Key benchmark indices edge lower, snapping two-day winning streak. The 50-unit CNX Nifty reached 7-week closing low. The barometer index, BSE Sensex, shed 110.90 points or 0.57%, off about 143 points from the day's high and up about 53 points from the day's low. Quite a few small-cap and mid-cap shares dropped. The market breadth was weak. The Mid-Cap index was off almost 1.5%. The BSE Small-Cap index shed more than 1.5%. Index heavyweight and cigarette maker ITC edged higher in choppy trade. Index heavyweight Reliance Industries (RIL) extended intraday losses in late trade.
Key benchmark indices snapped two-day winning streak. From a recent low of 19,460.57 on 11 February 2013, the Sensex had risen 147,51 points or 0.75% in two trading sessions to settle at 19,608.08 on Wednesday, 13 February 2013. The Sensex has fallen 397.80 points or 2% in February 2013 so far (till 14 February 2013). The Sensex has gained 70.47 points or 0.36% in calendar 2013 so far (till 14 February 2013). From a 52-week high of 20,203.66 on 29 January 2013, the Sensex has declined 706.48 points or 3.50%. From a 52-week low of 15,748.98 on 4 June 2012, the Sensex has surged 3,748.20 points or 23.80%.
Coming back to today's trade, Tata Motors declined ahead of Q3 earnings. Tata Steel shrugged off weak Q3 results. JSW Steel dropped after reporting weak Q3 results. Coal India rose on good Q3 results. BPCL tumbled on poor Q3 results. State Bank of India (SBI) fell in choppy trade after the bank reported muted growth in net profit in Q3 December 2012. LIC Housing Finance tumbled on weak Q3 results. Aditya Birla Nuvo (ABNL) rose on strong Q3 results. Dr Reddy's Laboratories fell on weak Q3 results. Wockhardt declined on profit taking after the company reported strong Q3 results. Capital goods stocks fell across the board.
The Sensex alternately swung between gains and losses amid initial volatility. Intraday volatility continued in morning trade. The Sensex pared losses after hitting fresh intraday low in mid-morning trade. Volatility continued as key benchmark indices once again slipped into the red after moving into positive terrain from negative terrain soon after the latest data showed deceleration in headline inflation in January 2013. Key benchmark indices hit fresh intraday low in afternoon trade. Key market hovered in negative terrain in mid-afternoon trade. The market extended intraday losses in late trade.
The BSE Sensex shed 110.90 points or 0.57% to 19,497.18, its lowest closing level since 11 February 2013. The index lost 163.75 points at the day's low of 19,444.33 in late trade. The index gained 31.75 points at the day's high of 19,639.83 in early trade.
The CNX Nifty index fell 36 points or 0.61% to 5,896.95, its lowest closing level since 27 December 2012. The index hit low of 5,884.55 in intraday trade. The index hit a high of 5,940.20 in intraday trade.
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The BSE Small-Cap index was off 1.86%. The BSE Mid-Cap index was off 1.43%. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak. On BSE, 2,009 shares fell and 829 shares rose. A total of 116 shares were unchanged.
The total turnover on the BSE amounted to Rs 2158 crore, higher than Rs 2025 crore on Wednesday, 13 February 2013.
Among the 30-share Sensex pack, 16 stocks fell while the rest of them rose.
Index heavyweight Reliance Industries (RIL) fell 2.63% to Rs 855.15. The stock hit high of Rs 882.85 and low of Rs 850.25. The stock had hit 52-week high of Rs 954.80 in intraday trade on 21 January 2013. RIL early this week said it has scheduled a planned maintenance turnaround of one crude distillation unit of its SEZ refinery at Jamnagar complex in Gujarat for a period of approximately 4 weeks starting from 18 February 2013. This opportunity would also be utilized to carry out necessary modifications to improve the reliability and performance of the unit, RIL said in a statement on 11 February 2013. During the same period, one VGO & Diesel Hydrotreater unit are also planned for routine catalyst replacement, RIL said. The remaining three crude distillation units in addition to all secondary processing units are expected to sustain normal operations, RIL said in a statement.
RIL on 29 January 2013 raised $800 million via perpetual bonds carrying interest rate of 5.875%. The company will use the proceeds to fund its ongoing capital expenditure in the infrastructure sector. The transaction was about 4 times over-subscribed with an order book of close to $3 billion from high quality investor accounts, RIL said on 29 January 2013. The transaction witnessed participation from more than 160 accounts from Asia, Europe and the United States, RIL said.
