BSE Small-Cap, Mid-Cap indices outshine Sensex
After a virtual recession in the food products side, it is now the turn of the inflation to nose-dive: Invest in Banks, Real Estate, Auto and Construction Sectors. Now I am waiting for those MORONS in the RBI to cut the Rates....
A bout of volatility was witnessed as key benchmark indices once again trimmed gains after regaining strength in afternoon trade. The market breath was strong. The barometer index, BSE Sensex, was up 53.16 points or 0.33%, off close to 44 points from the day's high and up about 61 points from the day's low. Data showing decline in food inflation in late December 2011, underpinned sentiment.
Mid-cap and Small-cap indices on BSE outperformed the Sensex. FMCG stocks fell on profit taking after recent gains. Auto stocks rose as India Auto Expo 2012 began in New Delhi today, 5 January 2012.
The market edged higher in early trade as most Asian stocks rose. The market trimmed gains after hitting a fresh intraday high in morning trade. Key benchmark indices regained strength after trimming gains after hitting fresh intraday highs in morning trade. The market strengthened further and was hovering near intraday high in early afternoon trade. A bout of volatility was witnessed as key benchmark indices once again trimmed gains after regaining strength in afternoon trade.
At 13:15 IST, the BSE Sensex was up 53.16 points or 0.33% to 15,935.80. The index rose 97.53 points at the day's high of 15,980.17 in morning trade. The index fell 7.56 points at the day's low of 15,875.08 in early trade.The S&P CNX Nifty was up 20.90 points or 0.44% to 4,770.55. The index hit a high of 4,779.80 and a low of 4,745.50 in intraday trade.
The BSE Mid-Cap index was up 0.64% and the BSE Small-Cap index was up 0.71%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,562 shares rose and 880 shares fell. A total of 101 shares were unchanged.
Among the 30-member Sensex pack, 20 rose while rest of them fell. DLF (down 3.07%), NTPC (down 0.66%), ONGC (down 0.32%), Wipro (down 0.22%), Coal India (down 0.17%) and Bharti Airtel (down 0.14%), edged lower from the Sensex pack. Jaiprakash Associates (up 5.07%), Tata Power (up 2.56%), Hero MotoCorp (up 2.41%), Bhel (up 2.09%) and Larsen & Toubro (up 1.81%), edged higher from the Sensex pack.
Index heavyweight Reliance Industries (RIL) was down 0.32% to Rs 713.70, off the day's high of Rs 724.85. RIL on Wednesday, 4 January 2012, said it has scheduled a planned maintenance turnaround of one of the crude distillation unit of its SEZ Refinery at Jamnagar complex for a period of approximately three weeks starting mid February 2012. This maintenance turnaround is planned for the first time after its commissioning during the Financial Year 2008-09, RIL said. This opportunity would also be utilised to take up productivity improvement related jobs in other secondary processing units as necessary, RIL said. During this period, other three crude distillation units at Jamnagar refining complex are expected to sustain normal operations, RIL added.
RIL had announced early this week that it is divesting a part of the interest in ETV channels in favour of TV18 Broadcast, a Network18 Group firm. RIL said that as a part of the deal with TV18 Broadcast, Infotel Broad Band Services (Infotel), a subsidiary of RIL, has entered into a Memorandum of Understanding with TV18 Broadcast and Network18 Media and Investments for preferential access to all content of the latter for distribution through the 4G Broadband Network being set up by RIL.
Auto stocks rose as India Auto Expo 2012 began in New Delhi today, 5 January 2012.
Tata Motors rose 2.02%, extending recent gains triggered by strong sales in the month just gone by. The company's total sales of commercial and passenger vehicles jumped 22% to 82,278 units in December 2011 over December 2010. The domestic sales of the vehicles in both categories for the month stood at 76,663 cars, a 24% jump compared to 61,685 in December 2010, the company said in a statement. However, exports declined 3% to 5,615 units compared to 5,809 in December 2010.
Mahindra & Mahindra (M&M) rose 1.37% on bargain hunting after recent losses. M&M's total automobile sales jumped 26% to 42,761 units in December 2011 over December 2010. M&M's president for automotive and farm equipment Pawan Goenka today, 5 January 2012, said that the company plans to start assembling SsangYong vehicles in China, Brazil and Russia in the next two years.
