Indian stocks fell for the third straight trading session today, 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 barometer indices, the 30-share S&P BSE Sensex, and the CNX Nifty, both, reached their lowest level in more than 2 weeks. The Sensex regained the psychological 19,000 level after falling below that mark in intraday trade. The Sensex lost 285.10 points or 1.48%, up about 70 points from the day's low and off close to 370 points from the day's high. The market breadth, indicating the overall health of the market, was weak. All the 13 sectoral indices on BSE were in the red.
Indian stocks fell for the third straight day today, 19 March 2013. From a recent high 19570.44 on 14 March 2013, the Sensex has declined 562.34 points or 2.87% in three trading sessions. The Sensex has advanced 146.56 points or 0.77% in this month so far (till 19 March 2013). The Sensex has declined 418.61 points or 2.15% in calendar 2013 so far (till 19 March 2013). From a 52-week high of 20,203.66 on 29 January 2013, the Sensex has declined 1195.56 points or 5.91%. From a 52-week low of 15,748.98 on 4 June 2012, the Sensex has surged 3,259.12 points or 20.69%.
Coming back to today's trade, index heavyweight Reliance Industries (RIL) edged lower. Another index heavyweight and cigarette major ITC edged higher. Realty stocks reversed initial gains. Bajaj Auto recovered on bargain hunting after recent slide. GAIL (India) also rose on bargain hunting after recent decline. Shares of state-run power equipment major Bharat Heavy Electricals (Bhel) struck 52-week low.
Metal stocks fell as LMEX, a gauge of six metals traded on the London Metal Exchange dropped 2.1% on Monday, 18 March 2013. Steel Authority of India (Sail) hit a 52-week low. National Aluminium Company also hit a 52-week low.
Key benchmark indices edged higher in early trade on firm Asian stocks. The market held positive zone in morning trade. Key benchmark indices dropped in choppy trade in mid-morning trade after the Reserve Bank of India (RBI) said after cutting its key policy rate viz. the repo rate by 25 basis points after a mid-quarter monetary policy that the headroom for further monetary easing remains quite limited. Volatility ruled the roost as key benchmark indices trimmed intraday losses in early afternoon trade after the DMK withdrew support to the Congress led UPA government at the Centre citing differences on the issue of atrocities on Tamils in Sri Lanka. The Sensex regained the psychological 19,000 level soon after falling below that level in mid-morning trade. Weakness continued on the bourses in mid-afternoon trade.
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. The index lost 353.73 points at the day's low of 18,939.47 in early afternoon trade. The index gained 85.41 points at the day's high of 19,378.61 at the onset of the trading session, its highest level since 15 March 2013.
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The CNX Nifty lost 89.30 points or 1.53% to settle at 5,745.95, its lowest closing level since 4 March 2013. The index hit a low of 5,724.30 in intraday trade. The index hit a high of 5,863.60 in intraday trade, its highest level since 15 March 2013.
The BSE Small-Cap index declined 1.57% and underperformed the Sensex. The BSE Mid-Cap index fell 1.37% and outperformed the Sensex.
The total turnover on BSE amounted to Rs 2352 crore, higher than Rs 1756 crore on Monday, 18 March 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,958 shares declined and 904 shares gained. A total of 108 shares were unchanged.
Among the 30-share Sensex pack, 25 stocks declined while rest of them gained.
Index heavyweight Reliance Industries (RIL) fell 0.79% at Rs 825.05. The scrip hit high of Rs 839.70 and a low of Rs 812.30. The telecom department early this month cleared a proposal to allow companies with Internet permits to also offer basic mobile telecom services by paying a one-time license-conversion fee. RIL's telecom unit, Reliance Jio Infocomm, has frequencies to provide broadband Internet across India. Under the new rule, RIL will have to pay about Rs 1658 crore to also provide voice services.
The Finance Minister said in his speech while presenting the Union Budget 2013-14 on 28 February 2013 that the oil and gas exploration policy will be reviewed to move from profit sharing to revenue sharing contracts. The natural gas pricing policy will be reviewed and uncertainties regarding pricing will be removed. NELP blocks that were awarded but are stalled will be cleared. A policy to encourage exploration and production of shale gas will be announced.
