The market may open on a firm note on higher Asian stocks. Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could gain 29 points at the opening bell. Asian stocks rose on Friday as global manufacturing reports beat forecasts and central banks in Europe vowed to maintain stimulus.
The Union Cabinet on Thursday, 1 August 2013, approved a proposal to ease foreign-investment rules in multibrand retail. The cabinet also approved proposals to relax foreign-investment rules in about a dozen sectors including telecommunications and defense.
Power Grid Corporation of India's net profit rose 19.56% to Rs 1040.34 crore on 21.03% rise in total income to Rs 3634.03 crore in Q1 June 2013 over Q1 June 2012. The company announced Q1 result after market hours on Thursday, 1 August 2013.
Power Grid Corporation of also said that the board of directors of the company at its meeting held on 1 August 2013 has approved the Follow on Public Offer (FPO) of 15% of existing paid up share capital comprising fresh issue of 69.44 crore shares, for augmenting resources of company to fund its investment programme, subject to necessary approval of Government of India.
PSU OMCs will be in focus after the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas after trading hours on Thursday, 1 August 2013, said that the under-recovery on high speed diesel (HSD) applicable for first fortnight of August 2013 went down to Rs 9.29 per/litre from Rs 9.45 per litre for the second fortnight of July 2013. The under-recovery on, both, PDS Kerosene and Domestic LPG, has risen sharply for August 2013. The under-recovery on PDS Kerosene has surged to Rs 33.54 per litre for August 2013, from Rs 30.52 per litre in July 2013. The under-recovery on Domestic LPG has surged to Rs 412 per cylinder for August 2013, from Rs 368.58 per cylinder in July 2013. While the under-recovery on diesel is calculated on fortnightly basis, the under-recovery on PDS Kerosene and Domestic LPG is calculated on monthly basis.
PSU OMCs are currently incurring combined daily under-recovery of about Rs 379 crore on the sale of diesel, PDS Kerosene and Domestic LPG at government controlled prices.
The Union Cabinet on Thursday, 1 August 2013, approved a proposal to sell a 10% stake in state-run refiner and fuel retailer Indian Oil Corporation (IOC). The government currently owns 78.92% stake in IOC
Idea Cellular after trading hours on Thursday, 1 August 2013, said its net profit jumped 143.8% to Rs 482.90 crore on 18% growth in total revenue to Rs 6535.50 crore in Q1 June 2013 over Q1 June 2012. The multiple drivers of this sharp profitable growth have been robust 'Voice' and 'Mobile Data' revenue coupled with scale benefits and better cost management, Idea Cellular said. The net profit was also boosted by dividend income of Rs 83.80 crore from Indus Towers.
Earnings before interest, taxation, deprecation and amortization (EBITDA) jumped 43% to Rs 1843.60 crore in Q1 June 2013 over Q1 June 2012. EBITDA margin surged to 28.2% in Q1 June 2013, from 23.3% in Q1 June 2012.
Idea Cellular said that the company revised the life of some fixed assets to 10 years from 13 years in Q1 June 2013. This change in depreciation policy resulted in a higher depreciation of about Rs 180 crore in Q1 June 2013. The company said that the total impact of the change in depreciation policy for the entire year i.e. for the year ending 31 March 2014 (FY 2014), will be about Rs 450 crore.
With consistent network investment, market place agility, customer centricity and emphasis on building world class Indian brand, Idea Cellular remains on course for performance driven leadership in the mobile business, the company said in a statement. The company's strong balance sheet gives the management confidence to overcome the current volatile and uncertain phase of Indian wireless business and benefit from emerging triple play telecom opportunities in Voice, Data and Video, it said.
Meanwhile, Idea Cellular's board of directors has approved raising up to Rs 3000 crore from placement of equity shares to qualified institutional buyers. The board has also approved raising up to Rs 750 crore from preferential issue of equity shares to Axiata Group Berhad (or its nominee entity). The timing, pricing and exact quantum of equity shares to be issued are to be decided by the Securities Allotment Committee, a Committee of the Board of Directors, mandated for the purpose.
