http://asian-aviation-news.aerosoftseo.com/
http://asian-aviation-news.blogspot.com/
Key policy decisions by the Indian government on Thursday, 15 September 2011 and a coordinated decision from global central banks on Thursday, 15 September 2011, to boost dollar liquidity in Europe, which helped ease concerns there about the prospect of another funding crisis, kept sentiment upbeat. The government's decision to defer the mega Rs. 11000 crore follow-on public offer (FPO) of ONGC helped ease concerns of the large issue sucking secondary market liquidity.
The market breadth was positive. Interest rate sensitive banking and realty stocks rose ahead of RBI's monetary policy review. Airline stocks fell as PSU OMCs hiked aviation turbine fuel prices. State-run ONGC jumped close to 7% as the latest petrol price hike could help reduce the subsidy sharing burden of the state-run oil exploration major which is required to share under-recoveries at state-run oil marketing companies (PSU OMCs) on selling diesel and cooking fuels at government-set prices.
The market pared gains soon after a firm opening triggered by a rally in Asian shares. The market regained strength later. The market trimmed gains in morning trade. The Sensex once again regained strength later. A bout of volatility was witnessed in mid-morning trade as key benchmark indices trimmed gains after hitting fresh intraday highs to hit fresh intraday lows.
At 11:20 IST, the BSE Sensex was up 112.36 points or 0.67% to 16988.90. The index jumped 206.75 points at the day's high of 17,083.29 in morning trade, its highest level since 9 September 2011. The index gained 88.08 points at the day's low of 16,964.62 in mid-morning trade.
The S&P CNX Nifty was up 29.45 points or 0.58% to 5,105.15. The Nifty hit a high of 5,131.65 in intraday trade, its highest level since 9 September 2011. The Nifty hit a low of 5,092.65 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,310 shares rose and 960 shares fell. A total of 108 shares remained unchanged.
Among the 30-share Sensex pack, 23 rose and the rest fell. NTPC, Tata Power Company and Sterlite Industries rose by between 2.08% to 2.31%. Jaiprakash Associates, Bharti Airtel and Hindustan Unilever fell by between 0.63% to 1.22%.
Index heavyweight Reliance Industries (RIL) fell 0.02% to Rs. 835, off the day's high of Rs. 849.30. The company's advance tax payment reportedly jumped 67% to about Rs. 2000 crore in Q2 September 2011 over Q2 September 2010.
BP PLC will be able to start work on jointly developing RIL's oil and gas blocks in India only after a revised production-sharing contract is drafted and signed by the stakeholders, the upstream regulator said on Thursday, 15 September 2011. The amendment to the production-sharing contract is yet to be signed. BP will come in only when the amendment is signed, S.K. Srivastava, Director at the Directorate General of Hydrocarbons, told reporters on the sidelines of an industry conference. In the production-sharing contract, the explorers agree with the government to bear risks, production and development costs in return for a share of production.
Srivastava said that RIL is yet to approach the regulator with a new draft of the contract. RIL on 30 August 2011 closed a deal with BP to sell a 30% stake in its 21 oil and gas exploration blocks in India to the UK-based explorer.
RIL had, last week, denied inflating costs on its D6 gas field in the Krishna-Godavari (KG) basin. RIL made the clarification after CAG said in its final report submitted to the parliament on Thursday, 8 September 2011, that RIL initially estimated capital expenditure of D-1 and D-3 gas discovery at $2.4 billion, which it later revised to $8.8 billion.
State-run ONGC jumped 5.77% as the latest petrol price hike could help reduce the subsidy sharing burden of the state-run oil exploration major which is required to share under-recoveries at state-run oil marketing companies (PSU OMCs) on selling diesel and cooking fuels at government-set prices.
Meanwhile, the government today, 16 September 2011, deferred the about Rs. 11000-crore follow-on public offer (FPO) of ONGC. ONGC said in a statement that the government has decided not to proceed with the FPO of ONGC as per the timeline mentioned in the Red Herring Prospectus dated 5 September 2011 and it will evaluate its decision in relation to the FPO in due course. The FPO was scheduled to open on 20 September 2011 and close on 23 September 2011.
