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Coal India Vaults after Changing Pricing Norms for Non-Coking Coal

  • Key benchmark indices continued their uptrend to hit fresh intraday highs in early afternoon trade on firm Asian stocks. The government's decision on Sunday, 1 January 2012, to allow qualified foreign investors to invest directly in local equities, underpinned sentiment. The barometer index, BSE Sensex, was up 318.69 points or 2.05%, up about 200 points from the day's low and off close to 15 points from the day's high. The market breadth was strong. Asian stocks rose on Tuesday, 3 January 2012, as manufacturing growth from Australia, China and India added to optimism the region's economies will withstand Europe's unresolved sovereign-debt crisis.

  • All the 13 sectoral indices on BSE were in the green. Index heavyweight Reliance Industries (RIL) edged higher. Oil exploration stocks rose as crude oil prices gained. Shares of state-run oil marketing companies (PSU OMCs) declined as a hike in petrol price was deferred again on Monday, 2 January 2012. Aviation stocks rose after state-owned oil companies recently cut jet fuel price by over 1% in line with softening in the commodity's international rates. IT stocks rose on recent slew of positive economic data in the US. Shares of organized retailers also participated in the rally.

  • The market surged in early trade on firm Asian stocks. The market extended initial gains to hit its highest level in nearly one week in morning trade. The market strengthened further to hit fresh intraday high in mid-morning trade. The uptrend continued as key benchmark indices hit fresh intraday highs in early afternoon trade.At 12:20 IST, the BSE Sensex was up 318.69 points or 2.05% to 15,836.61. The index surged 332.43 points at the day's high of 15,850.35 in early afternoon trade, its highest level since 28 December 2011. The index rose 122.64 points at the day's low of 15,640.56 in early trade.

  • The S&P CNX Nifty was up 94.70 points or 2.04% to 4,729.80. The index hit a high of 4,736.25 in intraday trade, its highest level since 28 December 2011. The index hit a low of 4,675.80 in intraday trade. The market breadth, indicating the overall health of the market, was strong. On BSE, 1,732 shares rose and 591 shares fell. A total of 98 shares were unchanged. Among the 30-member Sensex pack, 29 rose while only one of them fell. Tata Motors, Tata Steel and DLF gained by between 3.92% to 4.74%. Coal India rose 5.2%, extending Monday's 3.61% gains. The company's board of directors at a meeting held on 30 December 2011 approved switching over of non-coking coal pricing from useful heat value (UHV) based grading system to gross caloric value (GCV) based classification with effect from 1 January 2012. It is difficult to assess the exact impact as it will be based on the calorie value, Coal India said.

  • Index heavyweight Reliance Industries (RIL) rose 1.38% to Rs. 716.80, extending Monday's 2.03% gains triggered by bargain hunting after a recent slide. The stock had hit a 52-week low of Rs. 690 in intraday trade on Friday, 30 December 2011. Reliance Industries (RIL) is reportedly planning to invest Rs. 1500 crore in TV18 group. Reports stated that the money from RIL will help Raghav Bahl, the promoter of the Network18 Group, subscribe to the rights issues of both the listed companies, Network18 Media and Investments and TV18 Broadcast. As per reports, the boards of TV18 Broadcast and Network18 Media will meet on Tuesday, 3 January 2012, to discuss plans for a rights issue.

  • Reports also said that the strategic investment by RIL will be used by the Network18 Group to retire debt and eventually buy out RIL's stake in Eenadu, the pan-India vernacular language channels owned by Ramoji Rao. As per reports, Mukesh Ambani has a financial interest in Eenadu. Shares of Network18 Media jumped 19.9% to Rs. 46.40. Shares of TV18 Broadcast jumped 19.93% to Rs. 33.70. Aviation stocks rose after state-owned oil companies recently cut jet fuel price by over 1% in line with softening in the commodity's international rates. Jet Airways (India), SpiceJet and Kingfisher Airlines rose by between 0.35% to 1.83%. Jet fuel or aviation turbine fuel (ATF) typically makes up almost half of an airline's operating cost and the latest cut in prices will slightly ease burden on the cash-strapped airlines.

  • Shares of organized retailers edged higher in a firm market. Pantaloon Retail, Shoppers Stop, and Trent rose by between 1.33% to 4.64%.Consumer durables stocks extended recent gains. Blue Star, Rajesh Exports, Videocon Industries and Titan Industries gained by between 0.61% to 2.2%. IT stocks rose on a slew of positive economic data in US in recent months. US is the biggest outsourcing market for the Indian IT firms. India's second largest software services exporter by revenue Infosys rose 2.43%. The company announces Q3 December 2011 results on 12 January 2012. The company said recently its business process outsourcing subsidiary -- Infosys BPO has signed a definitive agreement to acquire all of the outstanding share capital in Australia-based Portland Group Pty, a leading provider of strategic sourcing and category management services. The purchase consideration for the deal is Australian dollar (AUD) 37 million. Portland Group reported revenue of about AUD 31.3 million for the year ended 30 June 2011.

