Key benchmark indices extended losses to hit fresh intraday low in late trade as stocks fell across the globe after US House Republican leaders on Thursday, 20 December 2012, abruptly canceled a vote on a tax-cut bill, sparking fears that the parties remain far apart on a compromise budget deal. United States is the world's biggest economy. The barometer index, BSE Sensex, was provisionally down 216.59 points or 1.11%, up close to 15 points from the day's low and off about 155 points from the day's high. The market breadth was weak. BSE Mid-Cap and Small-Cap index dropped more than 1% each.
Index heavyweight and cigarette maker ITC reversed intraday losses in late trade. Another index heavyweight Reliance Industries (RIL) extended losses in late trade. Realty stocks edged lower. Adani Enterprises rose as the Offer for Sale (OFS) of the company's shares through the stock exchanges mechanism was fully subscribed. Auto stocks dropped for the second straight day. Aviation stocks also edged lower for the second straight day.
Shares in Bharti Airtel edged lower on reports the Central Bureau of Investigation (CBI) today, 21 December 2012, filed charges against Bharti Airtel and Vodafone Group Plc's India unit as part of a probe into alleged corruption in allocation of mobile phone airwaves a decade ago. M&M Financial Services rose after the board of directors of company today, 21 December 2012, announced a 5-for-1 stock split.
The market edged lower in early trade on weak Asian stocks. The market extended initial losses to hit fresh intraday low in morning trade. The Sensex weakened once again after trimming intraday losses in mid-morning trade. Weakness continued on the bourses in early afternoon trade. Key benchmark indices trimmed losses after hitting fresh intraday low in afternoon trade. Weakness continued on the bourses in mid-afternoon trade.
As per provisional figures, the BSE Sensex was down 216.59 points or 1.11% to 19,237.33. The index lost 232.80 points at the day's low of 19,221.12 in late trade, its lowest level since 18 December 2012. The index fell 59.37 points at the day's high of 19,394.55 in opening trade.
The S&P CNX Nifty was down 70.65 points or 1.19% to 5,845.75, as per provisional figures. The index hit low of 5,841.65 in intraday trade, its lowest level since 18 December 2012. The index hit a high of 5,888 in intraday trade.
The BSE Mid-Cap index was down 1.5% and the BSE Small-Cap index declined 1.41%. Both these indices underperformed the Sensex.
The total turnover on the BSE amounted to Rs 2214 crore, lower than Rs 2423 crore on Thursday, 20 December 2012.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,916 shares declined and 998 shares rose. A total of 105 shares were unchanged.
From the 30-share Sensex pack, 28 stocks declined while only two of them gained.
Index heavyweight Reliance Industries (RIL) was down 1.68% to Rs 823. Russia's Spirit DPS early this week said that Indian telecom operator Infotel, a subsidiary of Reliance Group, has licensed its software TeamSpirit Voice and Video Engine. "Reliance intends to invest $10 billion in its LTE network and has turned to Spirit's software products for voice and video calls over LTE instead of waiting for phone makers who are slow in offering handsets transmitting voice and video in 4G networks. The lack of mobile devices supporting VoLTE (Voice-over-LTE) drives a growing number of carriers to implement a software-only product, which is more flexible, scalable and offers a quicker time to market. By using Spirit engines, Reliance will be able to offer its subscribers high-quality services as an alternative to Skype over cellular networks and attract new high-value subscribers that used services from other operators and commercial OTT service providers", Spirit DPS said in a statement.
RIL has bought back 4.62 crore shares for about of Rs 3358.09 crore till 11 December 2012 under its 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.
ONGC declined 1.15%. The board of directors of ONGC today, 21 December 2012, announced interim dividend of Rs 5 per share for the year ending 31 March 2013 (FY 2013). The actual payment of interim dividend to the shareholders will start from 27 December 2012, ONGC said
Index heavyweight and cigarette maker ITC rose 0.59% to Rs 289.40 on defensive buying. The stock hit a high of Rs 291.80 and low of Rs 282. 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.
