Nifty attains 23-month closing high
Key benchmark indices edged higher in volatile trade after Bahujan Samaj Party (BSP) chief Mayawati said that BSP will vote in favour of the government during retail FDI vote in the Rajya Sabha. The barometer index, BSE Sensex, attained its highest level in more than 19 months. The 50-unit S&P CNX Nifty attained 23-month closing high. Gains in European stocks also aided intraday rebound on the domestic bourses in late trade. The Sensex jumped 94.94 points or 0.49%, up close to 300 points from the day's low and off about 35 points from the day's high. Index heavyweight and cigarette maker ITC scaled record high. Index heavyweight Reliance Industries (RIL) also edged higher. The market breadth turned positive from negative in late trade.
Indian stocks rose for the third day in a row today, 6 December 2012. From a recent low of 19,305.32 on 3 December 2012, the Sensex has gained 181.48 points or 0.94% in three trading sessions. The Sensex has gained 146.90 points or 0.75% in this month so far (til 6 December 2012). The Sensex has surged 4031.88 points or 26.08% in calendar 2012 so far (till 6 December 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 4,350.94 points or 28.74%.
Coming back to today's trade, realty stocks extended recent gains on fresh buying. Shares of organised retailers edged higher in choppy trade. Bank stocks edged higher, with ICICI Bank and Axis Bank hitting 52-week high and Yes Bank and IndusInd Bank hitting record high. Metal shares extended Wednesday's gains triggered by comments from China's new leaders early this week that they would continue their supportive policy stance.
The market opened higher after the government won a vote in Lok Sabha on Wednesday 5 December 2012 evening on its decision in September 2012 to allow 51% FDI in multi-brand retail. The Sensex hit its highest level in more than 19 months. The 50-unit S&P CNX Nifty hit 20-month high. The market soon revered gains. Key benchmark indices dropped to their lowest level in almost one week in morning trade. Weakness continued in mid-morning trade, with Sensex hitting one-week low.
Key benchmark indices cut losses in early afternoon trade as most Asian stocks rose. Weakness continued on the bourses in afternoon trade as most Asian stocks fell. Key benchmark indices cut losses in mid-afternoon trade as European stocks edged higher in early trade. The Sensex surged in late trade after Bahujan Samaj Party (BSP) chief Mayawati said that BSP will vote in favour of the government during retail FDI vote in the Rajya Sabha.
Data showing that foreign institutional investors (FIIs) remained net buyers of Indian stocks on Wednesday, 5 December 2012, boosted sentiment. FIIs bought shares worth Rs 926 crore from the secondary equity markets on Wednesday, 5 December 2012, as per data from Securities & Exchange Board of India.
The BSE Sensex jumped 94.94 points or 0.49% to 19,486.80, its highest closing level since 26 April 2011. The index jumped 131.39 points at the day's high of 19,523.25 in late trade. The index lost 205.62 points at the day's low of 19,186.24 in mid-morning trade, its lowest level since 29 November 2012.
The S&P CNX Nifty advanced 30.40 points or 0.52% to 5,930.90, its highest closing level since 6 January 2011. The index hit a high of 5,942.55 in intraday trade. The index hit a low of 5,838.90 in intraday trade, its lowest level since 30 November 2012.
The BSE Mid-Cap index rose 0.73% and outperformed the Sensex. The BSE Small-Cap index rose 0.46% and underperformed the Sensex.
The total turnover on BSE amounted to Rs 2880 crore, slightly lower than Rs 2886 crore on Wednesday, 5 December 2012.
The market breadth, indicating the overall health of the market, turned positive from negative in late trade. On BSE, 1,601 shares gained and 1,297 shares declined. A total of 103 shares were unchanged.
From the 30-share Sensex pack, 23 stocks rose while the rest of them fell.
Index heavyweight Reliance Industries (RIL) advanced 1.29% to Rs 841.65 in volatile trade. The stock hit a high of Rs 844 and low of Rs 821.90. RIL said after trading hours on Wednesday, 5 December 2012, that the board of Ex-Im Bank has voted to extend the single largest financing transaction of $2.1 billion to Reliance Industries. This includes a $1.06 billion direct credit loan and to guarantee a $1.06 billion JP Morgan Chase loan to the company. The loan will be primarily used to finance goods and services procured from exporters and suppliers in the United States as part of RIL's expansion projects at Jamnagar, Gujarat, RIL said in a statement.
Located on the Gulf of Kutch, the Jamnagar complex overseas the largest single-location refinery operations in the world. RIL Intends to increase the complex's petrochemical output by constructing a petcoke gasification unit that will top the world's rosters in size and significantly enhance the efficiency of the company's refinery business. RIL also plans to erect a refinery off- gas cracker with matching downstream units that will better integrate polymer and polyester production
Commenting on the development, Mr. Alok Agarwal, Chief Financial Officer, RIL said, We are once again partnering with major US suppliers for cutting edge technology, critical project management services and equipment from a wide section of American exporters for rolling out our next phase of growth. We value our long standing relationship with Ex-Im Bank and this landmark transaction further strengthens the partnership. This landmark transaction reaffirms the catalyst role played by Ex-Im Bank in facilitating trade between US and India. We also sincerely appreciate the role played by JPMorgan Chase in this important transaction for us.
RIL on Wednesday, 5 December 2012, said its wholly owned subsidiary, Reliance Exploration and Production DMCC, has signed the completion documents for divestment of its 25% working interest in the Production Sharing Contract (PSC) for Yemen Block-9 with Medco Yemen Malik, a wholly owned subsidiary of PT Medco Energi Internasional Tbk of Indonesia. The effective economic date of the transaction is 1 January 2012 and the transaction has been approved by the Ministry of Oil and Minerals of Yemen.
RIL has bought back 4.62 crore shares for about of Rs 3357.27 crore till 27 November 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 rose 1.09% to Rs 301.30. The stock hit record high of Rs 302 in intraday trade today, 6 December 2012.
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.
Realty stocks extended recent gains. DLF (up 1.71%), HDIL (up 0.72%), Indiabulls Real Estate (up 1.47%), Unitech (up 4.80%), Orbit Corporation (up 1.65%), and DB Realty (up 2.10%) edged higher.
Shares of organised retailers edged higher in choppy trade. Shoppers Stop rose 0.95% to Rs 468.05. The stock hit a high of Rs 492 and low of Rs 461. The stock had hit 52-week high of Rs 494 in intraday trade on Wednesday, 5 December 2012.
Pantaloon Retail (India) gained 0.55% to Rs 239.15. The stock hit 52-week high of Rs 252 in intraday trade today, 6 December 2012. The stock hit a low of Rs 232.25 in intraday trade.
Trent shed 0.08% to Rs 1269.70. The stock hit high of Rs 1,320.85 and low of Rs 1,251.20. The stock had scaled a record high of Rs 1324.70 in intraday trade on Wednesday, 5 December 2012.
