Banking, realty stocks rally

Key benchmark indices edged higher in choppy trade and attained their highest closing level in 13-1/2 months as the government after market hours on Friday, 14 September 2012, announced liberalization of foreign investment rules in retail, aviation and broadcasting sectors. While the government has allowed up to 51% foreign direct investment (FDI) in multi-brand retail trading (MBRT), in the aviation sector the government has allowed foreign airlines to acquire up to 49% stake in Indian carriers. Comments by Finance Minister P. Chidambaram that the government will unveil more measures to narrow the 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, aided the upmove on the bourses. The barometer index, BSE Sensex, was up 78.04 points or 0.42%, off close to 170 points from the day's high and up about 60 points from the day's low. Shares of Reliance Industries (RIL), which has a presence in organized retail, jumped nearly 4% on the back of the government's decision to allow up to 51% foreign direct investment (FDI) in multi-brand retail trading (MBRT). The market breadth was positive. Shares of organised retailers surged after the government after trading hours on Friday, 14 September 2012, announced that the Union Cabinet has approved the proposal of the Department of Industrial Policy & Promotion for permitting foreign direct investment (FDI) up to 51% in multi-brand retail trading (MBRT). Media shares rose after the government after trading hours on Friday, 14 September 2012, announced liberation of foreign investment rules in the broadcasting sector. From a recent low of 17,313.34 on 5 September 2012, the Sensex has gained 1,228.97 points or 7.09% in nine trading sessions. The Sensex has gained 1,112.75 points or 6.38% in this month so far (till 17 September 2012). The Sensex has jumped 3,087.39 points or 19.97% in calendar 2012 so far (till 17 September 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 3406.45 points or 22.5%. Coming back to today's trade, defensive FMCG and pharma stocks declined on profit booking as investors shifted their attention to high beta stocks in banking, realty, construction, capital goods, power generation, and infrastructure sectors as risk appetite returned after government's bold reform measures. Index heavyweight and cigarette maker ITC slumped. India's largest dedicated housing finance firm by revenue HDFC hit a record high. Realty stocks surged on expectations that the entry of foreign retail chains in India will boost demand for setting up of new malls in the country. PSU OMCs declined on reports the government is likely to announce a partial rollback of the cap on subsidised LPG. Bank stocks rose after RBI 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 the monetary policy. ICICI Bank hit 52-week high. The market opened on a firm note after the government after market hours on Friday, 14 September 2012, announced liberalization of foreign investment rules in retail, aviation and broadcasting sectors. The Sensex and the 50-unit S&P CNX Nifty hit their highest level in more than 13-1/2 months. The market trimmed initial gains in morning trade. A bout of volatility was witnessed as key benchmark indices further trimmed intraday gains to hit fresh intraday lows after the Reserve Bank of India (RBI) after kept its key policy rate viz. the repo rate unchanged at 8% after mid-quarter review of the monetary policy which was announced at 11:00 IST. The Sensex traded off the day's high in early afternoon trade. Key benchmark indices came off lows after erasing a lion's share of intraday gains in afternoon trade. The market regained strength in mid-afternoon trade. Intraday volatility continued as the Sensex once again pared gains in late trade. The market sentiment was also boosted by data showing substantial purchases of Indian stocks by foreign funds on Friday, 14 September 2012. FIIs bought shares worth a net Rs 2859.80 crore from the secondary equity markets on Friday, 14 September 2012, as per data from Securities & Exchange Board of India (Sebi). The BSE Sensex was up 78.04 points or 0.42% to 18,542.31, its highest closing level since 25 July 2011. The index surged 250.76 points at the day's high of 18,715.03 at the onset of the trading session. The index rose 16.27 points at the day's low of 18,480.54 in afternoon trade. The S&P CNX Nifty was up 32.35 points or 0.58% to 5,610, its highest closing level since 25 July 2011. The index hit a high of 5,652.20 and a low of 5,585.15 in intraday trade. The BSE Mid-Cap index rose 1.14% and the BSE Small-Cap index gained 1.13%. Both these indices outperformed the Sensex. BSE clocked turnover of Rs 3161 crore, higher than Rs 2734 crore on Friday, 14 September 2012. The market breadth, indicating