  • India's largest software services exporter by revenues Tata Consultancy Services (TCS) gained 2.21%. TCS recently announced that it will expand its operations in the state of Maharashtra by building a new software development campus in Nagpur with an investment of Rs. 600 crore in the first phase. India's third largest software services exporter by revenues Wipro jumped 3.18%. Oil exploration stocks rose as crude oil futures topped $100 a barrel mark in Asian trade today, 3 January 2012, spurred by gains in Asian equities, a weaker dollar and geopolitical concerns involving Iran. Higher crude oil prices will result in higher realization from crude sales for oil exploration firms. Cairn India rose 2.56%.

  • ONGC rose 1.34%. ONGC Videsh (OVL), the overseas investment arm of state-run oil exploration giant ONGC, will pursue acquisitions of unconventional energy assets like oil sands and shale gas to spread its portfolio, its director of exploration said. We see that the profitability of unconventional hydrocarbon resources is increasing as the prices are driven up by intensifying competition for acquisition of conventional oil and gas assets, Narendra Verma said on the company's website. Mr. Verma replaced Joeman Thomas as OVL's exploration head on Monday after Thomas retired last month. OVL. which produced 9.43 million tons oil and oil-equivalent gas in the year through March 2011, has a target of producing 20 million tons of oil equivalent by March 2018 and 35 million tons by March 2030, Mr. Verma said.

  • Oil India fell 2.76% after the stock turned ex-dividend today, 3 January 2012, for an interim final dividend of Rs. 25 per share for the year ending March 2012. Crude oil futures for February 2012 delivery were up $1.61 a barrel to $100.40 a barrel in Asian electronic trading today, 3 January 2012, spurred by higher equity markets, a weaker dollar and geopolitical concerns involving Iran. Crude-oil prices also got a lift from news that Iran test-fired a surface-to-surface cruise missile during a drill on Monday, 2 January 2012 -- on top of another test over the weekend -- to prove its control over the Strait of Hormuz, a key channel for crude shipments. Iran's move came after the US imposed new sanctions on Iran over the weekend.

  • Shares of state-run oil marketing companies (PSU OMCs) declined as a hike in petrol price was deferred again on Monday, 2 January 2012. As per reports, the the oil ministry has refused to allow PSU OMCs to hike petrol price following the parliamentary debacle last week over the Lokpal Bill and due to impending assembly polls in five states. BPCL, and Indian Oil Corporation shed by between 1.01% to 1.28%. PSU OMCs which review petrol prices on the 15th and last day of each month, wanted to raise petrol price by about Rs. 2 per litre to offset the rupee's fall against the dollar. HPCL fell 1.14%. The company said during market hours today that subsequent to transfer of entire equity shareholding of ICICI Group and HDFC in Prize Petroleum Co. (PPLL) in favour of Hindustan Petroleum Corporation (HPCL) and consequent upon necessary amendments to the Articles of Association of PPCL, Prize Petroleum Company has become a wholly owned subsidiary of HPCL.

  • Higher crude oil prices also weighed on PSU OMCs. Higher crude oil prices will increase under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol.Suzlon Energy rose 2.76% to Rs. 18.60 at 10:56 IST on BSE after the company said its North American subsidiary has won an order for supply of 57 Suzlon S97-2.1 megawatt wind turbines for a large wind energy project in Western United States.

  • Foreign institutional investors (FIIs) sold shares worth Rs. 93.87 crore on Monday, 2 January 2012, as per provisional data from the stock exchanges. FIIs offloaded shares worth a net Rs. 1287.84 crore in three trading sessions from 29 December 2011 to 2 January 2012, as per provisional data from stock exchanges.

  • Starting off the New Year on a liberalisation note, the government on Sunday, 1 January 2012, announced its decision to allow Qualified Foreign Investors (QFIs) to directly invest in the Indian equity market from 15 January 2012. The move comes against the backdrop of significant foreign capital outflows from the domestic equity market in recent times, which has resulted in rupee volatility. A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs do not include FIIs/sub accounts. In August last year, the government allowed foreign investors to directly invest up to $13 billion in equity and debt schemes of mutual funds.

  • Qualified foreign investors, or QFIs, will now be able to invest individually up to 5% of the capital of the Indian company. Cumulatively, QFIs can invest up to 10% of the capital of the company being invested in. These limits are over and above the FII and NRI investment ceilings prescribed under the PIS route for foreign investment in India, a government statement said. The next major trigger for the market is Q3 December 2011 corporate earnings, which will start tricking from the second week of January 2012. The focus will be on guidance from the company managements on outlook for the remaining part of the year and for the next year. Analysts expect weak Q3 December 2011 results due to lower volume growth in a slowing economy, higher raw material costs and higher interest charges. IT bellwether Infosys and housing finance major HDFC report Q3 results on 12 January 2012. HDFC Bank and Bajaj Auto unveil Q3 results on 19 January 2012. Axis Bank unveils Q3 results on 20 January 2012. Dabur India unveils Q3 results on 31 January 2012. Mahindra & Mahindra unveils Q3 results on 7 February 2012.