M&M last year picked up a 70.03% stake in South Korean auto maker SsangYong Motor Co. for 522.5 billion Korean won. It is slated to launch SsangYong's sport-utility vehicle Rexton in India in the second half of 2012 and the Korando C SUV in 2013.
Ashok Leyland rose 2.74%. The company reported sales of 9,088 units for December 2011 including 1,099 units of the recently launched LCV for cargo transportation -- Dost. Adjusting for Dost which was launched in October 2011, sales came in at 7,989 units, up 6% year-on-year.
However, Maruti Suzuki India declined 0.81%. The company announced during market hours today that it has unveiled XA Alpha -- a concept for a compact sports utility vehicle (SUV). Together with Ertiga to be unveiled on 6 January 2012, the XA Alpha signals Maruti Suzuki's plans to expand into the utility vehicles space, it said.
Maruti's total vehicle sales fell 7.1% to 92,161 units in December 2011 over December 2010. Domestic sales dropped 13.4% to 77,475 units. Exports surged by 50.5% to 14,686 units.
Fiat India Automobiles said early this week that it expects to conclude shortly discussions with Maruti Suzuki India for the supply of diesel engines for cars, a step that will allow the local unit of Suzuki Motor Corp. cut the waiting period on its Swift model. Maruti currently sources all its diesel engines from Suzuki Powertrain, a joint venture between Maruti and Suzuki. These engines are made using Fiat's technology.
Two-wheeler makers rose on bargain hunting after recent losses. Bajaj Auto rose 2.15%. The firm unveiled an ultra-low-cost car early this week, its first foray into the four-wheel market. The compact "RE60" boasts of high fuel efficiency and low carbon dioxide emissions, but the firm did not release a price tag.
Shares of Bajaj Auto had tumbled recently on reported comments by a company official that the company does not expect to meet its vehicle sales target for this financial year through March. The company's total sales rose 10% to 3.05 lakh units in December 2011 over December 2010. Motorcycle sales rose 8% to 2.63 lakh units and commercial vehicle sales rose 27% to 41,991 units. Exports jumped 25% to 1.19 lakh units. The company announced the monthly sales data early this week.
India's largest two-wheeler maker Hero MotoCorp rose 2.24% on reports the company will soon unveil a new petrol-electric hybrid scooter, which would deliver a fuel efficiency of 100 kilometre per litre. Meanwhile, the company on Wednesday launched two motorcycle models and one scooter model. The company will start retail sales of the 110-cubic-centimeter scooter model Maestro later this month, while that of the 110cc motorcycle model Passion X Pro and 125cc motorcycle Ignitor will happen in the remainder of the year, Chief Executive Pawan Munjal said at the launch.
However, TVS Motor Company fell 0.42%. The stock had been under selling pressure recently after the company said its total sales declined 0.79% to 1.70 lakh units in December 2011 over December 2010.
FMCG stocks fell on profit taking after recent gains. United Spirits (down 3.42%), Tata Global Beverages (down 1.63%), Hindustan Unilever (down 1.34%), Dabur India (down 0.59%), ITC (down 0.48%), Nestle India (down 0.35%), Marico (down 0.17%) and Britannia Industries (down 0.09%), edged lower.
Top gainers in the BSE Mid-Cap index were, KEC International (up 10.13%), Graphite India (up 7.04%), Zydus Wellness (up 5.90%), Puravankara Projects (up 5.84%) and Phoenix Mills (up 5.44%).
Top gainers in the BSE Small-Cap index were, Welspun Projects (up 14.70%), Brigade Enterprises (up 13.25%), Tata Metaliks (up 12.06%), CCL Products (India) (up 9.87%) and Kalyani Steels (up 9.09%).
Foreign institutional investors (FIIs) bought shares worth Rs 138.97 crore on Wednesday, 4 January 2012, as per provisional data from the stock exchanges. FII inflow totaled Rs 394.36 crore in two trading sessions on 3 and 4 January 2012, as per provisional data from the stock exchanges. Earlier, FIIs had offloaded shares worth a net Rs 1287.84 crore in three trading sessions from 29 December 2011 to 2 January 2012.