the overall health of the market, was positive. On BSE, 1,628 shares rose and 1,262 shares fell. A total of 117 shares were unchanged. From the 30-share Sensex pack, 18 stocks rose and rest of them fell. Many metal shares rose after LMEX, a gauge of six metals traded on the London Metal Exchange, jumped 4.31% on Friday, 14 September 2012. Tata Steel, Sail, Hindustan Zinc, Sterlite Industries and Jindal Steel & Power rose by between 0.92% to 5.99%. Shares of power generation firms rose after the Cabinet Committee on Economic Affairs (CCEA), on Friday, 14 September 2012, approved foreign investment up to 49 percent, in Power Trading Exchanges. Torrent Power, GVK Power & Infrastructure, NTPC, Adani Power, JSW Energy, and Tata Power Company 0.38% to 14.03%. The CCEA has decided to permit foreign investment, up to 49 percent (FDI & FII) [FDI limit of 26 per cent and FII limit of 23 per cent of the paid-up capital], in Power Trading Exchanges, in compliance with SEBI Regulations; Central Electricity Regulatory Commission (Power Market) Regulations, 2010; and other applicable laws/ regulations; security and other conditionalities. FII investments would be permitted under the automatic route and FDI would be permitted under the government approval route. This is subject to the conditions that FII purchases shall be restricted to secondary market only, and no non-resident investor/ entity, including persons acting in concert, holding more than 5 percent of the equity in these companies. The approval is expected to strengthen the power trading exchanges and to enhance the availability of power, as well as improve its distribution for inclusive development, the government said in a statement. Introduction of global best practices, concomitant with the induction of FDI, is expected to lead to higher service standards in power trading exchanges, the government said. Reliance Power (RPower) jumped 6.55%. The company today, 17 September 2012, announced the commissioning of the 400 Kv switchyard at its ultra mega power plant (UMPP) in Sasan. With this the 3,960 megawatts (MW) Sasan UMPP is now connected to the national grid, RPower said. The project is now ready to draw power from the grid to provide start-up power for the first 660 MW unit which is nearing completion, five months ahead of the schedule, RPower said. The same switchyard would enable evacuation of the power to seven states which would be using power from the Sasan UMPP, RPower said in a statement. As announced earlier, coal production has already commenced from the 20 million tones Moher and Moher-Amlohri coal mines, RPower said. The Sasan UMPP thus has both the fuel as well as the off-take systems in place for its commissioning ahead of schedule, RPower said. Reliance Infrastructure jumped 8.3%, The company through its subsidiary Reliance Cement Company (RCC) today, 17 September 2012, announced the commercial launch of cement under the brand Reliance Cement. Reliance Cement is a new-age Portland pozzollona cement, manufactured in its recently commissioned Butibori plant in Maharashtra and will mainly be delivered to Vidharbha market, Reliance Infrastructure said. A strong channel network has been set up to service the retail customers of the Vidharbha, region, the company said. Reliance Cement is currently executing its two integrated projects with a total cement capacity of 10 million tones in Madhya Pradesh and Maharashtra with connected satellite grinding plants. These two plants of 5 millions tones capacity each will set the foundation for the company's projects thereon, Reliance Infrastructure said. Shares of state-run firms -- MMTC, Oil India, National Aluminium Company (Nalco) and Hindustan Copper were mixed after the Cabinet Committee on Economic Affairs on Friday, 14 September 2012, cleared divestment of government stakes in these firms. Shares of MMTC declined 0.66%. The CCEA has approved the disinvestment of 9.33% paid up equity of MMTC out of the Government of India's holding of 99.33% through an Offer for Sale of Shares through Stock Exchanges, as per SEBI Rules and Regulations. After this disinvestment the Government of India's shareholding in MMTC will come down to 90%. Shares of Hindustan Copper (HCL) rose 0.97%. The CCEA has approved disinvestment of 9.59% equity of HCL, out of the Government of India's holding of 99.59%, through an Offer for Sale of Shares through Stock Exchanges as per SEBI Rules and Regulations. After this disinvestment the Government of India's shareholding in the HCL would come down to 90% Shares of Oil India (OIL) dropped 1.86%. The CCEA has approved disinvestment of 10% paid up equity of OIL out of the Government of India's holding of 78.43% through an offer for sale of shares through stock exchanges as per SEBI rules