GAIL (India) rose 1.97% to Rs 334.35. Net profit rose 17.72% to Rs 1284.86 crore on 11.87% increase in total income to Rs 12658.37 crore in Q3 December 2012 over Q3 December 2011. The result was announced after market hours today, 14 February 2013. In terms of the decision of the Government of India to share the under recoveries on LPG, the company has provided discount of Rs 700 crore for Q3 December 2013, which was higher than Rs 536.12 crore in Q3 December 2011. GAIL (India) also said it has adjusted Rs 85.67 crore towards excess provision for discount pertaining to Q2 September 2012.
Index heavyweight and cigarette maker ITC rose 0.12% to Rs 300.50. The stock hit high of Rs 302 and low of Rs 299.10. The stock had hit record high of Rs 310.75 in intraday trade on 4 February 2013. ITC on 18 January 2013 said its net profit rose 20.62% to Rs 2051.85 crore on 22.41% growth in total income to Rs 8041.90 crore in Q3 December 2012 over Q3 December 2011.
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.
Tata Motors fell 2.59% to Rs 296.70. On a consolidated basis, Tata Motors' net profit fell 52.2% to Rs 1628 crore on 1.8% growth in revenue (net of excise) to Rs 46090 crore in Q3 December 2012 over Q3 December 2011. Earnings before interest, taxation, depreciation and amortization (EBITDA) declined 14.93% to Rs 6144 crore in Q3 December 2012 over Q3 December 2011. EBITDA margin dropped to 13.3% in Q3 December 2012 from 16% in Q3 December 2011. The result was announced after market hours today, 14 February 2013.
Tata Motors attributed the small growth in revenue to strong demand, growth in volumes and favourable market mix at Jaguar Land Rover (JLR). The company said JLR's revenue for the quarter ended December 2012 of GBP 3,804 million represented a growth of 1.5% over GBP 3,749 million during the corresponding quarter last year. JLR's operating profit (EBITDA) stood at GBP 533 million in the quarter, lower than GBP 639 million during the corresponding quarter last year. JLR's operating margin for the quarter ended 31 December 2012 stood at 14%, lower than a strong quarter a year ago period, reflecting product mix, the ongoing effect of higher marketing costs compared to the low levels experienced in Q3 of the prior year, launch costs of the all-new Range Rover, run out of the earlier Range Rover, and continued growth in product investments and related costs to support future business growth. JLR's profit before tax for the quarter ended 31 December 2012 was GBP 404 million, lower than GBP 509 million in the corresponding quarter last year. JLR's profit after tax for the quarter was GBP 296 million, lower than GBP 393 million in the corresponding quarter last year.
JLR issued new 10 year bond of $500 million at 5.625% per annum during January 2013.
With regard to the future business plan of JLR, Tata Motors said that JRL will focus on continuing the launch of new Range Rover, full launch of the new Jaguar engine and AWD options, XF Sportbrake, and F-TYPE. JRL will continue its focus on both refreshed and new Jaguar and Land Rover products. JRL will continue to focus on profitable volume growth and improving efficiencies to sustain the growth momentum, Tata Motors said. Given the significant growth in sales and profitability with strong liquidity, JLR's capex and product development spending is expected to increase in FY 2014 in the region of 2.75 billion to develop new products and technologies and for expanding the manufacturing foot print to realize increased market opportunities.
Tata Motors reported net loss on standalone basis in Q3 December 2012. The standalone financial operations represent mainly the India operations of Tata Motors. Revenue on standalone basis (net of excise) stood at Rs 10630 crore for the quarter ended 31 December 2012, which was lower than Rs 13338 crore for the corresponding quarter of the previous year. The operating margin was 2.2% for the quarter ended 31 December 2012, sharply lower than 6.7% for the corresponding quarter last year. Tata Motors reported a net loss of Rs 458 crore on standalone basis in Q3 December 2012, as against net profit of Rs 174 crore in Q3 December 2011.
Tata Motors said that the external environment and overall economic activities remain stressed, resulting in the overall demand continuing to remain under pressure, mainly for the medium and heavy commercial vehicles. Sluggish economic activity and weak macro outlook have impacted freight availability, Tata Motors said. The company said that competitive intensity is resulting in higher marketing costs. The company said that demand in the small commercial vehicles (SCV) segment remains strong. Tata Motors said that the company continues to leverage on its strengths in the commercial vehicles business, which include strong understanding of the domestic market, wide and compelling product portfolio, strong brand and customer support, widespread distribution network and economies of scale.