BSP chief Mayawati today, 6 December 2012, said that BSP will vote in favour of the government during the retail FDI vote in the Rajya Sabha. The BSP supremo made her decision clear during a date on FDI in retail in the Rajya Sabha saying her party took in consideration the fact that FDI will not be forced upon the states. Mayawati said, It is important to see in which sector foreign investment will be done. For any developing country, investment in all sectors is important. FDI is needed for developing countries. FDI should do value addition. She also said that there is a perception in people's minds that FDI affect farmers and small traders, therefore, no decision should be taken without proper analysis and discussion. But she added that the plus point for the current FDI policy of the central government is that sates won't be forced to implement it.
A two-day debate on FDI in multi-brand retail kicked off in Rajya Sabha today, 6 December 2012. After the debate, voting will take place in the upper house of the parliament where the government is not in a majority.
FDI in multi-brand retail on Wednesday 5 December 2012 got the approval of the Lok Sabha as the Opposition motion seeking immediate withdrawal of the decision was rejected convincingly as MPs of BSP and SP walked out of the house before the vote. 218 voted in favour of the Opposition motion, while 253 voted against it in the House where 471 members participated in the voting. The total strength of the House is 545. Lok Sabha also rejected the motion seeking amendment to the rules notified by the Reserve Bank under Foreign Exchange Management Act (FEMA) to enable FDI in multi-brand retail. While 254 voted in favour of the government, 224 were against.
Bank stocks rose across the board. State Bank of India (SBI) rose 1.68%. SBI's net profit rose 30.16% to Rs 3658.14 crore on 12.21% increase in total income to Rs 32983.47 crore in Q2 September 2012 over Q2 September 2011. The result was announced on 9 November 2012.
The bank's ratio of net non-performing assets to net advances stood at 2.44% as on 30 September 2012, higher than 2.22% as on 30 June 2012 and 2.04% as on 30 September 2011. The bank's ratio of gross non-performing assets (NPA) to gross advances stood at 5.15% as on 30 September 2012, higher than 4.99% as on 30 June 2012 and 4.19% as on 30 September 2011.
During the quarter ended 30 September 2012, the bank made additional provisions of Rs 115 crore (net) against an account pending restructuring and against certain non performing domestic advances. The bank's provision coverage ratio as on 30 September 2012 works out to 62.78%.
State-run Oriental Bank of Commerce (OBC) gained 1.67%. The bank has raised interest rates on fixed deposits on some buckets with effect from 5 December 2012. OBC has raised interest rates fixed deposits of less than Rs 15 lakh held between 91 days to 179 days to 8% from 7.5%. For term deposits of Rs 15 lakh but less Rs 1 crore, the bank will now pay interest rate of 8.25% against 8% earlier.
United Bank of India gained 0.73%. The state-run bank today, 6 December 2012, said it has raised Rs 300 crore from Innovative Perpetual Debt Instruments.
Among other PSU bank stocks, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank rose by between 1.16% to 2.99%.
India's second largest private sector bank by net profit HDFC Bank rose 0.24% to Rs 694. 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. HDFC Bank announced the second quarter results on 12 October 2012.
Yes Bank rose 3.76% to Rs 466.95 after striking a record high of Rs 470.30 in intraday trade today, 6 December 2012.
ICICI Bank gained 1.41% to Rs 1135.05. The stock had hit 52-week high of Rs 1,143.50 in intraday trade today, 6 December 2012. ICICI Bank clarified on 30 November 2012 that the bank is currently not considering merger or acquisition of any bank.
ICICI Bank last week said it successfully launched and priced a $250 million tap of its $750 million 4.70% 2018 notes originally issued in August 2012. The securities referred were offered only to non-US persons outside the United States under Regulation S of the Securities Act and will be listed on the Singapore Stock Exchange. The notes are fungible with the existing Reg S/144A tranche after the expiration of a 40-day distribution compliance period, taking the total aggregate nominal amount issued under the series to $1 billion. The offering was oversubscribed by 5.6 times and had an order book of $1.4 billion. The notes were offered at an issue price of 102.953%, which is a spread of 318 basis points over equivalent LIBOR.
IndusInd Bank gained 1.37%. The stock record high of Rs 428.95 in intraday trade today, 6 December 2012. After trading hours on Wednesday, 5 December 2012, the bank said that the finance committee of the board of directors of the bank has approved the allotment of 5.21 crore equity shares at a price of Rs 384 per share (including a premium of Rs 374 per share) aggregating to Rs. 2000.64 crore to qualified institutional buyers (QIBs).
Private sector Axis Bank rose 2.28% to Rs 1,365.35. The stock hit a 52-week high of Rs 1,377 in intraday trade today, 6 December 2012. Axis Bank early this week said its board of directors has passed a resolution approving the allotment of Senior Notes aggregating to $20 million under the MTN Programme through its Hong Kong branch.
The government will table the Banking Laws (Amendment) Bill, 2011, among other bills, in the winter session of parliament which began on 22 November 2012. The Banking Laws (Amendment) Bill, 2011 includes increasing the voting rights of large shareholders in private banks to 26% from 10%, and giving the central bank more powers. The Reserve Bank of India has held back approvals of new bank licenses, urging the government to first get the bill passed in parliament.
IDFC rose 1.3% to Rs 175.65 after striking a 52-week high of Rs 177.20 in intraday trade today, 6 December 2012.
Jaiprakash Associates surged 4.02% to Rs 104.80 after hitting a 52-week high of Rs 104.95 in intraday trade today, 6 December 2012. The company early this week said that the Ministry of Environment and Forest has accorded the Second Stage (Final) Forest Clearance for Amelia (North) Coal Block in Sidhi District of Madhya Pradesh by granting its approval under Section 2 of the Forest (Conservation) Act, 1980 for diversion of 728.750 hectares of forest land for Coal Mining. It may be recalled that JAL had entered into a joint venture agreement with Madhya Pradesh State Mining Corporation for coal mining at Amelia (North) Coal Block in Sidhi District of Madhya Pradesh. For this purpose, a Special Purpose Vehicle viz. Madhya Pradesh Jaypee Minerals was incorporated, with JAL being appointed as Mine Developer cum Operator for the mines. The coal produced from this mine is committed to be supplied to Jaypee Nigrie Super Thermal Power Project being implemented by Jaiprakash Power Ventures.
Jaiprakash Associates (JAL) said after market hours on Monday, 3 December 2012, that its wholly owned subsidiary Jaypee Cement Corporation (JCCL) is looking into various options to unlock the value for its shareholders. So far, JCCL not signed any Binding Agreement, JAL said. The company issued this clarification with respect to media reports that UltraTech Cement is in talks to acquire the Gujarat cement unit of Jaiprakash Associates.