Tata Motors, India's biggest auto maker by revenue, jumped 4.5% after company said its global vehicle sales in August rose 3% from a year earlier to 87,459 units. The company said sales at its UK-based luxury car unit, Jaguar Land Rover, jumped 31% to 21,242 vehicles during the month. Sales of Land Rover sport-utility vehicles surged 43% to 17,833 units, but Jaguar sedan sales fell 10% to 3,409 autos. Global sales of all trucks and buses rose 17% to 48,023 units, the company said. The company's advance tax payment reportedly remained unchanged at Rs. 90 crore in Q2 September 2011 over Q2 September 2010.
Interest rate sensitive banking stocks rose ahead of RBI's monetary policy review today, 16 September 2011. India's second largest private sector bank by net profit HDFC Bank rose 0.83%, with the stock gaining for the third straight day. HDFC Bank's advance tax payment reportedly rose 33.33% to Rs. 800 crore in Q2 September 2011 over Q2 September 2010.
India's largest private sector bank by net profit ICICI Bank rose 1.36%, with the stock gaining for the third straight day. ICICI Bank's advance tax payment reportedly remained unchanged at Rs. 600 crore in Q2 September 2011 over Q2 September 2010.
India's largest bank by branch network and net profit State Bank of India (SBI) gained 0.57% to Rs. 1909, extending Thursday's 3.64% gains on bargain hunting. The stock had hit a 52-week low of Rs. 1,812.90 in intraday trade on Wednesday, 14 September 2011. The government is likely to take a call shortly on infusing capital into SBI. SBI requires Rs. 20000 crore to fund its growth plans over the next two financial years. SBI's advance tax payment reportedly fell 10.52% at Rs. 1700 crore in Q2 September 2011 over Q2 September 2010.
HDFC rose 2.18% extending Thursday's 1.56% gain. The housing finance firm's advance tax payment reportedly rose 9.52% to Rs. 460 crore in Q2 September 2011 over Q2 September 2010.
Interest rates sensitive realty stocks rose on the eve of RBI's monetary policy review today, 16 September 2011. DLF, HDIL, Indiabulls Real Estate and Unitech gained by between 0.01% to 2.04%.
Airline stocks fell as PSU OMCs hiked aviation turbine fuel prices (ATF) prices on Thursday, 15 September 2011. ATF constitutes more than 50% of operating cost for airliners. Jet Airways (down 2.41%) and SpiceJet (down 1.02%) edged lower. Kingfisher Airlines rose 0.2%.
Prices of jet fuel are directly linked to crude oil prices. State-run oil marketing companies--Indian Oil Corporation, BPCL and HPCL revise jet fuel prices on the 1st and 16th of every month based on the average international crude price in the preceding fortnight. State-owned oil companies on Thursday hiked jet fuel, or ATF, price by 2.5% in line with firming of international oil rates. Aviation Turbine Fuel (ATF) price at Delhi's T3 airport was hiked by Rs. 1,429 per kilolitre (kl), or 2.5%, to Rs. 57,689 per kl with effect from Thursday midnight.
A recent India investor survey report prepared by J P Morgan Asset Management-ValueNotes expects benchmark Sensex to trade between 20,000 and 22,000 by end of this year. According to the report, the investment sentiment is affected by concerns such as recession, frequent hikes in interest rates and volatility in the domestic investment environment. Despite witnessing a 4.2-point decline from the last quarter, the 'Retail Investor Confidence Index' ranks the highest at 137.5 points. Retail investors' activity in mutual funds has improved 11% since the last quarter, the survey said. The survey was carried out from 22 July to 4 August 2011.
The survey also shows that investors are becoming cautious as preserving capital emerges as a popular investment strategy among retail investors (40%). However, 40% of investors, in comparison to 57% in March 2011, are expected to turn somewhat aggressive about their investment strategy over the coming six months.
The advance tax for the September 2011 quarter paid by top 100 Mumbai-based companies has reportedly recorded a moderate growth of 5% at about Rs. 17,224 crore (Rs 16,366 crore) as most banks and oil companies reported a flat growth in their tax payout.
The key event today, 16 September 2011, is the RBI's mid-quarter policy review at 12:00 IST. Eleven out of twelve economists polled by Capital Market expect a 25 basis points (bps) hike in repo rate, the key short-term policy interest, from the Reserve Bank of India at its mid-quarter policy review today, 16 September 2011. RBI has said that a change in its anti-inflationary monetary stance will be motivated by signs of a sustainable downturn in inflation. The Reserve Bank of India has raised its key policy rate 11 times in the past 18 month to tame high inflation.
