Key benchmark indices pared losses after hitting fresh intraday low in afternoon trade. The barometer index, BSE Sensex, was down 67.59 points or 0.38%, off close to 32 points from the day's high and up about 45 points from the day's low. The market breadth was negative. Index heavyweights Reliance Industries (RIL) and ITC hovered in negative territory.
Cement shares rose for the second day in a row led by the government's thrust on the infrastructure sector. Realty stocks fell on profit booking after recent strong gains triggered by the Competition Commission of India directing cement firms last month 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 edged lower in early trade on weak Asian stocks. A bout of volatility was witnessed as key benchmark indices trimmed initial losses to hit fresh intraday highs in morning trade. Volatility continued as key benchmark indices weakened once again in mid-morning trade. Weakness continued on the bourses in early afternoon trade. Key benchmark indices pared losses after hitting fresh intraday low in afternoon trade.
At 13:15 IST, the BSE Sensex was down 67.59 points or 0.38% to 17,550.76. The index declined 112.74 points at the day's low of 17,505.61 in afternoon trade. The index fell 35.36 points at the day's high of 17,582.99 in morning trade.
The S&P CNX Nifty was down 16.35 points or 0.31% to 5,329. The index hit a high of 5,336.45 and a low of 5,314.10 in intraday trade.
The BSE Mid-Cap index was up 0.35% and the BSE Small-Cap index was up 0.16%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,399 shares fell and 1,154 shares rose. A total of 148 shares were unchanged.
From the 30-share Sensex pack, 23 stocks fell and the rest of them rose. Hindalco Industries (down 2.66%), Wipro (down 2.18%), Tata Motors (down 1.85%), Bhel (down 1.53%), Tata Power (down 1.48%), Bharti Airtel (down 1.18%), Hindustan Unilever (down 1.13%) and Maruti Suzuki India (down 1.02%), edged lower from the Sensex pack.
Infosys (up 0.98%), State Bank of India (up 0.24%), Larsen & Toubro (up 0.16%), Coal India (up 0.13%), HDFC Bank (up 0.12%) and Mahindra & Mahindra (up 0.05%), edged higher from the Sensex pack.
Index heavyweight Reliance Industries (RIL) fell 1.49% to Rs 728.50. The company last week said it has selected Technip as a technology supplier and engineering contractor to implement its Refinery Off-Gas Cracker (ROGC) project. This is part of the expansion project being executed at RIL's Jamnagar refinery and petrochemical complex in Gujarat. The ROGC plant will be amongst the largest ethylene crackers in the world and will be using refinery off-gas as feedstock, RIL said. The products from the plant will be utilised for the new downstream petrochemical plants being built at Jamnagar, RIL said.
RIL has bought back 3 crore shares for Rs 2144.73 crore till 22 June 2012 under its ongoing share buyback program. RIL has set a maximum buyback price of Rs 870 for share buyback. 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. Last month, RIL chairman Mukesh Ambani said at the company's Annual General Meeting in Mumbai 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.
Index heavyweight and cigarette major ITC declined 1.12% to Rs 255.25.
Cummins India slipped 3.83% to Rs 431.70 after US-based parent Cummins Inc cut its full-year sales forecast on Tuesday, 10 July 2012, citing weaker US orders from truck and power generation customers, a stronger dollar and softer demand in emerging markets.
Cummins Inc said it expects second-quarter sales of about $4.45 billion and warned that it sees full-year sales in line with 2011 rather than growing by 10% as it had earlier forecast.
Order trends in the US for trucks and power generation equipment have softened and demand in Brazil, China and India is not improving as we had previously expected, Cummins Chief Executive Tom Linebarger said in a statement.
Cement shares rose for the second day in a row led by the government's thrust on the infrastructure sector. J K Cements (up 2.43%), Shree Cement (up 1.18%), ACC (up 0.82%) and Ambuja Cement (up 0.32%), edged higher.
UltraTech Cements rose 1.73% to Rs 1,592. The stock hit a record high of Rs 1595.50 in intraday trade today, 11 July 2012.
Prime Minister Manmohan Singh last month laid out ambitious infrastructure development plans for the current fiscal year. Singh said that the government plans to award 9,500 kms of roads for construction this year and over 4,000 kms for maintenance under the new system.
Housing finance major HDFC declined 0.34% to Rs 680.20 ahead of its Q1 results today, 11 July 2012.
Realty stocks fell on profit booking after recent strong gains triggered by the Competition Commission of India directing cement firms last month 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. Indiabulls Real Estate (down 2.45%), Prestige Estates (down 1.91%), DLF (down 1.89%), Unitech (down 1.87%), HDIL (down 1.23%), Godrej Properties (down 1.19%), D B Realty (down 0.97%) and Sunteck Realty (down 0.13%), edged lower.
