QUICK REVIEW 22.2.2013

QUICK REVIEW

Railways related stocks skid ahead of next week's Rail Budget

Key benchmark indices reversed intraday gains and slipped into the red in late trade as index heavyweight ITC dropped and as another index heavyweight Reliance Industries (RIL) trimmed intraday gains. The market breadth, indicating the overall health of the market, turned negative from positive in late trade, having alternately moved between positive and negative zone throughout the trading session. The barometer index, BSE Sensex, was provisionally down 16.20 points or 0.08%, off 92.59 points from the day's low and up 19.33 points from the day's low.

Index heavyweight Reliance Industries (RIL) edged higher after the company said that Reliance Sibur Elastomers (RSEPL), a joint venture between the company and SIBUR, has begun construction of a new butyl rubber plant at Jamnagar in Gujarat. Another index heavyweight and cigarette maker ITC extended Thursday's losses triggered by the Gujarat state government raising the VAT on cigarettes to 30% from 25% in the state government's FY 2014 budget presented on Wednesday, 20 February 2013.

In pharma pack, Sun Pharmaceutical Industries hit record high. In IT pack, TCS hit record high. Realty major DLF scaled 52-week high. Telecom stocks were in demand. Shares of companies whose fortunes are linked to orders from Indian Railways dropped sharply ahead of next week Railway Budget. Tyre stocks rose as fall in rubber price could boost profitability of tyre makers.

Key benchmark indices edged higher in early trade as Asian stocks rose. The 50-unit CNX Nifty regained positive zone after a lower opening took it to its lowest level in almost 9-1/2 weeks. Key benchmark indices reversed initial gains, with investor sentiment hit by two deadly bomb blasts in Hyderabad late on Thursday, 21 February 2013. Key benchmark indices regained positive in mid-morning trade. Key benchmark indices alternately swung between positive and negative zone near the flat line in early afternoon trade. The Sensex trimmed gains after hitting fresh intraday high in afternoon trade. Key benchmark indices retained positive zone in mid-afternoon trade as European markets edged higher. Key benchmark indices reversed intraday gains and slipped into the red in late trade.

As per provisional closing, the BSE Sensex was down 16.20 points or 0.08% to 19,309.16. The index rose 76.39 points at the day's high of 19,401.75 in mid-afternoon trade. The index lost 35.53 points at the day's low of 19,289.83 in morning trade.

The CNX Nifty was down 3.90 points or 0.07% to 5,848.35. The index hit a high of 5,873.80 in intraday trade. The index hit a low of 5,835.80 in intraday trade, its lowest level since 18 December 2012.

The market breadth, indicating the overall health of the market, turned negative from positive in late trade. On BSE, 1,492 shares declined and 1,414 shares gained. A total of 161 shares were unchanged. The breadth alternately moved between positive and negative zone throughout the trading session.

The total turnover on BSE amounted to Rs 1714 crore, lower than Rs 1958 crore on Thursday, 21 February 2013.

Among the 30-share Sensex pack, 16 stocks gained while the rest of them declined.

Index heavyweight Reliance Industries (RIL) rose 0.73% to Rs 863. The stock hit high of Rs 871.90 and low of Rs 858. RIL today, 22 February 2013, said that Reliance Sibur Elastomers (RSEPL), a joint venture between the company and SIBUR, has begun construction of a new butyl rubber plant at Jamnagar in Gujarat. When commissioned in 2015, the new plant will be India's only manufacturer of butyl rubber and the JV will be amongst the world's top five manufacturers of butyl rubber.

Commenting on the development, Mr. Nikhil Meswani, Executive Director, RIL, said: "Reliance is excited to join a select group of global butyl rubber producers. India, as a fast emerging auto hub, is a vast market for these products. We look forward to serving this market."

Dmitry Konov, CEO, SIBUR, said: "India is one of the most attractive petrochemicals markets right now due to the significant investment in infrastructure which has spurred demand. SIBUR's technologies together with Reliance's infrastructure and resources will help to establish a facility that will meet the demand for butyl rubber in Asian market."

