RIL SURGES OVER 3% Mar-12-2012

RIL SURGES OVER 3% Mar-12-2012

Date: 12.03.2012

Key benchmark indices regained strength in afternoon trade as index heavyweight Reliance Industries (RIL) jumped more than 3%. The barometer index, BSE Sensex, was up 91.73 points or 0.52%, up close to 100 points from the day's low and off about 180 points from the day's high. The market breadth was positive.

Shares of companies whose fortunes are linked to orders from Indian Railways jumped ahead of the railway budget this week. Textile stocks were mostly lower after trade secretary Rahul Khullar told reporters on Monday a panel of ministers will likely review a halt on fresh cotton exports from India in two weeks. Realty stocks were mostly higher. Capital goods stocks also gained.

The market pared gains after a firm start triggered by the Reserve Bank of India's announcement after markets hours on Friday, 9 March 2012, of a reduction in cash reserve ratio (CRR) o banks by 75 basis points to ease liquidity situation in the banking system. The market came off lows in morning trade. Key benchmark indices regained positive zone after slipping into the red in mid-morning trade. The market regained strength in afternoon trade.

At 13:20 IST, the BSE Sensex was up 91.73 points or 0.52% to 17,594.97. The index jumped 268.86 points at the day's high of 17,772.10 in opening trade, its highest level since 29 February 2012. The index fell 8.59 points at the day's low of 17,494.65 in early afternoon trade.

The S&P CNX Nifty was up 25.70 points or 0.48% to 5,359.25. The index hit high of 5,421.90 in intraday trade, its highest level since 29 February 2012. The index hit a low of 5,327.30 in intraday trade.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,474 shares rose and 1,082 shares fell. A total of 122 shares were unchanged.

Among the 30-share Sensex pack, 17 gained while the rest declined. SBI, Bajaj Auto and ICICI Bank rose by between 1.61% to 3.68%. Cipla, Infosys and M&M declined by between 1.63% to 2.24%.

Index heavyweight Reliance Industries (RIL) rose 3.13% to R 797.80 in volatile trade. The stock hit a high of R 798.80 and low of R 781 so far during the day. RIL along with BP PLC will reportedly submit a joint plan to the government to develop the D6 natural gas block and its satellite fields as an integrated unit. The proposal is significant in that it will seek approval to develop an entire block as one unit, rather than follow the current practice of getting clearance for one oil or natural gas field at a time.

In 2011, BP purchased a 30% stake in 21 RIL's oil and gas blocks across India, including D6, which is India's biggest gas discovery so far. RIL is facing declining output at D6 due to reservoir complexity, a natural decline in reserves and delays in developing satellite fields. Output at the D1, D3 and MA fields in the D6 block has plunged to about 38 million metric standard cubic meters a day (MMSCMD) from 60 MMSCMD in June 2010. It is estimated that output will fall further to 27.60 MMSCMD in the next financial year starting April, and to 22.60 MMSCMD in the year after that.

Shares of companies whose fortunes are linked to orders from Indian Railways jumped ahead of the railway budget this week. Kernex Microsystems, Kalindee Rail Nirman, Titagarh Wagons, BEML, Simplex Casting, and Stone India rose by between 0.41% to 3.78%. The Railway Budget will be presented on Wednesday, 14 March 2012.

Given the financial condition of railways, this Rail Budget is likely to seek a two-year moratorium on paying dividend to the government.

Textile stocks were mostly lower after trade secretary Rahul Khullar told reporters on Monday a panel of ministers will likely review a halt on fresh cotton exports from India in two weeks. Arvind Mills, Patspin India, Jindal Cotex, Jindal Worldwide, Alok Industries and Ruby Mills fell by between 0.65% to 2.23%. The government has flip-flopped on the issue of banning cotton exports. After saying it was lifting a ban on overseas sales of the fibre on the weekend, Khullar said on Monday no fresh exports would be allowed and only the quantity permitted to be sold before the ban will be allowed to be shipped.

Realty stocks were mostly higher. Unitech, HDIL and D B Realty rose by between 0.17% to 3.68%. But, realty major DLF fell 0.17%.

Property consultants and real estate developers have reportedly demanded industry status to the realty sector in the forthcoming Budget. They have also sought incentives to promote affordable housing and an increase in the tax exemption on home loans. To boost supply, they have also asked for a single-window clearance for real estate development projects and foreign direct investment (FDI) in multi-brand retail to create demand for retail space in shopping malls.

Capital goods shares rose after the latest data showed that capital goods production fell 1.5% in January 2012 from a year earlier, recovering sharply compared with a 16.3% decline in December 2011. Siemens, Punj Lloyd, BEML, Bhel and L&T rose by between 1.34% to 4.17%.