Index heavyweight and cigarette major ITC rose 0.44% to Rs 305.45 on defensive buying in weak market. The scrip hit high of Rs 307 and a low of Rs 303.50. The government raised the excise duty on cigarettes by about 18% on all cigarettes except cigarettes of length not exceeding 65 mm in Union Budget 2013-14 which was unveiled on 28 February 2013.
GlaxoSmithkline Consumer Healthcare shed 0.66%. The stock turned ex-dividend today, 19 March 2013, for dividend of Rs 45 per share for the year ended 31 December 2012.
IT stocks were mostly lower. Infosys fell 0.17%. The company on 15 March 2013 announced that it has been selected by India Post to implement and manage a platform that will transform its rural operations. With this new agreement, Infosys will facilitate India Post's Rural Systems Integration (RSI) program. This initiative will increase adoption of the department's services, and enhance the reach of postal services to the country's rural population, streamlining the distribution of social benefits. As part of an earlier agreement, Infosys is also partnering with India Post to transform its financial services operations and end-user experience under the Financial Services System Integration program.
The two projects are part of the 'India Post 2012' modernization program that aims to bring transparency, agility, flexibility and scalability to its business operations. The programs will empower employees to deliver services more efficiently to rural communities using the latest technology. They will also position India Post as a key agent in the Government of India's inclusive growth policies.
TCS dropped 1.26% to Rs 1545.10. The stock had hit record high of Rs 1,598 in intraday trade on 7 March 2013. The company on 4 March 2013 said that it has added $1.179 billion in brand value over 2012, growing by 28.9% annually to reach the $5 billion brand value mark as per the brand valuation carried out by Brand Finance, the world's leading brand valuation firm.
HCL Technologies fell 2.33% to Rs 781.40 on profit booking. The stock had hit record high of Rs 804.50 in intraday trade Monday, 18 March 2013.
Wipro gained 0.07%. Wipro Technologies, the Global Information Technology, Consulting and Outsourcing business of Wipro on 15 March 2013 announced that it has been appraised at Capability Maturity Model Integration CMMI-DEV 1.3 Level 5. This assessment validates Wipro's process capability based on the CMMI standards that measure process improvements, Wipro Technologies said in a statement. An assessment at maturity Level 5 indicates that the organization is performing at an "optimizing" level. At this level, an organization continually improves its processes based on a quantitative understanding of its business objectives and performance needs. The organization uses a quantitative approach to understand the variation inherent in the process and the causes of process outcomes.
Capital goods stocks edged lower on worries slowdown in the economy could crimp new orders. ABB, BEML, L&T, Thermax, Siemens and Punj Lloyd shed by 0.98% to 5.7%.
Bhel dropped 4.94% to Rs 186.50 after hitting 52-week low of Rs 185.60 in intraday trade today, 19 March 2013.
Asian Paints fell 2.05%. Asian Paints today, 19 March 2013, said that the company's board of directors has considered and approved in principle an arrangement with the promoters of the Sleek Group for acquiring a 51% stake in the Sleek Group, subject to due diligence, necessary approvals and documentation. The Sleek Group is engaged in the business of manufacturing, selling and distributing kitchens, kitchen components including wire baskets, cabinets, appliances, accessories, etc., with pan India presence. It has a retail network of more than 30 showrooms including shop-in shops and a network of more than 250 dealers.
This acquisition of the Sleek Group has a strategic fit and is a step in the company's foray into Home Improvement, Asian Paints said in a statement. Asian Paints has chosen to enter the modern kitchen "space", as the company believes that the modern kitchen space is currently undergoing an inflection, has very few organised pan India players and is growing rapidly.
Commenting on the acquisition of a majority stake in the Sleek Group, Mr. K B S Anand, Managing Director & CEO, Asian Paints said: "Sleek is well poised to be a meaningful and enriching partner for Asian Paints' foray into modern kitchens. This acquisition will offer significant opportunities and synergy for the company."