Most airline stocks extended recent gains triggered by state-run oil marketing firms cutting aviation turbine fuel prices early this month. SpiceJet rose 0.72% to Rs 49. The stock had struck a 52-week high of Rs 50.40 in intraday trade on Wednesday, 5 December 2012. The budget carrier last week said that some investors have evinced interest in the company after the Government of India in September this year allowed foreign airlines to pick up stake in Indian carriers. SpiceJet said it will be very pre-mature to comment on the possibilities of any fresh equity issuance to such interested parties or confirm/deny names of any specific entity. The company made this announcement while issuing a clarification to media reports with regard to possible equity infusion in the company by a foreign airline.
Kingfisher Airlines rose 2.73%.
Jet Airways (India) fell 0.32%. Jet Airways (India) last week said media reports of the company planning to sell stake to Etihad Airways are speculative.
In Delhi, price of aviation turbine fuel (ATF), or jet fuel, was reduced by 1.01%, or Rs 688.40, to 67,709.12 per kilolitre (kl). In Mumbai, ATF price was reduced by 1.02% to 68,392.80. The price reduction is effective from 1 December 2012.
Prices of ATF constitutes approximately 50% of operating expenses of Indian airlines. State-run oil marketing companies -- Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation -- revise jet fuel prices on the 1st and 16th of every month based on the average international crude price in the preceding fortnight.
Fertiliser shares bucked weak market on reports that the Cabinet Committee on Economic Affairs is likely to meet today, 6 December 2012, to approve a new urea investment policy. National Fertilizer, GSFC, Rashtriya Chemicals & Fertilizers, Nagarjuna Fertilizers & Chemicals, Tata Chemicals, and Chambal Fertiliser & Chemicals rose by between 0.01% to 2.67%.
According to reports, the Cabinet Committee on Economic Affairs (CCEA) is expected to approve a new urea investment policy today that is likely to incentivise fertiliser firms setting up new plants and expanding existing capacity. Reports suggest that India faces shortage of 10 million tonnes of urea, which is met through imports. In 2008, the government had announced a 'New Investment Policy' to boost urea production, but the scheme failed to attract fresh investment in the sector, reports added.
Auto stocks were mixed. Small car maker Maruti Suzuki India rose 0.44%. The company early this month said its total sales rose 12.5% to 1.03 lakh units in November 2012 over November 2011. Domestic sales rose 9.7% to 90,882 units in November 2012 over November 2011. Export sales jumped 38.4% to 12,318 units in November 2012 over November 2011.
Tata Motors advanced 1.93%. The company early this month said its total sales (including exports) of Tata commercial and passenger vehicles in November 2012 stood at 66,500 vehicles. The company's domestic sales of Tata commercial and passenger vehicles fell 13.96% to 62,354 units in November 2012 over November 2011. The company's total exports declined 4.66% to 4,146 units in November 2012 over November 2011.
The company's sales of commercial vehicles in the domestic market declined 0.91% to 44,323 units in November 2012 over November 2011. LCV sales rose 21.46% to 34,828 units whereas M&HCV sales declined 40.89% to 9,495 units in November 2012 over November 2011.
Sales of passenger vehicles declined 34.98% to 18,031 units in November 2012 over November 2011. There has been encouraging response to the Tata Manza Club Class, now available across the country, and the Tata Safari Storme, now available in the NCR region, Punjab, UP, Rajasthan and Gujarat, for which the company is ramping up production, Tata Motors said in a statement.
Mahindra & Mahindra (M&M) shed 0.01% to Rs 930. The stock had scaled a record high of Rs 964.45 on Monday, 3 December 2012. The company early this month said its total automobile sales rose 18% to 48,143 units in November 2012 over in November 2011. The company's domestic sales rose 23% to 46,755 units in November 2012 over November 2011. Passenger vehicle sales rose 38% to 24,604 units in November 2012 over November 2011. The 4 wheeler commercial segment which includes the passenger and load categories registered a growth of 7% to 14,353 units, while the 3 wheeler segment grew by 17% at 6,867 units in November 2012 over November 2011. Exports for the month of November 2012 stood at 1,388 units.
M&M's total tractor sales rose 17% to 20,476 units in November 2012 over November 2011. Domestic tractor sales jumped 22% to 19,757 units in November 2012 over November 2011. Exports for the month of November 2012 stood at 719 units.
Bajaj Auto rose 1.28%. The company early this week said its total sales fell 1% to 3.72 lakh shares in November 2012 over November 2011. Motorcycle sales fell 2% to 3.26 lakh units in November 2012 over November 2011. The company said sales bigger and sportier Pulsar and Discover brands contributed 68% of motorcycle sales in November 2012. Sales of Discover brand totaled 1.5 lakh units in November 2012.
Bajaj Auto's three-wheeler sales rose 7% to 45,566 units in November 2012 over November 2011. The company said growth in its diesel three-wheeler sales and growth in the company's market share in this segment continues. Bajaj Auto's total exports fell 4% to 1.24 lakh units in November 2012 over November 2011.
Hero MotoCorp declined 0.16%.
Zee Entertainment Enterprises rose 2.09% to Rs 214.70 after hitting a 52-week high of Rs 215.55 in intraday trade today, 6 December 2012.
Metal shares extended Wednesday's gains triggered by comments from China's new leaders early this week that they would continue their supportive policy stance. China is the world's largest consumer of copper and aluminum. Hindustan Zinc, Jindal Steel & Power, Sterlite Industries, JSW Steel, Tata Steel, Sail and Hindalco Industries rose by between 0.22% to 2.35%.
IT pivotals fell for second day in a row on concerns that US-based Cognizant Technology may lower its revenue growth guidance for 2013 based on compensation targets for top executives. Wipro, Infosys, TCS, Tech Mahindra and HCL Technologies shed by between 0.33% to 2.03%.
Cognizant Technology may lower its revenue growth guidance for 2013 based on compensation targets for top executives. The company shared compensation details of its top executives in a regulatory filing on Tuesday, 4 December, with 100% of option-based pay at 16% growth for 2013. This is lower than the 20% revenue growth it expects to achieve in 2012.
MphasiS gained 2.24%. After market hours on Wednesday, 5 December 2012, MphasiS reported 0.27% rise in consolidated net profit to Rs 209.31 crore on 4.07% fall in Q4 October 2012 over Q3 July 2012. The company recommended a significant increase in the dividend payout to Rs 17 per share in the year ended 31 October 2012 from Rs 6.50 per share in the year ended 31 October 2011.
On a consolidated basis, net profit fell 3.6% to Rs 792.32 crore on 5.1% increase in net sales to Rs 5357.33 crore in the year ended October 2012 over the year ended October 2011. Operating profits rose 5.7% to Rs 877 crore in the year ended October 2012 over the year ended October 2011.
MphasiS said its continued efforts towards cost rationalization resulted in incremental margin improvement in the last four consecutive quarters.