Mahindra & Mahindra Financial Services rose 1.12%. The board of directors of Mahindra & Mahindra Financial Services today, 21 December 2012, announced a 5-for-1 stock split. The board approved sub-division (stock-split) of each equity share of the face value of Rs 10 each into 5 equity shares of the face value of Rs 2 each.
Aviation stocks edged lower for the second straight day. Jet Airways (India) (down 7.28%), Spicejet (down 4.96%) and Kingfisher Airlines (down 0.84%), edged lower.
The Ministry of Civil Aviation after trading hours on Wednesday, 19 December 2012, said that 4.65 lakh more passengers travelled in India in November 2012 compared to October 2012. As per the passenger traffic data submitted by various domestic airlines, the total domestic passengers carried by the scheduled domestic airlines in November 2012 stood at 50.20 lakh, compared with 45.55 lakh in October 2012, the Ministry of Civil Aviation said.
Shares in Bharti Airtel fell 2.78% on reports the Central Bureau of Investigation (CBI) today, 21 December 2012, filed charges against Bharti Airtel and Vodafone Group Plc's India unit as part of a probe into alleged corruption in allocation of mobile phone airwaves a decade ago. The CBI probe concerns alleged irregularities in allotting mobile spectrum in 2002 during the previous government led by the Bharatiya Janata Party (BJP), which is now in opposition.
The investigation follows a scandal over airwave allocations in 2008 that rocked the ruling Congress Party-led government after a state auditor said the government may have lost up to $32 billion due to below-market price sales of radio spectrum. The Supreme Court had asked the CBI to investigate any possible irregularities in the granting of mobile permits from 2001 to 2007.
Adani Enterprises fell 0.07% to Rs 271.05, off the day's high of Rs 285.30. As per BSE data, investors put in bids for a total of 2.38 crore shares as of 15:50 IST for the Offer for Sale (OFS) of the company's shares through the stock exchanges mechanism today, 21 December 2012, at indicative price of Rs 283.99. The indicative price is the volume weighted average price of all the valid/confirmed bids. The promoters of Adani Enterprises had offered 2.3 crore equity shares of the company via the OFS. The OFS started at 9:15 IST and ended at 15:30 IST. The floor price for the OFS was set at Rs 282. Ahead of the OFS, shares of Adani Enterprises plunged 6.98% to settle at Rs 271.25 on BSE on Thursday, 20 December 2012.
Realty stocks edged lower. Unitech, HDIL, D B Realty and Sobha Developers fell by between 2.77% to 6.62%.
Realty major DLF declined 2.88%. DLF Global Hospitality (DGHL), a 100% step-down subsidiary of DLF and Mr. Adrian Zecha, the founder and Chairman of the Amanresorts Group of luxury resorts, on Wednesday, 19 December 2012, announced the signing of a definitive agreement to effect Mr. Zecha's Management Buy-Out (MBO) of DGHL's 100% shareholding in Silverlink Resorts, the holding company for Amanresorts. The value of the MBO is at an enterprise value of approximately $300 million and it does not include the Aman New Delhi property (Lodhi Hotel) which will be retained by DLF. The transaction is slated for final closure by end-Feb 2013 and is subject to usual closing conditions, DLF said.
The Reserve Bank of India early this week said that upon a review of the policy related to External Commercial Borrowings (ECB) and keeping in view the announcement made in the Union Budget for the Year 2012-13, it has decided to allow External Commercial Borrowings (ECB) for low cost affordable housing projects as a permissible end-use, under the approval route. For the financial year 2012-13, an aggregate limit of $1 billion is fixed for ECB under the low cost affordable housing scheme which includes ECBs to be raised by developers/builders and NHB/specified Housing Finance Companies (HFCs), RBI said on Monday, 17 December 2012. This limit will be reviewed annually, RBI said. A low cost affordable housing project for the purpose of ECB would be a project in which at least 60% of the permissible FSI would be for units having maximum carpet area up to 60 square meters.