RIL and SIBUR signed a technology licence agreement facilitating use of SIBUR's proprietary butyl rubber production technology at the new facility. The licensing package includes development of a Basic Engineering Package (BEP) and full-time provision of highly-experienced technical personnel on both project and operational stages. RIL will supply monomer and provide the JV with world-class infrastructure and utilities. The project is progressing as per the original schedule. The BEP has already been completed in Nov 2012, and detailed engineering is underway. At present, RSEPL is placing orders for long-lead equipment. When complete, the Jamnagar plant will have the capacity to produce 100,000 tonnes annually.

RIL has already started market seeding butyl rubber from SIBUR in India. The response is very encouraging, RIL said in a statement.

RIL and BP said in a joint statement on 19 February 2013 that under the KG D6 block enhancement plan, BP and RIL are planning to invest in a series of projects to develop around 4 trillion cubic feet of discovered natural gas resources from the block. At current international liquefied natural gas (LNG) prices, it would cost more than $50 billion to import this volume of gas into India, RIL and BP said on 19 February 2013. This plan, when implemented, would entail a potential total investment in excess of $5 billion over the next three to five years.

RIL and BP have agreed to accelerate the pace of exploration and development activities as soon as necessary approvals are received. The implementation of the plan will require deployment of advanced skills, processes and technologies through the combined partnership of RIL and BP to produce gas from water depths of more than 1,500 metres. RIL and BP are confident that development of the existing discoveries, together with exploration prospects in KG D6 have the potential to enhance domestic production significantly.

In an historic partnership with RIL in 2011, BP took a 30% stake in multiple oil and gas blocks in India, including the producing KG D6 block and the formation of a 50:50 joint venture to source and market gas in India. The implementation of the various projects in the KG D6 enhancement plan is subject to regulatory and government approvals, RIL said.

Index heavyweight and cigarette maker ITC fell 1.77% to Rs 291.25. The stock hit high of Rs 298 and low of Rs 290.90. The stock had hit record high of Rs 310.75 in intraday trade on 4 February 2013. The Gujarat state government increased the VAT on cigarettes to 30% from 25% in the state government's FY 2014 budget presented on Wednesday, 20 February 2013.

The Ministry of Health and Family Welfare in October 2012 notified new pictorial health warnings to be depicted on tobacco product packs which will come into effect from 1 April 2013. The Ministry of Health and Family Welfare said in a statement on 22 October 2012 that three sets of warnings each have been notified for smoking as well as smokeless forms of tobacco product packages. The well-designed health warnings and messages are part of a range of measures to communicate health risks due to tobacco use. Pictorial health warnings communicate health risks in a visible way, provoke a greater emotional response and increase the motivation of tobacco users to quit and to decrease their tobacco consumption, the ministry's statement said. Graphic warning labels have a greater impact than text-only labels and can be recognized by low-literacy audiences and children, the statement added.

Sun Pharmaceutical Industries rose 2.04% to Rs 811.90 after striking a record high of Rs 814.20 in intraday trade today, 22 February 2012.

TCS rose 0.52% to Rs 1,455.60. The stock hit a record high of Rs 1,462.95 in intraday trade today, 22 February 2013. The company early this week said it is expanding its operations in the UK. The company has invested in a new delivery centre in Liverpool, dedicated to delivering government services that require Impact Level 3 (IL3) security constraints. TCS plans to use the facility to deliver services to the Home Office, following a multi million, multi year contract that was awarded in November 2012, to manage, the technology needs and support services of the newly formed Disclosure and Barring Service (DBS), TCS said in a statement on 18 February 2013. The new facility in Liverpool will be fully operational in July 2013 and will house over 300 employees, TCS said.