and regulations. After this disinvestment, the Government of India's shareholding in OIL would come down to 68.43%. Shares of National Aluminium Company (Nalco) rose 1.57%. The CCEA has approved the disinvestment of 12.15% paid up equity of the Nalco out of the Government of India's holding of 87.15%, through an Offer for Sale of Shares through Stock Exchanges as per SEBI Rules and Regulations. After this disinvestment the Government of India's shareholding in Nalco will come down to 75%. Cairn India rose 2.44% as US crude oil futures hovered at the highest level in 4 months on speculation that economic stimulus in the US will boost fuel demand. US crude oil futures for October 2012 delivery were down 16 cents at $98.84 a barrel in electronic trading today, 17 September 2012. The contract had risen 69 cents or 0.7% to settle at $99 a barrel on the New York Mercantile Exchange on Friday, 14 September 2012, its highest closing level since 3 May 2012. Prices are up 13% from a year ago. Higher crude oil prices will result in higher realization from crude sales for oil exploration firms such as Cairn India. Auto stocks were mostly higher. Maruti Suzuki India (up 1.61%), Ashok Leyland (up 5.26%), and M&M (up 1.1%) edged higher. Tata Motors jumped 3.37%. The company today said its global wholesales, including Jaguar Land Rover, rose 13% to 97,225 units in August 2012 over August 2011. Cumulative wholesales for the fiscal are 475,381, higher by 11%, compared to the corresponding period in 2011-12. Global wholesales of all commercial vehicles - Tata, Tata Daewoo and the Tata Hispano Carrocera range – rose 4% to 50,084 units in August 2012 over August 2011. Cumulative wholesales for the fiscal were flat at 228,785 units. Global wholesales of all passenger vehicles rose 23% to 47,141 units in August 2012 over August 2011. Cumulative wholesales for the fiscal are 246,596 units, higher by 20%. Global wholesales of Tata passenger vehicles rose 35% at 23,081 units in August 2012 over August 2011. Cumulative wholesales for the fiscal are at 112,163 units, higher by 10%. Global wholesales of Jaguar Land Rover in August 2012 rose 13% at 24,060 vehicles in August 2012 over August 2011. Cumulative wholesales of Jaguar Land Rover for the fiscal are 134,433 units, higher by 31%. Jaguar wholesales for the month were 2,960 vehicles and cumulative wholesales were at 18,798 vehicles, while Land Rover wholesales in August 2012 were 21,100 vehicles and cumulative wholesales were 115,635 vehicles. Motorcycle makers were mixed. India's biggest bike maker by sales Hero MotoCorp (HMCL) gained 3.06%. Bajaj Auto fell 0.37%. TVS Motor Company gained 0.75%. Media shares rose after the government after trading hours on Friday, 14 September 2012, announced liberation of foreign investment rules in the broadcasting sector. Balaji Telefilms, Zee News, NDTV, TV Today Network, Sun TV Network and Zee Entertainment Enterprises gained by between 0.34% to 5.02%. Among cable TV and direct-to-home (DTH) service providers, Dish TV India, DEN Networks and Hathway Cable & Datacom rose by between 1.35% to 3.16% The Cabinet Committee on Economic Affairs (CCEA) has 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 has allowed foreign investment (FI) up to 74 percent in mobile TV. For up-linking of News & Current Affairs TV channels/FM Radio, the existing limit of 26 percent foreign investment, under the Government route, would continue and for up-linking of Non-'News & Current Affairs' TV Channels / Down-linking of TV Channels, the existing policy of 100 percent foreign investment, through the Government route, would continue. For companies operating in the broadcasting sector the foreign investment (FI) limits for different activities include different components. It has been decided to rationalise the methodology of calculation of direct investment and the methodology, as applicable to the telecom sector, would also be made applicable across the Information & Broadcasting (I&B) sector, the government said. Accordingly, as in the case of the telecommunications sector, the foreign investment limit in companies engaged in various activities of the I&B sector shall include, in addition to FDI, investment by Foreign Institutional Investors (FIIs), Non Resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible preference shares held by foreign entities, the government said. At present, it is possible to provide broadcasting 'carriage services" using either telecommunication networks or broadcasting networks. Keeping in view the convergence of technologies in the broadcasting and telecom sectors, uniformity has been proposed in respect of companies providing carriage services (except cable services), the government said. For the same reason, uniformity is necessary