Tata Motors said that several initiatives are under aggressive implementation by the company in the passenger car business to achieve performance improvement. For the overall passenger car industry, raw material and component prices are expected to be under control going ahead, Tata Motors said. For the company, cost and expense optimization focus will continue in the passenger vehicles business, Tata Motors said.
State Bank of India (SBI) fell 1.80% to Rs 2214.35 after the bank reported muted rise in Q3 net profit. Net profit rose 4.08% to Rs 3396.06 crore on 14.12% rise in total income to Rs 33992.11 crore in Q3 December 2012 over Q3 December 2011. The result was announced during trading hours today, 14 February 2013.
SBI's ratio of net non-performing assets to net advances stood at 2.59% as on 31 December 2012, compared with 2.44% as on 30 September 2012 and 2.22% as on 31 December 2011.
The bank's ratio of gross non-performing assets (NPA) to gross advances stood at 5.30% as on 31 December 2012, compared with 5.15% as on 30 September 2012 and 4.61% as on 31 December 2011.
Provisions and contingencies rose 10.82% to Rs 2667.91 crore in Q3 December 2012 over Q3 December 2011. The provisioning coverage ratio as on 31 December 2012 stood at 61.49%.
The bank's Capital Adequacy Ratio (CAR) as per Basel II norms stood at 12.21% as on 31 December 2012, compared with 12.63% as on 30 September 2012 and 11.60% as on 31 December 2011
Government of India holds 61.58% stake in SBI (as on 31 December 2012).
SBI said that the Government has decided to infuse capital funds to the tune of Rs 3004 crore in the bank by way of preferential allotment of equity in favour of the Government of India.
ICICI Bank fell 1.64% to Rs 1,123.85. The scrip had hit 52-week high of Rs 1,231 in intraday trade on 31 January 2013. ICICI Bank's net profit jumped 30% to Rs 2250 crore in Q3 December 2012 over Q3 December 2011. Net interest income increased 29% to Rs 3499 crore in Q3 December 2012 over Q3 December 2011. Net interest margin improved to 3.07% in Q3 December 2012 from 2.7% in Q3 December 2011. Non-interest income increased by 17% to Rs 2215 crore in Q3 December 2012 over Q3 December 2011. The bank announced Q3 results on 31 January 2013.
Among other banks, Axis Bank (down 3.07%), Yes Bank (down 2.26%), Federal Bank (down 1.99%), IDBI Bank (down 1.62%), Canara Bank (down 1.37%), Bank of Baroda (down 0.44%), Union Bank of India (down 0.28%), IndusInd Bank (down 0.09%) and Kotak Mahindra Bank (down 0.03%), edged lower.
However, India's second largest private sector bank by net profit HDFC Bank gained 1.65% to Rs 674.90. The bank's net profit rose 30.04% to Rs 1859.07 crore on 23.01% increase in total income to Rs 10,606.51 crore in Q3 December 2012 over Q3 December 2011. The result was announced on 18 January 2013.
Realty stocks dropped. Sobha Developers (down 6.70%), Prestige Estates (down 2.70%), Godrej Properties (down 2.68%), Parsvnath Developers (down 1.96%), Sunteck Realty (down 1.69%), Peninsula Land (down 1.60%), Indiabulls Real Estate (down 1.01%), HDIL (down 0.95%) and Oberoi Realty (down 0.41%), edged lower.
Realty major, DLF fell 1.76% ahead of its Q3 results today, 14 February 2013.
However, Unitech rose 2.96%. The company's consolidated net profit jumped 52.43% to Rs 84.17 crore on 24.04% growth in total income to Rs 679.32 crore in Q3 December 2012 over Q3 December 2011. The company announced Q3 results during trading hours Wednesday, 13 February 2013.
Unitech achieved sales booking of 1.36 million square feet (sq. ft) valued at Rs 676 crore in Q3 December 2012.
Unitech's consolidated net debt stood at Rs 5421 crore as on 31 December 2012, with net debt to equity ratio of 0.45 -- one of the lowest in the industry. Additional LRD (Lease rental discounting) facility was availed in Q3 December 2012 in IT SEZ projects, part of Unitech Corporate Parks Plc (UCP) portfolio, keeping in view the good progress being made in those projects, Unitech said in a statement.
