A bout of initial volatility was witnessed as key benchmark indices pared gains after a firm start. The barometer index, S&P BSE Sensex, was up 12.51 points or 0.06%, off about 50 points from the day's high. The market breadth was strong. Index heavyweight and cigarette maker ITC edged lower in early trade. Another index heavyweight Reliance Industries (RIL) also edged lower. Infosys gained after company on Saturday, 23 February 2013, announced the launch of a state-of-the-art Central Processing Center for the Income Tax Department (ITD) for efficient administration and processing of tax deducted at source (TDS).
Shares of non-banking finance companies surged after the Reserve Bank of India (RBI) after trading hours on Friday, 22 February 2013, said in final guidelines on licensing of new banks in the private sector, said that existing NBFCs, if considered eligible, may be permitted to promote a new bank or convert themselves into banks.
State Bank of India (SBI) rose after the bank said that the Executive Committee of Central Board (ECCB) of the bank at its meeting held on Saturday, 23 February 2013, has approved preferential allotment of equity shares to the Government of India (GoI) to the tune of up to Rs 3004 crore.
Volatility may remain high on the bourses this week as traders roll over positions in the futures & options (F&O) segment from the near month February 2013 series to March 2013 series. The February 2013 F&O contracts expire on Thursday, 28 February 2013.
Foreign institutional investors (FIIs) bought shares worth a net Rs 280.30 crore on Friday, 22 February 2013, as per provisional data from the stock exchanges.
At 9:30 IST, the S&P BSE Sensex was up 12.51 points or 0.06% to 19,329.52. The index rose 65.88 points at the day's high of 19,382.89 in early trade. The index gained 11.43 points at the day's low of 19,328.44 in early trade.
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The CNX Nifty was up 4.15 points or 0.07% to 5,854.45. The index hit a high of 5,874.25 in intraday trade, its highest level since 21 February 2013. The index hit a low of 5,853.75 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 872 shares advanced and 508 shares declined. A total of 68 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks gained while the rest of them declined.
Index heavyweight Reliance Industries (RIL) declined 0.24% to Rs 860.60. RIL on Friday, 22 February 2013, said that Reliance Sibur Elastomers (RSEPL), a joint venture between the company and SIBUR, has begun construction of a new butyl rubber plant at Jamnagar in Gujarat. When commissioned in 2015, the new plant will be India's only manufacturer of butyl rubber and the JV will be amongst the world's top five manufacturers of butyl rubber.
RIL and BP said in a joint statement on 19 February 2013 that under the KG D6 block enhancement plan, BP and RIL are planning to invest in a series of projects to develop around 4 trillion cubic feet of discovered natural gas resources from the block. At current international liquefied natural gas (LNG) prices, it would cost more than $50 billion to import this volume of gas into India, RIL and BP said on 19 February 2013. This plan, when implemented, would entail a potential total investment in excess of $5 billion over the next three to five years.
RIL and BP have agreed to accelerate the pace of exploration and development activities as soon as necessary approvals are received. The implementation of the plan will require deployment of advanced skills, processes and technologies through the combined partnership of RIL and BP to produce gas from water depths of more than 1,500 metres. RIL and BP are confident that development of the existing discoveries, together with exploration prospects in KG D6 have the potential to enhance domestic production significantly.
In an historic partnership with RIL in 2011, BP took a 30% stake in multiple oil and gas blocks in India, including the producing KG D6 block and the formation of a 50:50 joint venture to source and market gas in India. The implementation of the various projects in the KG D6 enhancement plan is subject to regulatory and government approvals, RIL said.
Index heavyweight and cigarette maker ITC fell 0.55% to Rs 290.45. The stock had hit record high of Rs 310.75 in intraday trade on 4 February 2013. The Gujarat state government increased the VAT on cigarettes to 30% from 25% in the state government's FY 2014 budget presented on 20 February 2013.
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.