The company's direct business revenues grew by 38% to Rs 2391 crore in the year ended October 2012 from Rs 1733 crore of the year ended October 2011. The direct versus HP business mix stood at 46:54 in this financial year compared with 38:62 at the end of last year. The direct business saw a healthy addition of 65 new logos out of the 92 additions during the year.
The company's cash and cash equivalents increased by Rs 874 crore during the year to Rs 2940 crore or Rs 140 per equity share. The board has recommended a dividend to Rs 17 per share in the year ended October 2012 compared with Rs 6.50 per share in the year ended October 2011.
Our focus on driving operational excellence has resulted in incremental margin expansion in each quarter this year. MphasiS is committed to creating shareholder value, and the Board's approval of the increased dividend payout reflects our confidence that the successful execution of our strategic plan will continue to generate strong cash flows, enabling us to strike a balance between investing in the business and regularly returning cash to our shareholders, said Ganesh Ayyar, Chief Executive Officer, MphasiS.
The winter session of the parliament which began on 22 November 2012 has heavy legislative agenda. The key financial sector reforms bills that the government intends to pass this session include insurance and pension bills and the Banking Laws (Amendment) Bill, 2011. The insurance bill will aim to raise the limit for foreign direct investment in the sector to 49% from 26%, while the pension bill will seek to allow foreign investments of up to 49% in local pension-fund managers. The Banking Laws (Amendment) Bill, 2011 includes increasing the voting rights of large shareholders in private banks to 26% from 10%, and giving the central bank more powers. The Reserve Bank of India has held back approvals of new bank licenses, urging the government to first get the bill passed in parliament.
Industry body Associated Chambers of Commerce and Industry of India or Assocham in its pre-Budget memorandum for 2013-14 has suggested reduction service tax and excise tax to 8% from 12%, increase income tax deduction of interest on housing loan to Rs 5 lakh and increase in personal income tax exemption limit to Rs 3 lakh to revive consumer demand and boost investment. The excise duty and service tax rates were increased in the last two Union Budgets from 8% to 12%.
In a statement issued early this week, Assocham said that the tax base for goods and services has already expanded to generate high revenue and the government can selectively increase customs duty rates to neutralize the effect of lower tax rate of excise duty and service tax. Besides, by increasing customs rates, the government should protect the domestic industry from unfair competition from countries like China, it said. There are cases where goods are being sold in the global market below production cost in highly competitive markets abroad, it said.
The industry body has also suggested reduction in the effective rate of corporate income tax to 25% from current 32.45%. It has also suggested increase in the rate of depreciation on plant and machinery to 25% from the existing level of 15% in view of the technologies. Assocham has sought continuation of deduction under 801A (4) to encourage investments in infrastructure during the 12th five-year plan period. The industry body has also sought removal of surcharge and education cesses on corporate assesses and education cess on non-corporate assesses.
The Reserve Bank of India next undertakes monetary policy review on 18 December 2012, which is a mid-quarter policy review. After Second Quarter Review of Monetary Policy 2012-13 on 30 October 2012, RBI kept its key policy rate viz. the repo rate unchanged at 8% citing high inflation. At that time, the central bank announced a reduction in cash reserve ratio (CRR) requirement of scheduled commercial banks by 25 basis points to 4.25%. The baseline scenario suggests a reasonable likelihood of further policy easing in Q4 March 2013, RBI said on 30 October 2012. RBI said that the policy guidance will, however, be conditioned by the evolving growth-inflation dynamic.
The Congress led UPA government at the Centre has been reduced to a minority government after Trinamool Congress (TMC) withdrew support to the UPA in September 2012. Trinamool Congress withdrew support to the UPA in September this year over the big bang reforms introduced by the Centre which included a cap on subsidised LPG cylinders and 51% FDI in multi-brand retail, among others.
The next general elections must be held in India before May 2014. 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 stocks edged higher on Thursday, with oil firms in the lead, as investors awaited the outcome of the European Central Bank's policy meeting later in the day. Key benchmark indices in Germany, France and UK were up by between 0.16% to 0.94%.
The European Central Bank (ECB) is likely to keep its benchmark interest rate on hold at 0.75% at a policy meeting on euro-zone interest rates today, 6 December 2012. ECB President Mario Draghi is expected to reiterate that the bank is ready to formally launch its bond-buying program.
At a bond auction held on Wednesday, 5 December 2012, Spain wasn't able to issue on as much debt as it had planned, and the lack of investor demand is seen as a black cloud over the country that is widely expected to need to ask its neighbors for a bailout next year. That would trigger the European Central Bank's offer to buy the country's debt to push yields lower. Smaller borrowing costs are seen as necessary for the country facing a recession.
The euro-area economy was pushed into a recession for the second time in four years as trade slowed and government spending declined. Gross domestic product n the 17-nation currency bloc slipped 0.1 percent in the third quarter from the previous three months, when it fell 0.2 percent, the European Union's statistics office in Luxembourg said today, confirming an initial estimate published on Nov. 15.
The Bank of England will announce its latest policy decision later in the global day today, 6 December 2012, and is expected to leave the size of its asset-purchase program at 375 billion pounds ($603.5 billion).
Most Asian stocks rose on Thursday, 6 December 1012. Key benchmark indices in Taiwan, Hong Kong, and China were off 0.09% to 0.34%. Key benchmark indices in Singapore, South Korea and Indonesia were up 0.07% to 0.13%.
Japanese stocks rose after a Nikkei opinion poll showed the main opposition Liberal Democratic Party (LDP) on track to reach a majority in the election on Dec. 16. The Nikkei 225 Average advanced 0.81%. The LDP and its leader, former prime minister Shinzo Abe, are broadly in favor of applying looser monetary policies.
The Bank of Japan's two-day policy meeting on Dec. 19 and 20 will take place after general elections on Dec. 16.
The South Korean economy grew worse than earlier expected in the third quarter from the prior three months, expanding at the slowest pace in three and a half years, the Bank of Korea's revised data showed Thursday, strengthening the market view that the central bank might cut rates again early next year to underpin growth. The country's quarterly economic growth barely averted contracting in the July-September period by rising a seasonally adjusted 0.1% from the second quarter, according to the revised growth data. It marks the worst quarter since the first quarter of 2009, when the economy also grew 0.1% from the previous quarter.
On a year-on-year basis, the economy expanded 1.5% in the third quarter, marking the weakest growth in three years. The reading is worse than the central bank's preliminary estimate in October of a 0.2% on-quarter rise and a 1.6% on-year expansion.
Trading in US index futures indicated that the Dow could gain 12 points at the opening bell on Thursday, 6 December 2012. US stocks mostly rose Wednesday, as Wall Street applauded what appeared to be a softening of stances in talks to avert the fiscal cliff, but the Nasdaq Composite fell with Apple Inc. which suffered its worst day of losses in almost four years. Media reports on Wednesday, 5 December 2012, said about 40 Republicans had joined a bipartisan call to break the budget impasse. Separately, Texas Representative Kay Granger, also a Republican, called extending tax cuts for middle-class earnings the right thing to do.