State run National Thermal Power Corporation (NTPC) rose 0.16%. NTPC has tied up a term loan facility of $250 million with State Bank of India, New York Branch and Mizuho Corporate Bank, Singapore Branch as Arrangers and Lenders. The loan agreement signed in New York by Mr. A.K. Singhal, Director (Finance), empowers NTPC for utilization of the proceeds of the loan towards capital expenditure for procurement of goods and services for the ongoing and new projects and renovation and modernization of power generation stations of the company. The loan carries a floating rate of interest linked to LIBOR and has a door to door maturity of 7 years. With the execution of the facility, NTPC has raised $750 million in the current financial year, the maximum amount permitted under the Automatic Route of the ECB guidelines issued by the RBI, the Ministry of Power said in a statement today, 22 February 2013.

Bharat Heavy Electricals (Bhel) shed 1.26%. The Union Cabinet on Thursday, 21 February 2013, gave its approval for merger of Bharat Heavy Plate & Vessels (BHPV) Vishakhapatnam with Bharat Heavy Electricals (Bhel). The merger will facilitate BHPV to become a unit of Bhel. BHPV would be able to participate in tenders, obtain orders and attract best vendors for procuring materials/capital goods. BHPV is an engineering/heavy fabrication company established in 1966 in Vishakhapatnam, Andhra Pradesh. Due to various factors, there were heavy losses and the company was declared sick by the Board for Industrial and Financial Reconstruction (BIFR) in October, 2005.

Bhel took over BHPV as its 100% subsidiary in 2008. However, the company's performance was not upto the mark, as it remained a separate company and it could not derive full benefits of synergy with Bhel.

Realty major DLF gained 3.4% to Rs 281.65. The scrip hit a 52-week high of Rs 283 in intraday trade today, 22 February 2013. DLF's consolidated net profit rose 10.46% to Rs 285 crore on 4% fall in revenue to Rs 2291 crore in Q3 December 2012 over Q3 December 2011. Earnings before interest, taxation, depreciation and amortization (EBITDA) dropped 10% to Rs 1068 crore in Q3 December 2012 over Q3 December 2011. On sequential basis, DLF's net profit jumped 105.03% to Rs 285 crore on 6% growth in revenue to Rs 2291 crore in Q3 December 2012 over Q2 September 2012. EBITDA jumped 24% to Rs 1068 crore in Q3 December 2012 over Q2 September 2012. The company announced Q3 results on 14 February 2013.

The financial results are after taking into account 'one time' profit from the sale of NTC mills land in Mumbai and accounting for certain additional costs/rebates to be incurred in the future on existing projects, including potential loss on the sale of Silverlink Resorts (Aman Resorts). It also reflected the deferment of recognition of revenues under the new accounting policy for new launches.

DLF's net debt declined by Rs 1870 crore in Q3 December 2012. The company said it continues to make investments in new assets, with a capex/land of about Rs 250 crore in Q3 December 2012. DLF said that the management believes that with the new initiatives by the government on the policy initiatives and outlook of reduction on the interest rates, the investment sentiment in the country shall improve. This shall have a positive impact on the company's operations in the medium term, DLF said.

DLF said that highly accretive launches in Gurgaon are on the anvil from the company, which is expected to further bolster cash flows of the company. However, in most cases, the revenue and profitability shall be reflected only after a few quarters given the new accounting policies, DLF said. DLF said that the company is focused to create a business model of highly stable and predictable earnings, cash flows and long term value creation. In the current macro environment, DLF intends to continue with the current volume of launches, development and leasing. Over the next few years, DLF expects to move to a higher RoE model with reduced quantum of debt and at a lower cost.

Telecom stocks surged. Bharti Airtel (up 4.49%), Idea Cellular (up 5.19%), MTNL (up 0.86%) Tata Teleservices (Maharashtra) (up 0.65%) and Reliance Communications (up 2.02%) gained.

The Ministry of Communications & Information Technology on Thursday, 21 February 2013, said that the Department of Telecom has decided that a separate auction will be held for the balance of Spectrum in 1,800 MHz band in compliance with the direction of the Supreme Court in its order dated 15 February 2013. Details are being worked out and a separate NIA in this regard will be issued shortly, the Ministry of Communications & Information Technology said.

The Supreme Court of India vide its Order dated 2 February 2012 quashed the licenses and allocation of spectrum granted on or after 10 January 2008 pursuant to two press releases issued on 10 January 2008. It further ordered grant of license and allocation of spectrum in 2G band in 22 Service Areas by auction.