Auto stocks dropped for the second straight day. Tata Motors fell 1.59% to Rs 300.50. The company early this week announced the launch of a new variant of its crossover vehicle Tata Aria viz. Tata Aria Pure LX with a bouquet of features. The Tata Aria Pure LX has been priced at Rs 9.95 lakh (ex-showroom Bangalore), Tata Motors said.
Mahindra & Mahindra slipped 1.44% to Rs 938. The stock had hit record high of Rs 973.35 in intraday trade on Wednesday, 19 December 2012. The company early this week said that it intends to purchase Navistar Group's stake in Mahindra Navistar Automotives and Mahindra Navistar Engines for a total consideration of about Rs 175 crore. Following the purchase of Navistar Group's stake in Mahindra Navistar Automotives (MNAL) and Mahindra Navistar Engines (MNEPL), both MNAL and MNEPL would become wholly-owned subsidiaries of Mahindra & Mahindra (M&M). M&M would take complete ownership of operations and continue to sell MNEPL and MNAL products. The sale requires regulatory approval in India, is subject to the conclusion of definitive agreements, and is expected to be completed by early 2013, M&M said in a statement.
The agreement allows Navistar to continue sourcing components from India while Mahindra would continue to provide engineering services to Navistar. Navistar Group would continue to support M&M through a license agreement and extend necessary support to MNAL and MNEPL for the purpose of business continuity, M&M said in a statement.
Navistar and M&M had entered into the MNAL joint venture (JV) in late 2005 to manufacture trucks and buses in India, source components and provide engineering services for the design and development of Navistar vehicle products. The MNEPL JV was formed in 2007 and began producing engines in 2010.
Navistar International Corporation is a holding company whose subsidiaries and affiliates produce International brand commercial and military trucks, MaxxForce brand diesel engines, IC Bus brand school and commercial buses, and Navistar RV brands of recreational vehicles. The company also provides truck and diesel engine service parts.
Small car maker Maruti Suzuki India declined 1.05% to Rs 1501. The stock had struck 52-week high of Rs 1,537 in intraday trade on 7 December 2012. The car major will reportedly raise prices of cars by up to Rs 20,000 from January 2013 to counter currency fluctuations. Japan accounts for up to a fourth of parts sourced by Maruti from overseas. More than half of the company's foreign exchange exposure is to the yen, as it also pays royalty its parent Suzuki for using its technology.
Maruti Suzuki India early this month said its total sales rose 12.5% to 1.03 lakh units in November 2012 over November 2011. Domestic sales rose 9.7% to 90,882 units in November 2012 over November 2011. Export sales jumped 38.4% to 12,318 units in November 2012 over November 2011.
Minister of Corporate Affairs Mr. Sachin Pilot on Monday, 17 December 2012, said that the Competition Commission of India (CCI), on receipt of information under Section 19(1) (a) of the Competition Act, 2002 alleging anti-competitive practices against certain car manufacturers, has initiated proceedings under the provisions of the Competition Act, 2002.
Two wheeler makers edged lower. Hero MotoCorp slipped 0.57%.
Bajaj Auto declined 1.11% to Rs 2,090. The stock had hit record high of Rs 2,155.20 in intraday trade on Wednesday, 19 December 2012. Bajaj Auto's total sales fell 1% to 3.72 lakh shares in November 2012 over November 2011. Motorcycle sales fell 2% to 3.26 lakh units in November 2012 over November 2011. The company said sales bigger and sportier Pulsar and Discover brands contributed 68% of motorcycle sales in November 2012. Sales of Discover brand totaled 1.5 lakh units in November 2012.
Bajaj Auto's three-wheeler sales rose 7% to 45,566 units in November 2012 over November 2011. The company said growth in its diesel three-wheeler sales and growth in the company's market share in this segment continues. Bajaj Auto's total exports fell 4% to 1.24 lakh units in November 2012 over November 2011.