in the method of calculation of direct foreign investment, in companies operating in the telecom and broadcasting sectors, the government said. Shares of organised retailers surged after the government after trading hours on Friday, 14 September 2012, announced that the Union Cabinet has approved the proposal of the Department of Industrial Policy & Promotion for permitting foreign direct investment (FDI) up to 51% in multi-brand retail trading (MBRT). Pantaloon Retail (India), Trent and Shoppers Stop surged by between 4.21% to 19.04%. The permission for 51% FDI in MBRT is subject to specified conditions. A statement issued by the government said that retail sales outlets can be set up in those states which have agreed or agree in future to allow FDI in MBRT under this policy. The establishment of the retail sales outlets will be in compliance of applicable state laws/ regulations, such as the Shops and Establishments Act etc. The policy provides that it would be the prerogative of the state governments to decide whether and where a multi-brand retailer, with FDI, is permitted to establish its sales outlets within the state. Therefore, implementation of the policy is not a mandatory requirement for all states, the government said in statement. Retail sales outlets can be set up only in cities with a population of more than 10 lakh as per 2011 Census and may also cover an area of 10 kms around the municipal/urban agglomeration limits of such cities; retail locations will be restricted to conforming areas as per the Master/Zonal Plans of the concerned cities and provision will be made for requisite facilities such as transport connectivity and parking; In States/ Union Territories not having cities with population of more than 10 lakh as per 2011 Census, retail sales outlets may be set up in the cities of their choice, preferably the largest city and may also cover an area of 10 kms around the municipal/urban agglomeration limits of such cities. The locations of such outlets will be restricted to conforming areas, as per the Master/Zonal Plans of the concerned cities and provision will be made for requisite facilities such as transport connectivity and parking At least 50% of total FDI brought in shall be invested in 'backend infrastructure' within three years of the induction of FDI, where 'back-end infrastructure' will include capital expenditure on all activities, excluding that on front-end units. For instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of backend infrastructure. A high-level group under the Minister of Consumer Affairs may be constituted to examine various issues concerning internal trade and make recommendations for internal trade reforms, a government statement said. A three year time frame has been fixed for setting up the back-end infrastructure, which includes capital expenditure on all activities, excluding that on front-end units. For instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of backend infrastructure. This condition will bind the foreign investors to invest in critical back-end infrastructure, which is a felt need across the country. It would also make the foreign investors accountable for proper implementation of the condition, the government said in a statement. Shares of aviation firms jumped after the government after trading hours on Friday, 14 September 2012, announced that the Cabinet Committee on Economic Affairs has 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. Kingfisher Airlines and SpiceJet surged by between 11.86% to 20%. But, Jet Airways fell 2.13%. 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. Higher foreign investment inflows are necessary at the present juncture, in order to strengthen the sector, the government 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 said in a statement. The decision to allow foreign airlines to make foreign investment up to 49% in scheduled and non-scheduled air transport services is subject to certain conditions. A scheduled operator's permit can be granted only to a company that is registered and has its principal place of business within India, the government said. The Chairman and at least two-thirds of the directors of the company should be citizens of India, and the substantial ownership and effective control of the company is vested in Indian nationals. Construction stocks rallied. Hindustan Construction Company, NCC, Patel Engineering, Unity Infrastructure and IRB Infrastructure Developers rose by between 4.39% to 21.04%. IT stocks fell on a firm rupee. India's second largest software services exporter by revenues Infosys declined 2.67%. India's third largest software services exporter by revenues Wipro fell 1.51%. India's largest software services exporter by revenues Tata Consultancy Services (TCS) shed 5.03%. The rupee rose to a four-month high against the dollar on Monday on hopes of major foreign inflows after the government announced opening up of the aviation and multi-brand retail sectors to overseas direct investment. