Nifty
hits highest level in nearly 14 months
DATE: 21/09/2012
Key benchmark indices
continued their uptrend to hit fresh intraday high in mid-morning trade as the
government on Thursday evening braved intense political opposition to notify
the rules for allowing greater foreign investment in retail, aviation and broadcasting
sectors. The 50-unit S&P CNX Nifty hit its highest level in nearly 14
months. The barometer index, BSE Sensex, was up 297.89 points or 1.62%, up
about 240 points from the day's low and off close to 20 points from the day's
high. The market breadth was strong. All the 13 sectoral indices on BSE were in
the green. Gains in Asian stocks also boosted sentiment.
Index heavyweight and
cigarette maker ITC extended initial gains. Another index heavyweight Reliance
Industries (RIL) retained positive zone. Shares of aviation firms jumped after
the government on Thursday evening notified the norms for allowing 49%
investment by foreign airlines in Indian carriers. Media shares rose after the
government on Thursday notified rules for greater foreign investment in some
sections of the broadcasting sector.
The market opened on a
firm note after the government on Thursday formally notified its decision to
allow greater foreign investment in retail, aviation and broadcasting sectors.
The market extended initial gains to hit fresh intraday high in morning trade.
The Sensex hit fresh intraday high in mid-morning trade.
Asian stocks rose on
Friday as Apple Inc.'s iPhone 5 debut boosted information technology shares and
energy companies advanced on higher crude prices.
BSE Sensex was up
297.89 points or 1.62% to 18,647.14. The index jumped 317.60 points at the
day's high of 18,666.85 in morning trade, its highest level since 17 September
2012. The index rose 61.95 points at the day's low of 18,411.20 at the onset of
the trading session.
The S&P CNX Nifty
was up 92.65 points or 1.67% to 5,646.90. The index hit a high of 5,657.75 in
intraday trade, its highest level since 26 July 2011. The index hit a low of
5,575.45 in intraday trade.
The market breadth,
indicating the overall health of the market, was strong. On BSE, 1,627 shares
rose and 667 shares fell. A total of 109 shares were unchanged.
From the 30-share
Sensex pack, 29 stocks rose and only one of them fell.
Index heavyweight and
cigarette maker ITC rose 2.07% to Rs 261.75. The stock had scaled a record high
of Rs 272.50 in intraday trade on 14 September 2012.
Index heavyweight
Reliance Industries (RIL) rose 0.89%. DSP Merrill Lynch and Citigroup Global
Markets India, who are the managers of RIL's buyback programme, have announced
that RIL has purchased 3.90 crore shares and spent Rs 2794.73 crore (excluding
brokerage, service tax, Securities Transaction Tax, Stamp Duty, Exchange
Transaction Charges and Sebi fees) till 18 September 2012 under the company's
ongoing share buyback program. RIL has set maximum buyback price of Rs 870 per
share. The company has set aside Rs 10440 crore for share buyback. The buyback
program opened on 1 February 2012 and closes on 19 January 2013. RIL chairman
Mukesh Ambani said at the company's Annual General Meeting in June 2012 that
the company's buyback program represents a highly accretive use of cash by the
company and it will supplement earnings growth from operations, for higher EPS
(earnings per share), in the near future.
Shares of aviation
firms jumped after the government on Thursday evening notified the norms for
allowing 49% investment by foreign airlines in Indian carriers. Kingfisher
Airlines, Jet Airways and SpiceJet surged by between 1.33% to 4.41%.
The Cabinet Committee
on Economic Affairs last week approved the proposal of the Department of
Industrial Policy and Promotion for permitting foreign airlines to make foreign
investment, up to 49% in scheduled and non-scheduled air transport services.
Removing the existing restriction on investment by foreign airlines would
assist in bringing in strategic investors into the civil aviation sector, the
government said in a statement issued last week. Higher foreign investment
inflows are necessary at the present juncture, in order to strengthen the
sector, the government had said. Introduction of global best practices,
concomitant with the induction of FDI from foreign airlines, is expected to
lead to higher service standards, international best practices and induction of
state-of-the-art technologies, in the air transport sector, the government had
said.
Media shares rose
after the government on Thursday notified rules for greater foreign investment
in some sections of the broadcasting sector. Balaji Telefilms, Zee News, NDTV,
TV Today Network, and Sun TV Network gained by between 0.11% to 2.73%.
Among cable TV and
direct-to-home (DTH) service providers, Dish TV India, DEN Networks and Hathway
Cable & Datacom rose by between 1.02% to 2.17%
The Cabinet Committee
on Economic Affairs (CCEA) last week announced increase in foreign investment
limit from 49% to 74% in teleports (setting up up-linking HUBs/teleports),
Direct to Home (DTH), Cable Networks (Multi-System-Operators operating at
National or State or District level and undertaking upgradation of networks
towards digitalization and addressability). In respect of Cable Networks (Other
Multi-System-Operators not undertaking up-gradation of networks towards
digitalization and addressability and Local Cable Operators), the existing
limit of 49% foreign investment, under the automatic route, would continue. The
CCEA also allowed foreign investment (FI) up to 74 percent in mobile TV.
