Market slips on weak global cues

The market declined marginally last week on weak global cues amid dimming hopes that US politicians will reach a debt deal before the end of the year. United States is the world's biggest economy. Gains fuelled by hopes of new government reforms also subsided as the winter session of parliament ended on Thursday, 20 December 2012. The BSE Sensex fell 75.25 points or 0.39% to 19,242 in the week ended Friday, 21 December 2012. The 50-unit S&P CNX Nifty declined 31.90 points or 0.54% to 5,847.70 in the week. The BSE Mid-Cap index fell marginally by 0.02% and the BSE Small-Cap index fell by 0.38%. Both these indices outperformed the Sensex. The Sensex has fallen 97.90 points or 0.5% in this month so far (till 21 December 2012). The Sensex has surged 3,787.08 points or 24.5% in calendar 2012 so far (till 21 December 2012). From a 52-week low of 15,358.02 on 2 January 2012, the Sensex has risen 3,883.98 points or 25.28%. The Sensex is off 370.18 points or 1.88% from a 52-week high of 19,612.18 hit on 11 December 2012. Foreign institutional investors (FIIs) have purchased shares worth Rs 18380 crore in December 2012 so far (till 20 December 2012). FIIs had bought shares worth Rs 9577.20 crore in November 2012. FIIs have bought shares worth net Rs 121652.10 crore in calendar 2012 so far (till 20 December 2012). FIIs offloaded shares worth a net Rs 2714.20 crore in 2011. On the macro front, the rate of inflation based on the Consumer Price Index-Agricultural Labourers increased to 10.31% in November 2012 from 9.85% in October 2012, the Ministry of Labour & Employment said after trading hours on Thursday, 20 December 2012. The rate of inflation based on the Consumer Price Index-Rural Labourers edged up to 10.47% in November 2012 from 9.84% in October 2012. The Reserve Bank of India (RBI) kept its key policy rate viz. the repo rate unchanged at 8% after mid-quarter monetary policy review on Tuesday, 18 December 2012. The central bank said that in view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards. Liquidity conditions will be managed with a view to supporting growth as stated in the Second Quarter Review (SQR) of Monetary Policy 2012-13 on 30 October 2012, thereby preparing the ground for further shifting the policy stance to support growth, RBI said. Overall, recent inflation patterns and projections provide a basis for reinforcing October guidance about policy easing in the fourth quarter, RBI said. However, risks to inflation remain and accordingly, even as the policy emphasis shifts towards growth, the policy stance will remain sensitive to these risks, RBI said. RBI said it is closely monitoring the evolving growth-inflation dynamic and will update the formal numerical assessment of its growth and inflation projections for 2012-13 as part of the third quarter review in January 2013. Rajya Sabha on Thursday, 20 December 2012, passed the Banking Laws (Amendment) Bill, 2011. The bill was passed in Lok Sabha early this week. The passage of the Banking Laws (Amendment) Bill, 2011 in parliament is expected to pave the way for issuance of the new bank licenses by the RBI. The Banking Laws (Amendment) Bill, 2011 proposes to give the Reserve Bank of India the power to take temporary control of private sector banks in the event of operational irregularities. It would also increase the limit on the voting rights of any one shareholder in a private bank to 26% from 10%. The cap would rise to 10% from 1% for state-run banks. Voting rights of 26% in a private sector bank could allow an investor to gain operational control over a bank, or at least significant influence over the board. Higher voting rights in private sector bank could also encourage foreign banks to expand in India by buying stakes in local banks, as they would have greater operational control. The Lok Sabha early this week approved the much-awaited Companies Bill, 2011, making it mandatory for profit-making companies to spend on activities related to corporate social responsibility (CSR). If a company does not do so, it will have to explain the reasons for it. The Bill, aimed at improving corporate governance, also contains provisions to strengthen regulations for companies and auditing firms. The winter session of parliament ended on Thursday, 20 December 2012. The changes in the bill include provisions that make it mandatory for firms -- those that