Metal stocks fell as LMEX, a gauge of six metals traded on the London Metal Exchange dropped 2.10% on Monday, 18 March 2013.
Jindal Steel & Power (down 3.96%), Hindalco Industries (down 2.1%), Sesa Goa (down 4.14%), JSW Steel (down 3.93%), Tata Steel (down 2.89%), Sterlite Industries (India) (down 4.15%), Hindustan Zinc (down 0.85%) edged lower.
Steel Authority of India (Sail) fell 3.33% to Rs 65.40 after sliding to a 52-week low of Rs 64.60 in intraday trade today, 19 March 2013 on reports a ministerial panel is likely to meet today, 19 March 2013, to decide the floor price for sale of 10.82% stake in the state-run steel major.
National Aluminium Company lost 1.43% to Rs 37.90 after falling to a 52-week low of Rs 37.70 in intraday trade today, 19 March 2013.
PSU stocks declined. ONGC (down 3.29%), Coal India (down 1.29%), MMTC (down 3.6%) and Hindustan Copper (down 2.6%) edged lower.
Realty stocks reversed initial gains. D B Realty (down 4.97%), Godrej Properties (down 1.08%), Orbit Corporation (down 2.33%), Indiabulls Real Estate (down 3.05%), Unitech (down 3.61%) and HDIL (down 4.6%) declined.
DLF shed 4.14% to Rs 259.25. The stock had hit 52-week high of Rs 289.20 in intraday trade on 12 March 2013.
The finance minister proposed levy of TDS at the rate of one percent on the value of the transfer of immovable property where the consideration exceeds Rs 50 lakh in Union Budget 2013-14, which was unveiled on 28 February 2013.
Service tax abatement on homes and flats with a carpet area of 2000 square feel or more or of a value of Rs 1 crore or more has been reduced from 75% to 70%. However the existing exemptions from service tax for low cost housing and single residential units will continue.
GAIL (India) rose 1.96% to Rs 320 on bargain hunting. The stock had fallen 9.2% in four trading sessions to Rs 313.85 on Monday, 18 March 2013, from a recent high of Rs 345.65 on 12 March 2013.
Auto stocks were mixed. Tata Motors lost 1.76%. The company's British luxury car unit Jaguar Land Rover (JLR) on 12 March 2013 said its sales rose 3% to 26,855 units in February 2013 over February 2012. Sales were up in almost every major market in February 2013, JLR said. But, sales declined 22% in China on year on year basis in February 2013, reflecting the Chinese New Year falling in February this year and January last year, JLR said.
Sales of Jaguar jumped 27% to 4,595 units in February 2013 over February 2012, with increased sales of the XF (up 37%) and the XJ (up 15%), reflecting new smaller engines and all-wheel drive options as well as the XF Sportbrake, JLR said. Sales of Land Rover declined slightly on year on year basis in February 2013, reflecting the Chinese New Year holiday period, JLR said. Sales of Freelander jumped 26% year on year in February 2013 and that of Range Rover jumped 46% year on year in February 2013, JLR said.
Maruti Suzuki India rose 0.16%. Maruti Suzuki India on 15 March 2013 said it has appointed Mr. Kenichi Ayukawa as the Managing Director and Chief Executive Officer in place of Mr. Shinzo Nakanishi with effect from 1 April 2013 on the latter having attained the age of retirement.
Mahindra & Mahindra (M&M) shed 3.45%. The company said after market hours today, 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.
Mahindra Reva, part of the $15.9 billion Mahindra Group, on Monday, 18 March 2013, unveiled its all-electric, zero-emission 'Mahindra e2o' at a ceremony at India Gate in New Delhi. The Mahindra e2o will go on sale immediately at select Mahindra dealerships nationwide in a phased manner. The vehicle is priced at Rs 5.96 lakh (on road Delhi, post state subsidy).