Shares of companies whose fortunes are linked to orders from Indian Railways dropped sharply ahead of next week Railway Budget. Kernex Microsystems (India) (down 7.35%), Titagarh Wagons (down 3.63%), Kalindee Rail Nirman (Engineers) (down 5.94%), Stone India (down 4.78%) declined.

Tyre stocks rose as fall in rubber price could boost profitability of tyre makers. CEAT (up 0.77%), Goodyear India (up 2.22%), Apollo Tyres (up 2.77%), MRF (up 0.4%) edged higher. Rubber futures on the Tokyo Commodity Exchange have dropped more than 7% this week on concern that demand may slow as China, the world's biggest user, called for property curbs and as European data signaled the region's recession is worsening. Rubber is key raw material in tyre making.

16 people have been died and 117 injured in two deadly bomb blasts in Hyderabad late on Thursday, 21 February 2013. Home Minister Sushil Kumar Shinde said that NIA will assist the Andhra Pradesh police in the probe. Two cases have been registered in connection with the blasts, he added. The situation is under control. The government is committed to combat such cowardly terror attacks, Shinde said.

Coming back to stocks, PSU disinvestment and reduction of promoter stake to meet the Securities & Exchange Board of India (Sebi) mandated minimum public shareholding of 25% for private companies and 10% for state-run firms will result in supply of equity in the market over the next few months. The government has set target of Rs 30000 crore from PSU divestment for the fiscal year ending 31 March 2013. Meanwhile, as per the Sebi mandated minimum public shareholding rule, private-sector companies must cut founders' stake to adhere to the rules by 13 June 2013, while the deadline for state-run firms is 13 August 2013.

Finance Minister Mr. P. Chidambaram on Tuesday, 19 February 2013, emphasized the need to meet the financing requirements of the infrastructural deficit. He said that that the government has initiated several major steps in this direction. He said that the government has set-up the Cabinet Committee on Investments (CCI) with the Prime Minister as the Chairman to expedite decisions on approvals/clearances for implementation of projects. This is likely to improve the investment environment by bringing transparency, efficiency and accountability in accordance of various approvals and sanctions, Chidambaram said. The government is also promoting Public Private Partnerships (PPPs) as an effective tool for bringing private sector efficiencies in creation of economic and social infrastructure assets and for delivery of quality public services, Chidambaram said. The Viability Gap Funding Scheme has been further strengthened by adding many new sectors like modern storage, education, health, irrigation etc.

The cost and tariff of infrastructure services are likely to go down as a result of low cost long term debt provided by Infrastructure Debt Fund (IDFs), Chidambaram said on the occasion of the launch of the first Infrastructure Debt Fund (IDF) under the NBFC structure on 19 February 2013. A buy-out guarantee from Project Authority will enable IDF-NBFC to maintain zero NPAs, Chidambaram said. The taking over of existing bank debts by IDFs will release an equivalent volume for fresh lending by banks to infrastructure projects, the finance minister said.

The Reserve Bank of India governor D. Subbarao said in mid-February 2013 that he sees limited room for further interest rate cuts.

The annual rate of inflation, based on monthly wholesale price index (WPI), decelerated to 6.62% in January 2013 from 7.18% in December 2012 and 7.24% in November 2012, data released by the government on 14 February 2013 showed. This is the first time since November 2009 that the inflation rate has dropped below 7%. The non-food manufacturing inflation or core inflation decelerated to 4.08% in January 2013 from 4.19% in December 2012.

Inflation based on the combined consumer price index for urban and rural India edged up to 10.79% in January 2013, from 10.56% in December 2012, another data released by the CSO on 12 February 2013 showed. Within the consumer price index, inflation in the category 'food and beverages' stood at 13.36% in January 2013.

