Key benchmark indices trimmed losses in mid-morning trade as index heavyweight and cigarette maker ITC edged higher ahead of its Q1 result today, 26 July 2012. The barometer index, BSE Sensex, was down 18.73 points or 0.14% up close to 25 points from the day's low and off about 70 points from the day's high. A number of small-cap and mid-cap stocks fell, with shares of Tulip Telecom off a staggering 29.21% at Rs 84.20. The market breadth was weak. Provisional data showing selling of Indian stocks by foreign funds on Wednesday, 25 July 2012, hit investor sentiment adversely.

Index heavyweight Reliance Industries (RIL) edged lower. Bank stocks were mostly lower. But, Yes Bank extended Wednesday's gains triggered by strong Q1 results. Pharma stocks bucked weak market.

The market pared gains after a higher start triggered by gains in Asian shares. The Sensex slipped into the red to hit fresh intraday low in morning trade. The market trimmed losses in mid-morning trade.

The market may remain volatile today, 26 July 2012, as traders roll over positions from the near-month July 2012 series to August 2012 series. The July 2012 derivatives contracts expire today, 26 July 2012.

Foreign institutional investors (FIIs) sold shares worth a net Rs 372.21 crore on Wednesday, 25 July 2012, as per provisional data released by the stock exchanges. FIIs sold shares worth a net Rs 220.20 crore in secondary equity markets on Tuesday, 24 July 2012, as per data from Securities & Exchange Board of India (Sebi). Earlier, FIIs made sustained purchases of Indian stocks. FIIs bought shares worth Rs 5580.50 crore from the secondary equity market during 15 trading sessions from 3 July to 23 July 2012 as per Sebi data.

At 11:20 IST, the BSE Sensex was down 18.73 points or 0.14% to 16,822.92. The index rose 53.72 points at the day's high of 16,899.77 at the onset of the trading session, its highest level since 24 July 2012. The index declined 45.70 points at the day's low of 16,800.35 in morning trade.

The S&P CNX Nifty was down 5.95 points or 0.12% at 5,103.65. The Nifty hit high of 5,126.30 in intraday trade, its highest level since 24 July 2012. The index hit a low of 5,093.75 in intraday trade.

The BSE Mid-Cap index was down 1.09% and the BSE Small-Cap index declined 0.98%. Both these indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,346 shares fell and 711 shares rose. A total of 102 shares were unchanged.

From the 30-share Sensex pack, 19 stocks declined and rest of them rose. Tata Power Company, Sterlite Industries and Tata Motors fell by between 1.1% to 1.19%.

Index heavyweight Reliance Industries (RIL) declined 0.24%. The company last week said its net profit fell 21% to Rs 4473 crore on 13.4% growth in turnover to Rs 94926 crore in Q1 June 2012 over Q1 June 2011. The gross refining margin (GRM) stood at $7.6 per barrel in Q1 June 2012, matching the GRM of Q4 March 2012, but sharply lower than GRM of $10.3 a barrel in Q1 June 2011.

With regard to oil and gas exploration and production operations, RIL said it has made significant efforts towards augmenting production from KG D6. The company said it is planning to submit a Revised Field Development Plan (RFDP) for D1-D3 which is aimed at maximizing gas recovery from the existing fields. It also plans to further pursue approval of RFDP of D 26 (MA) submitted in the earlier quarter. To expedite the development projects of other discoveries, RIL is preparing development plans based on an integrated concept which is planned for submission in Q3 December 2012, RIL said in a statement.

RIL has also commenced pre-development activities in the D6 block which includes Engineering Surveys i.e. Geophysical Surveys & Geotechnical Investigations and Conceptual Engineering and FEED

With regard to telecom business, RIL said its subsidiary, Infotel Broadband Services (Infotel), which has emerged as a successful bidder in all the 22 circles of the auction for Broadband Wireless Access (BWA) spectrum, is in the process of setting up a world class Broadband network using state-of-the-art technologies and finalizing the arrangement with leading global technology players, service providers, infrastructure providers, application developers, device manufacturers and others to help usher the 4G revolution into India.

Infotel plans to provide end-to-end solutions that address the complete digital value chain across various digital services in key domains of national interest such as education, healthcare, security, financial services, government-citizen interfaces, entertainment and working on building the requisite parts of this customers' experience which fundamentally change the lives of hundreds of millions of Indians, RIL said.

Another index heavyweight and cigarette maker ITC gained 0.75% ahead of its Q1 result today, 26 July 2012.