Economic Affairs Secretary R. Gopalan on Thursday, 15 September 2011, said that the government has raised the limit of overseas borrowing for companies to $750 million from $500 million. Indian companies can also now raise loans up to $1 billion in Chinese yuan, Mr. Gopalan added. The relaxation of overseas borrowing rules will help Indian companies tap cheaper cash abroad amid rising credit costs in the local market. US and European countries have near-zero interest rates in a bid to support weak economic growth.
The government on Thursday, 15 September 2011, cleared the ambitious $90-billion Delhi-Mumbai industrial corridor. The Delihi-Mumbai industrial corridor project will set up nine mega industrial zones of about 200-250 square kilometre (km) along with a 1,500 km high speed freight line connecting the two cities. It will include three ports and six airports, as well as a six-lane intersection-free expressway connecting the two cities and a 4,000 megawatts (MW) power plant and also set up seven new cities.
Meanwhile, the public private partnership (PPP) approval committee approved projects worth Rs. 18000 crore on Thursday that include a housing project for para-military forces and a road project among others.
Finance Minister Pranab Mukherjee on Tuesday, 13 September 2011, said central banks in emerging economies have been forced to raise interest rates repeatedly as they battle high inflation, exposing them to volatile capital flows. An issue of immediate concern for emerging economies is managing large capital flows, he said. Large and volatile capital flows to emerging markets can be destabilizing as they lead to high exchange rate volatility and in some cases make it incumbent to maintain high levels of foreign exchange reserves as an insurance against sudden and large-scale flight of international capital.
Given the lackluster initial FII response to the government's sharply raising the ceiling of FII investment in long-term corporate bonds issued by the companies in the infrastructure sector in March 2011, the government on Monday, 12 September 2011, further relaxed the norms on FII investment in such bonds. The Finance Ministry said in a statement that FIIs can now invest in long-term infra bonds, subject a ceiling of $5 billion limit, which have an initial maturity of five years or more at the time of issue and residual maturity of one year at the time of first purchase by FIIs. These investments are subject to a lock-in period of one year. FIIs can trade amongst themselves in these bonds but cannot sell to domestic investors during the lock-in period of one year.
FIIs can also now invest, subject to a ceiling of $17 billion, in long-term infra bonds which have an initial maturity of five years or more at the time of issue and residual maturity of three years at the time of first purchase by FIIs. These investments are subject to a lock-in period of three years. During the three-year lock-in period, FIIs can trade amongst themselves but cannot sell to domestic investors. The Securities & Exchange Board of India (Sebi) is expected to issue notifications incorporating these changes in the scheme by 15 October 2011.
Sebi had in early August 2011 allowed Qualified Foreign Investors (QFIs) to subscribe to Mutual Fund Debt Schemes which invest in the infrastructure sector subject to a total overall ceiling of $3 billion within the total ceiling of $25 billion.
On the macro front, the recent steep slide in the rupee against the dollar has added to concerns of high inflation as India imports majority of its crude oil requirements. Lower rupee will raise cost of imports which could worsen the current account deficit.
The food inflation dipped marginally to 9.47% for the week ended 3 September 2011 year-on-year, coming down from the 9.55% registered in the previous week, according to official data released Thursday. The primary articles index, which has a 20.12% weight in the wholesale price index, rose by 13.04% in the week under review as compared to 13.34% rise in the previous week, according to data released by the commerce and industry ministry. The index for fuel and power rose 13.01% as against 12.55% in the previous week.
Inflation as measured by the wholesale price index (WPI) accelerated to 9.78% in August 2011 from the previous month's provisional reading of 9.22%, data released by the government on Wednesday, 14 September 2011, showed. The inflation reading exceeded market expectations. The government also revised upwards the inflation rate for June 2011 to 9.51% from a provisional 9.44% rise reported earlier.
Planning Commission deputy chairman Montek Singh Ahluwalia on Monday, 12 September 2011, said at a conference that private funding has to make up half of the infrastructure investment of $1 trillion planned for in the five years during 2012-2017. Prime Minister Manmohan Singh said at the conference that to overcome the fund crunch for infrastructure projects, the government has proposed to set up a $11 billion fund to help finance infrastructure projects. We have also constituted a high-level committee to suggest measures necessary for financing our ambitious program in infrastructure development, Mr. Singh said.