have reported profits of Rs 5 crore or more in last three years -- to spend at least two per cent of their average net profit on CSR activities. Companies failing to meet the obligation and not disclosing reasons for it in their books of account would face action, including penalty. In global market, US Republican House Speaker John Boehner expressed optimism about reaching a budget deal with President Barack Obama. However, on Thursday (20 December 2012) evening House Republican leaders canceled a vote on a "Plan B" that would have extended tax cuts on incomes below $1 million, saying it didn't have the votes to pass. The failure to attract support among Republican members for their own leadership's bill cast a shadow over prospects for a bipartisan deal. The US fiscal 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, if the US Congress fails to act. 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. The Congressional Budget Office has estimated the US economy would drop into a recession in the first half of the new year if a deal is not reached. Key benchmark indices edged lower on Monday, 17 December 2012, as world stocks fell as US budget negotiations were put on the back burner on Sunday, 16 December 2012, as US President Barack Obama visited grieving families in Newtown, Conn., after the mass shooting at an elementary school on Friday, 14 December 2012. The BSE Sensex lost 72.83 points or 0.38% to 19244.42. The S&P CNX Nifty fell 21.70 points or 0.37% to 5,857.90. Key benchmark indices edged higher on Tuesday, 18 December 2012, after the Reserve Bank of India (RBI) said after mid-quarter monetary policy review that in view of inflation pressures ebbing, the monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards. The BSE Sensex jumped 120.33 points or 0.63% to settle at 19364.75. The S&P CNX Nifty rose 38.90 points or 0.66% to settle at 5,896.80. Key benchmark indices edged higher on Wednesday, 19 December 2012, and attained their highest closing level in almost two weeks as world stocks rose following a credit-rating upgrade for Greece, rise in US home-builder confidence and progress in negotiations to avert the US fiscal cliff. The BSE Sensex jumped 111.25 points or 0.57% to settle at 19,476. The S&P CNX Nifty rose 32.80 points or 0.56% to 5,929.60. Key benchmark indices edged lower in choppy trade on Thursday, 20 December 2012, as world stocks fell amid dimming hopes that US politicians will reach a debt deal before the end of the year. United States is the world's biggest economy. The BSE Sensex shed 22.08 points or 0.11% to 19,453.92. The S&P CNX Nifty lost 13.20 points or 0.22% to 5,916.40. Key benchmark indices slumped on Friday, 21 December 2012, as stocks fell across the globe after US House Republican leaders on Thursday, 20 December 2012, abruptly canceled a vote on a tax-cut bill, sparking fears that the parties remain far apart on a compromise budget deal. United States is the world's biggest economy. The BSE Sensex was down 211.92 points or 1.09% to 19,242. The S&P CNX Nifty was down 68.70 points or 1.16% to 5,847.70. Among the 30-Sensex shares, 20 rose and the remaining shares declined. Metal stocks topped the Sensex gainers last week. Metal shares gained after data on 14 December 2012 showed that a preliminary version of HSBC's China manufacturing Purchasing Managers' Index hit a 14-month high in December 2012. China is the world's largest consumer of copper and aluminum. Tata Steel (up 8.13% to Rs 429.55), Hindalco Industries (up 7.63% to Rs 129.15), Jindal Steel & Power (up 5.52% to Rs 454.25) and Sterlite Industries (India) (up 3.31% to Rs 116.95), edged higher. Pharma major Cipla rose 3.68% to Rs 418.90. The stock scaled a record high of Rs 430 in intraday trade on Friday, 21 December 2012. Drug major Sun Pharmaceutical Industries rose 1.85% to Rs 729.85. Caraco Pharmaceutical Laboratories, (CPL), a subsidiary of Sun Pharmaceutical Industries (Sun Pharma), after market hours on Thursday, 20 December 2012, announced that in connection with the previously announced merger agreement, the tender offer by Caraco Acquisition Corporation, a wholly-owned subsidiary of CPL, to acquire all of the outstanding shares of common stock of DUSA Pharmaceuticals, Inc. for $8 per share, net to the seller thereof in cash, without interest thereon and less any applicable withholding taxes, expired at 12:00 Midnight, New York