Bank stocks were mostly lower. The country's biggest commercial bank in terms of branch network State Bank of India declined 0.5%. The bank has raised the rate of interest on NRE Rupee Term Deposits for tenor of 3 years to less than 5 years from 8.75% to 9% on deposits of less than Rs 15 lakhs with effect from 17 July 2012.

Among other PSU banks, Bank of India and Bank of Baroda fell by between 0.01% to 0.63%. Punjab National Bank declined 1.62% ahead of its Q1 results tomorrow, 27 July 2012.

India's second biggest private sector bank in terms of branch network HDFC Bank declined 0.54%.

India's largest private sector bank by net profit ICICI Bank rose 0.25% ahead of its Q1 results tomorrow, 27 July 2012.

Yes Bank extended Wednesday's gains triggered by strong Q1 results. The stock was up 1.62%. The bank's net profit jumped 34.3% to Rs 290.14 crore on 39% growth in total income to Rs 2174.44 crore in Q1 June 2012 over Q1 June 2011. The result was announced during trading hours on Wednesday, 25 June 2012.

Canara Bank fell 2.37%, with the stock declining for the third straight day as the state-run bank's ratio of net non-performing assets rose to 1.66% of net advances as on 30 June 2012 from 1.46% as on 31 March 2012 and 1.33% as on 30 June 2011. The ratio of gross non-performing assets (NPA) stood at 1.98% of gross advances as on 30 June 2012, higher than 1.73% as on 31 March 2012 and 1.69% as on 30 June 2011.

Canara Bank's net profit rose 6.8% to Rs 775.24 crore on 18.91% growth in total income to Rs 9165.47 crore in Q1 June 2012 over Q1 June 2011. Canara Bank's Capital Adequacy Ratio (CAR) stood at 13.22% as on 30 June 2012, lower than 13.76% as on 31 March 2012 and 13.37% as on 30 June 2011.

Gujarat Gas Company and Gujarat State Petronet rose by 1.54% and 3.16% respectively on reports the Gujarat high court has made it compulsory for all four-wheelers registered in Gujarat to convert to natural gas within one year. Further, the court gave two months to the state government to issue necessary orders to impose stringent restrictions to reduce pollution by fixing levels of emission to the minimum, at par with international norms. The order applies to both public and private vehicles running on petrol and diesel, reports added.

Gujarat State Petronet (GSPL) transmits natural gas across the state of Gujarat. GSPL has a pipeline network of about 1960 kilometre. The company has signed gas transmission agreements with various industries for the transportation of natural gas from various supply sources in Gujarat. Presently, the company transmits over 35 million metric standard cubic metre per day (MMSCMD) of natural gas.

Gujarat Gas Company is India's largest private sector player in the natural gas transmission and distribution business. It supplies gas to more than 3.49 lakh domestic, commercial and industrial customers and serves over 1.75 lakh compressed natural gas (CNG) users.

Most pharma stocks bucked weak market. Cipla, Dr. Reddy's Laboratories, Ranbaxy Laboratories and Sun Pharmaceutical Industries rose by between 0.07% to 2.95%.

Lupin fell 1.95% to Rs 573 on profit booking after recent gains triggered by the company reporting good Q1 earnings. The stock had hit a record high of Rs 593.85 in intraday trade on Wednesday, 25 July 2012. Lupin's consolidated net profit jumped 33.5% to Rs 280.39 crore on 43.8% growth in net sales to Rs 2219.15 crore in Q1 June 2012 over Q1 June 2011.

Bayer CropScience jumped 6.76% after net profit rose 77.91% to Rs 88.74 crore on 16.32% rise in net sales to Rs 899.44 crore in Q1 June 2012 over Q1 June 2011.

The Congress party on Wednesday agreed to form two coordination committees, one at the Centre and another in Maharashtra, to end the standoff with Sharad Pawar-led Nationalist Congress Party, which had threatened to withdraw its ministers from the cabinet. Congress managed to bring down the curtain on the week-long standoff by agreeing to NCP's demand that it needed to institutionalise consultations with its allies. The committee at the Centre will meet at least once a month to discuss policies and other issues, a statement jointly issued by Congress and NCP said. Comprising leaders of all members of Congress-led United Progressive Alliance, the committee will be headed by Congress President and UPA Chairperson Sonia Gandhi.