The Union Cabinet early this month approved the proposal for extending the scheme of interest subvention of 1% on housing loans upto Rs 15 lakh where the cost of the house does not exceed Rs 25 lakh for the year 2012-13 and to amend the operational part of guidelines for release of funds. A budgetary provision of Rs 400 crore has been made for Financial Year 2012-13 for implementing the scheme. Consequent upon the extension of scheme, the limit of subsidy for an individual borrower would be Rs 14,912 for a loan of Rs 15 lakh and Rs 9,925 for a loan of Rs10 lakh. The extended scheme will benefit all house loans availed in Financial Year 2012-13, a government statement said.
Agila-Jamp will be launching around 40 products in the next 2 years. Many of these products have already been approved by Health Canada and will be immediately launched through local hospitals and pharmacists. The existing sales force at Jamp Pharma will be responsible to introduce the entire Agila-Jamp product portfolio, Strides said in a statement.
Corporate affairs minister Veerappa Moily said in a newspaper interview published on Wednesday, 11 July 2012, that the government is hopeful of the passage of the pension bill in the monsoon session of parliament. The monsoon session of parliament begins on 7 August 2012.
An India-Mauritius joint panel will in August discuss a series of proposals to review the double taxation avoidance treaty between the two nations, Mauritius Foreign Minister Arvin Boolell said on Thursday, 5 July 2012. India has been looking to negotiate the double taxation avoidance agreement with Mauritius for the past few years to check so-called round tripping and other potential abuses. Round tripping entails moving money out of one country to another, and getting it back under the garb of foreign capital. Capital gains tax is close to zero in Mauritius and almost 40% of investments into India come through the island nation.
Under the bilateral agreement, capital gains from sale of securities can be taxed only in Mauritius. India and Mauritius will discuss the renegotiation of the tax pact between 22-24 August in Mauritius. The India-Mauritius joint working group will also discuss the inclusion of a so-called limitation of benefit clause, similar to the Singapore tax treaty with India, to ensure only genuine Mauritius-based companies are benefited. India's tax agreement with Singapore says that only those companies that spend a minimum of $200,000 (about Rs 1 crore) in Singapore can avail the benefits of the treaty.
Sanctity of tax residency certificates issued by a country to companies operating in its jurisdiction to enable the firms to claim tax benefits under various treaties is another issue between India and Mauritius. While India in this year's national budget said the certificates are a necessary but not sufficient condition, Mauritius wants those issued by it honoured.
Draft guidelines issued by Indian government recently for implementing the controversial anti-avoidance tax proposal viz. the General Anti-Avoidance Rules (GAAR) state 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 draft guidelines suggested that the onus of proving wrongdoing should be on the authorities.
Prime Minister Dr Manmohan Singh said in a newspaper interview last week that he has identified controlling the fiscal deficit, achieving clarity on tax matters, reviving the mutual funds and insurance industries, clearing a backlog of foreign investment proposals and boosting infrastructure as his focus areas in the short term. Singh said there will be no arbitrariness in tax matters. The statement assumes significance in the context of a raging controversy over the Income Tax amendment to re-open tax demands with retrospective effect from companies like Vodafone over acquisition of companies having operations in India but registered abroad to avoid taxes.
Singh last month said he is chalking out plan for the country's economic revival. Singh last month took additional charge at the finance ministry after Pranab Mukherjee resigned as finance minister on 26 June 2012 to contest the presidential polls scheduled on 19 July 2012. 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 this week. Investors and analysts will closely watch the management commentary that would accompany the result which could cause revision in their future earnings forecast of the company for the current year or the next year. 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.
IT heavyweights -- Infosys and TCS -- unveil Q1 results tomorrow, 12 July 2012. HDFC Bank declares its Q1 results on Friday, 13 July 2012. Axis Bank announces Q1 results on 17 July 2012. Bajaj Auto reports Q1 results on 18 July 2012. Kotak Mahindra Bank, Hero MotoCorp and Dr Reddy's Laboratories unveil Q1 results on 19 July 2012. Asian Paints announces Q1 results on 20 July 2012.
Hindustan Unilever, L&T and Cairn India unveil Q1 results on 23 July 2012. Wipro announces Q1 results on 24 July 2012. Bhel announces Q1 results on 26 July 2012. Ambuja Cements announces Q2 June 2012 results on the same day. ICICI Bank announces Q1 results on 27 July 2012. Maruti Suzuki India announces Q1 results on 28 July 2012. Mahindra & Mahindra announces Q1 results on 8 August 2012. Ranbaxy Laboratories announces Q2 June 2012 results on 9 August 2012.
On macro front, India's industrial production is seen rising 1.7% in May 2012 as per the median estimate of a poll of economists carried out by Capital Market. Industrial production growth slowed sharply to 0.1% in April due to contraction in capital goods and dip in manufacturing output. The Central Statistics Office (CSO) will announce data on industrial production (IIP) for May 2012 at 11:00 IST tomorrow, 12 July 2012.