  • India's manufacturing activity surged to a six-month high in December thanks to a spike in factory output and new orders from domestic and international firms, a survey of purchasing managers showed on Monday. The HSBC Markit India Manufacturing PMI jumped to 54.2 from 51 in November, its biggest monthly rise since April 2009. The index has stayed above the 50 mark that separates growth from contraction for 33 months now. Food inflation rose at its slowest pace in more than five years in the third week of December 2011, bolstering hopes of a steady easing in overall price pressures which could prompt Reserve Bank of India to consider cut in interest rates to revive a slowing economy. Food inflation eased to 0.42% in the week ended December 17 from 1.81% in the preceding week, the Commerce & Industry Ministry said on 29 December 2011. Inflation in the Primary Articles group eased to 2.7% in the week under review, from 3.78% in the week ended December 10. Inflation in the Fuel & Power group stood at 14.37% in the week ended December 17, from 15.24% in the previous week.

  • The Reserve Bank of India is likely to begin easing monetary policy to address concerns about economic growth, Governor D Subbarao said in an interview to a foreign electronic media house, reiterating comments made by the RBI when it kept rates unchanged on 16 December 2011. At its mid-quarterly monetary policy review meet on 16 December 2011, the Reserve Bank of India (RBI) left its main lending rate unchanged in order to support faltering economic growth as inflation shows signs of cooling. While inflation remains on its projected trajectory, downside risks to growth have clearly increased, RBI had said in a statement on 16 December 2011. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth, RBI had said.

  • RBI said inflation risks remain high and inflation could quickly recur as a result of both supply and demand forces. RBI also said that the rupee remains under stress. The timing and magnitude of further actions will depend on a continuing assessment of how these factors shape up in the months ahead, RBI said. The RBI has raised rates 13 times since March 2010.

  • Credit rating agency Moody's Investors Service on 14 December 2011 said that the sharp decline in the value of the Indian rupee against the dollar over the past few months is generally exerting only a moderate impact on rated Indian companies. Risks for companies holding large amounts of dollar denominated debt are also manageable in the near term, given that debt maturities are limited for this time frame, Moody's said in a new report. This means Indian companies rated by Moody's do not have a significant dollar outflow at a time when the Indian rupee is losing ground. The infrastructure sector output grew 6.8% in November from a year earlier, sharply higher than the annual growth of 3.7% in November last year, data released by the government on Monday, 26 December 2011, showed. The infrastructure sector accounts for 37.9% of India's industrial output.

  • India may face the risk of stagflation if the government doesn't take urgent steps to tame inflation and stimulate growth, a parliamentary panel on finance warned on 22 December 2011. The Standing Committee on Finance blamed the Reserve Bank of India's 13 interest-rate increases over the past 21 months for stalling economic growth. Measures taken by the government and the RBI so far have squarely failed to rescue the economy from unabated inflation. Instead, monetary measures initiated for this purpose have only resulted in worsening the condition of the economy further, the report said. The budget for 2012/13 ending March will be presented after elections scheduled in five states, Finance Minister Pranab Mukherjee said on Monday, 2 January 2012. State elections are scheduled between the end of January and early March. We have not yet decided the time, but naturally it (the budget) will be after the elections, Mukherjee told media reporters. The annual budget is usually presented on the last working day of February.

  • The Election Commission on 24 December 2011 announced the dates for the assembly polls in Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. Uttar Pradesh will have polling on February 4, 8, 11, 15, 19, 23 and 28, while Uttarakhand and Punjab will go to polls on January 30. Manipur will have polls on January 28 and Goa on March 3. India's November exports rose an annual 3.87% to $22.3 billion, while imports for the month rose 24.55% to $35.9 billion, the government said in a statement on Monday. India's trade deficit in November was at $13.6 billion.

  • Asian stocks rose on Tuesday amid signs of increased manufacturing output around the world. Key benchmark indices in Hong Kong, Indonesia Singapore, South Korea and Taiwan rose by between 0.96% to 2.69%. Stock markets in China and Japan were closed for holidays. The US ISM Manufacturing Index due later in the global day today, 2 January 2012, is widely expected to show an improvement in the December reading. The key US economic indicator due this week is the non-farm payrolls data for December 2011 due on Friday, 6 January 2012.

  • French President Nicolas Sarkozy will meet German Chancellor Angela Merkel in Berlin on 9 January 2012 for talks that are likely to centre on new rules to enforce budget discipline across the European Union (EU). The two leaders are anxious to flesh out a plan agreed at a December 2011 summit by all EU members except Britain for a new treaty to forge closer fiscal integration, as Europe battles to stem a sovereign debt crisis in the euro zone. Finance ministers from the EU's 27 members will meet on 23 January 2012 before their leaders hold a summit a week later. They will be under intense pressure to find a definitive solution to the crisis which threatens the very survival of the single currency, 10 years after it came into circulation.

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