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 Federal Open Market Committee (FOMC) holds a two-day meeting on interest rates in the United States on 11-12 December. As per market talks, concerns about US economy will make the Federal Reserve say next week that it will continue the Treasury purchase portion of the program known as Operation Twist. That will be on top of the mortgage-debt buying program known as its third round of quantitative easing.
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Indian stocks rose for the third day in a row today, 6 December 2012. From a recent low of 19,305.32 on 3 December 2012, the Sensex has gained 181.48 points or 0.94% in three trading sessions. The Sensex has gained 146.90 points or 0.75% in this month so far (til 6 December 2012). The Sensex has surged 4031.88 points or 26.08% in calendar 2012 so far (till 6 December 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 4,350.94 points or 28.74%.
Coming back to today's trade, realty stocks extended recent gains on fresh buying. Shares of organised retailers edged higher in choppy trade. Bank stocks edged higher, with ICICI Bank and Axis Bank hitting 52-week high and Yes Bank and IndusInd Bank hitting record high. Metal shares extended Wednesday's gains triggered by comments from China's new leaders early this week that they would continue their supportive policy stance.
The market opened higher after the government won a vote in Lok Sabha on Wednesday 5 December 2012 evening on its decision in September 2012 to allow 51% FDI in multi-brand retail. The Sensex hit its highest level in more than 19 months. The 50-unit S&P CNX Nifty hit 20-month high. The market soon revered gains. Key benchmark indices dropped to their lowest level in almost one week in morning trade. Weakness continued in mid-morning trade, with Sensex hitting one-week low.
Key benchmark indices cut losses in early afternoon trade as most Asian stocks rose. Weakness continued on the bourses in afternoon trade as most Asian stocks fell. Key benchmark indices cut losses in mid-afternoon trade as European stocks edged higher in early trade. The Sensex surged in late trade after Bahujan Samaj Party (BSP) chief Mayawati said that BSP will vote in favour of the government during retail FDI vote in the Rajya Sabha.
Data showing that foreign institutional investors (FIIs) remained net buyers of Indian stocks on Wednesday, 5 December 2012, boosted sentiment. FIIs bought shares worth Rs 926 crore from the secondary equity markets on Wednesday, 5 December 2012, as per data from Securities & Exchange Board of India.
The BSE Sensex jumped 94.94 points or 0.49% to 19,486.80, its highest closing level since 26 April 2011. The index jumped 131.39 points at the day's high of 19,523.25 in late trade. The index lost 205.62 points at the day's low of 19,186.24 in mid-morning trade, its lowest level since 29 November 2012.
The S&P CNX Nifty advanced 30.40 points or 0.52% to 5,930.90, its highest closing level since 6 January 2011. The index hit a high of 5,942.55 in intraday trade. The index hit a low of 5,838.90 in intraday trade, its lowest level since 30 November 2012.
The BSE Mid-Cap index rose 0.73% and outperformed the Sensex. The BSE Small-Cap index rose 0.46% and underperformed the Sensex.
The total turnover on BSE amounted to Rs 2880 crore, slightly lower than Rs 2886 crore on Wednesday, 5 December 2012.
The market breadth, indicating the overall health of the market, turned positive from negative in late trade. On BSE, 1,601 shares gained and 1,297 shares declined. A total of 103 shares were unchanged.
From the 30-share Sensex pack, 23 stocks rose while the rest of them fell.
Index heavyweight Reliance Industries (RIL) advanced 1.29% to Rs 841.65 in volatile trade. The stock hit a high of Rs 844 and low of Rs 821.90. RIL said after trading hours on Wednesday, 5 December 2012, that the board of Ex-Im Bank has voted to extend the single largest financing transaction of $2.1 billion to Reliance Industries. This includes a $1.06 billion direct credit loan and to guarantee a $1.06 billion JP Morgan Chase loan to the company. The loan will be primarily used to finance goods and services procured from exporters and suppliers in the United States as part of RIL's expansion projects at Jamnagar, Gujarat, RIL said in a statement.
Located on the Gulf of Kutch, the Jamnagar complex overseas the largest single-location refinery operations in the world. RIL Intends to increase the complex's petrochemical output by constructing a petcoke gasification unit that will top the world's rosters in size and significantly enhance the efficiency of the company's refinery business. RIL also plans to erect a refinery off- gas cracker with matching downstream units that will better integrate polymer and polyester production
Commenting on the development, Mr. Alok Agarwal, Chief Financial Officer, RIL said, We are once again partnering with major US suppliers for cutting edge technology, critical project management services and equipment from a wide section of American exporters for rolling out our next phase of growth. We value our long standing relationship with Ex-Im Bank and this landmark transaction further strengthens the partnership. This landmark transaction reaffirms the catalyst role played by Ex-Im Bank in facilitating trade between US and India. We also sincerely appreciate the role played by JPMorgan Chase in this important transaction for us.
RIL on Wednesday, 5 December 2012, said its wholly owned subsidiary, Reliance Exploration and Production DMCC, has signed the completion documents for divestment of its 25% working interest in the Production Sharing Contract (PSC) for Yemen Block-9 with Medco Yemen Malik, a wholly owned subsidiary of PT Medco Energi Internasional Tbk of Indonesia. The effective economic date of the transaction is 1 January 2012 and the transaction has been approved by the Ministry of Oil and Minerals of Yemen.
RIL has bought back 4.62 crore shares for about of Rs 3357.27 crore till 27 November 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 rose 1.09% to Rs 301.30. The stock hit record high of Rs 302 in intraday trade today, 6 December 2012.
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.
Realty stocks extended recent gains. DLF (up 1.71%), HDIL (up 0.72%), Indiabulls Real Estate (up 1.47%), Unitech (up 4.80%), Orbit Corporation (up 1.65%), and DB Realty (up 2.10%) edged higher.
Shares of organised retailers edged higher in choppy trade. Shoppers Stop rose 0.95% to Rs 468.05. The stock hit a high of Rs 492 and low of Rs 461. The stock had hit 52-week high of Rs 494 in intraday trade on Wednesday, 5 December 2012.
Pantaloon Retail (India) gained 0.55% to Rs 239.15. The stock hit 52-week high of Rs 252 in intraday trade today, 6 December 2012. The stock hit a low of Rs 232.25 in intraday trade.
Trent shed 0.08% to Rs 1269.70. The stock hit high of Rs 1,320.85 and low of Rs 1,251.20. The stock had scaled a record high of Rs 1324.70 in intraday trade on Wednesday, 5 December 2012.
BSP chief Mayawati today, 6 December 2012, said that BSP will vote in favour of the government during the retail FDI vote in the Rajya Sabha. The BSP supremo made her decision clear during a date on FDI in retail in the Rajya Sabha saying her party took in consideration the fact that FDI will not be forced upon the states. Mayawati said, It is important to see in which sector foreign investment will be done. For any developing country, investment in all sectors is important. FDI is needed for developing countries. FDI should do value addition. She also said that there is a perception in people's minds that FDI affect farmers and small traders, therefore, no decision should be taken without proper analysis and discussion. But she added that the plus point for the current FDI policy of the central government is that sates won't be forced to implement it.