City time, on December 19, 2012 (at the end of the day on December 19, 2012). All shares that were validly tendered into the offer and not properly withdrawn will be accepted for payment and paid promptly in accordance with the terms of the offer, CPL said. The depositary for the tender offer has advised that, as of the offer's expiration, 20,946,624 shares of common stock of DUSA (excluding approximately 1,035,094 shares subject to guarantees of delivery) had been validly tendered and not properly withdrawn pursuant to the tender offer, which represents approximately 82.4% of the outstanding shares of DUSA. CPL intends to promptly move forward with a "short-form" merger under New Jersey law after exercising its top-up option under the merger agreement, and DUSA will become a wholly owned subsidiary of CPL. The merger is expected to be completed on or about 20 December 2012. As a result of the merger, any shares of DUSA common stock (except for shares held by DUSA as treasury stock and or Sun Pharma, CPL or their direct or indirect subsidiaries) not previously tendered, will be cancelled and shall cease to exist and will be converted into the right to receive the same $8 per share in cash paid in the tender offer, CPL said. Following the merger, DUSA's common stock will cease to be traded on The NASDAQ Global Market. Commercial vehicles major Tata Motors rose 2.57% to Rs 299.40. The company early this week announced the launch of a new variant of its crossover vehicle Tata Aria viz. Tata Aria Pure LX with a bouquet of features. The Tata Aria Pure LX has been priced at Rs 9.95 lakh (ex-showroom Bangalore), Tata Motors said. Small-car maker Maruti Suzuki India rose 1.80% to Rs 1,501. The stock had struck 52-week high of Rs 1,537 in intraday trade on 7 December 2012. The car major will reportedly raise prices of cars by up to Rs 20,000 from January 2013 to counter currency fluctuations. Japan accounts for up to a fourth of parts sourced by Maruti from overseas. More than half of the company's foreign exchange exposure is to the yen, as it also pays royalty its parent Suzuki for using its technology. Hindustan Unilever (up 1.63% to Rs 526.60), Hero MotoCorp (up 1.52% to Rs 1896.70), TCS (up 1.38% to Rs 1258.10), Bhel (up 1.22% to Rs 227.65), Tata Power (up 1.15% to Rs 105.95), Wipro (up 0.81% to Rs 379), GAIL (India) (up 0.71% to Rs 349.45) and Infosys (up 0.67% to Rs 2292.50), edged higher from the Sensex pack. Engineering and construction major L&T was the top Sensex loser last week. The stock fell 3.02% to Rs 1,588.75. The company on Wednesday, 19 December 2012, said its construction division won orders worth Rs 1009 crore in November 2012 and till date in December 2012. Mortgage lender HDFC fell 2.82% to Rs 828.35. HDFC unveils Q3 results on 21 January 2013. India's second largest private sector bank by net profit HDFC Bank shed 1.80% to Rs 676.30. The stock had hit a record high of Rs 705 in intraday trade on 30 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. Index heavyweight Reliance Industries (RIL) fell 1.94% to Rs 822.95. Russia's Spirit DPS early this week said that Indian telecom operator Infotel, a subsidiary of Reliance Group, has licensed its software TeamSpirit Voice and Video Engine. "Reliance intends to invest $10 billion in its LTE network and has turned to Spirit's software products for voice and video calls over LTE instead of waiting for phone makers who are slow in offering handsets transmitting voice and video in 4G networks. The lack of mobile devices supporting VoLTE (Voice-over-LTE) drives a growing number of carriers to implement a software-only product, which is more flexible, scalable and offers a quicker time to market. By using Spirit engines, Reliance will be able to offer its subscribers high-quality services as an alternative to Skype over cellular networks and attract new high-value subscribers that used services from other operators and commercial OTT service providers", Spirit DPS said in a statement. RIL has bought back 4.62 crore shares for about of Rs 3358.09 crore till 11 December 2012 under its 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. Index heavyweight and cigarette maker ITC fell 2.69% to Rs 287.80 on defensive buying. The stock hit a high of Rs 291.80 and low of Rs 282. The Ministry of Health and Family Welfare in October 2012 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.