Nifty Hits Resistance, awaits – India Economic Data IIP numbers.
Equity Traders await the key Economic Data IIP numbers as markets hit crucial resistance levels. The S&P CNX Nifty has shot to above 5370 from a low of 5070 seen last month. A weekly close in Nifty above 5365, a crucial resistance level, can be considered mildly bullish for a short term. The Nifty may look forward to rise only on a sustained momentum above 5365 towards a 5626 – 5671 range. India’s Industrial Production (IIP) Economic Data is due for release at 11:00 IST today, 9 August 2012. Industrial production grew 2.4% in May 2012 but had declined 0.9% in April 2012. If the level of 5365 is not breached with sustained momentum, then a decline may surely be seen again. Weak Economic Data numbers may trigger a down slide again towards a very delicate & an important support of 5167 to 5140 range now. Nifty had slumped earlier to 5070 from the same strong resistance of 5365.
Japan Economic Data:
BOJ – Bank of Japan keeps Asset Purchase Fund at 45 Trillion YEN, Keeps Credit Loan Program at 25 Trillion YEN.
Indian Equity Markets hit resistance levels, Await Economic Data Trigger:
Key Indian benchmark indices cut almost the entire intraday gains as markets hit crucial resistance levels and provisionally settled almost unchanged for the day on Wednesday, 8 August 2012 as weakness in European stocks hurt investor sentiment adversely. Economic Data expected today may add the necessary boost for a further rise. The S&P CNX Nifty was up 1.35 points or 0.03% to 5,338.05, as per provisional figures. The Nifty hit a high of 5,377.60 in intraday trade, its highest level since 3 April 2012. The Nifty hit a low of 5,331.05 in intraday trade. The BSE Sensex shed 1.22 points or 0.01% to settle at 17,600.56 on that day, its lowest closing level since 6 August 2012. Foreign institutional investors (FIIs) bought shares worth Rs 1114.20 crore on Wednesday, 8 August 2012, as per provisional figures on the stock exchanges. FIIs bought shares worth a net Rs 2228.70 crore from the secondary equity markets in five trading sessions from 1 to 7 August 2012. The inflow this month comes on the top of substantial purchases last month. FIIs bought shares worth net Rs 9691 crore from the secondary equity markets in July 2012.
Most Asian stock markets rose on Wednesday, supported by expectations that policymakers will soon decisively address the Euro-zone fiscal crisis amid declining global growth. Key benchmark indices in China, Indonesia, Taiwan, Japan and South Korea rose around 0.13% to 0.88%. Key benchmark indices in Hong Kong and Singapore fell around 0.04% to 0.58%. Some important Asian Economic Data also expected today.
Indian Government to initiate positive steps:
Union Finance Minister P. Chidambaram early this week said that a path of financial consolidation will be unveiled shortly. He made it clear that the burden of fiscal correction must be shared fairly and equitably by different classes of stakeholders. Finance Minister P. Chidambaram on Wednesday, 8 August 2012, said that it will be difficult to achieve a 9% annual growth target set for the five years to March 31, 2017. He added that the Planning Commission would cut the target later this year.
The Finance Minister said that the poor must be protected and others must bear their fair share of the burden. Obviously, adjustments must be made both on the revenue side and on the expenditure side, he said. Government finances are under pressure as expenses exceed revenue, mainly because of subsidies doled out for cheaper supplies of food, fuel and fertilizer. The subsidy expense was 2.4% of GDP in the last fiscal year. The government aims to bring it down to 2% of GDP this year, and reduce fiscal deficit to 5.1% from 5.75%. The oil ministry has already sought Rs 32800 crore in cash subsidy from the finance ministry to compensate retailers who sell diesel and cooking fuel at government-set discounted rates. Mr. Chidambaram said that price stability is an important objective and that the government will work with the RBI -Reserve Bank of Indiato ensure that inflation is moderated in the medium term. Sometimes it is necessary to take carefully calibrated risks in order to stimulate investment and to ease the burden on consumers.