A two-day debate on FDI in multi-brand retail kicked off in Rajya Sabha today, 6 December 2012. After the debate, voting will take place in the upper house of the parliament where the government is not in a majority.
FDI in multi-brand retail on Wednesday 5 December 2012 got the approval of the Lok Sabha as the Opposition motion seeking immediate withdrawal of the decision was rejected convincingly as MPs of BSP and SP walked out of the house before the vote. 218 voted in favour of the Opposition motion, while 253 voted against it in the House where 471 members participated in the voting. The total strength of the House is 545. Lok Sabha also rejected the motion seeking amendment to the rules notified by the Reserve Bank under Foreign Exchange Management Act (FEMA) to enable FDI in multi-brand retail. While 254 voted in favour of the government, 224 were against.
Bank stocks rose across the board. State Bank of India (SBI) rose 1.68%. SBI's net profit rose 30.16% to Rs 3658.14 crore on 12.21% increase in total income to Rs 32983.47 crore in Q2 September 2012 over Q2 September 2011. The result was announced on 9 November 2012.
The bank's ratio of net non-performing assets to net advances stood at 2.44% as on 30 September 2012, higher than 2.22% as on 30 June 2012 and 2.04% as on 30 September 2011. The bank's ratio of gross non-performing assets (NPA) to gross advances stood at 5.15% as on 30 September 2012, higher than 4.99% as on 30 June 2012 and 4.19% as on 30 September 2011.
During the quarter ended 30 September 2012, the bank made additional provisions of Rs 115 crore (net) against an account pending restructuring and against certain non performing domestic advances. The bank's provision coverage ratio as on 30 September 2012 works out to 62.78%.
State-run Oriental Bank of Commerce (OBC) gained 1.67%. The bank has raised interest rates on fixed deposits on some buckets with effect from 5 December 2012. OBC has raised interest rates fixed deposits of less than Rs 15 lakh held between 91 days to 179 days to 8% from 7.5%. For term deposits of Rs 15 lakh but less Rs 1 crore, the bank will now pay interest rate of 8.25% against 8% earlier.
United Bank of India gained 0.73%. The state-run bank today, 6 December 2012, said it has raised Rs 300 crore from Innovative Perpetual Debt Instruments.
Among other PSU bank stocks, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank rose by between 1.16% to 2.99%.
India's second largest private sector bank by net profit HDFC Bank rose 0.24% to Rs 694. 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. HDFC Bank announced the second quarter results on 12 October 2012.
Yes Bank rose 3.76% to Rs 466.95 after striking a record high of Rs 470.30 in intraday trade today, 6 December 2012.
ICICI Bank gained 1.41% to Rs 1135.05. The stock had hit 52-week high of Rs 1,143.50 in intraday trade today, 6 December 2012. ICICI Bank clarified on 30 November 2012 that the bank is currently not considering merger or acquisition of any bank.
ICICI Bank last week said it successfully launched and priced a $250 million tap of its $750 million 4.70% 2018 notes originally issued in August 2012. The securities referred were offered only to non-US persons outside the United States under Regulation S of the Securities Act and will be listed on the Singapore Stock Exchange. The notes are fungible with the existing Reg S/144A tranche after the expiration of a 40-day distribution compliance period, taking the total aggregate nominal amount issued under the series to $1 billion. The offering was oversubscribed by 5.6 times and had an order book of $1.4 billion. The notes were offered at an issue price of 102.953%, which is a spread of 318 basis points over equivalent LIBOR.
IndusInd Bank gained 1.37%. The stock record high of Rs 428.95 in intraday trade today, 6 December 2012. After trading hours on Wednesday, 5 December 2012, the bank said that the finance committee of the board of directors of the bank has approved the allotment of 5.21 crore equity shares at a price of Rs 384 per share (including a premium of Rs 374 per share) aggregating to Rs. 2000.64 crore to qualified institutional buyers (QIBs).
Private sector Axis Bank rose 2.28% to Rs 1,365.35. The stock hit a 52-week high of Rs 1,377 in intraday trade today, 6 December 2012. Axis Bank early this week said its board of directors has passed a resolution approving the allotment of Senior Notes aggregating to $20 million under the MTN Programme through its Hong Kong branch.
The government will table the Banking Laws (Amendment) Bill, 2011, among other bills, in the winter session of parliament which began on 22 November 2012. The Banking Laws (Amendment) Bill, 2011 includes increasing the voting rights of large shareholders in private banks to 26% from 10%, and giving the central bank more powers. The Reserve Bank of India has held back approvals of new bank licenses, urging the government to first get the bill passed in parliament.
IDFC rose 1.3% to Rs 175.65 after striking a 52-week high of Rs 177.20 in intraday trade today, 6 December 2012.
Jaiprakash Associates surged 4.02% to Rs 104.80 after hitting a 52-week high of Rs 104.95 in intraday trade today, 6 December 2012. The company early this week said that the Ministry of Environment and Forest has accorded the Second Stage (Final) Forest Clearance for Amelia (North) Coal Block in Sidhi District of Madhya Pradesh by granting its approval under Section 2 of the Forest (Conservation) Act, 1980 for diversion of 728.750 hectares of forest land for Coal Mining. It may be recalled that JAL had entered into a joint venture agreement with Madhya Pradesh State Mining Corporation for coal mining at Amelia (North) Coal Block in Sidhi District of Madhya Pradesh. For this purpose, a Special Purpose Vehicle viz. Madhya Pradesh Jaypee Minerals was incorporated, with JAL being appointed as Mine Developer cum Operator for the mines. The coal produced from this mine is committed to be supplied to Jaypee Nigrie Super Thermal Power Project being implemented by Jaiprakash Power Ventures.
Jaiprakash Associates (JAL) said after market hours on Monday, 3 December 2012, that its wholly owned subsidiary Jaypee Cement Corporation (JCCL) is looking into various options to unlock the value for its shareholders. So far, JCCL not signed any Binding Agreement, JAL said. The company issued this clarification with respect to media reports that UltraTech Cement is in talks to acquire the Gujarat cement unit of Jaiprakash Associates.
Most airline stocks extended recent gains triggered by state-run oil marketing firms cutting aviation turbine fuel prices early this month. SpiceJet rose 0.72% to Rs 49. The stock had struck a 52-week high of Rs 50.40 in intraday trade on Wednesday, 5 December 2012. The budget carrier last week said that some investors have evinced interest in the company after the Government of India in September this year allowed foreign airlines to pick up stake in Indian carriers. SpiceJet said it will be very pre-mature to comment on the possibilities of any fresh equity issuance to such interested parties or confirm/deny names of any specific entity. The company made this announcement while issuing a clarification to media reports with regard to possible equity infusion in the company by a foreign airline.
