Firmness continued on the bourses in afternoon trade as euro-zone debt worries eased after European leaders agreed on a growth and bank recapitalization plan for Europe which is designed to alleviate the worst of the current debt crisis gripping euro-zone. The barometer index, BSE Sensex, was up 361.86 points or 2.13%, up about 220 points from the day's low and off close to 30 points from the day's high. The market breadth was strong. All the 13 sectoral indices on BSE were in the green. All the members from the 30-share Sensex pack logged gains.
Cigarette major ITC, pharma major Sun Pharmaceutical Industries and private sector banking firm HDFC Bank scaled record highs today, 29 June 2012. India's largest engineering & construction firm by sales L&T jumped over 3% after company said its construction division has won new orders valued at over Rs 1002 crore in June 2012. Realty shares extended recent gains triggered by the Competition Commission of India last week directing cement firms to cease and desist from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market.
The market opened on a firm note after European Council President Herman van Rompuy said during early hours of Friday morning in Brussels, Belgium that Europe will present a proposal for a single supervisory mechanism for the region's banking system. The Sensex surged past the psychological 17,000 level. The Sensex extended initial gains to scale its highest level in more than 8 weeks in morning trade. The market held firm in mid-morning trade. Key benchmark indices pared gains after hitting fresh intraday highs in early afternoon trade. Firmness continued in afternoon trade.
European leaders today, 29 June 2012, unexpectedly announced a raft of measures designed to alleviate the worst of the current debt crisis gripping euro-zone. European Union leaders announced a plan for a single financial supervisor for the region, as part of a range of short-term measures to try to stabilize markets, amid the ongoing debt crisis gripping the region. European banks will now have the possibility of direct recapitalization, he said, with financial assistance provided by the region's current bailout fund -- the European Financial Stability Facility (EFSF) -- until the new European Stability Mechanism (ESM) becomes available. Loans will be transferred from the EFSF to ESM without a change in seniority of the debt, he said.
At 13:20 IST, the BSE Sensex was up 361.86 points or 2.13% to 17,352.62. The index jumped 389.71 points at the day's high of 17,380.47 in early afternoon trade, its highest level since 2 May 2012. The index rose 143.85 points at the day's low of 17,134.61 in early trade.
The S&P CNX Nifty was up 105.70 points or 2.05% to 5,254.85. The index hit intraday high of 5,264.20, its highest level since 2 May 2012. The index hit a low of 5,189 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,688 shares gained and 879 shares declined. A total of 138 shares were unchanged.
All the members from the 30-share Sensex pack logged gains. Jindal Steel & Power, Tata Power Company and ICICI Bank gained by between 3.77% to 4.46%.
Index heavyweight Reliance Industries (RIL) rose 1.76% to Rs 732. RIL on Wednesday, 27 June 2012, said it has bought back 3 crore shares for Rs 2144.73 crore till 22 June 2012. Under the ongoing share buyback program, RIL has set a maximum buyback price of Rs 870. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013.
RIL chairman Mukesh Ambani said at the company's Annual General Meeting in Mumbai early this month that the company's buyback program represents a highly accretive use of cash by the company and it will supplement earnings growth from operations, for higher EPS (earnings per share), in the near future.
Realty shares extended recent gains triggered by the Competition Commission of India last week directing cement firms to cease and desist from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market. Cement is a key raw material in housing construction. DLF, Unitech and D B Realty rose by between 2.17% to 3.55%.
India's largest pharmaceutical firm by market capitalization Sun Pharmaceutical Industries surged 3.34% to Rs 636.95. The stock hit a record high of Rs 643 in intraday trade today, 29 June 2012.
Among other pharma stocks, Cipla, Dr Reddy's Laboratories and Ranbaxy Laboratories gained by between 1.33% to 2.63%.
Index heavyweight and cigarette major ITC rose 3.1% to Rs 259.25. The stock hit a record high of Rs 259.90 in intraday trade today, 29 June 2012.
Among other FMCG stocks, Dabur India, United Spirits, Nestle India, Marico and Hindustan Unilever gained by between 0.44% to 2.65%.
State-run Power Grid Corporation of India rose 2.55% after the company said during market hours today, 29 June 2012, said that the company's board has cleared expansion plans aggregating Rs 1631.51 crore.
India's largest engineering & construction firm by sales L&T gained 3.39% after the company said during market hours today, 29 June 2012, its construction division has won new orders valued at over Rs 1002 crore in June 2012.
The Indian government on Thursday, 28 June 2012, issued draft guidelines for implementing the controversial anti-avoidance tax proposal. A panel of seven members suggested that the provisions be applied from 1 April 2013, and that the onus of proving wrongdoing should be on the authorities. The panel has proposed that to avoid the indiscriminate application of the General Anti-Avoidance Rules (GAAR) provisions and to provide relief to small taxpayers, there should be monetary threshold for invoking the GAAR provisions.