LIC Housing Finance tumbled 5.88% to Rs 252.15 on weak Q3 results. LIC Housing Finance's net profit dropped 23% to Rs 236.25 crore on 23% growth in total income to Rs 1955 crore in Q3 December 2012 over Q3 December 2011. Revenue from operations jumped 24% to Rs 1905 crore in Q3 December 2012 over Q3 December 2011. Total loan disbursals jumped 27% to Rs 6005 crores in Q3 December 2012 over Q3 December 2011. Individual loan disbursals grew 21% to Rs 5508 crore in Q3 December 2012 over Q3 December 2011. The result was announced during trading hours today, 14 February 2013.
LIC Housing Finance's net interest margin witnessed a decline on sequential basis to 2.09% in Q3 December 2012 from 2.1% in Q2 September 2012.
The gross NPA for the total portfolio stood at 0.74% as on 31 December 2012 and net NPA was 0.45%.
Commenting on the third quarter results, Mr. V. K. Sharma, LIC Housing Finance, Director and Chief Executive said: "We have witnessed a healthy growth rate this quarter. It is very satisfying to mention that our recently launched home loan product for women 'Bhagya Lakshmi' has received an unprecedented response with over 3800 loan applications aggregating to nearly Rs 1000 cr with in a period of 3 weeks of the launch."
Cadila HealthCare declined 2.68% to Rs 741.40. The company said during market hours today, 14 February 2013, that it has received the final approval from the USFDA to market Pioglitazone HCI tablets in different strengths of 15 mg, 30 mg and 45 mg. The drug falls in the anti-diabetics segment. Pioglitazone HCI tablets had sales of $2 billion in calendar 2012 as per IMS Health data.
Dr Reddy's Laboratories (DRL) declined 1.44% to Rs 1,878.15 after consolidated net profit declined 29.17% to Rs 363.31 crore on 3.69% growth in total income to Rs 2888.47 crore in Q3 December 2012 over Q3 December 2011. The result was announced during trading hours today, 14 February 2013. DRL said its revenue, excluding the impact of the Olanzapine, jumped 23% to Rs 2865.10 crore in Q3 December 2012 over Q3 December 2011.
DRL's research and development expenses amounted to Rs 202.60 crore in Q3 December 2012, accounting for 7% of revenue. During the quarter, the company launched 17 new products, filed 13 new product registrations and filed 13 DMFs globally.
Wockhardt fell 2.12% to Rs 1,728.75 on profit taking after consolidated net profit jumped 101.04% to Rs 427.84 crore on 25.78% growth in net sales to Rs 1435.04 crore in Q3 December 2012 over Q3 December 2011. Wockhardt announced the Q3 results during market hours today, 14 February 2013.
Aditya Birla Nuvo (ABNL) rose 0.83% to Rs 1,057.95 after consolidated net profit rose 28% to Rs 323 crore on 10% growth in revenue to Rs 6305 crore in Q3 December 2012 over Q3 December 2011. EBITDA jumped 29% to Rs 1090 crore in Q3 December 2012 over Q3 December 2011. The result was announced during trading hours today, 14 February 2013.
Commenting on the results Dr. Rakesh Jain, Managing Director, ABNL said: "Given the current economic environment, which is marked with moderation in GDP growth, high interest rates and inflation, Aditya Birla Nuvo has registered strong earnings."
Mr. Sushil Agarwal, Whole Time Director and CFO, ABNL said: "Most of the businesses of Aditya Birla Nuvo are competitively well positioned. The company continues to scale up and has plans to expand the businesses with long term growth potential."
Going forward, ABNL's thrust is on capturing growth opportunities across its businesses to achieve the next higher level of growth, ABNL said in a statement. Aditya Birla Nuvo (ABNL) is diversified conglomerate. Over the years, it has made successful ventures into the sunrise sectors viz., Financial Services (Life Insurance, Asset Management, NBFC, Private Equity, Broking, Wealth Management and general insurance advisory), Telecom, Fashion & Lifestyle and IT-ITeS. The company is also a leading player in Agri-business, Carbon Black, Insulators, Rayon and Textiles sectors.
Capital goods stocks fell across the board. Among sectors bellwethers, L&T (down 2.72%) and Bhel (down 0.80%), declined.
Among other shares in the capital goods sector, Crompton Greaves (down 4.51%), Jindal Saw (down 3.84%), AIA Engineering (down 3.18%), ALSTOM India (down 3.04%), ABB (down 2.41%), BEML (down 2.30%), Bharat Electronics (down 2.08%), Praj Industries (down 2.07%), Alstom T&D India (down 1.45%), Punj Lloyd (down 0.71%), Thermax (down 0.22%), Pipavav Defence and Offshore Engineering Company (down 0.12%) and SKF India (down 0.06%), edged lower.
