Key benchmark indices pared gains after firm start triggered on positive Asian stocks. The BSE Sensex hit two-week high in early trade. The CNX Nifty also hit almost two-week high. Index heavyweight and cigarette maker ITC edged higher in early trade. Another index heavyweight Reliance Industries (RIL) advanced after the company updated the oil ministry on the future plans of its joint venture with BP. The BSE Sensex was up 69.89 points or 0.36%, up 2.39 points from the day's low and off 36.81 points from the day's high. The market breadth, indicating the overall health of the market, was strong.
Asian stocks rose on Wednesday as the S&P 500 index's rise to a five-year high in US trading helped lift sentiment.
Foreign institutional investors (FIIs) sold shares worth a net Rs 181.57 crore on Tuesday, 19 February 2013, as per provisional data from the stock exchanges.
At 9:20 IST, the BSE Sensex was up 69.89 points or 0.36% to 19,705.61. The index gained 106.70 points at the day's high of 19,742.42 at the onset of the trading session, its highest level since 6 February 2013. The index rose 67.50 points at the day's low of 19,703.22 in early trade.
The CNX Nifty was up 27.90 points or 0.47% to 5,967.60. The index hit a high of 5,971 in intraday trade, its highest level since 7 February 2013. The index hit a low of 5,963.90 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 581 shares gained and 179 shares declined. A total of 30 shares were unchanged.
The total turnover on BSE amounted to Rs 181 crore by 09:30 IST.
Among the 30-share Sensex pack, 22 stocks advanced while the rest of them declined.
Index heavyweight Reliance Industries (RIL) rose 1.46% to Rs 861.20. The stock had hit 52-week high of Rs 954.80 in intraday trade on 21 January 2013. RIL's Chairman and Managing Director Mukesh Ambani and BP Group Chief Executive Bob Dudley held discussions with Minister of Petroleum and Natural Gas, Dr. Veerappa Moily on Tuesday, 19 February 2013, to update the oil ministry on the future plans of the RIL-BP joint venture, including the KG D6 block enhancement plan designed to increase production from the block. 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 in a joint statement. This plan, when implemented, would entail a potential total investment in excess of $5 billion over the next three to five years.
British Prime Minister David Cameron said: "BP is already the largest single British investor in India and the decision to join forces with Reliance Industries to invest $5 billion in the next few years into India's gas markets reinforces how two of Britain's and India's leading companies can work together to invest in and supply the energy needs of the future, creating jobs and boosting prosperity."
Dr. Moily said that gas from these projects will deliver energy to millions of Indians and would significantly help India in reducing import dependence. "My ministry is committed to provide necessary support to promote such investment in the domestic Oil & Gas sector. We will do the needful to fast track these projects and help them attain economic viability," Dr. Moily said.
Welcoming the minister's statement, both Ambani and Dudley agreed to accelerate the pace of exploration and development activities as soon as necessary approvals are received. Mukesh Ambani said: "The BP and RIL partnership is focused on finding more hydrocarbons and addressing the complexities of the geology along the east coast of India. We hope to significantly contribute to India's domestic production and help the country attain energy security." Bob Dudley said: "We will bring all our expertise in deep water to explore the prolific gas basins in India and BP looks forward to a rewarding and successful exploration programme in the coming years."
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 rose 0.43% to Rs 303. The stock had hit record high of Rs 310.75 in intraday trade on 4 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.
ICICI Bank shed 0.23%. Bank of Baroda rose 0.18%. The Finance Minister, Mr. P. Chidambaram on Tuesday, 19 February 2013, launched the operations of India Infra Debt (Infradebt) promoted by ICICI Bank, Bank of Baroda, Citibank and Life Insurance of Corporation (LIC). ICICI Bank (together with a wholly-owned subsidiary) is the largest shareholder in Infradebt with 31% holding followed by Bank of Baroda at 30%, Citibank at 29% and LIC at 10%. Infradebt would seek to raise debt capital from domestic as well as foreign resources and would invest in infrastructure projects under the Public-Private Partnership model that have completed one year of operations, the Ministry of Finance said in a statement on Tuesday, 19 February 2013. Infradebt will expand and diversify the domestic and international sources of debt funding to meet the large financing needs of the infrastructure sector, thereby giving an impetus to the creation of the infrastructure necessary to drive India's growth, the finance ministry said.
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.