The anti-avoidance rules and a retrospective tax amendment -- both proposed in the federal budget in March -- have rattled investor confidence and sparked a wave of criticism both domestically and overseas. Prime Minister Manmohan Singh, who took charge as the finance minister on Wednesday, 27 June 2012, has already identified problems on the tax front as having contributed to a general negative mood.
The panel has suggested that GAAR provisions should be invoked on a foreign institutional investor (FII), if it chooses to take a treaty benefit, but would not in any case be invoked in the case of the non-resident investors of the FII. The panel suggested that the GAAR provisions are meant for cases of tax evasion, not avoidance, or tax mitigation, where a tax payer takes advantage of a fiscal incentive allowed by a tax law. In a case where only a part of an arrangement is not allowed, the provisions will be limited to only that part, the panel proposed. Consistency of approach is essential for invoking GAAR, and the panel felt that there should be absolute certainty about the time limits during which the various actions under the provisions are to be completed.
The Prime Minister's office (PMO) today, 29 June 2012, clarified that the GAAR guidelines that have been put up on the government website from the official level of the Finance Ministry and shared with some stakeholders are only draft guidelines and have been put out for receiving wide-ranging feedback and for discussion purposes only. These guidelines have not been seen by the Prime Minister and will be finalised with the approval of the Prime Minister only after considering the feedback received.
Prime Minister Dr. Manmohan Singh on Wednesday, 27 June 2012, met senior officials from the Finance Ministry after taking over the Finance portfolio to chalk out plan for the country's economic revival. He stressed that reviving investor sentiment is on top of his priorities as the country is passing through challenging times, economically. Singh said India needs to work towards making the country resilient in meeting external challenges. In the short run, there is a need to revive investor sentiment, both domestic and international, Singh said.
Prime Minister Manmohan Singh took additional charge of the finance ministry after Pranab Mukherjee on Tuesday, 26 June 2012 resigned as finance minister to contest the presidential polls next month. The shift comes at a time when the economy is going through a slowdown amid deteriorating domestic conditions and euro-zone troubles.
Mr. Mukherjee is the leading contender in the July 19 presidential election, having been nominated by the Congress party-led United Progressive Alliance government for the largely ceremonial post.
The next major trigger for the stock market is Q1 June 2012 corporate earnings, which will start trickling from the second week of July 2012. A deceleration in top line growth of India Inc amid economic slowdown and slowdown in investment cycle will weigh on bottom line growth in Q1 June 2012 as the core operating profit margin could be negatively impacted by deceleration in top line growth.
HDFC announces Q1 results on 11 July 2012. Infosys announces its Q1 results on 12 July 2012. HDFC Bank declares its Q1 results on 13 July 2012. Bajaj Auto reports Q1 results on 18 July 2012.
European stock markets moved sharply higher in early trade on Friday after the European leaders struck a deal on a 120 billion euro ($149 billion) growth package and agreed that the euro zone's bailout funds should be able to directly recapitalize the region's ailing banks. Key benchmark indices in France, Germany and UK rose by between 1.47% to 2.76%.
European Commission President Herman van Rompuy said at a press conference early Friday that the mechanism will involve the European Central Bank and that there will be the possibility of direct recapitalization for European banks. Financial assistance will be provided by the European Financial Stability Facility until the European Stability Mechanism becomes available, he said. Europe is trying to do what's necessary in order to break the negative cycle for the region, he said. European leaders began a two-day summit in Brussels on Thursday, 28 June 2012, to find ways to resolve the ongoing euro-zone debt crisis.
Van Rompuy said that the Eurogroup is strongly committed to doing what's necessary to ensure the region's financial stability.
German retail sales unexpectedly fell for a second month in May as the sovereign debt crisis worsened, damping the economic outlook.Sales, adjusted for inflation and seasonal swings, dropped 0.3% from April, when they declined 0.2%, the Federal Statistics Office in Wiesbaden said today.
Asian shares surged on Friday, 29 June 2012, after a late Thursday night meeting of European leaders came up with a plan for a single financial supervisory mechanism for the European region to help stabilize markets. Key benchmark indices in Singapore, South Korea, Japan, China, Taiwan, Hong Kong and Indonesia were up by 1.35% to 2.31%.
A batch of Chinese economic data due out over the next few weeks will cast new light on the scale of the ongoing economic slowdown in the world's second biggest economy. Kicking off the parade of data is an official manufacturing survey for June 2012 due on Sunday, 1 July 2012. Other figures due out later, over a five-day period from July 9 include second quarter gross domestic product, as well as such indicators as June fixed-asset investment, inflation, industrial production and bank lending.
Trading in US index futures indicated that the Dow could jump 130 points at the opening bell on Friday, 29 June 2012. US markets pared most of their losses in trade on Thursday on talk of progress by European leaders in easing the region's debt crisis.
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