Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could slide 18 points at the opening bell. Asian stocks were mixed on Wednesday, 20 March 2013, with a rejection by the Cypriot parliament of a European bailout plan fueling some uncertainty.
Mahindra & Mahindra (M&M) said after market hours on Tuesday, 19 March 2013, that as part of aligning production with sales requirements, the company will be observing no production days at its tractor plants located at Jaipur for five days and Rudrapur for two days during the period from 24 March 2013 to 31 March 2013. The management does not envisage any adverse impact on the availability of tractors in the market due to adequacy of tractor stocks to serve the market requirements, M&M said in a statement.
Bharti Airtel said after market hours on Tuesday, 19 March 2013, that the management is saddened at the summons being issued to Bharti Airtel (earlier Bharti Cellular) and to Sunil Bharti Mittal, as the Chairman & Managing Director of Bharti Airtel, whilst taking cognizance of the Charge Sheet filed by the CBI against Bharti Airtel, two Vodafone entities and an individual. This matter pertains to certain policy decisions taken during the NDA Government in 2002. Bharti Airtel said that it will fight this charge sheet against Bharti Airtel and Sunil Bharti Mittal, Chairman of Bharti Airtel.
Bharti Airtel said that CBI has asserted that they have not found any evidence of conspiracy against any individual whatsoever. The requests for additional spectrum allocations to improve the Quality of Service and to raise the standards of mobile telephony in India to global standards had been raised by several telecom operators and by Industry Associations since 1999/2000, Bharti Airtel said. The spectrum allocation i.e. subject of the charge sheet was made to Bharti Airtel in December 2003 under the charge of then Minister of Communications in the NDA, Sh. Arun Shourie who has already been given a clean chit, Bharti Airtel said.
The fact also is that the spectrum under the government policy of 1 February 2002, which the Charge Sheet alleges, was issued to benefit Bharti Airtel and Vodafone continued until April 2010 under 3 separate Ministers of Telecom and 6 Secretaries in the DoT and despite being considered by several formal/informal committees of the DoT/TRAI, Bharti Airtel said. All other telecom operators including MTNL and BSNL received additional spectrum under this policy of 1 February 2002.
The government has on several occasions stated on the floor of the Parliament, even as recently as 7 December 2012, that the additional spectrum granted to all operators and the related spectrum usage charges are as per the policy. The DoT has also filed affidavits before the courts confirming the same, Bharti Airtel said.
The company said that it would like to reiterate that Bharti Airtel and its promoters have always practised the highest standards of corporate governance and accordingly view the Charge Sheet as an attempt to tarnish its high reputation.
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The Union Cabinet on Tuesday, 19 March 2013, cleared an ambitious food-security bill that would allow 67% of the population access to cheap food grains. The program would increase food subsidy costs and further bloat the government's fiscal deficit. Food subsidies account for more than 40% of India's total subsidy costs. Prices of the food grain to be supplied under the program would be frozen for three years from the date of implementation, expected in the second half of the year. Parliament's approval for the bill would permit the release of huge quantities of grain from the government's overflowing storage sites at near giveaway prices and is expected to become a big vote-winner for the Congress party-led coalition government, which faces a general election in early 2014.
Indian stocks fell for the third straight trading session on Tuesday, 19 March 2013, as political worries caused by DMK's decision to withdraw support to the Congress led UPA government at the Centre, a statement from the Reserve Bank of India (RBI) that the headroom for further monetary easing remains quite limited and weakness in European shares hit sentiment adversely. The S&P BSE Sensex lost 285.10 points or 1.48% to settle at 19,008.10, its lowest closing level since 4 March 2013.
Foreign institutional investors (FIIs) bought shares worth a net Rs 62.63 crore on Tuesday, 19 March 2013, as per provisional data from the stock exchanges.
On the political front, the DMK on Tuesday, 19 March 2013, withdrew support to the Congress led UPA government at the Centre citing differences on the issue of atrocities on Tamils in Sri Lanka. DMK chief M. Karunanidhi said the party can't continue in the government as it hasn't considered their demands on the issue. DMK leader TR Baalu met President Pranab Mukherjee late on Tuesday night to submit his party's letter of withdrawal of support to the government. The DMK ministers are likely to submit their resignations to Prime Minister Manmohan Singh today, 20 March 2013. The DMK has 18 MPs in the Lok Sabha and five ministers in the Union Cabinet. The DMK has been demanding that India's government pass a resolution in Parliament declaring the alleged atrocities on Tamils in Sri Lanka as genocide and war crimes. It also wants the government to demand the United Nations to probe the crimes.