A special trading session will be held on Saturday, 7 January 2012, as the National Stock Exchange is upgrading the capacity of its Futures and Options trading system hardware and software. Trading will take place from 11:15 IST to 12:45 IST on that day. Trades done on Saturday, January 07, 2012, will be settled on Tuesday, 10 January 10, 2012, as a separate settlement, NSE said in a circular.
Market regulator Securities & Exchange Board of India (Sebi) has allowed auctioning of securities through stock exchanges and introduced a new method for institutional placement of stocks. As per the auctioning route, a special window can be used by promoter stakeholders to sell at least 1% of the paid-up capital of a company. This will be similar to the block-deal mechanism for secondary stock market transactions, but with lesser restrictions. Under the institutional placement programme (IPP), shares can be sold only to qualified institutional buyers.
Exchanges will provide a separate window for the offer for sale of shares which will co-exist with the normal trading hours. But, promoter or promoter group of companies will not be allowed to bid for the shares. Sebi also said the auction method can be only used by promoters of top 100 companies based on average market capitalisation for sale of their stakes. The regulator said the IPP method can be used to increase public holding by 10% and could be offered to only qualified institutional buyers with 25% being reserved for mutual funds and insurance companies. Issuers will have to announce an indicative floor price or price band at least one day before the opening of the offer.
Starting off the New Year on a liberalisation note, the government on Sunday, 1 January 2012, announced its decision to allow Qualified Foreign Investors (QFIs) to directly invest in the Indian equity market from 15 January 2012. A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs include pension funds which normally tend to stay invested for a longer period of time. QFIs do not include FIIs/sub accounts. In August last year, the government allowed foreign investors to directly invest up to $13 billion in equity and debt schemes of mutual funds.
Qualified foreign investors, or QFIs, will now be able to invest individually up to 5% of the capital of the Indian company. Cumulatively, QFIs can invest up to 10% of the capital of the company being invested in. These limits are over and above the FII and NRI investment ceilings prescribed under the PIS route for foreign investment in India, a government statement said.
The next major trigger for the market is Q3 December 2011 corporate earnings, which will start tricking from the second week of January 2012. The focus will be on guidance from the company managements on outlook for the remaining part of the year and for the next year. Analysts expect weak Q3 December 2011 results due to lower volume growth in a slowing economy, higher raw material costs and higher interest charges.
IT bellwether Infosys and housing finance major HDFC report Q3 results on 12 January 2012. HCL Tech unveils Q2 results on 17 January 2012. HDFC Bank and Bajaj Auto unveil Q3 results on 19 January 2012. Axis Bank unveils Q3 results on 20 January 2012. Asian Paints unveils Q3 results on 21 January 2012. Biotech major Biocon unveils Q3 results on 24 January 2012. Dabur India unveils Q3 results on 31 January 2012. Mahindra & Mahindra unveils Q3 results on 7 February 2012.
Food inflation plunged into the negative territory in the fourth week of December mainly due to base effect, data released by the Government showed on Thursday, 5 January 2011. Fuel inflation edged up though. Food inflation shrank by 3.36% in the week ended December 24, after rising by 0.42% in the preceding week. Inflation in the Primary Articles group fell to 0.1% in the week under review, from 2.7% in the week ended December 17. Inflation in the Fuel & Power group stood at 14.60% in the week ended December 24, versus 14.37% in the previous week.
The RBI is likely to begin easing monetary policy to address concerns about economic growth, Governor D Subbarao said in an interview to a foreign electronic media house, reiterating comments made by the RBI when it kept rates unchanged on 16 December 2011. At its mid-quarterly monetary policy review meet on 16 December 2011, the RBI left its main lending rate unchanged in order to support faltering economic growth as inflation shows signs of cooling. While inflation remains on its projected trajectory, downside risks to growth have clearly increased, RBI had said in a statement on 16 December 2011. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth, RBI had said.