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports. Tech Mahindra fell 0.69%. The company announced after market hours today the acquisition of 51% stake on a fully diluted basis in Comviva Technologies, a Bharti Group Company, and a global leader in providing mobile Value Added Services (VAS), Mobile Money and Mobile Payment solutions, for Rs 260 crore. The deal will be subject to regulatory approvals. The new brand identity will be Mahindra Comviva, reflecting the combined strength and spirit of both the entities. As part of this arrangement, Tech Mahindra will make an upfront payment of Rs 125 crore towards the stake acquired and the balance amount of Rs 135 crore will be paid out over a period of five years based, on Comviva achieving mutually agreed performance targets. The current promoters will continue to hold a 20% stake on a fully diluted basis in Comviva, post the deal closure. Commenting on this move, Vineet Nayyar, Executive Vice Chairman, Tech Mahindra said: "This acquisition is a significant step forward, in our vision of being a complete and comprehensive partner to our clients and like always, we are confident of making this a successful venture for our stakeholders. In addition to the market leading capabilities, this will also add to our relationship with large operator groups across the world." "The world of mobility today encompasses wide range of solutions, where customers be it enterprise or consumers are driving their business and entertainment needs through mobility. This acquisition marks our strong intent and entry into the world of mobility products. We are adding significant capability in areas such as payments and VAS," said CP Gurnani, Managing Director, Tech Mahindra. Defensive FMCG and pharma stocks declined on profit booking as investors shifted their attention to high beta stocks as risk appetite returned after government's bold reform measures. Among FMCG stocks, Hindustan Unilever, Dabur India, Marico and Nestle India dropped by between 0.27% to 2.45%. Index heavyweight and cigarette maker ITC tumbled 5.52% to Rs 253.30 on profit booking. The stock had scaled a record high of Rs 272.50 in intraday trade Friday, 14 September 2012. Among pharma stocks, Dr. Reddy's Lab, Glaxosmithkline Pharma, Ranbaxy Lab, Cadila Healthcare, Divi's Lab, Glenmark Pharma, Pfizer and Lupin lost 0.64% to 4.06%. Wockhardt lost 3.88%. The company said during market hours today it has received final approval from the United States Food & Drug Administration (US FDA) for marketing 15 mg and 30 mg delayed release capsules of Lansoprazole, which is used in treatment of peptic ulcers. Lansoprazole is the generic name for the brand Prevacidl marketed in the United States by Takeda. Wockhardt is launching the product immediately. "Lansoprazole delayed release formulation is a very challenging product and it once again demonstrates Wockhardt R&D's capability in the NDDS technology space" said Dr. Habil Khorakiwala, Wockhardt Founder Chairman & Group CEO. "We have received eight ANDA approvals in the past 30-days and four of them have been products that involved significant technology in formulation," he said. According to IMS Health, the total market for this product in the US is about $700 million. Proton Pump Inhibitors like Lansoprazole are the mainstay of treating ulcers worldwide. Wockhardt already markets an Over-The Counter version of 15 mg Lansoprazole DR capsules in the US. In the US generic pharmaceutical market, Wockhardt has been consistently growing market shares for all its products. In many instances, Wockhardt, by virtue of being amongst the few players to market technically challenging products has reaped the advantage of being an early entrant. Wockhardt will be manufacturing the Lansoprazole API in its facility at Ankleshwar, India and the delayedrelease capsules of Lansoprazole at its facility in Aurangabad, India. The technology for the API and the capsules were developed in-house. Index heavyweight Reliance Industries (RIL) jumped after the government allowed up to 51% foreign direct investment (FDI) in multi-brand retail trading (MBRT). The stock surged 3.89%. RIL has a presence in organized retail sector through its subsidiary Reliance Retail. RIL has bought back 3.9 crore shares for about of Rs 2793.51 crore till 4 September 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. 