Speaking on the occasion, Mr. Anand Mahindra, Chairman, Mahindra Group said: "The launch of the Mahindra e2o marks an important milestone for the Mahindra Group which brings to mind the historic words of Pandit Jawaharlal Nehru - 'A moment comes, which comes but rarely in history, when we step out from the old to the new.' The Mahindra e2o is the embodiment of that shift from old to new within the Indian automotive industry. It also advances the Mahindra Group's efforts at redefining sustainable urbanization with the creation of an eco system that includes mobility solutions along with other environment friendly innovations."
Speaking on the occasion of the national launch of the Mahindra e2o, Dr. Pawan Goenka, Chairman, Mahindra Reva Electric Vehicles said: "The Mahindra e2o is our humble effort to usher in positive change in the lives of our customers. Electric vehicles have always had the potential to emerge as a serious alternative to fossil fuel driven vehicles. With the Mahindra e2o we have taken the lead in not only creating a comprehensive ecosystem to nurture sustainable mobility solutions, but have also firmly placed a choice in the hands of our consumers".
Bajaj Auto rose 1.42% to Rs 1,840 on bargain hunting. The stock had declined 9.85% in six trading sessions to Rs 1,814.25, from a recent high of Rs 2,012.60 on 8 March 2013.
The company on 4 March 2013 said its total sales fell 3% to 3.32 lakh units in February 2013 over February 2012. Motorcycles sales fell 4% to 2.91 lakh units February 2013 over February 2012. Sales of three wheelers declined 2% to 41,090 units in February 2013 over February 2012. The company's total exports rose 10% to 1.35 lakh units in February 2013 over February 2012.
Hero MotoCorp fell 2.51%. Hero MotoCorp on 1 March 2013 said total sales declined 4.23% to 5.01 lakh units in February 2013 over February 2012. Hero MotoCorp's scooters -- Pleasure and Maestro -- clocked close to 54,000 unit sales in February 2013. The company is now scaling up its scooter production to over 60,000 units a month.
ICICI Bank shed 1.94%. ICICI Bank on 14 March 2013 said it has constituted a high level inquiry committee to investigate allegations of money laundering activities. The committee will submit its findings in 2 weeks, the private sector bank said in a statement. ICICI Group conducts its business with the highest level of compliance to legal and regulatory requirements, it said. All employees of the Group are trained and required to adhere strictly to the Group Code of Conduct, including AML and KYC norms, the statement from the bank said. The ICICI Group has demonstarted its commitment to this by following a zero tolerance policy towards any violation, it said.
ICICI Bank said that the management is deeply concerned about media reports that major Indian private sector banks are involved in money laundering activities. A sting operation conducted by online magazine Cobrapost across various branches of top private sector banks has revealed how bank employees are accepting black money from customers to convert them into white money. The sting shows that money laundering services are openly being offered even to walk in customers who wish to launder their money and a variety of options are being offered.
"We want to assure our customers and all our other stakeholders that we are committed towards adherence to the high standards of business conduct, which is expected of us," ICICI Bank said on Thursday, 14 March 2013.
HDFC Bank declined 1.89%. HDFC Bank on Saturday, 16 March 2013, said the bank is committed to the highest standards of compliance, corporate governance and ethics, and has in place systems and procedures to ensure that its business is conducted in compliance with laws and regulations. The bank said that after considering the nature of the alleged money laundering charges against the bank, it has appointed Deloitte Touche Tohmatsu India, a leading accounting and audit firm, to carry out an independent forensic enquiry into the allegations and reported statements as made by Cobrapost representatives, when secretly taping bank officials. The bank has also appointed M/s. Amarchand & Mangaldas & Suresh A Shroff & Co to examine the breaches, if any of the bank's Code of Conduct and Ethical Standards, by any bank officials, in association with the bank's internal departmental enquiry, commenced to verify the truth or untruth or correctness, as the case may be, in the reported tapings of bank officials. The bank has also decided to carry out special audit of some of its branches, where the reported videotaping was done.
HDFC Bank said it is also proceeding to detail out the internal checks & balances and procedural safeguards already in place to report on the robustness of the compliance of regulatory guidelines and internal procedures, which would prevent, trap or enable pre-fact or post-fact discovery of violation of KYC norms and of money laundering activity. The bank is also detailing the efficacy of induction and ongoing training provided for ingraining ethical behaviour and conduct rules, as preventive and protective measures.