Prolonged rainfall in the latter part of the season has helped ease concerns that this year's monsoon might drop below the long-term average after a brief lull in July, when the country usually receives a third of its monsoon rains. The monsoon was 3% above average till 7 September 2011, as per the latest data from Indian Meteorological Department (IMD). Most parts of the country received average to above-average rainfall this year, but the season was marked by both lulls and periods of intense rainfall in western and eastern regions.
While overall rainfall plays a key part in determining farm output, the timing and distribution of rains are also important to ensure a good crop. The unusual pattern of this year's rains may delay harvesting, affecting the yield from key summer-sown crops such as rice, oilseeds, sugarcane and cotton. Rice acreage as of 2 September 2011 was up 12% from last year at 35.75 million hectares.
A good monsoon season can typically boost rural farm incomes and have an impact on the wider economy through increased spending on consumer goods as well as reduced prices of food items. But food prices may not necessarily fall if delayed and excess rains in some regions affect crop yields.
Moody's Investors Services affirmed its Baa3 rating for India's foreign currency government debt and its Ba1 rating for local currency debt in an annual credit analysis released last week. The ratings firm assigned a positive outlook to India's rupee-denominated bonds, saying it will consider a unified Baa3 rating for all bonds if India improves its fiscal position and its commitment to strengthening the domestic market. The outlook for foreign-currency debt is stable.
The report was upbeat about India's ability to weather a global economic downturn. While it is not immune to an international growth slowdown, the strength of domestic demand and the diversity of the economy provides a buffer against a deceleration in globally exposed sectors, the report said. It noted that India's foreign currency reserves equal four times its foreign debt obligations.
A debt-to-GDP ratio of 71% is cause for concern, as interest on this debt eats up 25% of India's revenues annually. However, Moody's expects that continued GDP growth and incremental fiscal consolidation efforts will continue to lower the government debt/GDP ratio, the report said.
India's merchandise exports grew 44.2% in August 2011 from a year earlier, totaling $24.3 billion, sharply slowing from the previous month's pace, Commerce Secretary Rahul Khullar said last week. Imports in the just-ended month rose 41.8% from a year earlier to $38.4 billion, which widened the trade deficit to $14.1 billion from $11.1 billion in July.
Asian stocks surged on Friday, 16 September 2011, with news of global central banks' plan to boost dollar liquidity in Europe, helping to alleviate concerns there about the prospect of another funding crisis. The key benchmark indices in China, Hong Kong, Indonesia, Singapore, Japan, South Korea and Taiwan rose by between 0.39% to 3.92%.
Concerns over Europe's troubles appeared to recede Friday after news of the central-bank moves followed a pledge made earlier in the week by Germany and France to support Greece as it struggles to cut its debt pile. The European Central Bank, the Bank of England, the Bank of Japan, the Swiss National Bank and the Federal Reserve on Thursday, 15 September 2011, said that they will provide extra dollar liquidity to commercial banks. The move appeared to calm some fears of another credit crunch, as Europe struggles to contain its sovereign-debt crisis.
A two-day European Union finance ministers' meeting, also to be attended by US Treasury Secretary Tim Geithner, begins today, 16 September 2011.
Trading in US index futures indicated that the Dow could gain 16 points at the opening bell on Friday, 16 September 2011. US stocks rose for a fourth day on Thursday as coordinated central bank action calmed fears that Europe's financial sector was headed for a credit freeze due to the region's sovereign debt crisis. On the macro front, weekly US jobless claims hit their highest level since late June and a gauge of New York state factory activity contracted in September. Another report showed manufacturing activity in the Mid-Atlantic region contracted for a second month in a row.
The Federal Open Market Committee (FOMC) is scheduled to undertake a two-day policy review on US interest rates on 20 and 21 September 2011. It remains to be seen if the Federal Reserve announces further measures to revive the US economy. Among the options that the Fed may consider include another round of quantitative easing or QE3, the Operation Twist which is the purchase of long-term verses selling short-term bonds so as to lower long-term yields, and lowering the rate on excess reserves held by banks at the Fed in order to increase the monetary aggregates.
No comments:
Post a Comment