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. L&T jumped 4.24%, with the stock extending Friday's 4.87% gains triggered by the firm announcing restructuring its IT and engineering businesses with a view to accelerate growth in the technology space. The company during trading hours on Friday, 14 September 2012, said it has restructured its IT and engineering businesses with a view to accelerate growth in the technology space. L&T Infotech has been reorganised around two business clusters, "industrial" and "services". L&T Integrated Engineering Services (IES) will be rebranded as L&T Technology Services. As a part of this strategy, it has inducted three US-based professionals - Keshab Panda, Mukesh Aghi and Vivek Chopra will join as directors on the L&T Infotech board. L&T believes this restructure will help the company in growing these businesses, the company said in a statement. Among other capital goods stocks, BEML, Bhel, ABB, Thermax and Siemens rose by between 1.15% to 12.58%. Realty stocks surged on expectations that the entry of foreign retail chains in India will boost demand for setting up of new malls in the country. DLF, D B Realty, Unitech and HDIL gained by between 0.97% to 14.75%. Bank stocks rose after RBI 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 the monetary policy. The reduction in CRR will inject around Rs 17000 crore of primary liquidity into the banking system, RBI said in a statement India's largest private sector bank by net profit ICICI Bank jumped 5.17% to Rs 1058.35. The stock hit a 52-week high of Rs 1068.70 in intraday trade today. The bank's advance tax reportedly rose 25.38% to Rs 815 crore in Q2 September 2012 over Q2 September 2011. India's second largest private sector bank by net profit HDFC Bank fell 1% to Rs 606. The stock reversed direction after hitting a record high of Rs 620 in intraday trade today. The bank's advance tax reportedly rose 37.5% to Rs 1100 crore in Q2 September 2012 over Q2 September 2011. India's largest bank by branch network SBI spurted 5.8%. Among other PSU bank stocks, Bank of India, Bank of Baroda and Punjab National Bank shed by between 4.04% to 6.88%. India's largest dedicated housing finance firm by revenue HDFC rose 1.1% to Rs 778. The stock hit a record high of Rs 785 in intraday trade today. PSU OMCs declined on reports the government is likely to announce a partial rollback of the cap on subsidised cooking gas. BPCL, HPCL and Indian Oil Corporation declined by between 0.5% to 4.07%. According to reports, the government is mulling the option of increasing the number of LPG cylinders to be made available at subsidised rates from the current six cylinders to 10 per year. It may be recalled that the government last week announced restricted supply of subsidised cooking gas to 6 cylinders per household in a year. The Cabinet Committee on Political Affairs (CCPA) chaired by Prime Minister Manmohan Singh had taken the decisions and decided that each household will get 6 cylinders of 14.2-kg per annum at the subsidised rate of Rs 399 and any requirement beyond that would have to be procured at the market rate of Rs 746 per cylinder. The Reserve Bank of India today, 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. While the recent upward revision in diesel prices and rationalisation of subsidy for LPG is a significant achievement, in the short-term, there will be pressures on headline inflation, RBI said. Over the medium-term, however, it will strengthen macroeconomic fundamentals, RBI said. Over the longer run, holding down subsidies to under 2 per cent of GDP as indicated in the Union Budget for 2012-13 is crucial to manage demand-side pressures on inflation. Containing inflationary pressures and lowering inflation expectations warrant maintaining the momentum of recent policy actions to step up investment, alleviate supply constraints, and improve productivity, RBI said. RBI said since the FQR while growth risks have increased, inflation risks remain. Mitigating the growth risks and taking the economy to a higher sustainable growth trajectory requires concerted policy action across a range of domains, a process to which last week's actions made a significant contribution, RBI said. Monetary policy also has an important role in supporting the growth revival, RBI said. However, in the current situation, persistent inflationary pressures alongside risks emerging from twin deficits – current account deficit and fiscal deficit - constrain a stronger response of monetary policy to growth risks, RBI said. Accordingly, as this process evolves, the stance of monetary policy will be conditioned by careful and continuous monitoring of the evolving growth-inflation dynamic, management of liquidity conditions to ensure adequate flows of credit to productive sectors and appropriate responses to shocks emanating from external developments, RBI said. Finance Minister P. Chidambaram, today, 