Foreign institutional investors (FIIs) bought shares worth a net R 1284.65 crore on Friday, 9 March 2012, as per provisional data from the stock exchanges.

Industrial production grew 6.8% in January 2012 from a year earlier, sharply higher than a revised 2.5% rise in December 2011, helped by a strong rebound in manufacturing output. Manufacturing output, which has a 75.5% weight in the index of industrial production, rose 8.5% from a year earlier in January. It had risen a revised 2.6% on year in December. Electricity production increased 3.2% from a year earlier in January while capital goods output shrank 1.5%.

The Reserve Bank of India (RBI) after market hours on Friday, 9 March 2012, surprised the markets by slashing the cash reserve ratio (CRR), by 75 basis points to 4.75% from 5.5% to ease liquidity situation. The CRR cut, effective the fortnight beginning 10 March 2012, will inject around R 48000 crore of primary liquidity into the banking system. At the 3rd quarter policy review in late January 2012, RBI had announced a cut of 50 basis points in CRR, thereby injecting R 32000 crore into the cash-strapped system.

The government will release data on inflation based on the wholesale price index (WPI) for February 2012 on Wednesday, 14 March 2012. WPI inflation for February 2012 is projected at 6.7% as per the median estimate of a poll of economists carried out by Capital Market. WPI inflation stood at 6.55% in January 2012.

Meanwhile, data on advance tax for the last installment of 15 March 2012 may provide cues on Q4 March 2012 corporate earnings.

The Reserve Bank of India (RBI) is slated to announce a mid-quarter review of the monetary policy on Thursday, 15 March 2012, a day before the presentation of the Union Budget 2012/13.

The government is working with state governments for early implementation of a goods and services tax (GST), Finance Minister Pranab Mukherjee said on 22 February 2012.

Stating that the United Progressive Alliance (UPA) was committed to honest and efficient governance, President Pratibha Patil on Monday said the country would soon be back on the high growth path of eight to nine percent from the seven percent estimated for the current fiscal. Addressing the joint session of Parliament on first day of the budget session, the President said the long-term fundamentals of the Indian economy remain robust. The government plans to achieve a 9%annual growth target in the five-year plan period ending on 31 March 2017.

Mukherjee will present the annual budget for 2012/13 on Friday, 16 March 2012, while the railways budget will be presented on Wednesday, 14 March 2012. The government will present on Thursday, 15 March 2012 the Economic Survey for 2011/12, a document on the state of economy prepared by the economic division in the ministry of finance. The annual budget is usually presented on the last working day of February. However, the budget has been delayed this time due to the assembly polls.

Reports indicate that the finance ministry is considering a proposal to increase excise duty from 10% to 12%, although still lower than the level before the 2008 financial crisis. The move is aimed at helping the government improve its fiscal situation but it is expected to push up the cost of almost all manufactured goods from food products to consumer durables and automobiles.

Meanwhile, the parliamentary standing committee on finance has given its approval to a revised version of the proposed Direct Taxes Code (DTC) Bill, 2010. The committee has recommended a more progressive tax regime, which entails widening of the income-tax slabs, increasing the exemption limit for savings and raising the ceiling for wealth tax. If accepted, these recommendations will increase disposable incomes in the hands of taxpayers, encourage savings and levy a higher tax on the rich, besides reducing compliance costs for the income-tax department.

The DTC Bill, 2010, consolidates and integrates all the direct tax laws and replaces both the Income Tax Act, 1961, and the Wealth Tax Act, 1957. The committee headed by Bharatiya Janata Party leader Yashwant Sinha, which submitted its report to the Lok Sabha speaker on Friday, 9 March 2012, has also recommended abolition of the securities transaction tax that is levied on the trading of equity shares and some other instruments.

Asian markets were trading lower on Monday, 12 March 2012, as sentiment sagged after China reported a much bigger than expected trade deficit of $31.48 billion in February, turning around sharply from a $27.28 billion surplus in January. Key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea and Taiwan were down by between 0.1% to 1.1%. Singapore's Straits Times rose 0.08%.

China's exports rose less than expected while imports climbed more than anticipated by economists, with the country importing record volumes of crude-oil in February 2012.

Trading in US index futures indicated that the Dow could fall 24 points at the opening bell on Monday, 12 March 2012.

US stocks advanced on Friday, 9 March 2012 as investors brushed off the technical default by Greece and focused instead on another strong monthly jobs report. The Dow Jones Industrial Average advanced 14.08 points, or 0.11%, to 12,922.02. The Standard & Poor's 500 Index rose 4.96 points, or 0.36%, to 1,370.87. The Nasdaq Composite index gained 17.92 points, or 0.60%, to 2,988.34.

In economic data, US employers added 227,000 jobs to their payrolls in February 2012, government data showed, while the unemployment rate held at a three-year low of 8.3%.

Powered by Capital Market - Live News