Mr. Chidambaram said adding that the government will take appropriate steps in this regard. In the next few weeks, the government will announce a number of decisions to attract more people to invest in mutual funds, insurance policies and other well-designed instruments. Mr. Chidambaram on Wednesday, 8 August 2012, said in the lower house of parliament that the government has received requests to put off plans to implement the General Anti-Avoidance Rules (GAAR) which aim to check tax avoidance. The implementation of GAAR was postponed by one year in order to provide an opportunity of wider consultation before such a legislation is implemented, he said in the lower house of parliament while replying to lawmakers’ questions. The provisions of GAAR are directed toward preventing tax avoidance by way of aggressive tax planning, he added.
Bharti Airtel shed 6.36% to Rs 275.10 after consolidated net profit as per international financial reporting standards (IFRS) fell 37.28% to Rs 762 crore on 14% increase in revenues to Rs 19350 crore in Q1 June 2012 over Q1 June 2011. The stock hit a 52-week low of Rs 272.60 in intraday trade yesterday, 8 August 2012. The stock declined on heavy volumes. On BSE, 52.87 lakh shares changed hands in the counter, compared with average daily volume of 2.27 lakh shares in the past one quarter. Bharti Airtel said its monthly average revenue per user (ARPU) in the country fell 2% to Rs 185 in Q1 June 2012 over Q4 March 2012. For its African operations, Bharti reported an ARPU of $6.5 in Q1 June 2012, down from $6.7 in Q4 March 2012. Bharti Airtel’s consolidated revenues rose 14% to Rs 19350 crore, marked by growth of 31.5% inAfricaand a strong 44.2% increase in India Mobile Data revenues. EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) margin at 30.2% was depressed due to the adverse regulatory and tax developments inIndia, enhanced market participation and planned accelerated investments in bothIndiaandAfrica.
U.S. Economic Data:
US Economic Data showed Non-farm productivity rose more than expected in the second quarter at 1.6% as companies expanded output. US Economic Data saw Weekly mortgage applications slipped last week amid lower demand for new purchase and refinance loans. Economic Data on Weekly jobless claims are expected to come in at 367,000. The international trade gap for the month of June is expected to come in at minus USD 47.5 billion.
European Economic Data:
Standard & Poor’s announced on Tuesday that it would lower its outlook on Greece to negative from stable based on the possibility that it may not secure additional bailout funds from the European Union and IMF – International Monetary Fund. Greece will not receive anymore bailout funds until after the EU finance ministers meeting on October 8. The latest delay of the aid, which was originally due in June, comes as the coalition government still struggles to agree on budget cuts with the latest hurdle apparently being public sector job cuts. Ratings agency DBRS has downgraded Spain, Italy and Ireland’s credit ratings citing deteriorating economic conditions. Spain’s new ‘A’ rating still keeps it above ECB’s rules on collateral levels, meaning Madrid does not have to pay extra charges to banks using it’s bonds as collateral.
ECB -European Central Bank President Mario Draghi last week said the ECB may soon step in to buy government bonds in the open market, possibly in unlimited quantities, and it will also consider other unconventional measures to lower exceptionally high borrowing costs of financially stressed euro-zone economies. Draghi indicated that the ECB may buy government bonds in the open market under strict conditions and after stressed states submitted a request for aid. Recent optimism that the ECB will soon start to buy up Spanish and Italian government bonds got a further boost after German Chancellor Angela Merkel’s government on Monday, 6 August 2012, said it supported the ECB’s bond-purchasing program.
Germany’s Federal Constitutional Courtwill announce a decision on lawsuits challenging the country’s participation in the permanent Euro-zone rescue fund, the European Stability Mechanism (ESM), and the fiscal pact on 12 September 2012. The court held a public hearing earlier this month to examine complaints that participation in the fund and the fiscal pact violated German law by taking some authority over the national budget away from parliament.
German Economic Data indicated factory orders declined much more than consensus forecast in June, as sales to Euro-zone countries slumped amid recession-like conditions across most of the region. German factory orders fell at a seasonally-adjusted rate of 1.7% in June, as domestic orders dropped 2.1% and orders from within the Euro-zone fell 4.9%, the Economics Ministry reported Tuesday. Italy’s Economic Data indicated it’s economy contracted for a fourth straight quarter in the three months ended June, as a protracted Euro-zone debt crisis continued to take its toll on bigger European nations. Italy’s economy contracted 0.7% in the second quarter of 2012.
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