RBI had said inflation risks remain high and inflation could quickly recur as a result of both supply and demand forces. RBI also said that the rupee remains under stress. The timing and magnitude of further actions will depend on a continuing assessment of how these factors shape up in the months ahead, RBI said. The RBI has raised rates 13 times since March 2010.
India's services sector grew at its fastest pace in five months in December riding on a surge in new business and expansion in employment, but rising input prices will likely add to inflationary pressures in the coming months, a survey showed. The HSBC Markit Business Activity Index -- based on a survey of around 400 firms -- rose to 54.2 in December from 53.2 in November, staying above the 50 mark that separates growth from contraction for the second month in a row. In the December survey, the new business sub-index jumped to 55.7 from 52.3 in November, thanks to an improvement in demand. Both the services PMI index and the new business sub-index were at their highest levels since July.
India's manufacturing activity surged to a six-month high in December thanks to a spike in factory output and new orders from domestic and international firms, a survey of purchasing managers showed early this week. The HSBC Markit India Manufacturing PMI jumped to 54.2 from 51 in November, its biggest monthly rise since April 2009. The index has stayed above the 50 mark that separates growth from contraction for 33 months now.
The infrastructure sector output grew 6.8% in November from a year earlier, sharply higher than the annual growth of 3.7% in November last year, data released by the government early last week showed. The infrastructure sector accounts for 37.9% of India's industrial output.
India's November exports rose an annual 3.87% to $22.3 billion, while imports for the month rose 24.55% to $35.9 billion, the government said in a statement early this week. India's trade deficit in November was at $13.6 billion.
Credit rating agency Moody's Investors Service on 14 December 2011 said that the sharp decline in the value of the Indian rupee against the dollar over the past few months is generally exerting only a moderate impact on rated Indian companies. Risks for companies holding large amounts of dollar denominated debt are also manageable in the near term, given that debt maturities are limited for this time frame, Moody's said in a new report. This means Indian companies rated by Moody's do not have a significant dollar outflow at a time when the Indian rupee is losing ground.
India may face the risk of stagflation if the government doesn't take urgent steps to tame inflation and stimulate growth, a parliamentary panel on finance warned on 22 December 2011. The Standing Committee on Finance blamed the Reserve Bank of India's 13 interest-rate increases over the past 21 months for stalling economic growth. "Measures taken by the government and the RBI so far have squarely failed to rescue the economy from unabated inflation. Instead, monetary measures initiated for this purpose have only resulted in worsening the condition of the economy further," the report said.
The budget for 2012/13 ending March will be presented after elections scheduled in five states, Finance Minister Pranab Mukherjee said on Monday, 2 January 2012. State elections are scheduled between the end of January and early March. The annual budget is usually presented on the last working day of February. The Election Commission on 24 December 2011 announced the dates for the assembly polls in Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. Uttar Pradesh will have polling on February 4, 8, 11, 15, 19, 23 and 28, while Uttarakhand and Punjab will go to polls on January 30. Manipur will have polls on January 28 and Goa on March 3.
Most Asian shares rose on Thursday on expectations that China's central bank will cut reserve ratio for Chinese banks later this month. Key benchmark indices in Indonesia, Hong Kong, Singapore, and Taiwan rose by between 0.14% to 0.71%. Key benchmark indices in China, Japan and South Korea fell by between 0.13% to 0.97%.
France plans to raise up to 8 billion euros in long-term debt on Thursday but a key litmus test for investor confidence is next week's debt sales by Spain and Italy, the two countries most exposed to the crisis. This follows Wednesday's 10-year German Bunds auction, which drew a subdued demand of bids amounting to 1.3 times the amount offered.
French President Nicolas Sarkozy will meet German Chancellor Angela Merkel in Berlin on 9 January 2012 for talks that are likely to centre on new rules to enforce budget discipline across the European Union (EU). The two leaders are anxious to flesh out a plan agreed at a December 2011 summit by all EU members except Britain for a new treaty to forge closer fiscal integration, as Europe battles to stem a sovereign debt crisis in the euro zone.
Finance ministers from the EU's 27 members will meet on 23 January 2012 before their leaders hold a summit a week later. They will be under intense pressure to find a definitive solution to the crisis which threatens the very survival of the single currency, 10 years after it came into circulation.