Indian companies will start unveiling Q3 December 2012 results from mid-January 2013. Investors and analysts will closely watch the management commentary that would accompany the result which could cause revision in their future earnings forecast of the company for the current year and or next year. Bajaj Auto unveils Q3 results on 16 January 2013. HDFC Bank unveils Q3 results on 18 January 2013. HDFC unveils Q3 results on 21 January 2013.
On the macro front, the rate of inflation based on the Consumer Price Index-Agricultural Labourers increased to 10.31% in November 2012 from 9.85% in October 2012, the Ministry of Labour & Employment said after trading hours on Thursday, 20 December 2012. The rate of inflation based on the Consumer Price Index-Rural Labourers edged up to 10.47% in November 2012 from 9.84% in October 2012.
The Reserve Bank of India (RBI) undertakes Third Quarter Review of Monetary Policy 2012-13 on 29 January 2013. RBI kept its key policy rate viz. the repo rate unchanged at 8% after mid-quarter monetary policy review on 18 December 2012. The central bank said that in view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards. Liquidity conditions will be managed with a view to supporting growth as stated in the Second Quarter Review (SQR) of Monetary Policy 2012-13 on 30 October 2012, thereby preparing the ground for further shifting the policy stance to support growth, RBI said. Overall, recent inflation patterns and projections provide a basis for reinforcing October guidance about policy easing in the fourth quarter, RBI said. However, risks to inflation remain and accordingly, even as the policy emphasis shifts towards growth, the policy stance will remain sensitive to these risks, RBI said.
RBI said it is closely monitoring the evolving growth-inflation dynamic and will update the formal numerical assessment of its growth and inflation projections for 2012-13 as part of the third quarter review in January 2013.
The Lok Sabha early this week approved the much-awaited Companies Bill, 2011, making it mandatory for profit-making companies to spend on activities related to corporate social responsibility (CSR). If a company does not do so, it will have to explain the reasons for it. The Bill, aimed at improving corporate governance, also contains provisions to strengthen regulations for companies and auditing firms.
The changes in the bill include provisions that make it mandatory for firms -- those that have reported profits of Rs 5 crore or more in last three years -- to spend at least two per cent of their average net profit on CSR activities. Companies failing to meet the obligation and not disclosing reasons for it in their books of account would face action, including penalty.
The next general elections in India must be held before May 2014.
European stocks fell on Friday, 21 December 2012, after American House Republicans canceled a vote on higher taxes for top earners, fueling concern budget talks will fail. Key benchmark indices in France, Germany and UK shed by between 0.68% to 0.96%.
Asian stocks fell on Friday, 21 December 2012, after US House Republican leaders canceled a planned vote that would permit higher taxes amid stalled budget talks. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Taiwan, Singapore and South Korea fell by between 0.11% to 0.99%.
Trading in US index futures indicated that the Dow could slump 179 points at the opening bell on Friday, 21 December 2012. US stocks ended Thursday's session on a moderately positive note after Republican House Speaker John Boehner expressed optimism about reaching a budget deal with President Barack Obama. However, on Thursday evening House Republican leaders canceled a vote on a "Plan B" that would have extended tax cuts on incomes below $1 million, saying it didn't have the votes to pass. The failure to attract support among Republican members for their own leadership's bill cast a shadow over prospects for a bipartisan deal.
The US fiscal cliff refers to the year-end deadline for the expiration of hundreds of billions of dollars worth of tax cuts and the triggering of $109 billion in across-the-board spending cuts, if the US Congress fails to act. The US Congress created the hazardous deadline of 31 December 2012 in August 2011 when it agreed to a deficit deal as a way out of a deadlock over raising the US debt ceiling. The Congressional Budget Office has estimated the US economy would drop into a recession in the first half of the new year if a deal is not reached.
Purchases of existing houses increased 5.9% to a 5.04 million annual rate, the most since November 2009, the National Association of Realtors said yesterday. The data reinforces forecasts that the industry is set to contribute to annual economic growth for the first time since 2005.
The US economy grew at a 3.1% annual rate in the third quarter, more than previously reported, according to Commerce Department figures released on Thursday, 20 December 2012.
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