Siemens declined 4.56% The National Stock Exchange after trading hours on Wednesday, 13 February 2013, said it has decided to replace two stocks -- Siemens and Wipro -- with IndusInd Bank and NMDC in the 50 unit CNX Nifty index with effect from 1 April 2013.
Tata Steel rose 1.17% to Rs 380.55, with the stock reversing initial losses. The company reported consolidated net loss of Rs 763 crore for Q3 December 2012, higher than net loss of Rs 603 crore in Q3 December 2011. Turnover declined 3% to Rs 32107 crore in Q3 December 2012 over Q3 December 2011. Earnings before interest, taxation, depreciation and amortization rose 11.31% to Rs 2252 crore in Q3 December 2012 over Q3 December 2011. The result hit the market after trading hours on Wednesday, 13 February 2013.
The company's net debt stood at Rs 57981 crore as on 31 December 2012, higher than Rs 47657 crore as on 31 March 2012.
Commenting on the third quarter results, Tata Steel Managing Director Mr HM Nerurkar said: "The Indian operations performed steadily despite the overall weak steel demand situation in India. Our ability to achieve sequential volume growth in a difficult market reaffirms the strength of our distribution channels and customer orientation strategy. Government reform initiatives and the reduction in interest rates should help boost steel demand. During the quarter, we continued to ramp up the production from Jamshedpur and we expect to achieve rated capacity utilisation levels by the end of current financial year. The company remains focused on the Kalinganagar Project execution and we have mobilised significant resources on site to achieve the project timelines."
Dr Karl-Ulrich Kler, MD & CEO of Tata Steel in Europe said: "Sliding demand was a key problem for European steelmakers in 2012 and this was reflected in our December quarter deliveries. With the restart of the No 4 blast furnace at Port Talbot this week, we have regained our normal operational and logistical flexibility, enabling us to improve our delivery performance and our service to customers. This, together with the improvements we continue to make in our product range and our customer relationships, will further strengthen our ability to make a difference to our customers' business performance."
With regard to the future business outlook, Tata Steel said overcapacity remains an overhang for the steel industry globally. Restocking across markets is expected to push steel prices and sector earnings upwards, Tata Steel said. Apparent steel demand contracted by 9.7% in the European Union (EU) in calendar 2012 and demand in EU is expected to decline by about 0.7% in calendar 2013, with stability expected in calendar 2014, Tata Steel said. Tata Steel said that Chinese steel demand is expected to grow on the back of the government's push for infrastructure growth. A slew of policy initiatives are expected to give boost to steel demand in India, Tata Steel said.
JSW Steel dropped 2.51% to Rs 786 as consolidated net loss widened in Q3 December 2012. The company reported consolidated net loss of Rs 73.70 crore for Q3 December 2012, higher than net loss of Rs 47.89 crore in Q3 December 2011. Net sales rose 5% to Rs 8866 crore Q3 December 2012 over Q3 December 2011. The result was announced after market hours on Wednesday, 13 February 2013. JSW Steel said net loss in Q3 December 2012 was primarily due to losses reported by associate company viz. JSW Ispat Steel. JSW Steel's operating earnings before interest, taxation, depreciation and amortization (EBITDA) rose 1% to Rs 1331 crore in Q3 December 2012 over Q3 December 2011.
JSW Ispat Steel reported operating EBIDTA of Rs 246 crore and net loss of Rs 131 crore in Q3 December 2012 after considering foreign exchange loss of Rs 83 crore on restatement of foreign currency monetary items which was considered by the company as an exceptional item.
Since the realization for all steel products fell sharply in the US in Q3 December 2012, JSW Steel's US plate and pipe mill operation incurred operating EBITDA loss of $0.76 million during the quarter, JSW Steel said in a statement.
JSW Steel's consolidated net total debt gearing stood at 1.15 as on 31 December 2012, higher than 1.04 as on 30 September 2012.
Coal India rose 0.92% after consolidated net profit rose 8.85% to Rs 4395.11 crore on 12.87% growth in net sales/income from operations (net of excise duty and other levies) to Rs 17325.04 crore in Q3 December 2012 over Q3 December 2011. The company's non-operational income jumped 25.7% to Rs 2360.49 crore in Q3 December 2012 over Q3 December 2011. The result hit the market after trading hours on Wednesday, 13 February 2013.