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. Mr. Chidambaram also said he wasn't disappointed about the RBI's latest decision. RBI is scheduled to under Second Quarter Review of Monetary Policy - 2012-13 on 30 October 2012. Meanwhile, the government's attempts to boost economy by allowing foreign direct investment in retail, its decision to raise diesel prices and restrict allotment of subsidies cooking gas cylinder to households and disinvestment in of stake in state-run companies have sparked protests across the political spectrum. Soon after the government's announcement of FDI in multi-brand retail Trinamool Congress (TC) chief Mamata Banerjee had set a 72-hour deadline for the government to rollback its decisions on diesel price hike and cutting supply of subsidised LPG cylinders and FDI in multi-brand retail. A meeting of the parliamentary partly of Trinamool Congress is scheduled tomorrow, 18 September 2012, to discuss the issue. Eight non-Congress, and non-BJP parties - including Samajwadi Party (SP), CPI, CPM, BJD and TDP - have decided to called for a nationwide bandh on Thursday, 20 September 2012, against a clutch of government decisions like allowing FDI in multi-brand retail, disinvestment in navratna companies, hike in diesel price and cut in subsidy on gas cylinders. The Bharatiya Janata Party (BJP) has already given call for a 'Bharat Bandh' on the same day. But NDA constituent Shiv Sena decided to stay away from the strike call, citing Ganesh festival as the reason. The Maharashtra Navnirman Sena (MNS), led by Raj Thackeray, has also announced that MNS will not be a part of the shutdown call citing similar reasons. Opposition parties and some allies of the government are demanding rollback of diesel price hike due to worries that inflation would accelerate. Their opposition to FDI in multi-brand retail is due to fears that the entry of foreign retail giants like Wal-Mart Stores Inc. and Carrefour S.A. will force numerous small shopkeepers and kirana shops to close down. The Full Planning Commission, chaired by Prime Minister Manmohan Singh on Saturday approved the 12th Five Year Plan document. The plan which extends from 2012 to 2017 has lowered the economic growth target across five years to 8.2%. Besides other things, the 12th Plan seeks to achieve 4% agriculture sector growth during the Plan period. The growth target for manufacturing sector has been pegged at 10%. The Cabinet Committee on Political Affairs (CCPA) raised price of heavily subsidised diesel by Rs 5 per liter on Thursday, 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. European shares edged lower on Monday, 17 September 2012. Key benchmark indices in UK, France and Germany were down by 0.2% to 0.6%. Asian stocks were mixed on Monday amid speculation additional stimulus measures from the US Federal Reserve will boost global demand for raw materials. Key benchmark indices in Singapore, Hong Kong, and Taiwan rose by between 0.14% to 0.31%. Key benchmark indices in China, Indonesia and South Korea fell by between 0.04% to 2.14%. Japanese markets were closed for a holiday. Chinese banks need to step up support for the world's second-largest economy, Shang Fulin, chairman of the China Banking Regulatory Commission, said on Monday, 17 September 2012, amid concern over slowing growth. Mr. Shang, speaking at a meeting of senior bankers, also said banks should give priority to extending credit to smaller businesses, according to a statement on the regulator's website. China's gross domestic product rose 7.6% in the second quarter of the year, the slowest pace in more than three years, and August data released earlier this month didn't point to any solid improvement. Japan's central bank, Bank of Japan, holds two-day policy meeting on interest rate in Japan on 18 and 19 September 2012. Singapore's exports fell more than economists estimated in August as shipments of electronics dropped and companies sold fewer goods to Europe. Non-oil domestic exports slid 10.6% from a year earlier, after a revised 5.7% increase in July, the trade promotion agency said in a statement today. Trading in US index futures indicated that the Dow could fall 12 points at the opening bell on Monday, 17 September 2012. US stocks rose Friday as the Federal Reserve's stimulus plans drove demand for risk assets. The US central bank on Thursday unveiled a bond-buying program designed to support the domestic recovery, which sparked a global rally across equity markets. The action, along with separate stimulus efforts to support the euro-zone and China, has also buoyed risky assets. The Fed currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. Election for a new president in the United States, the world's biggest economy, is scheduled on 6 November 2012.