Inflation based on the wholesale price index (WPI) is seen rising further to 7.62% in June 2012 from 7.55% in May 2012, as per the median estimate of a poll of economists carried out by Capital Market. The CSO will announce data on WPI inflation for June 2012 at 11:30 IST on 16 July 2012.
The Reserve Bank of India (RBI) announces first quarter review of the Monetary Policy 2012-13 on 31 July 2012. The RBI unexpectedly left its key lending rate unchanged at its last meeting in June 2012, citing inflationary concerns.
Investors remain concerned about delayed progress of the monsoon rains this. For the country as a whole, seasonal rainfall during this year's monsoon was 25% below the long period average (LPA) till 9 July 2012. According to the information received from the Department of Agriculture and Cooperation, rice was sown in 55.40 lakh hectare, coarse cereals in 21.95 lakh hectare and oilseeds in 26.55 lakh hectare till 6 July 2012. Though sowing of rice, coarse cereals and oilseeds is lagging behind, sowing of pulses has picked up and is now sown in 66 thousand hectares more than this time last year, the Ministry of Agriculture said in a statement on 6 July 2012. Sugarcane has been sown in 2.52 lakh ha and cotton in 3.78 lakh ha more than last year, it said.
The monsoon rains--which make up around 70% of India's annual rainfall--are crucial to the nation's agriculture sector and broader economy. More than 60% of the country's farmland is rain-fed. The timing, distribution and quantity of rainfall are all important for crops.
European shares fell in early trade on Wednesday as scepticism over the euro zone's ability to tackle its debt crisis pressured other risk assets. Key benchmark indices in UK, France and Germany were down by 0.27% to 0.52%.
Germany's top court agreed on Tuesday to examine complaints lodged against the EU's bailout fund and new budget rules but gave no date for its verdict, keeping investors on tenterhooks over the prospects for overcoming the euro zone crisis. European Union (EU) leaders agreed in June 2012 that the European Stability Mechanism (ESM), a bailout program, should be allowed to inject capital directly into ailing Spanish banks, once the euro zone created a banking regulator. Germany's Finance Ministry said in a statement after the court hearing on Tuesday that Chancellor Angela Merkel's government is confident the ESM and the fiscal pact are in accord with the constitution of Europe's biggest economy.
Italian Prime Minister Mario Monti reiterated on Tuesday that Italy won't need a Greek-style bailout but suggested that the country might at some point need the European Stability Mechanism, or ESM, to buy Italian bonds and keep soaring yield spreads under control. It wouldn't be prudent to say that Italy will never need to use that fund, Mr. Monti told reporters at a news conference closing a two-day Eurogroup and European Union finance ministers' meeting in Brussels.
The Italian premier, however, confirmed that Italy won't be asked to comply with further country-specific commitments in case it decides to activate the so-called stabilization mechanism, which was brokered at a key EU summit at the end of June and backed by Eurogroup members in a final statement on Tuesday. The agreement on bailout funds' bond-buying was backed by all euro-zone members with no exceptions, Mr. Monti said, hinting that the opposition voiced by countries like the Netherlands and Finland has been overcome.
Italian government tests sentiment in debt markets with a bond sale scheduled on Friday, 13 July 2012.
Asian stocks were mixed on Wednesday. Key benchmark indices in China, Hong Kong, Taiwan, Singapore and Indonesia rose by between 0.08% to 0.87%. Key benchmark indices in Japan and South Korea fell 0.08% and 0.17%, respectively.
Chinese Premier Wen Jiabao said on Tuesday that the government's top priority was now stabilizing economic growth rather than long-term restructuring, with policies to include business-tax cuts and more targeted investment, according to state-run media reports.
China is due to release Q2 June 2012 GDP growth data, along with industrial output and other June metrics, on Friday, 13 July 2012.
Economic growth across emerging markets eased in the second quarter of 2012, dragged down by lacklustre manufacturing sector activity, especially in China and Brazil, an HSBC survey showed on Wednesday. HSBC's emerging markets index (EMI), based on 21 service and manufacturing sector surveys in 16 emerging economies, slipped to 53 in the second quarter of the year. It stood at 53.6 in the first three months of 2012.
Trading in US index futures indicated that the Dow could gain 30 points at the opening bell on Wednesday, 11 July 2012. US stocks dropped on Tuesday as earnings warnings from US companies hit sentiment. US engine maker Cummins Inc cut its sales forecast for 2012 on Tuesday, citing weaker US orders from truck and power generation customers, a stronger dollar and softer demand in emerging markets.
Fitch Ratings on Tuesday affirmed its AAA credit rating on the United States and maintained a negative outlook, citing a diversified and wealthy economy that is undermined by the government's inability to agree on deficit reduction measures. The uncertainty over tax and spending policies associated with the so-called 'fiscal cliff' weighs on the near-term economic outlook, Fitch said in a statement.
Minutes of the US Federal Open Market Committee's mid-June policy meeting on US interest rates will be released later in the global day today, 11 July 2012. This could provide clues on how policy makers view the economy and how seriously they are considering new stimulus measures.
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