Media reports suggest that the UPA government is still working on a resolution on the Sri Lankan Tamil issue in a desperate last ditch effort to get the DMK back on board. But a breakthrough looks unlikely at the moment. The UPA government is likely to move amendments to the US-sponsored resolution against Sri Lanka at the UNHRC. But moving the amendments is no easy task and will involve hectic lobbying.
After the DMK's decision to withdraw support, the government on Tuesday expressed confidence that it still enjoys majority support and that there wasn't any threat to its survival. The government is absolutely stable and enjoys majority in lower house, Finance Minister P. Chidambaram said. The government is examining the demands of the DMK and expects the party would review its decision if Parliament agrees to adopt a resolution on the Lankan Tamil issue, he said. The government has begun consultations with various political parities on the resolution on Sri Lanka, Chidambaram said.
The DMK has called for an emergency executive committee meeting on 25 March 2013.
The UPA has already been reduced to a minority government after Trinamool Congress withdrew support to the government in September last year.
Reacting to DMK's decision to withdraw support to the UPA government, Samajwadi Party (SP) Rajya Sabha MP Ram Gopal Yadav on Tuesday said that the DMK has still not sent the letter to the President, so the party hasn't withdrawn support. He said that SP will continue to extend outside support the UPA government.
Bahujan Samaj Party (BSP) chief Mayawati has also decided not to rock the Congress-led UPA's boat. Mayawati on Tuesday said her party would continue extending outside support to the UPA. The BSP supremo also added that the Central government was not in minority and there was no threat of a Lok Sabha election due to the DMK pulling out.
The Lok Sabha has 539 MPs at present as four seats are vacant. The half-way mark is 270. With DMK deciding to withdraw from the UPA, its strength reduces by 18 to 232. Outside support for UPA totals 49 including SP 22, BSP 21, RJD 3 and JDS 3.
The Reserve Bank of India (RBI) cut its key policy rate viz. the repo rate by 25 basis points to 7.5% after a mid-quarter monetary policy review on Tuesday, 19 March 2013. The key macroeconomic priorities are to raise the growth rate, restrain inflation pressures and mitigate the vulnerability of the external sector, RBI said. The Central Statistics Office (CSO) has projected GDP growth for 2012-13 of 5%, lower than the Reserve Bank of India's baseline projection of 5.5% set out in the Third Quarter Review (TQR) of monetary policy in January 2013, reflecting slower than expected growth in both industry and services. The key to reinvigorating growth is accelerating investment, the RBI said. The government has a critical role to play in this regard by remaining committed to fiscal consolidation, easing the supply bottlenecks and improving governance surrounding project implementation, the RBI said.
On the inflation front, some softening of global commodity prices and lower pricing power of corporates domestically is moderating non-food manufactured products inflation, the RBI said. However, the unrelenting rise in food inflation is keeping headline wholesale price inflation above the threshold level and consumer price inflation in double digits. The RBI also said that there is still some suppressed inflation related to administered prices which carries latent inflationary pressures. All this complicates the task of inflation management and underscores the imperative of addressing supply constraints, the RBI said. From an inflation perspective, upward revisions in the minimum support prices (MSP) should warrant caution in view of their implications for overall inflation, the RBI said.
On the external sector front, the key challenge is to reduce the CAD, which is well above the sustainable threshold. This adjustment, requiring as it does, measures to improve the competitiveness of exports and wean away demand for unproductive imports, will inevitably take time. Meanwhile, financing of the CAD with stable flows remains a challenge, the RBI said.
The central bank said that the foremost challenge for returning the economy to a high growth trajectory is to revive investment. A competitive interest rate is necessary for this, but not sufficient. Sufficiency conditions include bridging the supply constraints, staying the course on fiscal consolidation, both in terms of quantity and quality, and improving governance, the RBI said.