Kingfisher Airlines rose 2.73%.
Jet Airways (India) fell 0.32%. Jet Airways (India) last week said media reports of the company planning to sell stake to Etihad Airways are speculative.
In Delhi, price of aviation turbine fuel (ATF), or jet fuel, was reduced by 1.01%, or Rs 688.40, to 67,709.12 per kilolitre (kl). In Mumbai, ATF price was reduced by 1.02% to 68,392.80. The price reduction is effective from 1 December 2012.
Prices of ATF constitutes approximately 50% of operating expenses of Indian airlines. State-run oil marketing companies -- Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation -- revise jet fuel prices on the 1st and 16th of every month based on the average international crude price in the preceding fortnight.
Fertiliser shares bucked weak market on reports that the Cabinet Committee on Economic Affairs is likely to meet today, 6 December 2012, to approve a new urea investment policy. National Fertilizer, GSFC, Rashtriya Chemicals & Fertilizers, Nagarjuna Fertilizers & Chemicals, Tata Chemicals, and Chambal Fertiliser & Chemicals rose by between 0.01% to 2.67%.
According to reports, the Cabinet Committee on Economic Affairs (CCEA) is expected to approve a new urea investment policy today that is likely to incentivise fertiliser firms setting up new plants and expanding existing capacity. Reports suggest that India faces shortage of 10 million tonnes of urea, which is met through imports. In 2008, the government had announced a 'New Investment Policy' to boost urea production, but the scheme failed to attract fresh investment in the sector, reports added.
Auto stocks were mixed. Small car maker Maruti Suzuki India rose 0.44%. The company early this month said its total sales rose 12.5% to 1.03 lakh units in November 2012 over November 2011. Domestic sales rose 9.7% to 90,882 units in November 2012 over November 2011. Export sales jumped 38.4% to 12,318 units in November 2012 over November 2011.
Tata Motors advanced 1.93%. The company early this month said its total sales (including exports) of Tata commercial and passenger vehicles in November 2012 stood at 66,500 vehicles. The company's domestic sales of Tata commercial and passenger vehicles fell 13.96% to 62,354 units in November 2012 over November 2011. The company's total exports declined 4.66% to 4,146 units in November 2012 over November 2011.
The company's sales of commercial vehicles in the domestic market declined 0.91% to 44,323 units in November 2012 over November 2011. LCV sales rose 21.46% to 34,828 units whereas M&HCV sales declined 40.89% to 9,495 units in November 2012 over November 2011.
Sales of passenger vehicles declined 34.98% to 18,031 units in November 2012 over November 2011. There has been encouraging response to the Tata Manza Club Class, now available across the country, and the Tata Safari Storme, now available in the NCR region, Punjab, UP, Rajasthan and Gujarat, for which the company is ramping up production, Tata Motors said in a statement.
Mahindra & Mahindra (M&M) shed 0.01% to Rs 930. The stock had scaled a record high of Rs 964.45 on Monday, 3 December 2012. The company early this month said its total automobile sales rose 18% to 48,143 units in November 2012 over in November 2011. The company's domestic sales rose 23% to 46,755 units in November 2012 over November 2011. Passenger vehicle sales rose 38% to 24,604 units in November 2012 over November 2011. The 4 wheeler commercial segment which includes the passenger and load categories registered a growth of 7% to 14,353 units, while the 3 wheeler segment grew by 17% at 6,867 units in November 2012 over November 2011. Exports for the month of November 2012 stood at 1,388 units.
M&M's total tractor sales rose 17% to 20,476 units in November 2012 over November 2011. Domestic tractor sales jumped 22% to 19,757 units in November 2012 over November 2011. Exports for the month of November 2012 stood at 719 units.
Bajaj Auto rose 1.28%. The company early this week said its total sales fell 1% to 3.72 lakh shares in November 2012 over November 2011. Motorcycle sales fell 2% to 3.26 lakh units in November 2012 over November 2011. The company said sales bigger and sportier Pulsar and Discover brands contributed 68% of motorcycle sales in November 2012. Sales of Discover brand totaled 1.5 lakh units in November 2012.
Bajaj Auto's three-wheeler sales rose 7% to 45,566 units in November 2012 over November 2011. The company said growth in its diesel three-wheeler sales and growth in the company's market share in this segment continues. Bajaj Auto's total exports fell 4% to 1.24 lakh units in November 2012 over November 2011.
Hero MotoCorp declined 0.16%.
Zee Entertainment Enterprises rose 2.09% to Rs 214.70 after hitting a 52-week high of Rs 215.55 in intraday trade today, 6 December 2012.
Metal shares extended Wednesday's gains triggered by comments from China's new leaders early this week that they would continue their supportive policy stance. China is the world's largest consumer of copper and aluminum. Hindustan Zinc, Jindal Steel & Power, Sterlite Industries, JSW Steel, Tata Steel, Sail and Hindalco Industries rose by between 0.22% to 2.35%.
IT pivotals fell for second day in a row on concerns that US-based Cognizant Technology may lower its revenue growth guidance for 2013 based on compensation targets for top executives. Wipro, Infosys, TCS, Tech Mahindra and HCL Technologies shed by between 0.33% to 2.03%.
Cognizant Technology may lower its revenue growth guidance for 2013 based on compensation targets for top executives. The company shared compensation details of its top executives in a regulatory filing on Tuesday, 4 December, with 100% of option-based pay at 16% growth for 2013. This is lower than the 20% revenue growth it expects to achieve in 2012.
MphasiS gained 2.24%. After market hours on Wednesday, 5 December 2012, MphasiS reported 0.27% rise in consolidated net profit to Rs 209.31 crore on 4.07% fall in Q4 October 2012 over Q3 July 2012. The company recommended a significant increase in the dividend payout to Rs 17 per share in the year ended 31 October 2012 from Rs 6.50 per share in the year ended 31 October 2011.
On a consolidated basis, net profit fell 3.6% to Rs 792.32 crore on 5.1% increase in net sales to Rs 5357.33 crore in the year ended October 2012 over the year ended October 2011. Operating profits rose 5.7% to Rs 877 crore in the year ended October 2012 over the year ended October 2011.
MphasiS said its continued efforts towards cost rationalization resulted in incremental margin improvement in the last four consecutive quarters.
The company's direct business revenues grew by 38% to Rs 2391 crore in the year ended October 2012 from Rs 1733 crore of the year ended October 2011. The direct versus HP business mix stood at 46:54 in this financial year compared with 38:62 at the end of last year. The direct business saw a healthy addition of 65 new logos out of the 92 additions during the year.
The company's cash and cash equivalents increased by Rs 874 crore during the year to Rs 2940 crore or Rs 140 per equity share. The board has recommended a dividend to Rs 17 per share in the year ended October 2012 compared with Rs 6.50 per share in the year ended October 2011.