Inflation is way above the desired threshold level of Reserve Bank of India, central bank governor D Subbarao said last week. The RBI's threshold level for inflation is around 5%, he said. However, the governor did issue a disclaimer that his statements did not imply RBI's decision in its July 31 policy. India's potential growth rate may have fallen to around 7.5% as the uncertainty surrounding economic activity has increased after the financial crisis of 2008-09, Subbarao said in a speech last week

The Reserve Bank of India (RBI) announces first quarter review of the Monetary Policy 2012-13 on Tuesday, 31 July 2012. The RBI unexpectedly left its key lending rate unchanged at its last meeting in June 2012, citing inflationary concerns.

India Meteorological Department (IMD) on 20 July 2012 said seasonal rainfall during this year's monsoon was 22% below the long period average (LPA) till 18 July 2012. Out of 36 meteorological subdivisions, the rainfall was excess/normal over 11, deficient in 22 and scanty in 3 sub-divisions (Punjab, Haryana, Chandigarh & Delhi and Saurashtra & Kutch). In area-wise distribution, 24% area of the country received excess/normal rainfall.

The monsoon rains--which make up around 70% of India's annual rainfall--are crucial to the nation's agriculture sector and broader economy. More than 60% of the country's farmland is rain-fed. The timing, distribution and quantity of rainfall are all important for crops. The four-month southwest monsoon season that starts from June accounts for almost 70% of total annual moisture that Indian soil receives in a year.

The central government has prepared extensive plans to deal with the deficiency in the monsoon/rainfall in some parts of the country, the Prime Minister's Office (PMO) said on Monday, 23 July 2012. There has been reduction of around eight million hectares in the crop area sown compared to last year. While the reduction in area sown in case of rice could be covered over time, area reduction in coarse cereals is likely to persist, the statement added.

While the prices of wheat and rice are stable, the prices of sugar, pulses and vegetable are showing an upward trend, the government said. A proposal for increase in subsidy for supply of pulses through Public Distribution System to BPL families is being brought before Cabinet Committee on Economic Affairs by the Ministry of Consumer Affairs, Food and Public Distribution, it said.

The government will increase the availability of electricity and diesel to the grain-bowl northern region to help farmers draw ground water so that the yield of rice isn't affected, it added. It also said there is a proposal to increase the subsidy for the supply of pulses through the government's welfare program to poor families.

The IMD last month predicted that rainfall this monsoon would likely be 96% of the 50-year average, with an error margin of 4%. The Prime Minister's Office said actual rainfall could be at the lower end of that range, which means around 92% of the 50-year average.

Principal adviser to the Planning Commission Pronab Sen early this week said rate cuts weren't the remedy for India's growth slowdown. Slowing investment due to weak confidence in the economy, and not a shortage of credit, is hurting growth, he said. Mr. Sen said Indian companies aren't facing any shortage of funds. Many of them are sitting on piles of cash and aren't even repatriating overseas borrowings, he added.

The government should take steps to meet the fiscal deficit target set out in the budget and that would improve sentiment and revive investments, Mr. Sen said. He said the government should scale back its spending and slash subsidies on fuels, food and fertilizers to help check its budget deficit. Mr. Sen said food prices would rise if rains don't improve in two weeks.

With presidential poll over, the focus now shifts to the Vice-President's poll, which is due on August 7 -- a day before the monsoon session of parliament kicks off.

An India-Mauritius joint panel will discuss a series of proposals to review the double taxation avoidance treaty between the two nations on 22-24 August in Mauritius. India has been looking to negotiate the double taxation avoidance agreement with Mauritius for the past few years to check so-called round tripping and other potential abuses. Round tripping entails moving money out of one country to another, and getting it back under the garb of foreign capital. Capital gains tax is close to zero in Mauritius and almost 40% of investments into India come through the island nation.

Under the bilateral agreement, capital gains from sale of securities can be taxed only in Mauritius. The India-Mauritius joint working group will also discuss the inclusion of a so-called limitation of benefit clause, similar to the Singapore tax treaty with India, to ensure only genuine Mauritius-based companies are benefited. India's tax agreement with Singapore says that only those companies that spend a minimum of $200,000 (about Rs 1 crore) in Singapore can avail the benefits of the treaty.

Sanctity of tax residency certificates issued by a country to companies operating in its jurisdiction to enable the firms to claim tax benefits under various treaties is another issue between India and Mauritius. While India in this year's national budget said the certificates are a necessary but not sufficient condition, Mauritius wants those issued by it honoured.