Coal India's coal production rose 2.39% to 117.37 million tones in Q3 December 2012 over Q3 December 2011. Coal off-take rose 9.23% to million tones in Q3 December 2012 over Q3 December 2011.
BPCL tumbled 3.58% on poor Q3 results. The company's net profit declined 47.52% to Rs 1647.57 crore on 5.87% growth in total income to Rs 62770.52 crore in Q3 December 2012 over Q3 December 2011. The result hit the market after trading hours on Wednesday, 13 February 2013.
BPCL said it has accounted for budgetary support of Rs 13226.65 crore from the Government of India for nine month period April-December 2012 towards under-recovery on sale of HSD, SKO (PDS) and LPG (domestic), which was higher than Rs 10518.16 crore for the nine month period April-December 2011.
MMTC declined 4.20%. The company reported net profit of Rs 28.84 crore for Q3 December 2012, as against net loss of Rs 91.31 crore in Q3 December 2011. Total income fell 61.6% to Rs 7334.36 crore in Q3 December 2012 over Q3 December 2011. 4.20 Mahindra Satyam declined 1.28%. The company said during market hours today, 14 February 2013 that it has appointed Manoj Chugh, as global head, business development. In the new role Manoj will be supporting the integrated entity's business expansion plans across accounts and geographies.
State Bank of India clocked a highest turnover of Rs 231.85 crore on BSE. United Spirits (Rs 81.54 crore), United Breweries (Rs 64.68 crore), Reliance Capital (Rs 51.43 crore) and Tata Steel (Rs 44.08 crore), were the other turnover toppers on BSE in that order.
TV18 Broadcast reported highest volumes of 1.23 crore shares on BSE. Unitech (1.12 crore shares), Cals Refineries (99.51 lakh shares), Suzlon Energy (93.06 lakh shares) and D B Realty (44.65 lakh shares), were the other volume toppers on BSE in that order.
PSU disinvestment and 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. The government has set target of Rs 30000 crore from PSU divestment for the fiscal year ending 31 March 2013. Meanwhile, 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.
The annual rate of inflation, based on monthly wholesale price index (WPI), decelerated to 6.62% in January 2013 from 7.18% in December 2012 and 7.24% in November 2012, data released by the government today, 14 February 2013, showed. This is the first time since November 2009 that the inflation rate has dropped below 7%. The non-food manufacturing inflation or core inflation decelerated to 4.08% in January 2013 from 4.19% in December 2012. The data is likely to mount pressure on the Reserve Bank of India to continue lowering interest rates and help stimulate growth in an economy set to post its weakest pace of expansion in a decade.
Build up inflation in the financial year so far was 5.09% compared to a build up of 6.15% in the corresponding period of the previous year, the Ministry of Commerce & Industry said in a statement today, 14 February 2013.
Inflation based on the combined consumer price index for urban and rural India edged up to 10.79% in January 2013, from 10.56% in December 2012, another data released by the CSO on Tuesday, 12 February 2013, showed. Within the consumer price index, inflation in the category 'food and beverages' stood at 13.36% in January 2013.
The Reserve Bank of India (RBI) on 29 January 2013 announced a 25 basis points reduction in its key policy rate viz. the repo rate to 7.75% from 8% after a monetary policy review. The central bank also announced a reduction of 25 basis points in the cash reserve ratio (CRR) to 4% from 4.25% effective the fortnight beginning 9 February 2013. As a result of the reduction in the CRR, around Rs 18000 crore of primary liquidity will be injected into the banking system, RBI said.
With headline inflation likely to have peaked and non-food manufactured products inflation declining steadily over the last few months, there is an increasing likelihood of inflation remaining range-bound around current levels going into 2013-14, the Reserve Bank of India (RBI) said. This provides space, albeit limited, for monetary policy to give greater emphasis to growth risks, the central bank said in its policy guidance. This policy guidance will, however, be conditioned by the evolving growth-inflation dynamic and the management of risks from twin deficits viz. the current account deficit and fiscal deficit, RBI said. The next mid-quarter review of Monetary Policy for 2012-13 will be announced on 19 March 2013.
The central bank on 29 January 2013 also signaled that there is less room for aggressive policy rate cuts amid any negative surprise emanating from inflation and the twin deficits.
