Market seen opening higher

Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could gain 6 points at the opening bell. Asian stocks were mostly higher Monday, with the yen's move lower boosting Japan but weighing on South Korea after the weekend's Group of 20 meeting remained silent on the Japanese currency's recent depreciation. State-run Oil Marketing Companies (PSU OMCs) may advance after hiking diesel prices by Rs 0.45 and petrol by Rs 1.50 per litre with effect from 16 February 2013. The actual increase in prices would be more after applying local sales tax and VAT. The hike in petrol price will reduce under-recoveries of state-run oil marketing companies (PSU OMCs). Shares of two-wheeler makers and small-car maker Maruti Suzuki India decline in anticipation the hike in petrol prices may lower vehicle sales. FMCG and agri-sector stocks will be in focus after the Centre after trading hours on Friday, 15 February 2013, said that as per reports received from various states, the sowing of rabi crops is progressing well in different parts of the country. FMCG firms derive substantial revenue from rural India. Sowing of rabi or winter crops so far this year has exceeded the area sown by this time last year. The total rabi sown area currently stands at 624.98 lakh hectares (LH) against 619.73 LH at this time last year. Pulses, coarse cereals and oilseeds have been sown in more area than last year while wheat and rabi rice lag behind as compared to last year, the Ministry of Agriculture said in a statement. Rural Electrification Corporation (REC) on Saturday, 16 February 2013 said REC Transmission Projects Company (RECTPCL), a wholly owned subsidiary of the company has been appointed as bid process coordinator (BPC) for four transmission projects. These include Baira Siul HEP - Sarna 220kV line, ATS of Unchahar TPS, Transmission System for connectivity for NCC Power Projects (1320 MW) and Transmission System required for evacuation of power from Kudgi TPS (3X800 MW in Phase-I) of NTPC. Accordingly, following four project specific special purpose vehicles (SPVs) have been incorporated as subsidiaries of RECTPCL. Kudgi Transmission has been incorporated to carry on the project of transmission system required for evacuation of power from Kudgi TPS (3X800 MW in Phase-I) of NTPC. The date of incorporation is 27 November 2012 and the date of certificate of commencement of business is 11 January 2013 while Nellore Transmission has been incorporated to carry on the project of transmission system for connectivity for NCC Power Projects (1320 MW). The date of incorporation is 04 December 2012 and date of certificate of commencement of business is 06 February 2013. Further, Unchahar Transmission has been incorporated to carry on the project for ATS of Unchahar TPS. The date of incorporation is 17 December 2012 and date of certificate of commencement of business is 15 February 2013 while Baira Siul Sarna Transmission has been incorporated to carry on the project for Baira Siul HEP - Sarna 220 kV line. The date of incorporation is 24 January 2013 and date of certificate of commencement of business is under process. Key benchmark indices edged lower in choppy trade on Friday, 15 February 2013 after global credit rating agency Moody's Investor Service warned that India's expanding current account deficit and external debt will make the country more vulnerable to international financial volatility and have negative implications for its sovereign credit profile. The BSE Sensex shed 29.03 points or 0.15% to settle at 19,468.15, its lowest closing level since 11 February 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 247.30 crore on Friday, 15 February 2013, as per provisional data from the stock exchanges. PSU disinvestment and reduction of promoter stake to meet the Securities & Exchange Board of India (Sebi) mandated minimum public shareholding of 25% for private companies and 10% for state-run firms will result in supply of equity in the market over the next few months. The government has set target of Rs 30000 crore from PSU divestment for the fiscal year ending 31 March 2013. Meanwhile, as per the Sebi mandated minimum public shareholding rule, private-sector companies must cut founders' stake to adhere to the rules by 13 June 2013, while the deadline for state-run firms is 13 August 2013. The annual rate of inflation, based on monthly wholesale price index (WPI), decelerated to 6.62% in January 2013 from 7.18% in December 2012 and 7.24% in November 2012, data released by the government on Thursday, 14 February 2013, showed. This is the first time since November 2009 that the inflation rate has dropped below 7%. The non-food manufacturing inflation or core inflation decelerated to 4.08% in January 2013 from 4.19% in December 2012. The data is likely to mount pressure on the Reserve Bank of India to continue lowering interest rates and help stimulate growth in an economy set to post its weakest pace of expansion in a decade. Build up inflation in the financial year so far was 5.09% compared to a build up of 6.15% in the corresponding period of the previous year, the Ministry of Commerce & Industry said in a statement on Thursday, 14 February 2013. Inflation based on the combined consumer price index for urban and rural India edged up to 10.79% in January 2013, from 10.56% in December 2012, another data released by the CSO on 12 February 2013 showed. Within the consumer price index, inflation in the category 'food and beverages' stood