Inflation based on the All-India Consumer Price Index for Agricultural Labourers (CPI-AL) edged up to 12.3% in January 2013 from 11.33% in December 2012, data released by the government on Wednesday, 20 February 2013, showed. Within CPI-AL, food price inflation stood at 12.98% in January 2013. Inflation based on the All-India Consumer Price Index for Rural Labourers (CPI-RL) edged up to 12.28% in January 2013 from 11.31% in December 2012. Within CPI-RL, food price inflation stood at 12.94% in January 2013.

The Reserve Bank of India (RBI) on 29 January 2013 announced a 25 basis points reduction in its key policy rate viz. the repo rate to 7.75% from 8% after a monetary policy review. The central bank also announced a reduction of 25 basis points in the cash reserve ratio (CRR) to 4% from 4.25% effective the fortnight beginning 9 February 2013.

With headline inflation likely to have peaked and non-food manufactured products inflation declining steadily over the last few months, there is an increasing likelihood of inflation remaining range-bound around current levels going into 2013-14, the Reserve Bank of India (RBI) said. This provides space, albeit limited, for monetary policy to give greater emphasis to growth risks, the central bank said in its policy guidance. This policy guidance will, however, be conditioned by the evolving growth-inflation dynamic and the management of risks from twin deficits viz. the current account deficit and fiscal deficit, RBI said. The next mid-quarter review of Monetary Policy for 2012-13 will be announced on 19 March 2013.

The central bank on 29 January 2013 also signaled that there is less room for aggressive policy rate cuts amid any negative surprise emanating from inflation and the twin deficits.

Investors' focus is now on Union Budget 2013-14 to be presented to the Parliament on 28 February 2013. Investors will focus on changes, if any, in excise duty and service tax in the Budget. It remains to be seen if the government announces measures to revive weak investment growth. It also remains to be seen if the government announces more economic reforms. A key figure to watch out is the divestment target for 2013-14. It remains to be seen if the Budget contains a clear roadmap for the implementation of Goods and Services Tax (GST). There has been some debate over taxing the super-rich. It remains to be seen if the Budget provides a clear roadmap to cap the government's subsidy bill. It also remains to be seen if there are measures to increase agriculture production to rein in food inflation.

It remains to be seen if the Finance Minister announces measures to channelise savings into financial assets given the sharp fall in financial savings of the household sector and a corresponding rise in household savings in physical assets such as gold and property over the past two years or so.

President Pranab Mukherjee said in his speech delivered at the beginning of the Budget session of the Parliament on Thursday, 21 February 2013, that the government is taking steps to deal with factors of economic slowdown. Both global and domestic factors have adversely affected India's economic growth, Mukherjee said. The government has responded to the situation by taking several measures to revive investment activity and investor sentiment, he said. Inflation is reducing gradually but still a problem, Mukherjee said.

The government is working with the state governments to reach a consensus on the Goods and Services Tax (GST), Mukherjee said. The President of India said that the government remains committed to increasing the share of manufacturing to 25% of GDP and creating 100 million jobs within a decade.

The next phase of the Jawaharlal Nehru Urban Renewal Mission is being finalized, Mukherjee said. Meanwhile, the tenure of the current Mission has been extended until March 2014 for completion of ongoing projects and for sanction of new projects so as to maintain the momentum of development of urban infrastructure. In order to give a push to capacity building efforts of Urban Local Bodies, the Government has decided to create a separate fund of Rs 1000 crore, Mukherjee said.

In due course, the Direct Benefits Transfer System will cover wages and subsidies on food and LPG, Mukherjee said. The Direct Benefits Transfer System will help cut down leakages, bring millions of people into the financial system and lead to better targeting of beneficiaries, Mukherjee said.

The Dedicated Freight Corridor project is an ambitious mega project connecting our Eastern and Western Coasts with the interiors of the country and will cover 3,300 km of railway track, Mukherjee said. Construction of over 1,000 km route length is expected to begin shortly, he said.

In 2012-13, 42 PPP port projects have been targeted for award, involving an additional capacity of 251 Million Tonnes Per Annum with an investment of Rs 14770 crore in 2012-13. The government proposes to establish two new major ports, one at Sagar Island in West Bengal and the other in Andhra Pradesh with a total additional capacity of around 100 Million Tonnes Per Annum.