Draft guidelines issued by Indian government for implementing the controversial anti-avoidance tax proposal viz. the GAAR state that GAAR provisions should be invoked on a foreign institutional investor (FII), if it chooses to take a treaty benefit, but would not in any case be invoked in the case of the non-resident investors of the FII. The draft guidelines suggested that the onus of proving wrongdoing should be on the authorities.

Prime Minister Dr. Manmohan Singh said in a newspaper interview this month that he has identified controlling the fiscal deficit, achieving clarity on tax matters, reviving the mutual funds and insurance industries, clearing a backlog of foreign investment proposals and boosting infrastructure as his focus areas in the short term. Singh said there will be no arbitrariness in tax matters. The statement assumes significance in the context of a raging controversy over the Income Tax amendment to re-open tax demands with retrospective effect from companies like Vodafone over acquisition of companies having operations in India but registered abroad to avoid taxes.

Singh last month said he is chalking out plan for the country's economic revival. Singh last month took additional charge at the finance ministry after Pranab Mukherjee resigned as finance minister on 26 June 2012 to contest the presidential polls.

The monsoon session of the parliament will begin on 8 August 2012 and the session will conclude on 7 September 2012, Parliamentary Affairs Minister Pawan Kumar Bansal said on Wednesday, 18 July 2012. The government hasn't yet finalized the agenda for the session, but the expectation is that Prime Minister Dr. Manmohan Singh -- who took charge of the finance ministry after Mr. Pranab Mukherjee resigned to contest the presidential elections -- will try and push through long-pending legislations. These could include the Direct Tax Code and the insurance, pension and banking bills. The government would also place before lawmakers the first demand for additional spending for this fiscal year which began April 1.

Corporate affairs minister Veerappa Moily said in a newspaper interview published on 11 July 2012 that the government is hopeful of the passage of the pension bill in the monsoon session of parliament.

Investors' focus is currently on Q1 June 2012 earnings. ICICI Bank, Grasim Industries, NTPC and Punjab National Bank unveil Q1 results tomorrow, 27 July 2012. Maruti Suzuki India announces Q1 results on 28 July 2012. HDFC announces its consolidated Q1 June 2012 results on the same day. HDFC has already announced its standalone results. Bank of Baroda and GAIL (India) unveil Q1 results on 30 July 2012. Jaiprakash Associates and Cipla unveil Q1 results on 31 July 2012.

Steel Authority of India announces Q1 results on 6 August 2012. Mahindra & Mahindra and Bharti Airtel unveil Q1 results on 8 August 2012. Ranbaxy Laboratories announces Q2 June 2012 results on 9 August 2012. Siemens unveils Q3 June 2012 results on 10 August 2012. BPCL announces Q1 results on the same day. ONGC announces Q1 results on 11 August 2012. Hindalco Industries and IDFC will unveil Q1 results on 14 August 2012.

Asian stocks rose on Thursday as hopes grew for more US stimulus to support growth and new European policy measures to keep the euro zone's debt crisis from deepening further, but sentiment was fragile. Key benchmark indices in South Korea, Singapore, Japan, Hong Kong, China and Taiwan rose by between 0.11% to 1.05%. Indonesia's Jakarta Composite declined 0.11%.

Changsha, the capital city of central China's Hunan province, on Wednesday unveiled a plan to develop its infrastructure and industry that would require total investments of 829.2 billion yuan ($130.7 billion).

South Korea's economy expanded 0.4% during the April-June quarter, for a rise of 2.4% from a year earlier, according to reported government data Thursday.

European Central Bank (ECB) policy maker Ewald Nowotny said in a media interview recently that arguments can be made in favor of giving Europe's future, permanent rescue fund a banking license. Nowotny said he's not aware of specific discussions on the issue. A banking license would give the European Stability Mechanism access to loans via the ECB, boosting its firepower

Germany's Federal Constitutional Court will announce a decision on lawsuits challenging the country's participation in the permanent euro-zone rescue fund, the European Stability Mechanism, 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.

Trading in US index futures indicated a flat opening of US stocks on Thursday, 26 July 2012. US stocks were mixed on Wednesday, after investors sorted through a divergent batch of earnings reports, including solid results from Boeing and a big miss from Apple. US Commerce Department on Wednesday said sales of new homes plunged 8% last month to the slowest pace in five months.

Data on weekly jobless claims, durable-goods orders, and pending-home sales data is due on Thursday, 26 July 2012. Data on US GDP growth figure for the second quarter is due on Friday, 27 July 2012.

The Federal Open Market Committee holds a two-day policy meeting on US interest rates on 31 July and 1 August 2012.