at 13.36% in January 2013. The Reserve Bank of India (RBI) on 29 January 2013 announced a 25 basis points reduction in its key policy rate viz. the repo rate to 7.75% from 8% after a monetary policy review. The central bank also announced a reduction of 25 basis points in the cash reserve ratio (CRR) to 4% from 4.25% effective the fortnight beginning 9 February 2013. As a result of the reduction in the CRR, around Rs 18000 crore of primary liquidity will be injected into the banking system, RBI said. With headline inflation likely to have peaked and non-food manufactured products inflation declining steadily over the last few months, there is an increasing likelihood of inflation remaining range-bound around current levels going into 2013-14, the Reserve Bank of India (RBI) said. This provides space, albeit limited, for monetary policy to give greater emphasis to growth risks, the central bank said in its policy guidance. This policy guidance will, however, be conditioned by the evolving growth-inflation dynamic and the management of risks from twin deficits viz. the current account deficit and fiscal deficit, RBI said. The next mid-quarter review of Monetary Policy for 2012-13 will be announced on 19 March 2013. The central bank on 29 January 2013 also signaled that there is less room for aggressive policy rate cuts amid any negative surprise emanating from inflation and the twin deficits. Investors' focus is now on Union Budget 2013-14 to be presented to the Parliament on 28 February 2013. Investors will focus on changes, if any, in excise duty and service tax in the Budget. It remains to be seen if the government announces measures to revive weak investment growth. It also remains to be seen if the government announces more economic reforms. A key figure to watch out is the divestment target for 2013-14. It remains to be seen if the Budget contains a clear roadmap for the implementation of Goods and Services Tax (GST). There has been some debate over taxing the super-rich. It remains to be seen if the Budget provides a clear roadmap to cap the government's subsidy bill. It also remains to be seen if there are measures to increase agriculture production to rein in food inflation. India will have to pursue domestic policy initiatives to help achieve any near-term improvement in its current account deficit as global growth may only be slightly better in 2013 and commodity prices are unlikely to ease sharply, Moody's Investor Service said. While recent government moves to cut subsidies and woo foreign investment would help narrow the external deficit, these policies need to be persisted for any significant success, it said in a note dated Thursday, 14 February 2013. Moody's said it would be watching the assumptions underlying India's budget deficit target for the new fiscal year that begins on April 1, as well as the expenditure and revenue policies announced in order to meet that goal. "Policies that trigger private investment and curb inflationary pressures in the near term are more likely to help narrow the account deficit," it said. "Deficit targets based on an assumption of accelerating growth rates are more likely to be missed, leading to higher government borrowing requirements and likely inflationary pressure, both of which have negative implications. If funding for the current account deficit shifted away from external debt and towards foreign direct investment, the sovereign credit profile would benefit, Moody's said. Moody's has a Baa3 rating for India with a stable outlook. The Budget Session of the Parliament will commence on 21 February 2013 and is likely to conclude on 10 May 2013. In order to enable the Standing Committees to consider the Demands for Grants of Ministries/Departments and prepare their Reports, the two Houses will adjourn for recess on 22 March 2013 to meet again on 22 April 2013. The government intends to present the revised National Food Security Bill in the Parliament during Budget Session for consideration and passage, so that the people are ensured of its benefits at the earliest, the Ministry of Consumer Affairs, Food & Public Distribution said in a statement on 13 February 2013. The Bill, to provide food security for all in a rights based manner, is being finalised in the light of recommendations of Parliamentary Standing Committee, it said. Economic affairs secretary Arvind Mayaram on 9 February 2013 said that the fiscal deficit for the current financial year ending 31 March 2013 will not exceed the projected 5.3% of the country's gross domestic product. He said that the government will stick to its fiscal deficit aim and its borrowing plan. Finance Minister, P. Chidambaram on 9 February 2013 said he it confident of a 5.5% growth rate in the economy for this year. In the second half of this fiscal year, there are indications of green shoots in the economy, he said, adding it is imperative for the country to achieve a growth rate of 8%. The Central Statistics Office (CSO) on 7 February 2013 said that the growth in India's GDP during 2012-13 is estimated at 5%, the lowest in a decade and significantly lower than the growth rate of 6.2% in 2011-12. The dimmer forecast is due to continued weakness in manufacturing and farm output growth, data from the ministry of statistics and implementation showed. The Ministry of Finance on 8 February 2013 said that since the GDP growth is turning around, it is likely that the CSO's advance estimate of 5% GDP growth for 2012-13 will be revised