the country's next leaders and policies kicked off on Thursday, 8 November 2012. Vice President Xi Jinping is widely expected to become the next general secretary of the Communist Party of China's Central Committee and soon after take over as China's president from current leader Hu Jintao. Li Keqiang -- one of China's vice premiers and, like Xi, a current standing committee member -- is expected to take over as premier, replacing Wen Jiabao. Xi and Li's new seniority will likely be confirmed publicly at next week's Communist Party Congress closing ceremony, when they appear with the rest of the new Central Committee, as selected by the party's 25-member politburo. China will "definitely" meet or exceed its official target of 7.5% gross domestic product growth this year, People's Bank of China Vice Governor Yi Gang said on Thursday. China's Statistics Bureau Chief Ma Jiantang echoed Mr Yi's remarks, saying China "has conditions to meet" its economic targets this year. Both officials were speaking on the sidelines of the Communist Party Congress in Beijing. Mr. Yi said that China's economic direction is getting better and loan demand is improving. The inflation situation, he added, is "not bad" at the moment. China's GDP grew by 7.4% from a year earlier in the third quarter, and by 7.7% in the first three quarters of the year, according to data from the National Bureau of Statistics. A spate of better-than-expected data for the month of September, including exports and industrial production, has bolstered market confidence that the slowdown in the world's second-largest economy is ending. Meanwhile, data out Thursday highlighted Japan's economic problems, with core machinery orders down 4.3% in September from the previous month. In August, core machinery orders -- which exclude orders for ships and power equipment -- fell 3.3%. In separate data, the Finance Ministry said September's current-account surplus narrowed by a sharp 69% to an unadjusted 503.6 billion yen ($6.4 billion). Australia's major banks have passed the latest round of stress testing by the country's banking regulator, the Chairman of the Australian Prudential Regulation Authority said on Thursday. John Laker told a business forum in Brisbane that none of Australia's major banks would fail if Australia were to face a downturn comparable to the effects of the global financial crisis in the US and parts of Europe. The latest test, which follows a less-stringent review in 2010, modelled the impact of a 5% contraction in the economy, a more-than doubling of unemployment to 12% and slump in house prices of 35% and commercial property of 40% on the balance sheets of the top five banks. Trading in US index futures indicated that the Dow could gain 16 points at the opening bell on Thursday, 8 November 2012. US markets closed with heavy losses on Wednesday, 7 November 2012, as investors moved to price in the implications of President Barack Obama's re-election in terms of the "fiscal cliff" of tax hikes and spending cuts that will take place in January if no action is taken. The Dow Jones Industrial Average slid 312.95 points, or 2.36%, to 12,932.73. The Standard & Poor's 500 index fell 33.86 points, or 2.37%, to 1,394.53. The Nasdaq Composite Index lost 74.64 points, or 2.48%, to 2,937.29. Barack Obama was re-elected as US president on Wednesday, 7 November 2012, defeating Republican opponent Mitt Romney. Obama captured a second term after winning a number of electoral-vote rich states and several key battlegrounds. Obama overcame a long-running economic downturn to defeat Romney, while the House remained in Republican hands and Democrats maintained control of the Senate. Going ahead, investors are worried about US fiscal cliff -- a combination of major spending cuts and tax hikes that will automatically take effect early next year unless politicians reach a compromise. 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 US Congress created the hazardous deadline of 31 December 2012 in August 2011 when it agreed to a deficit deal as a way out of a deadlock over raising the US debt ceiling.