The internal and external audits and inspections undertaken previously, and the action taken reports in this regard are being compiled and reviewed once again, to enable the bank to reiterate that the internal checks and balances and processes for ensuring compliance with KYC norms and for prevention and detection of, and protection against money laundering activity are robust and adequate, HDFC Bank said in a statement.
Earlier, HDFC Bank has said on 14 March 2013 that the management is concerned about allegations of money laundering activities. The matter is being investigated on top priority, HDFC Bank had said.
Axis Bank slipped 0.2%. Axis Bank on 14 March 2013 said that the bank has systems and processes that are robust and fully complaint with extant regulations. The bank said that the management will examine whatever information that is brought to its notice and investigate the matter thoroughly. Axis Bank made this statement while clarifying its position with regard to allegations of money laundering activities being carried out by top private sector banks in India. Axis Bank said it has built a strong customer franchise over the years and maintains high corporate governance standards. Any deviations to these standards are viewed very seriously, Axis Bank said. "Best practices across businesses are followed by the bank and we are confident that all our businesses will live up to the high standards we have set for ourselves as a bank", Axis Bank said in a statement.
State Bank of India fell 2.03%.
Among other PSU bank stocks, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank dropped by 2.36% to 5.47%.
The Finance Minister on 28 February 2013 said that the government will provide Rs 14000 crore for capital infusion in public sector banks in FY 2014.
In Union Budget 2013-14 announced on 28 February 2013, the finance minister (FM) set a target of Rs 7 lakh crore for agricultural credit in FY 2014. He said that the target of Rs 5.75 lakh crore fixed for 2012-13 is likely to be exceeded. The FM said that the interest subvention scheme for short-term crop loans will be continued and a farmer who repays the loan on time will be able to get credit at 4% per annum. The FM proposed to extend the scheme to crop loans borrowed from private sector scheduled commercial banks in respect of loans given within the service area of the branch concerned. So far, the scheme has been applied to loans extended by public sector banks, RRBs and cooperative banks.
On the political front, the DMK today, 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. The DMK ministers in the government are likely to resign from their posts later this evening or Wednesday morning. 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.
The government, however, expressed confidence that it still enjoys majority support and that there wasn't any threat to its survival. "We take note of that [DMK's decision], but let me assure all that 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. DMK Rajya Sabha MP Vasanthi Stanley said that the window of negotiation with the UPA is still open. "We are not here to destabilise the government, we are sure government will look at our demand. There is no divorce from the UPA, only an attempt to explain our position," Vasanthi said.
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 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. A couple of hours after the DMK decided to pull out of the ruling coalition, Mayawati said her party would continue extending outside support to the UPA. "We don't want non-secular parties to come to fore. So we will continue to support the government. BSP will not withdraw support. Our support is so that non-secular powers don't get strengthened. We are supporting the government from outside even though we have our differences with the UPA," Mayawati said. 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 today, 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.
The Securities and Exchange Board of India (Sebi) on 8 March 2013 approved the SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 thereby providing a comprehensive regulatory framework for issuance and listing of non-convertible redeemable preference shares. The proposed regulations provide framework for public issuance of non-convertible redeemable preference shares and also listing of privately placed redeemable preference shares, Sebi said in a statement. Considering the risks involved in the instrument, certain requirements like the minimum tenure of the instruments of three years and minimum rating of "AA-" or equivalent etc. have been specified in case of public issuances, Sebi said. For listing of privately placed non-convertible redeemable preference shares, minimum application size for each investor is fixed at Rs 10 lakh.
As per Basel III norms, banks can issue non-equity instruments such as Perpetual Non-Cumulative Preference Shares and Innovative Perpetual Debt Instruments, which are in compliance with the specified criteria for inclusion in Additional Tier I Capital. The proposed regulations shall, mutatis mutandis, be applicable to these instruments issued by banks, subject to compliance with the provisions of Companies Act, 1956 or/and any other applicable laws and such other conditions that may be specified by SEBI and subject to making adequate disclosures and relevant risk factors in the offer document, Sebi said.