upwards and the final estimate will be closer to the finance ministry's estimate of a growth rate of 5.5% or slightly more. Early sign of an upturn in the economy are evident in the year on year growth in Union Excise Duty of 16% and of 33% increase in service tax in April-December 2012. The Purchasing Manager's Index (manufacturing) has started moving up since October 2012. This has been accompanied by a seasonally adjusted stabilization of the index of industrial production since October 2012, the finance ministry said in a statement. The finance ministry also said that lower interest rates will help support growth. The Ministry of Finance in its initial reaction to the CSO's advance estimate had said on 7 February 2018 that the finance ministry is keeping a watch on the situation adding that it has taken and will continue to take appropriate measures to revive growth. The Ministry of Finance on 14 January 2013 said that the government has decided to defer the implementation of the General Anti Avoidance Rules or GAAR by two years until 1 April 2016 and that it has accepted major recommendations of the Parthasarathi Shome Committee on GAAR with some modifications. The provisions of GAAR will apply to only those foreign institutional investors (FIIs) who seek to take advantage of the double taxation avoidance treaties India has with different countries. The rules won't apply to the non-resident individual investors who put money with the FIIs. Any investments made before 30 August 2010 won't be examined under GAAR. Finance Minister Mr. Chidambaram said that the GAAR provisions strike a balance between the government's need for revenue generation and investors' interests. Commerce, Industry and Textiles Minister Mr. Anand Sharma on 9 January 2013 said that the Joint Working Group on Indo-Mauritius Double Taxation Avoidance Convention (DTAC), which is scheduled to meet in February 2013, would be able to take the deliberations forward. Finance Minister Mr. P. Chidambaram on 31 January 2013 reiterated the commitment of the government for observing the path of fiscal consolidation and imposition of fiscal targets and policies that will make necessary fiscal correction needed for the economy and take the economy back to the path of higher growth. Chidambaram highlighted the efforts being made to turn the economy around and create a more investor-friendly climate. Chidambaram said that to encourage foreign flows into India and offer reassurance on the positive investment climate, he had recently held discussions with a cross section of international investors at Singapore, Hongkong, London and Frankfurt last month and hoped to get positive results. He was speaking at the Sixth Meeting of the Financial Stability and Development Council. The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The deficit target is 5.3% of gross domestic product for the current fiscal year through March, 4.8% in the next fiscal year, and 3% by the end of the year through March 2017. The government on 17 January 2013 allowed PSU OMCs to increase diesel prices by a small margin from time to time, a decision aimed at reducing the government's oil subsidy burden and fiscal deficit and improving the government's finances. Oil Minister Veerappa Moily said after a meeting of the Union Cabinet that there was an earlier proposal to deregulate diesel prices, and in pursuance of that, oil companies have been authorised to make price corrections from time to time. Finance Minister P. Chidambaram on 17 January 2013 said the government will factor in the reduction in subsidies and its impact on the deficit once the retailers say how much they intend to increase prices by. The government on 17 January 2013 also said it has increased the limit of subsidized cooking-gas cylinders to nine per year a family from six now. Mr. Moily said that the raising of the cap will cost the government about an additional Rs 10000 crore a year. Bahujan Samaj Party (BSP) chief Mayawati slammed the UPA government for its decision to deregulate diesel prices and said that it would affect prices and hit common man badly. She, however, ruled out the possibility of withdrawing BSP's support to the government, saying she did not want to destabilise it as the general election is not too far. BSP provides outside support to the Congress led UPA government which has already been reduced to a minority government after Trinamool Congress withdrew support to the government in September last year. Asian stocks were mostly higher Monday, with the yen's move lower boosting Japan but weighing on South Korea after the weekend's Group of 20 meeting remained silent on the Japanese currency's recent depreciation. Key benchmark indices in Indonesia, Taiwan, Singapore, Japan and China were up by 0.12% to 2.23%. Key benchmark indices in South Korea and Hong Kong were down by 0.22% to 0.46%. US stocks had ended mostly lower Friday, with investors pausing ahead of a long holiday weekend, as markets were due to stay closed Monday. The Group of 20 finance ministers and central bank governors on Saturday pledged to monitor negative currency spillovers to other countries caused by monetary policies implemented for domestic purposes. The G-20 fell short of any direct action related specifically to Japan, which has drawn criticism for policy moves that have caused the yen to lose 17.5% against the dollar in five months The G-20 also put off plans for new debt-cutting goals in a move to stoke economic growth.