Trading in US index futures indicated that the Dow could fall 22 points at the opening bell on Thursday, 5 January 2012. US stocks fared better than European peers, ending nearly flat on Wednesday after data showed new US factory goods orders rose solidly in November while business capital spending cooled.
Mid-cap and Small-cap indices on BSE outperformed the Sensex. FMCG stocks fell on profit taking after recent gains. Auto stocks rose as India Auto Expo 2012 began in New Delhi today, 5 January 2012.
The market edged higher in early trade as most Asian stocks rose. The market trimmed gains after hitting a fresh intraday high in morning trade. Key benchmark indices regained strength after trimming gains after hitting fresh intraday highs in morning trade. The market strengthened further and was hovering near intraday high in early afternoon trade. A bout of volatility was witnessed as key benchmark indices once again trimmed gains after regaining strength in afternoon trade.
At 13:15 IST, the BSE Sensex was up 53.16 points or 0.33% to 15,935.80. The index rose 97.53 points at the day's high of 15,980.17 in morning trade. The index fell 7.56 points at the day's low of 15,875.08 in early trade.The S&P CNX Nifty was up 20.90 points or 0.44% to 4,770.55. The index hit a high of 4,779.80 and a low of 4,745.50 in intraday trade.
The BSE Mid-Cap index was up 0.64% and the BSE Small-Cap index was up 0.71%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,562 shares rose and 880 shares fell. A total of 101 shares were unchanged.
Among the 30-member Sensex pack, 20 rose while rest of them fell. DLF (down 3.07%), NTPC (down 0.66%), ONGC (down 0.32%), Wipro (down 0.22%), Coal India (down 0.17%) and Bharti Airtel (down 0.14%), edged lower from the Sensex pack. Jaiprakash Associates (up 5.07%), Tata Power (up 2.56%), Hero MotoCorp (up 2.41%), Bhel (up 2.09%) and Larsen & Toubro (up 1.81%), edged higher from the Sensex pack.
Index heavyweight Reliance Industries (RIL) was down 0.32% to Rs 713.70, off the day's high of Rs 724.85. RIL on Wednesday, 4 January 2012, said it has scheduled a planned maintenance turnaround of one of the crude distillation unit of its SEZ Refinery at Jamnagar complex for a period of approximately three weeks starting mid February 2012. This maintenance turnaround is planned for the first time after its commissioning during the Financial Year 2008-09, RIL said. This opportunity would also be utilised to take up productivity improvement related jobs in other secondary processing units as necessary, RIL said. During this period, other three crude distillation units at Jamnagar refining complex are expected to sustain normal operations, RIL added.
RIL had announced early this week that it is divesting a part of the interest in ETV channels in favour of TV18 Broadcast, a Network18 Group firm. RIL said that as a part of the deal with TV18 Broadcast, Infotel Broad Band Services (Infotel), a subsidiary of RIL, has entered into a Memorandum of Understanding with TV18 Broadcast and Network18 Media and Investments for preferential access to all content of the latter for distribution through the 4G Broadband Network being set up by RIL.
Auto stocks rose as India Auto Expo 2012 began in New Delhi today, 5 January 2012.
Tata Motors rose 2.02%, extending recent gains triggered by strong sales in the month just gone by. The company's total sales of commercial and passenger vehicles jumped 22% to 82,278 units in December 2011 over December 2010. The domestic sales of the vehicles in both categories for the month stood at 76,663 cars, a 24% jump compared to 61,685 in December 2010, the company said in a statement. However, exports declined 3% to 5,615 units compared to 5,809 in December 2010.
Mahindra & Mahindra (M&M) rose 1.37% on bargain hunting after recent losses. M&M's total automobile sales jumped 26% to 42,761 units in December 2011 over December 2010. M&M's president for automotive and farm equipment Pawan Goenka today, 5 January 2012, said that the company plans to start assembling SsangYong vehicles in China, Brazil and Russia in the next two years.
M&M last year picked up a 70.03% stake in South Korean auto maker SsangYong Motor Co. for 522.5 billion Korean won. It is slated to launch SsangYong's sport-utility vehicle Rexton in India in the second half of 2012 and the Korando C SUV in 2013.