The finance ministry on 1 March 2013 said that the Tax Residency Certificate (TRC) produced by a resident of a contracting state will be accepted as evidence that he is a resident of that contracting state and the Income Tax Authorities in India will not go behind the TRC and question his resident status. The finance ministry issued this clarification on 1 March 2013 after it said that concern has been expressed regarding the clause in the Finance Bill, 2013 that amends section 90 of the Income-tax Act that deals with Double Taxation Avoidance Agreements (DTAA). Since a concern has been expressed about the language of sub-section (5) of section 90, this concern will be addressed suitably when the Finance Bill is taken up for consideration, the finance ministry said. In the case of Mauritius, circular no. 789 dated 13 April 2000 continues to be in force, pending ongoing discussions between India and Mauritius, the finance ministry said.
Under the double taxation avoidance agreement India has with Mauritius, investors sending money into India can't be taxed by India if they pay capital-gains tax in Mauritius. Many foreign investors route their investments in India through Mauritius.
The Ministry of Finance and Economic Development, Mauritius on 5 March 2013 said that although there are still some prevailing uncertainties regarding how the GAAR will be implemented in 2016-17, the post budget declarations from the Indian Ministry of Finance contain some positive elements. It is with satisfaction that we note that the Indian Ministry of Finance has acted promptly to clarify the situation regarding the validity of the TRC, the Ministry of Finance and Economic Development, Mauritius said in a statement.
Mauritius said it is committed and willing to collaborate fully to address the concerns of the Indian side on the DTAA while ensuring that the treaty remains commercially viable. "We are optimistic that both sides can conclude a mutually acceptable package that would yield a win-win solution", the Ministry of Finance and Economic Development, Mauritius said. The India-Mauritius Joint Working Group (JWG) met in December 2011 and again in August 2012 to discuss concerns on the operation of the India-Mauritius DTAA. Mauritius has agreed with India on a Tax information Exchange Agreement, which incorporates provisions on assistance in the collection of taxes.
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.
European stock markets dropped on Tuesday, 19 March 2013, amid worries over the bailout plan for Cyprus, including a controversial levy on bank deposits. Key benchmark indices in UK, France and Germany were down by 0.37% to 0.91%.
A vote on the bailout measures for Cyprus is scheduled for later Tuesday, but there had been rumors that the vote could be postponed to later this week. The Eurogroup indicated late on Monday that it is open to negotiating the details of the tax, which is due to be debated in the Cypriot parliament at some point, although the timing remains unclear.
Meanwhile, trading on the Cyprus Stock Exchange has been suspended on Tuesday and Wednesday and will reopen again on Thursday, to avoid any potential risks to the financial system amid discussions of bailout conditions for the country, the exchange said. Cypriot banks are scheduled to remain closed until Thursday, amid worries that a controversial bank-deposit tax will create a run on the country's banks. The Cyprus Stock Exchange said in a statement that the decision to suspend trading was taken in the view of "the current very serious developments in the Cyprus economy due to recent decisions of the Eurogroup which affect the banking sector in Cyprus and the economy in general which affects banks whose securities are listed on the Stock Exchange."
Asian stocks moved higher Tuesday, 19 March 2013, to take back some losses made the previous day, when investors reacted to news that a bailout for Cyprus would include a tax on bank deposits. Key benchmark indices in Singapore, South Korea, Japan, China, Taiwan and Indonesia were up by 0.35% to 2.03%. Hong Kong's Hang Seng index shed 0.19%.
Trading in US index futures indicated that the Dow could fall 11 points at the opening bell on Tuesday, 19 March 2013. US stocks on Monday fell for a second session as Europe's efforts to get a handle on a rescue of Cyprus provided enough uncertainty for a much-anticipated retreat on the Wall Street.
A two-day meeting of the Federal Open Market Committee (FOMC) on interest rates in the United States begins today, 19 March 2013.
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