Investors' focus is now on Union Budget 2013-14 to be presented to the Parliament on 28 February 2013. Investors will focus on changes, if any, in excise duty and service tax in the Budget. It remains to be seen if the government announces measures to revive weak investment growth. It also remains to be seen if the government announces more economic reforms. A key figure to watch out is the divestment target for 2013-14. It remains to be seen if the Budget contains a clear roadmap for the implementation of Goods and Services Tax (GST). There has been some debate over taxing the super-rich. It remains to be seen if the Budget provides a clear roadmap to cap the government's subsidy bill. It also remains to be seen if there are measures to increase agriculture production to rein in food inflation.
The Budget Session of the Parliament will commence on 21 February 2013 and is likely to conclude on 10 May 2013. In order to enable the Standing Committees to consider the Demands for Grants of Ministries/Departments and prepare their Reports, the two Houses will adjourn for recess on 22 March 2013 to meet again on 22 April 2013.
The government intends to present the revised National Food Security Bill in the Parliament during Budget Session for consideration and passage, so that the people are ensured of its benefits at the earliest, the Ministry of Consumer Affairs, Food & Public Distribution said in a statement on 13 February 2013. The Bill, to provide food security for all in a rights based manner, is being finalised in the light of recommendations of Parliamentary Standing Committee, it said.
Economic affairs secretary Arvind Mayaram on 9 February 2013 said that the fiscal deficit for the current financial year ending 31 March 2013 will not exceed the projected 5.3% of the country's gross domestic product. He said that the government will stick to its fiscal deficit aim and its borrowing plan. Finance Minister, P. Chidambaram on 9 February 2013 said he it confident of a 5.5% growth rate in the economy for this year. In the second half of this fiscal year, there are indications of green shoots in the economy, he said, adding it is imperative for the country to achieve a growth rate of 8%.
The Central Statistics Office (CSO) on 7 February 2013 said that the growth in India's GDP during 2012-13 is estimated at 5%, the lowest in a decade and significantly lower than the growth rate of 6.2% in 2011-12. The dimmer forecast is due to continued weakness in manufacturing and farm output growth, data from the ministry of statistics and implementation showed.
The Ministry of Finance on 8 February 2013 said that since the GDP growth is turning around, it is likely that the CSO's advance estimate of 5% GDP growth for 2012-13 will be revised upwards and the final estimate will be closer to the finance ministry's estimate of a growth rate of 5.5% or slightly more. Early sign of an upturn in the economy are evident in the year on year growth in Union Excise Duty of 16% and of 33% increase in service tax in April-December 2012.
The Purchasing Manager's Index (manufacturing) has started moving up since October 2012. This has been accompanied by a seasonally adjusted stabilization of the index of industrial production since October 2012, the finance ministry said in a statement. The finance ministry also said that lower interest rates will help support growth.
The Ministry of Finance in its initial reaction to the CSO's advance estimate had said on 7 February 2018 that the finance ministry is keeping a watch on the situation adding that it has taken and will continue to take appropriate measures to revive growth.
The Ministry of Finance on 14 January 2013 said that the government has decided to defer the implementation of the General Anti Avoidance Rules or GAAR by two years until 1 April 2016 and that it has accepted major recommendations of the Parthasarathi Shome Committee on GAAR with some modifications. The provisions of GAAR will apply to only those foreign institutional investors (FIIs) who seek to take advantage of the double taxation avoidance treaties India has with different countries. The rules won't apply to the non-resident individual investors who put money with the FIIs. Any investments made before 30 August 2010 won't be examined under GAAR. Finance Minister Mr. Chidambaram said that the GAAR provisions strike a balance between the government's need for revenue generation and investors' interests.
Commerce, Industry and Textiles Minister Mr. Anand Sharma on 9 January 2013 said that the Joint Working Group on Indo-Mauritius Double Taxation Avoidance Convention (DTAC), which is scheduled to meet in February 2013, would be able to take the deliberations forward.
Finance Minister Mr. P. Chidambaram on 31 January 2013 reiterated the commitment of the government for observing the path of fiscal consolidation and imposition of fiscal targets and policies that will make necessary fiscal correction needed for the economy and take the economy back to the path of higher growth. Chidambaram highlighted the efforts being made to turn the economy around and create a more investor-friendly climate. Chidambaram said that to encourage foreign flows into India and offer reassurance on the positive investment climate, he had recently held discussions with a cross section of international investors at Singapore, Hongkong, London and Frankfurt last month and hoped to get positive results. He was speaking at the Sixth Meeting of the Financial Stability and Development Council.