Shares of non-banking finance companies surged after the Reserve Bank of India (RBI) after trading hours on Friday, 22 February 2013, said in final guidelines on licensing of new banks in the private sector, said that existing NBFCs, if considered eligible, may be permitted to promote a new bank or convert themselves into banks. Mahindra & Mahindra Financial Services, L&T Finance Holdings, IFCI, IDFC, Reliance Capital, SKS Microfinance, Indiabulls Financial Services and LIC Housing Finance were up 0.49% to 8.21%.
In its final guideline on licensing of new banks in the private sector, the Reserve Bank of India (RBI) after trading hours on Friday, 22 February 2013, said entities/groups in the private sector, entities in public sector and non-banking financial companies (NBFCs) will be eligible to set up a bank in India through a wholly-owned Non-Operative Financial Holding Company (NOFHC). The entities/groups should have a past record of sound credentials and integrity, be financially sound with a successful track record of 10 years, the RBI said. For this purpose, RBI may seek feedback from other regulators and enforcement and investigative agencies, the central bank said.
The NOFHC shall be wholly owned by the promoter/promoter group, the RBI said. The NOFHC shall hold the bank as well as all the other financial services entities of the group, the central bank said. The initial minimum paid-up voting equity capital for a bank shall be Rs 500 crore. The NOFHC shall initially hold a minimum of 40% of the paid-up voting equity capital of the bank which shall be locked in for a period of five years and which shall be brought down to 15% within 12 years, the RBI said. The bank shall get its shares listed on the stock exchanges within three years of the commencement of business by the bank, the central bank said. The NOFHC and the bank shall not have any exposure to the promoter group. The bank shall not invest in the equity/debt capital instruments of any financial entities held by the NOFHC, the RBI said.
The bank will be governed by the provisions of the relevant Acts, relevant Statutes and the Directives, Prudential regulations and other Guidelines/Instructions issued by RBI and other regulators. The NOFHC shall be registered as a non-banking finance company (NBFC) with the RBI and will be governed by a separate set of directions issued by RBI.
The aggregate non-resident shareholding in the new bank shall not exceed 49% for the first 5 years after which it will be as per the extant policy, the RBI said. At least 50% of the directors of the NOFHC should be independent directors. The corporate structure should not impede effective supervision of the bank and the NOFHC on a consolidated basis by RBI.
The prudential norms will be applied to NOFHC both on stand-alone as well as on a consolidated basis and the norms would be on similar lines as that of the bank, the RBI said. The bank's business plan should be realistic and viable and should address how the bank proposes to achieve financial inclusion, the RBI said. The board of director of the bank should have a majority of independent directors. The bank shall open at least 25% of its branches in unbanked rural centres (population upto 9,999 as per the latest census). The bank shall comply with the priority sector lending targets and sub-targets as applicable to the existing domestic banks.
Banks promoted by groups having 40% or more assets/income from non-financial business will require RBI's prior approval for raising paid-up voting equity capital beyond Rs 1000 crore for every block of Rs 500 crore, RBI said. Any non-compliance of terms and conditions will attract penal measures including cancellation of licence of the bank, the RBI said.
State Bank of India (SBI) rose 0.68% after the bank before trading hours today, 25 February 2013, said that the Executive Committee of Central Board (ECCB) of the bank at its meeting held on Saturday, 23 February 2013, has approved preferential allotment of equity shares to the Government of India (GoI) to the tune of up to Rs 3004 crore to enable the bank to support national and international banking operations undertaken through its Subsidiaries and Associates. The preferential issue has been priced at Rs 2,312.78 per share.
Infosys gained 1.47% after company on Saturday, 23 February 2013, announced the launch of a state-of-the-art Central Processing Center for the Income Tax Department (ITD) for efficient administration and processing of tax deducted at source (TDS). The TDS facility will process more than 400 million tax deduction submissions filed by nearly 1 million entities annually, Infosys said. Commenting on the development, C. N. Raghupati, Head - India Business, Infosys said: "The launch of the new CPC will play a key role in increasing the efficiency of tax filing for entities and processing of TDS for the Income Tax Department. We are delighted to partner with the ITD in their endeavor to improve the tax-payer experience in India."