Ashok Leyland rose 2.74%. The company reported sales of 9,088 units for December 2011 including 1,099 units of the recently launched LCV for cargo transportation -- Dost. Adjusting for Dost which was launched in October 2011, sales came in at 7,989 units, up 6% year-on-year.
However, Maruti Suzuki India declined 0.81%. The company announced during market hours today that it has unveiled XA Alpha -- a concept for a compact sports utility vehicle (SUV). Together with Ertiga to be unveiled on 6 January 2012, the XA Alpha signals Maruti Suzuki's plans to expand into the utility vehicles space, it said.
Maruti's total vehicle sales fell 7.1% to 92,161 units in December 2011 over December 2010. Domestic sales dropped 13.4% to 77,475 units. Exports surged by 50.5% to 14,686 units.
Fiat India Automobiles said early this week that it expects to conclude shortly discussions with Maruti Suzuki India for the supply of diesel engines for cars, a step that will allow the local unit of Suzuki Motor Corp. cut the waiting period on its Swift model. Maruti currently sources all its diesel engines from Suzuki Powertrain, a joint venture between Maruti and Suzuki. These engines are made using Fiat's technology.
Two-wheeler makers rose on bargain hunting after recent losses. Bajaj Auto rose 2.15%. The firm unveiled an ultra-low-cost car early this week, its first foray into the four-wheel market. The compact "RE60" boasts of high fuel efficiency and low carbon dioxide emissions, but the firm did not release a price tag.
Shares of Bajaj Auto had tumbled recently on reported comments by a company official that the company does not expect to meet its vehicle sales target for this financial year through March. The company's total sales rose 10% to 3.05 lakh units in December 2011 over December 2010. Motorcycle sales rose 8% to 2.63 lakh units and commercial vehicle sales rose 27% to 41,991 units. Exports jumped 25% to 1.19 lakh units. The company announced the monthly sales data early this week.
India's largest two-wheeler maker Hero MotoCorp rose 2.24% on reports the company will soon unveil a new petrol-electric hybrid scooter, which would deliver a fuel efficiency of 100 kilometre per litre. Meanwhile, the company on Wednesday launched two motorcycle models and one scooter model. The company will start retail sales of the 110-cubic-centimeter scooter model Maestro later this month, while that of the 110cc motorcycle model Passion X Pro and 125cc motorcycle Ignitor will happen in the remainder of the year, Chief Executive Pawan Munjal said at the launch.
However, TVS Motor Company fell 0.42%. The stock had been under selling pressure recently after the company said its total sales declined 0.79% to 1.70 lakh units in December 2011 over December 2010.
FMCG stocks fell on profit taking after recent gains. United Spirits (down 3.42%), Tata Global Beverages (down 1.63%), Hindustan Unilever (down 1.34%), Dabur India (down 0.59%), ITC (down 0.48%), Nestle India (down 0.35%), Marico (down 0.17%) and Britannia Industries (down 0.09%), edged lower.
Top gainers in the BSE Mid-Cap index were, KEC International (up 10.13%), Graphite India (up 7.04%), Zydus Wellness (up 5.90%), Puravankara Projects (up 5.84%) and Phoenix Mills (up 5.44%).
Top gainers in the BSE Small-Cap index were, Welspun Projects (up 14.70%), Brigade Enterprises (up 13.25%), Tata Metaliks (up 12.06%), CCL Products (India) (up 9.87%) and Kalyani Steels (up 9.09%).
Foreign institutional investors (FIIs) bought shares worth Rs 138.97 crore on Wednesday, 4 January 2012, as per provisional data from the stock exchanges. FII inflow totaled Rs 394.36 crore in two trading sessions on 3 and 4 January 2012, as per provisional data from the stock exchanges. Earlier, FIIs had offloaded shares worth a net Rs 1287.84 crore in three trading sessions from 29 December 2011 to 2 January 2012.