The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The deficit target is 5.3% of gross domestic product for the current fiscal year through March, 4.8% in the next fiscal year, and 3% by the end of the year through March 2017.
The government on 17 January 2013 allowed PSU OMCs to increase diesel prices by a small margin from time to time, a decision aimed at reducing the government's oil subsidy burden and fiscal deficit and improving the government's finances. Oil Minister Veerappa Moily said after a meeting of the Union Cabinet that there was an earlier proposal to deregulate diesel prices, and in pursuance of that, oil companies have been authorised to make price corrections from time to time. Finance Minister P. Chidambaram on 17 January 2013 said the government will factor in the reduction in subsidies and its impact on the deficit once the retailers say how much they intend to increase prices by.
The government on 17 January 2013 also said it has increased the limit of subsidized cooking-gas cylinders to nine per year a family from six now. Mr. Moily said that the raising of the cap will cost the government about an additional Rs 10000 crore a year.
Bahujan Samaj Party (BSP) chief Mayawati slammed the UPA government for its decision to deregulate diesel prices and said that it would affect prices and hit common man badly. She, however, ruled out the possibility of withdrawing BSP's support to the government, saying she did not want to destabilise it as the general election is not too far. BSP provides outside support to the Congress led UPA government which has already been reduced to a minority government after Trinamool Congress withdrew support to the government in September last year.
European stock markets edged lower on Thursday, 14 February 2013, after data showed France's and Germany's economy shrank more than expected in the final quarter of last year. Key benchmark indices in France, Germany and UK shed by 0.82% to 1.18%.
The German economy, Europe's largest, shrank more than economists forecast in the fourth quarter as exports declined. Gross domestic product fell 0.6 percent from the third quarter, when it gained 0.2 percent, the Federal Statistics Office in Wiesbaden said today.
The French economy shrank in the fourth quarter as manufacturers slashed thousands of jobs and President Francois Hollande struggled to keep the nation from falling back into recession for the first time since 2009. Gross domestic product dropped 0.3 percent in the fourth quarter from the previous three months when it climbed 0.1 percent, the national statistics office Insee in Paris said today.
Asian stocks rose on Thursday, 14 February 2013, as investors awaited the G20 meeting of finance and central bank officials over the weekend for clues to their views about global growth and the role currencies play in the economies of individual member countries. Key benchmark indices in Hong Kong, Indonesia, South Korea and Japan rose by 0.18% to 0.85%. Singapore's Straits Times fell 0.32%.
The stock market in Taiwan was shut for Lunar New Year holidays. Mainland Chinese bourses are closed the whole of this week for Lunar New Year holidays.
The Bank of Japan on Thursday left its policy interest rate and the size of its asset purchases unchanged, and said the domestic economy "appears to stop weakening." The decision to leave the policy interest rate in the 0 to 0.1% range was taken by a unanimous vote. However, the central bank's monetary policy-setting board defeated by a majority vote a proposal by board member Ryuzo Miyao to continue with a virtually zero-interest rate policy until the Bank of Japan's 2% price-stability target was judged to be in sight. Despite its recently adopted price-stability target of 2%, the central bank continues to expect year-on-year changes in the consumer price index to remain around 0%.
Earlier in the day, gross domestic product data showed that Japan's economy chalked up a third quarter of contraction in the October-December period, shrinking 0.1%.
South Korea's central bank kept interest rates on hold as officials monitor the won's gains against the yen and look ahead to policy changes after President Park Geun Hye takes office Feb. 25. Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate at 2.75 percent after a 25 basis point cut in October.
Trading in US index futures indicated that the Dow could fall 58 points at the opening bell on Thursday, 14 February 2013. US stocks ended mostly higher on Wednesday, 13 February 2013. US retail sales barely rose in January as tax increases and higher gasoline prices restrained spending.
A two-day meeting of finance ministers from the Group of 20 major economies will be held in Moscow on 15 and 16 February 2013.
The G7 on 12 February 2013 issued a statement saying it will not target exchange rates. The G7 Ministers and Governors, reaffirmed their commitment to market determined exchange rates and to consult closely in regard to actions in foreign exchange markets. They reaffirmed that their fiscal and monetary policies have been and will remain oriented towards meeting their respective domestic objectives using domestic instruments, and that they will not target exchange rates. They are agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. The group said they will continue to consult closely on exchange markets and cooperate as appropriate.
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