Zee Entertainment
Enterprises fell 0.46%, with the stock reversing initial gains. The company on Thursday
launched 24-hour Bangla Movie Channel -'Zee Bangla Cinema'. With a rich and
varied film library, the Zee Bangla Cinema promises to offer a mixed bag of
blockbusters from the golden era directors and the best masterpieces of
Satyajit Ray, Mrinal Sen, Ritwick Ghatak, Tarun Mazumdar to the present movies
of directors like Rituparno Ghosh, Raj Chakraborty and Anjan Dutta. The channel
will go on-air on September 23rd and will telecast 2012's blockbuster movie
'Shatru' starring Jeet and Nusrot.
Mahindra &
Mahindra (M&M) jumped 3.36%. The company Thursday unveiled the eagerly
awaited all new compact and versatile sports utility vehicle (SUV) Quanto in
Mumbai. Designed and developed in-house by Mahindra on the robust, proven and
highly successful Ingenio platform, the Quanto is a direct outcome of customer
insights pointing to the need for a compact and affordable SUV.
The Quanto will be
available nationally at Mahindra dealerships, with four distinct and attractive
variants - C2, C4, C6 & C8. The Quanto price range starts from Rs 5.82
lakhs (ex-showroom Thane) for the base C2 model, to Rs 7.36 lakhs (ex showroom
Thane) for the fully loaded top end C8 model. All the Quanto variants are
powered by a 1.5 litre mCRlOO diesel engine giving a category best output of
l00 bhp & a massive 240 nm of torque. The mCRlOO engine has India's first
twin stage turbo technology for maximum power and excellent torque delivery.
Foreign institutional
investors (FIIs) sold shares worth a net Rs 73.67 crore on Thursday, 20
September 2012, as per the provisional data from the stock exchanges. Earlier,
FIIs made heavy purchases of Indian stocks. FIIs bought shares worth a net Rs
6267.30 crore from secondary markets in three sessions from 14 to 18 September
2012, as per data from Securities & Exchange Board of India (Sebi).
The government on
Thursday evening braved intense political opposition to notify the rules for
allowing 51% foreign direct investment (FDI) in multi-brand retail. The
government also notified on Thursday the relaxed conditions for single brand
retail as well as the norms for allowing 49% investment by foreign airlines in
Indian carries and permitted greater foreign investment in some sections of the
broadcasting sector.
The Congress led UPA
government will become a minority government with six ministers of Trinamool
Congress set to formally submit their resignation letters to President Pranab
Mukherjee today, 21 September 2012. Trinamool Congress early this week decided
to withdraw from the government due to a recent hike in diesel prices, the
government's decision to cap subsidised LPG for households and to allow 51% FDI
in multi-brand retail. As per media reports, Prime Minister Manmohan Singh will
addresses the nation today, 21 September 2102, to explain the economic
rationale behind the government's decisions to hike fuel prices and allow
foreign supermarkets into the country.
With the TMC formally
withdrawing support, UPA will now have just 254 MPs, lower than the half way
mark of 271 in total strength of 540 of 15th Lok Sabha. There will be no
immediate threat to the government's survival if Bahujan Samaj Party (BSP) with
21 MPs, Samajwadi Party with 22 MPs, Rashtriya Janata Dal (RJD) with 4 MPs and
Janata Dal (Secular) with 3 MPs continue to provide outside support to the UPA.
The outlook for winter
crops has improved due to the annual monsoon rains' delayed withdrawal, which
has provided crops with badly needed moisture after months of insufficient
rainfall. The monsoon rains usually leave India by 1 September, but this year
rainfall began to pick up in late August, after insufficient rain in preceding
months forced four major agricultural states to declare a drought. The rains
are now expected to begin departing from northwest regions by Monday, 24
September 2012, the state-run India Meteorological Department said on
Wednesday, 19 September 2012. The overall rainfall deficit for the monsoon
season has narrowed to 5% below the long-term average from around 13% in July
and 29% in June. The late rain was unexpected. In fact, weather department had
forecast that an El Nino would emerge in September. The weather event usually
limits rainfall in India.
Farm Secretary Ashish
Bahuguna on Wednesday, 19 September 2012, said that the late rainfall would
mitigate damage to summer crops caused by the earlier rain shortfall, but
wouldn't result in a dramatic improvement. The insufficient rain is expected to
hurt production of rice, sugar cane and corn. The government will release its
latest crop estimate for the year that started on 1 July 2012 on Monday, 24
September 2012, Mr. Bahuguna said. The monsoon rains--which make up around 70%
of India's annual rainfall--are crucial to the nation's agriculture sector and
broader economy. More than 60% of the country's farmland is rain-fed. The
timing, distribution and quantity of rainfall are all important for crops. The
four-month southwest monsoon season that starts from June accounts for almost
70% of total annual moisture that Indian soil receives in a year.