Notwithstanding moderation in non-food manufactured products inflation, headline inflation is expected to be range-bound around current levels over 2013-14 in view of sectoral demand-supply imbalances, the ongoing corrections in administered prices and their second-round effects, the RBI said. Elevated food prices, including pressures stemming from MSP increases, and the wedge between wholesale and retail inflation have adverse implications for inflation expectations, the central bank said. Risks on account of the CAD remain significant notwithstanding likely improvement in Q4 over an expected sharp deterioration in Q3 of 2012-13. Accordingly, even as the policy stance emphasises addressing the growth risks, the headroom for further monetary easing remains quite limited, the RBI said. The RBI said it will continue to actively manage liquidity through various instruments, including open market operations (OMO), so as to ensure adequate flow of credit to productive sectors of the economy.
Reduction of promoter stake to meet the Securities & Exchange Board of India (Sebi) mandated minimum public shareholding of 25% for private companies and 10% for state-run firms will result in supply of equity in the market over the next few months. As per the Sebi mandated minimum public shareholding rule, private-sector companies must cut founders' stake to adhere to the rules by 13 June 2013, while the deadline for state-run firms is 13 August 2013. PSU divestment will also add to share sale glut in FY 2014. The government has set a target of Rs 40000 crore from divestment of government stake in state-run firms and Rs 14000 crore from divestment of stake in non-government companies for FY 2014.
The India Meteorological Department will issue its first forecast of 2013 southwest monsoon in April 2013.
Moody's Investors Service on Monday, 18 March 2013, said that the current pace of food inflation in India is much faster than the global average and is negative for the country's credit rating as it hurts the government's finances. Food inflation hurts consumption, government finances, the balance of payments and monetary policy flexibility, Atsi Sheth, a senior analyst at Moody's, wrote in a note. According to Moody's, the average increase in the World Bank's commodity food price index for emerging countries was 3% year-over-year in the past 12 months, when India's index of wholesale food prices rose 10%. Food accounts for more than half of average household spending in India, Moody's said. Rural households spend 57% and urban homes 44% on food. Among the country's poorest rural households, that ratio rises to 65%, it said. Elevated inflation also affects export competitiveness and limits the extent to which the central bank can cut interest rates to help stimulate the economy, Moody's said.
Finance Minister P. Chidambaram on 4 March 2013 said that the government will soon announce more measures -- including sops for exporters -- to boost economic growth. Some of these steps will be announced in parliament during the debate on the Budget, Chidambaram told industry representatives at a customary address held on Monday, 4 March 2013, after the budget announcement on 28 February 2013. The finance minister said that the fiscal deficit could turn out to be lower than the projected 5.2% of gross domestic product for the current fiscal year ending 31 March 2013. The government aims to reduce the fiscal deficit to 4.8% of GDP in the year ending 31 March 2014.
The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The government hopes to reduce the fiscal deficit to 3% by March 2017.
The first leg of the Budget Session of the Parliament ends on Friday, 22 March 2013. After a one month recess, the Parliament reconvenes on 22 April 2013. The Budget Session of the Parliament ends on 10 May 2013.
The government has lined up a number of key bills for consideration and passing during the ongoing Budget session of the parliament, which include The Forward Contracts (Regulation) Amendment Bill, 2010, The Pension Fund Regulator and Development Authority Bill, 2011, The Land Acquisition, Rehabilitation and Resettlement Bill, 2011, The National Food Security Bill, 2011 and The Insurance Laws (Amendment) Bill, 2008.
The government has set a target of Rs 40000 crore from divestment of government stake in state-run firms and Rs 14000 crore from divestment of stake in non-government companies for FY 2014. The target of divestment of government stake in state-run firms has been reduced to Rs 24000 crore for FY 2013 from the initial Rs 30000 crore.
The government expects to mop up Rs 40847 crore from the sale of telecom bandwidth and fees in FY 2014. The government has substantially pruned the expected mop up from the sale of telecom bandwidth and fees to Rs 19440 crore from an initial target of Rs 58217 crore for FY 2013.
Asian stocks were mixed on Wednesday, 20 March 2013, with a rejection by the Cypriot parliament of a European bailout plan fueling some uncertainty. Key benchmark indices in Singapore, South Korea and Taiwan were down by 0.16% to 0.28%. Key benchmark indices in Hong Kong, China and Indonesia were up by 0.22% to 1.05%. Japanese markets were closed for a holiday.
US stocks mostly ended with mild losses on Tuesday, 19 March 2013, after the Cypriot parliament rejected a proposed financial bailout plan, forcing the government and its creditors back to the negotiating table.
A two-day meeting of the Federal Open Market Committee (FOMC) on interest rates in the United States ends today, 20 March 2013.
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