Finance Minister Mr. P. Chidambaram on Tuesday, 19 February 2013, emphasized the need to meet the financing requirements of the infrastructural deficit. He said that that the government has initiated several major steps in this direction. He said that the government has set-up the Cabinet Committee on Investments (CCI) with the Prime Minister as the Chairman to expedite decisions on approvals/clearances for implementation of projects. This is likely to improve the investment environment by bringing transparency, efficiency and accountability in accordance of various approvals and sanctions, Chidambaram said. The government is also promoting Public Private Partnerships (PPPs) as an effective tool for bringing private sector efficiencies in creation of economic and social infrastructure assets and for delivery of quality public services, Chidambaram said. The Viability Gap Funding Scheme has been further strengthened by adding many new sectors like modern storage, education, health, irrigation etc.
The cost and tariff of infrastructure services are likely to go down as a result of low cost long term debt provided by Infrastructure Debt Fund (IDFs), Chidambaram said on the occasion of the launch of the first Infrastructure Debt Fund (IDF) under the NBFC structure on Tuesday, 19 February 2013. A buy-out guarantee from Project Authority will enable IDF-NBFC to maintain zero NPAs, Chidambaram said. The taking over of existing bank debts by IDFs will release an equivalent volume for fresh lending by banks to infrastructure projects, the finance minister said.
The Reserve Bank of India governor D. Subbarao said in mid-February 2013 that he sees limited room for further interest rate cuts.
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 on 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.
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 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.
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.
India will have to pursue domestic policy initiatives to help achieve any near-term improvement in its current account deficit as global growth may only be slightly better in 2013 and commodity prices are unlikely to ease sharply, Moody's Investor Service said on 14 February 2013. While recent government moves to cut subsidies and woo foreign investment would help narrow the external deficit, these policies need to be persisted for any significant success, Moody's said.
Moody's said it would be watching the assumptions underlying India's budget deficit target for the new fiscal year that begins on April 1, as well as the expenditure and revenue policies announced in order to meet that goal. "Policies that trigger private investment and curb inflationary pressures in the near term are more likely to help narrow the account deficit," it said. "Deficit targets based on an assumption of accelerating growth rates are more likely to be missed, leading to higher government borrowing requirements and likely inflationary pressure, both of which have negative implications.
If funding for the current account deficit shifted away from external debt and towards foreign direct investment, the sovereign credit profile would benefit, Moody's said. Moody's has a Baa3 rating for India with a stable outlook.
The Budget Session of the Parliament begins on Thursday, 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 Railway Budget for 2013-2014 will be presented to the Lok Sabha on 26 February 2013 immediately after Question Hour. The Economic Survey of India will be laid in the Parliament on on 27 February, 2013.
The government has lined up 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, for consideration and passing during the Budget session of the parliament.
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.
RBI said after Third Quarter Review of Monetary Policy 2012-13 on 29 January 2013 that a staggered increase in diesel prices will percolate through to overall costs and inflation. However, these price pressures will dissipate over time, and the consequent reduction entailed in the fiscal deficit will bring about an enduring reduction in inflation and inflation expectations, the central bank said at that time.
Bahujan Samaj Party (BSP) chief Mayawati slammed the UPA government last month 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.
Asian stocks rose on Wednesday as the S&P 500 index's rise to a five-year high in US trading helped lift sentiment. Key benchmark indices in Hong Kong, Singapore, South Korea, Japan, Taiwan and Indonesia were up by 0.18% to 1.42%. China's Shanghai Composite index fell 0.07%.
Japanese exports grew faster than expected in January, with shipments to China swing back to growth after a recent fall-off, though the trade deficit hit an all time record, according to data out Wednesday. Japan's exports rose 6.4% last month from a year earlier, the Finance Ministry said. The gain in exports was the first in eight months, and came as China-bound shipment rose 3%, swinging back to growth after falling amid territorial tensions between the two nations -- China exports had fallen 15.8% in December. Imports rose 7.3%, while the trade deficit hit 1.629 trillion yen ($17.4 billion) to hit an all-time record and the seventh straight monthly deficit.
US stocks ended higher Tuesday, pushing the S&P 500 index to a five-year high, buoyed by a rise in corporate deal activity and an improvement in German investor sentiment. The Dow Jones Industrial Average gained 53.91 points, or 0.39%, to 14,035.67. The Standard & Poor's 500 index gained 11.15 points, or 0.73%, to 1,530.94. The Nasdaq Composite index gained 21.56 points, or 0.68%, to 3,213.59.
Powered by Capital Market - Live News