Our focus on driving operational excellence has resulted in incremental margin expansion in each quarter this year. MphasiS is committed to creating shareholder value, and the Board's approval of the increased dividend payout reflects our confidence that the successful execution of our strategic plan will continue to generate strong cash flows, enabling us to strike a balance between investing in the business and regularly returning cash to our shareholders, said Ganesh Ayyar, Chief Executive Officer, MphasiS.
The winter session of the parliament which began on 22 November 2012 has heavy legislative agenda. The key financial sector reforms bills that the government intends to pass this session include insurance and pension bills and the Banking Laws (Amendment) Bill, 2011. The insurance bill will aim to raise the limit for foreign direct investment in the sector to 49% from 26%, while the pension bill will seek to allow foreign investments of up to 49% in local pension-fund managers. The Banking Laws (Amendment) Bill, 2011 includes increasing the voting rights of large shareholders in private banks to 26% from 10%, and giving the central bank more powers. The Reserve Bank of India has held back approvals of new bank licenses, urging the government to first get the bill passed in parliament.
Industry body Associated Chambers of Commerce and Industry of India or Assocham in its pre-Budget memorandum for 2013-14 has suggested reduction service tax and excise tax to 8% from 12%, increase income tax deduction of interest on housing loan to Rs 5 lakh and increase in personal income tax exemption limit to Rs 3 lakh to revive consumer demand and boost investment. The excise duty and service tax rates were increased in the last two Union Budgets from 8% to 12%.
In a statement issued early this week, Assocham said that the tax base for goods and services has already expanded to generate high revenue and the government can selectively increase customs duty rates to neutralize the effect of lower tax rate of excise duty and service tax. Besides, by increasing customs rates, the government should protect the domestic industry from unfair competition from countries like China, it said. There are cases where goods are being sold in the global market below production cost in highly competitive markets abroad, it said.
The industry body has also suggested reduction in the effective rate of corporate income tax to 25% from current 32.45%. It has also suggested increase in the rate of depreciation on plant and machinery to 25% from the existing level of 15% in view of the technologies. Assocham has sought continuation of deduction under 801A (4) to encourage investments in infrastructure during the 12th five-year plan period. The industry body has also sought removal of surcharge and education cesses on corporate assesses and education cess on non-corporate assesses.
The Reserve Bank of India next undertakes monetary policy review on 18 December 2012, which is a mid-quarter policy review. After Second Quarter Review of Monetary Policy 2012-13 on 30 October 2012, RBI kept its key policy rate viz. the repo rate unchanged at 8% citing high inflation. At that time, the central bank announced a reduction in cash reserve ratio (CRR) requirement of scheduled commercial banks by 25 basis points to 4.25%. The baseline scenario suggests a reasonable likelihood of further policy easing in Q4 March 2013, RBI said on 30 October 2012. RBI said that the policy guidance will, however, be conditioned by the evolving growth-inflation dynamic.
The Congress led UPA government at the Centre has been reduced to a minority government after Trinamool Congress (TMC) withdrew support to the UPA in September 2012. Trinamool Congress withdrew support to the UPA in September this year over the big bang reforms introduced by the Centre which included a cap on subsidised LPG cylinders and 51% FDI in multi-brand retail, among others.
The next general elections must be held in India before May 2014. 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 stocks edged higher on Thursday, with oil firms in the lead, as investors awaited the outcome of the European Central Bank's policy meeting later in the day. Key benchmark indices in Germany, France and UK were up by between 0.16% to 0.94%.
The European Central Bank (ECB) is likely to keep its benchmark interest rate on hold at 0.75% at a policy meeting on euro-zone interest rates today, 6 December 2012. ECB President Mario Draghi is expected to reiterate that the bank is ready to formally launch its bond-buying program.
At a bond auction held on Wednesday, 5 December 2012, Spain wasn't able to issue on as much debt as it had planned, and the lack of investor demand is seen as a black cloud over the country that is widely expected to need to ask its neighbors for a bailout next year. That would trigger the European Central Bank's offer to buy the country's debt to push yields lower. Smaller borrowing costs are seen as necessary for the country facing a recession.
The euro-area economy was pushed into a recession for the second time in four years as trade slowed and government spending declined. Gross domestic product n the 17-nation currency bloc slipped 0.1 percent in the third quarter from the previous three months, when it fell 0.2 percent, the European Union's statistics office in Luxembourg said today, confirming an initial estimate published on Nov. 15.
The Bank of England will announce its latest policy decision later in the global day today, 6 December 2012, and is expected to leave the size of its asset-purchase program at 375 billion pounds ($603.5 billion).
Most Asian stocks rose on Thursday, 6 December 1012. Key benchmark indices in Taiwan, Hong Kong, and China were off 0.09% to 0.34%. Key benchmark indices in Singapore, South Korea and Indonesia were up 0.07% to 0.13%.
Japanese stocks rose after a Nikkei opinion poll showed the main opposition Liberal Democratic Party (LDP) on track to reach a majority in the election on Dec. 16. The Nikkei 225 Average advanced 0.81%. The LDP and its leader, former prime minister Shinzo Abe, are broadly in favor of applying looser monetary policies.
The Bank of Japan's two-day policy meeting on Dec. 19 and 20 will take place after general elections on Dec. 16.
The South Korean economy grew worse than earlier expected in the third quarter from the prior three months, expanding at the slowest pace in three and a half years, the Bank of Korea's revised data showed Thursday, strengthening the market view that the central bank might cut rates again early next year to underpin growth. The country's quarterly economic growth barely averted contracting in the July-September period by rising a seasonally adjusted 0.1% from the second quarter, according to the revised growth data. It marks the worst quarter since the first quarter of 2009, when the economy also grew 0.1% from the previous quarter.
On a year-on-year basis, the economy expanded 1.5% in the third quarter, marking the weakest growth in three years. The reading is worse than the central bank's preliminary estimate in October of a 0.2% on-quarter rise and a 1.6% on-year expansion.
Trading in US index futures indicated that the Dow could gain 12 points at the opening bell on Thursday, 6 December 2012. US stocks mostly rose Wednesday, as Wall Street applauded what appeared to be a softening of stances in talks to avert the fiscal cliff, but the Nasdaq Composite fell with Apple Inc. which suffered its worst day of losses in almost four years. Media reports on Wednesday, 5 December 2012, said about 40 Republicans had joined a bipartisan call to break the budget impasse. Separately, Texas Representative Kay Granger, also a Republican, called extending tax cuts for middle-class earnings the right thing to do.
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 Federal Open Market Committee (FOMC) holds a two-day meeting on interest rates in the United States on 11-12 December. As per market talks, concerns about US economy will make the Federal Reserve say next week that it will continue the Treasury purchase portion of the program known as Operation Twist. That will be on top of the mortgage-debt buying program known as its third round of quantitative easing.
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