The government on Thursday approved liberalisation of FDI norms in a dozen sectors, including 100 per cent in telecom and higher caps in insurance and defence sectors, to boost the sagging economy. In the contentious insurance sector, it was decided to raise the sectoral FDI cap from 26 per cent to 49 per cent under automatic route under which companies investing do not require prior government approval. A bill to raise FDI cap in the sector is pending in the Rajya Sabha. It was also decided to allow 49 per cent FDI in single brand retail under the automatic route and beyond, through the Foreign Investment Promotion Board (FIPB) route. In case of PSU oil refineries, commodity bourses, power exchanges, stock exchanges and clearing corporations, FDI would be allowed up to 49 per cent under automatic route as against the current routing of the investment through FIPB. In basic and cellular services, FDI was raised to 100 per cent from the current 74 per cent. Of this, up to 49 per cent would be allowed under automatic route and the remaining through FIPB approval. A similar dispensation would be allowed for asset reconstruction companies and tea plantations. FDI of up to 100 per cent was allowed in courier services under automatic route. Earlier, similar amount of investment was allowed through FIPB route. In credit information firms, 74 per cent FDI under automatic route has been allowed. While the FDI cap in defence sector remained unchanged at 26 per cent, it was decided that higher limits of foreign investments in 'state-of-the-art' technology manufacturing would be considered by the Cabinet Committee on Security.
The Union Cabinet on Thursday also approved the proposal for amendment in the existing FDI policy in Multi-Brand Retail Trading (MBRT). At least 50% of total FDI brought in the first tranche of $100 million, shall be invested in 'backend infrastructure' within three years, where 'back-end infrastructure' will include capital expenditure on all activities, excluding that on front-end units. For instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of backend infrastructure. Subsequent investment in the back-end infrastructure would be made by the MBRT retailer as needed, depending upon his business requirements.
The government also said at least 30% of the value of procurement of manufactured/processed products purchased shall be sourced from Indian micro, small and medium industries which have a total investment in plant & machinery not exceeding $2 million. This valuation refers to the value at the time of installation, without providing for depreciation. The 'small industry' status would be reckoned only at the time of first engagement with the retailer and such industry shall continue to qualify as a 'small industry' for this purpose even if it outgrows the said investment of $ 2 million, during the course of its relationship with the said retailer. Sourcing from agricultural co-operatives and farmers cooperatives would also be considered in this category. The procurement requirement would have to be met, in the first instance, as an average of five years' total value of the manufactured/ processed products purchased, beginning 1st April of the year during which the first tranche of FDI is received. Thereafter, it would have to be met on an annual basis.
It added retail sales outlets may be set up only in cities with a population of more than 10 lakh as per the 2011 Census or any other cities as per the decision of the respective State Governments, and may also cover an area of 10 kms around the municipal/urban agglomeration limits of such cities; retail locations will be restricted to conforming areas as per the Master/Zonal Plans of the concerned cities and provision will be made for requisite facilities such as transport connectivity and parking.
The amendment in the extant FDI policy relating to Multi-Brand Retail Trading in respect of 'small industry' will bring in a balance between the business exigencies of the MBRT entity and intent of the policy which is to extend the benefits of the FDI policy in multi-brand retail trading to a larger constituency of small industries. The amendment in the provision regarding 'back-end infrastructure' will give more clarity to the policy. The amendment to the provision regarding location of retail outlets will bring in parity in the policy as it is proposed to extend such dispensation to all States.
Key benchmark indices edged lower in choppy trade on Thursday, 1 August 2013, after the Reserve Bank of India (RBI) tightened hedging rules for foreign institutional investors (FIIs) in the currency market. The S&P BSE Sensex fell 28.51 points or 0.15% to settle at 19,317.19 on that day, its lowest closing level since 10 July 2013.
Foreign institutional investors (FIIs) bought shares worth a net Rs 177.78 crore on Thursday, 1 August 2013, as per provisional data from the stock exchanges.
Asian stocks rose on Friday as global manufacturing reports beat forecasts and central banks in Europe vowed to maintain stimulus. Key benchmark indices in Hong Kong, China, Indonesia, Japan, Singapore, Taiwan and South Korea rose by 0.18% to 1.45%.
China's non-manufacturing purchasing managers' index is scheduled to be released tomorrow, 3 August 2013 after the manufacturing gauge unexpectedly strengthened in July, data yesterday showed.
US stocks kicked off the month by rallying Thursday to all-time highs in the wake of upbeat economic signals from around the globe. Factory output from the US to China and Europe expanded in July, reports on Thursday showed, while American jobless claims fell to a five-year low. The Institute for Supply Management's US factory index increased to 55.4 in July 2013, the strongest since June 2011, from 50.9 in June 2013. Readings above 50 indicate expansion.
The influential US non-farm payroll data for July 2013 is due later in the global day today, 2 August 2013.
The European Central Bank on Thursday kept its key financing rate at a record low, and ECB President Mario Draghi said interest rates would remain at or below present levels for an extended period of time. The Bank of England also on Thursday also left its benchmark interest rate and bond-buying program unchanged.
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