A special trading session will be held on Saturday, 7 January 2012, as the National Stock Exchange is upgrading the capacity of its Futures and Options trading system hardware and software. Trading will take place from 11:15 IST to 12:45 IST on that day. Trades done on Saturday, January 07, 2012, will be settled on Tuesday, 10 January 10, 2012, as a separate settlement, NSE said in a circular.
Market regulator Securities & Exchange Board of India (Sebi) has allowed auctioning of securities through stock exchanges and introduced a new method for institutional placement of stocks. As per the auctioning route, a special window can be used by promoter stakeholders to sell at least 1% of the paid-up capital of a company. This will be similar to the block-deal mechanism for secondary stock market transactions, but with lesser restrictions. Under the institutional placement programme (IPP), shares can be sold only to qualified institutional buyers.
Exchanges will provide a separate window for the offer for sale of shares which will co-exist with the normal trading hours. But, promoter or promoter group of companies will not be allowed to bid for the shares. Sebi also said the auction method can be only used by promoters of top 100 companies based on average market capitalisation for sale of their stakes. The regulator said the IPP method can be used to increase public holding by 10% and could be offered to only qualified institutional buyers with 25% being reserved for mutual funds and insurance companies. Issuers will have to announce an indicative floor price or price band at least one day before the opening of the offer.
Starting off the New Year on a liberalisation note, the government on Sunday, 1 January 2012, announced its decision to allow Qualified Foreign Investors (QFIs) to directly invest in the Indian equity market from 15 January 2012. A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs include pension funds which normally tend to stay invested for a longer period of time. QFIs do not include FIIs/sub accounts. In August last year, the government allowed foreign investors to directly invest up to $13 billion in equity and debt schemes of mutual funds.
Qualified foreign investors, or QFIs, will now be able to invest individually up to 5% of the capital of the Indian company. Cumulatively, QFIs can invest up to 10% of the capital of the company being invested in. These limits are over and above the FII and NRI investment ceilings prescribed under the PIS route for foreign investment in India, a government statement said.
The next major trigger for the market is Q3 December 2011 corporate earnings, which will start tricking from the second week of January 2012. The focus will be on guidance from the company managements on outlook for the remaining part of the year and for the next year. Analysts expect weak Q3 December 2011 results due to lower volume growth in a slowing economy, higher raw material costs and higher interest charges.
IT bellwether Infosys and housing finance major HDFC report Q3 results on 12 January 2012. HCL Tech unveils Q2 results on 17 January 2012. HDFC Bank and Bajaj Auto unveil Q3 results on 19 January 2012. Axis Bank unveils Q3 results on 20 January 2012. Asian Paints unveils Q3 results on 21 January 2012. Biotech major Biocon unveils Q3 results on 24 January 2012. Dabur India unveils Q3 results on 31 January 2012. Mahindra & Mahindra unveils Q3 results on 7 February 2012.
Food inflation plunged into the negative territory in the fourth week of December mainly due to base effect, data released by the Government showed on Thursday, 5 January 2011. Fuel inflation edged up though. Food inflation shrank by 3.36% in the week ended December 24, after rising by 0.42% in the preceding week. Inflation in the Primary Articles group fell to 0.1% in the week under review, from 2.7% in the week ended December 17. Inflation in the Fuel & Power group stood at 14.60% in the week ended December 24, versus 14.37% in the previous week.
The RBI is likely to begin easing monetary policy to address concerns about economic growth, Governor D Subbarao said in an interview to a foreign electronic media house, reiterating comments made by the RBI when it kept rates unchanged on 16 December 2011. At its mid-quarterly monetary policy review meet on 16 December 2011, the RBI left its main lending rate unchanged in order to support faltering economic growth as inflation shows signs of cooling. While inflation remains on its projected trajectory, downside risks to growth have clearly increased, RBI had said in a statement on 16 December 2011. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth, RBI had said.
RBI had said inflation risks remain high and inflation could quickly recur as a result of both supply and demand forces. RBI also said that the rupee remains under stress. The timing and magnitude of further actions will depend on a continuing assessment of how these factors shape up in the months ahead, RBI said. The RBI has raised rates 13 times since March 2010.