The Reserve Bank of
India Monday, 17 September 2012, announced a reduction of 25 basis points in
the cash reserve ratio (CRR) of scheduled banks to 4.5% of their net demand and
time liabilities (NDTL) effective the fortnight beginning 22 September 2012
from current 4.75% after mid-quarter review of monetary policy. The reduction
in CRR will inject around Rs 17000 crore of primary liquidity into the banking
system, RBI said in a statement. The RBI kept its policy rate viz. the repo
rate unchanged at 8%, stating that inflationary pressures, both at wholesale
and retail levels, remain strong. As inflationary tendencies have persisted,
the primary focus of monetary policy remains the containment of inflation and
anchoring of inflation expectations, RBI said.
Finance Minister P.
Chidambaram, Monday, 17 September 2012, said the government will unveil more
measures to narrow fiscal deficit and to boost economic growth, which may
encourage the central bank to cut interest rates at its next monetary policy
review on 30 October 2012. He didn't elaborate on what the measures could be.
RBI is scheduled to undertake Second Quarter Review of Monetary Policy -
2012-13 on 30 October 2012.
The Cabinet Committee
on Political Affairs (CCPA) raised price of heavily subsidised diesel by Rs 5
per liter on 13 September 2012 to balance government's fiscal deficit
situation. The CCPA also restricted the supply of subsidized LPG cylinders to
each consumer to six cylinders (of 14.2 kg) per annum.
Finance Minister P.
Chidambaram early this month said that India is making consistent efforts to
check the abuse of a double-taxation-avoidance pact it has with Mauritius.
India has in the past said it is considering a review of the treaty in an
effort to boost tax revenue. An India-Mauritius joint working panel was set up
in 2006 to put in place adequate safeguards for preventing the misuse of the
double-taxation-avoidance agreement between the two countries. India, in the
past, has said that Mauritius was unwilling to cooperate on this issue.
Mauritius says it has taken India's concerns seriously.
Traditionally,
Mauritius has accounted for nearly 40% of India's foreign investment. Under the
avoidance of double taxation treaty, companies that invest through Mauritius do
not have to pay tax in India but only have to pay tax in the island. But
capital gains tax is close to zero in Mauritius, making it a popular investment
hub.
India wants to
renegotiate the double taxation treaty with Mauritius to check round-tripping,
in which money is moved out of one country to another and brought back under
the garb of foreign capital, taking advantage of tax breaks. Meanwhile, a
committee appointed by the government to review the controversial general
anti-avoidance rules (GAAR) early this month suggested deferring the
implementation of anti-avoidance rules by three years. "Where Circular No.
789 of 2000 with respect to Mauritius is applicable, GAAR provisions shall not
apply to examine the genuineness of the residency of an entity set up in
Mauritius," the committee said.
The committee has also
recommended that the government should abolish the tax on gains arising from
transfer of listed securities, whether in the nature of capital gains or
business income, to both residents as well as non-residents. The panel has said
the government might consider increasing the rate of Securities Transaction Tax
(STT) appropriately to make the proposal tax neutral. At present, short-term
capital gains on equities are taxable at the rate of 15%. Holding period of
less than one year is considered as short term. There is no long term capital
gains tax on sale of shares. Business income is taxed at 30%.
Distinguishing capital
gains and business income depends on several factors, and disagreements have
resulted in numerous litigation cases between the Revenue Department and
taxpayers, the committee said in its report.
Asian stocks rose,
Friday as Apple Inc.'s iPhone 5 debut boosted information technology shares and
energy companies advanced on higher crude prices. Key benchmark indices in
China, Hong Kong, Japan, Singapore, South Korea and Taiwan rose by between
0.32% to 0.93%. But, Indonesia's Jakarta Composite fell 0.17%.
The Japanese central
bank moved to ease monetary policy Wednesday, saying it would buy more
government bonds and other assets, following the United States Federal Reserve
in a show of resolve to shore up a shaky economic recovery. The Bank of Japan
will expand its asset purchase and loan program by 10 trillion yen, or $126
billion, to 80 trillion yen, the bank announced after a two-day board meeting
that ended Wednesday. The purchase program was also extended six months, to the
end of 2013. The program aims to stimulate economic growth by adding to bank
reserves and driving down the cost of lending, prompting more money to flow
through the economy. The Bank of Japan downgraded its assessment of the
country's export-driven economy, citing slower global demand and fresh
uncertainties caused by anti-Japan protests this week in China, a big trading
partner. As expected, the bank kept its benchmark interest rate at a range of
zero to 0.1 percent.
Central banks have
been stepping in with monetary-policy easing to limit weakness in the global
economy, with bond-buying plans by the Federal Reserve last week and the Bank
of Japan on Wednesday marking the latest efforts in this direction.
Trading in US index
futures indicated that the Dow could gain 53 points at the opening bell on
Friday, 21 September 2012. US stocks ended Thursday's session little changed,
as investors weighed more data pointing to an ongoing slowdown in the global
economy. US manufacturing ended its weakest quarter of growth in three years
this month, data showed on Thursday, while the Philadelphia Federal Reserve
Bank said its business activity index in the U.S. mid-Atlantic region shrank in
September for a fifth straight month, though the pace of contraction lessened.
Election for a new
president in the United States, the world's biggest economy, is scheduled on 6
November 2012.
+POWERED BY: CAPITAL MARKET NEWS