Infosys has been processing tax returns filed online by Indian citizens since 2008. Till date, the company has successfully processed more than 30 million tax filings and related refunds, Infosys said. In 2011, ITD selected Infosys as its managed services provider to facilitate central processing of TDS filings by business entities. As part of this new agreement, Infosys provides comprehensive services to the department including technology infrastructure, maintenance, and upgrade of applications for the Tax Deduction Reconciliation, Analysis, and Correction Enabling System, better known as TRACES.
Shares of telecom service providers were mixed. Bharti Airtel fell 1.03%. Bharti Airtel added about 2.29 million subscribers in January 2013
Idea Cellular rose 1.1%. Idea Cellular got 2.45 million new customers in January 2013.
Videocon Industries gained 1.11%. Videocon Industries' telecom venture lost almost 1.4 million users in January 2013.
Nestle India was flat at Rs 4,623.95. The stock turned ex-dividend today, 25 February 2013, for interim dividend of Rs 12.50 per share for the year ended 31 December 2012. The company's net profit jumped 20.8% to Rs 278.93 crore on 10.1% increase in net sales to Rs 2152.64 crore in Q4 December 2012 over Q4 December 2011. Domestic sales rose 9.6% on year on year basis in Q4 December 2012, mainly on account of net realizations and product mix, the company said in a statement. Export sales jumped 20.6%, contributed largely by exports to third parties which rose 47.2%, Nestle India said. Nestle India announced Q4 results on 20 February 2013.
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.
Investors' focus is now on Union Budget 2013-14 to be presented to the Parliament on Thursday, 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.
It remains to be seen if the Finance Minister announces measures to channelise savings into financial assets given the sharp fall in financial savings of the household sector and a corresponding rise in household savings in physical assets such as gold and property over the past two years or so.
The Budget Session of the Parliament which began on 21 February 2013 will 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 Railway Budget for 2013-2014 will be presented to the Lok Sabha tomorrow, 26 February 2013 immediately after Question Hour. The Economic Survey of India will be laid in the Parliament on 27 February 2013.
The government has lined up a number of key bills for consideration and passing during the 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.
Asian stocks rose on Monday, 25 February 2013, as Japanese shares gained on speculation the next Bank of Japan governor will deploy aggressive monetary easing. Key benchmark indices in Singapore, Indonesia, Japan, Hong Kong and China rose by 0.11% to 1.95%. Key benchmark indices in South Korea and Taiwan fell by 0.03% to 0.09%.
China's manufacturing may expand this month at a slower rate, according to a private survey of companies. The preliminary reading of a Purchasing Managers' Index was 50.4 in February, according to a statement from HSBC Holdings Plc and Markit Economics today, 25 February 2013. HSBC and Markit will report the final February reading on Friday, 1 March 2013, the same day that a separate, government-backed purchasing managers' index will be released.
US stocks rallied on Friday, 22 February 2013, after better-than-expected results from personal-computer maker Hewlett-Packard Co. and an upbeat report on German business confidence.
Moody's Investor Service late Friday cut its triple-A rating on the United Kingdom because of a weak growth outlook and the country's rising debt burden. Moody's lowered its rating on the UK's domestic and foreign-currency government bond ratings by one notch to Aa1 from Aaa. The outlook is stable. Explaining the main reason for the downgrade, Moody's said "the UK's economic growth will remain sluggish over the next few years due to the anticipated slow growth of the global economy and the drag on the UK economy from the ongoing domestic public- and private-sector deleveraging process."
Italians are voting in an election, with initial estimates of the result due in Rome later in the global day today, 25 February 2013.
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