India's services sector grew at its fastest pace in five months in December riding on a surge in new business and expansion in employment, but rising input prices will likely add to inflationary pressures in the coming months, a survey showed. The HSBC Markit Business Activity Index -- based on a survey of around 400 firms -- rose to 54.2 in December from 53.2 in November, staying above the 50 mark that separates growth from contraction for the second month in a row. In the December survey, the new business sub-index jumped to 55.7 from 52.3 in November, thanks to an improvement in demand. Both the services PMI index and the new business sub-index were at their highest levels since July.
India's manufacturing activity surged to a six-month high in December thanks to a spike in factory output and new orders from domestic and international firms, a survey of purchasing managers showed early this week. The HSBC Markit India Manufacturing PMI jumped to 54.2 from 51 in November, its biggest monthly rise since April 2009. The index has stayed above the 50 mark that separates growth from contraction for 33 months now.
The infrastructure sector output grew 6.8% in November from a year earlier, sharply higher than the annual growth of 3.7% in November last year, data released by the government early last week showed. The infrastructure sector accounts for 37.9% of India's industrial output.
India's November exports rose an annual 3.87% to $22.3 billion, while imports for the month rose 24.55% to $35.9 billion, the government said in a statement early this week. India's trade deficit in November was at $13.6 billion.
Credit rating agency Moody's Investors Service on 14 December 2011 said that the sharp decline in the value of the Indian rupee against the dollar over the past few months is generally exerting only a moderate impact on rated Indian companies. Risks for companies holding large amounts of dollar denominated debt are also manageable in the near term, given that debt maturities are limited for this time frame, Moody's said in a new report. This means Indian companies rated by Moody's do not have a significant dollar outflow at a time when the Indian rupee is losing ground.
India may face the risk of stagflation if the government doesn't take urgent steps to tame inflation and stimulate growth, a parliamentary panel on finance warned on 22 December 2011. The Standing Committee on Finance blamed the Reserve Bank of India's 13 interest-rate increases over the past 21 months for stalling economic growth. "Measures taken by the government and the RBI so far have squarely failed to rescue the economy from unabated inflation. Instead, monetary measures initiated for this purpose have only resulted in worsening the condition of the economy further," the report said.
The budget for 2012/13 ending March will be presented after elections scheduled in five states, Finance Minister Pranab Mukherjee said on Monday, 2 January 2012. State elections are scheduled between the end of January and early March. The annual budget is usually presented on the last working day of February. The Election Commission on 24 December 2011 announced the dates for the assembly polls in Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. Uttar Pradesh will have polling on February 4, 8, 11, 15, 19, 23 and 28, while Uttarakhand and Punjab will go to polls on January 30. Manipur will have polls on January 28 and Goa on March 3.
Most Asian shares rose on Thursday on expectations that China's central bank will cut reserve ratio for Chinese banks later this month. Key benchmark indices in Indonesia, Hong Kong, Singapore, and Taiwan rose by between 0.14% to 0.71%. Key benchmark indices in China, Japan and South Korea fell by between 0.13% to 0.97%.
France plans to raise up to 8 billion euros in long-term debt on Thursday but a key litmus test for investor confidence is next week's debt sales by Spain and Italy, the two countries most exposed to the crisis. This follows Wednesday's 10-year German Bunds auction, which drew a subdued demand of bids amounting to 1.3 times the amount offered.
French President Nicolas Sarkozy will meet German Chancellor Angela Merkel in Berlin on 9 January 2012 for talks that are likely to centre on new rules to enforce budget discipline across the European Union (EU). The two leaders are anxious to flesh out a plan agreed at a December 2011 summit by all EU members except Britain for a new treaty to forge closer fiscal integration, as Europe battles to stem a sovereign debt crisis in the euro zone.
Finance ministers from the EU's 27 members will meet on 23 January 2012 before their leaders hold a summit a week later. They will be under intense pressure to find a definitive solution to the crisis which threatens the very survival of the single currency, 10 years after it came into circulation.
Trading in US index futures indicated that the Dow could fall 22 points at the opening bell on Thursday, 5 January 2012. US stocks fared better than European peers, ending nearly flat on Wednesday after data showed new US factory goods orders rose solidly in November while business capital spending cooled.
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