The Budget Session of the Parliament which began on Thursday, 21 February 2013, will conclude on 10 May 2013. In order to enable the Standing Committees to consider the Demands for Grants of Ministries/Departments and prepare their Reports, the two Houses will adjourn for recess on 22 March 2013 to meet again on 22 April 2013.

The Railway Budget for 2013-2014 will be presented to the Lok Sabha on 26 February 2013 immediately after Question Hour. The Economic Survey of India will be laid in the Parliament on 27 February 2013.

The government has lined up a number of key bills for consideration and passing during the Budget session of the parliament, which include The Forward Contracts (Regulation) Amendment Bill, 2010, The Pension Fund Regulator and Development Authority Bill, 2011, The Land Acquisition, Rehabilitation and Resettlement Bill, 2011, The National Food Security Bill, 2011 and The Insurance Laws (Amendment) Bill, 2008.

Economic affairs secretary Arvind Mayaram on 9 February 2013 said that the fiscal deficit for the current financial year ending 31 March 2013 will not exceed the projected 5.3% of the country's gross domestic product. He said that the government will stick to its fiscal deficit aim and its borrowing plan. Finance Minister, P. Chidambaram on 9 February 2013 said he it confident of a 5.5% growth rate in the economy for this year. In the second half of this fiscal year, there are indications of green shoots in the economy, he said, adding it is imperative for the country to achieve a growth rate of 8%.

The Ministry of Finance on 8 February 2013 said that since the GDP growth is turning around, it is likely that the CSO's advance estimate of 5% GDP growth for 2012-13 will be revised upwards and the final estimate will be closer to the finance ministry's estimate of a growth rate of 5.5% or slightly more. Early sign of an upturn in the economy are evident in the year on year growth in Union Excise Duty of 16% and of 33% increase in service tax in April-December 2012.

The Purchasing Manager's Index (manufacturing) has started moving up since October 2012. This has been accompanied by a seasonally adjusted stabilization of the index of industrial production since October 2012, the finance ministry said in a statement. The finance ministry also said that lower interest rates will help support growth.

The Ministry of Finance in its initial reaction to the CSO's advance estimate had said on 7 February 2018 that the finance ministry is keeping a watch on the situation adding that it has taken and will continue to take appropriate measures to revive growth.

The Ministry of Finance on 14 January 2013 said that the government has decided to defer the implementation of the General Anti Avoidance Rules or GAAR by two years until 1 April 2016 and that it has accepted major recommendations of the Parthasarathi Shome Committee on GAAR with some modifications. The provisions of GAAR will apply to only those foreign institutional investors (FIIs) who seek to take advantage of the double taxation avoidance treaties India has with different countries. The rules won't apply to the non-resident individual investors who put money with the FIIs. Any investments made before 30 August 2010 won't be examined under GAAR. Finance Minister Mr. Chidambaram said that the GAAR provisions strike a balance between the government's need for revenue generation and investors' interests.

Commerce, Industry and Textiles Minister Mr. Anand Sharma on 9 January 2013 said that the Joint Working Group on Indo-Mauritius Double Taxation Avoidance Convention (DTAC), which is scheduled to meet in February 2013, would be able to take the deliberations forward.

Finance Minister Mr. P. Chidambaram on 31 January 2013 reiterated the commitment of the government for observing the path of fiscal consolidation and imposition of fiscal targets and policies that will make necessary fiscal correction needed for the economy and take the economy back to the path of higher growth. Chidambaram highlighted the efforts being made to turn the economy around and create a more investor-friendly climate. Chidambaram said that to encourage foreign flows into India and offer reassurance on the positive investment climate, he had recently held discussions with a cross section of international investors at Singapore, Hongkong, London and Frankfurt last month and hoped to get positive results. He was speaking at the Sixth Meeting of the Financial Stability and Development Council.

The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The deficit target is 5.3% of gross domestic product for the current fiscal year through March, 4.8% in the next fiscal year, and 3% by the end of the year through March 2017.

The government on 17 January 2013 allowed PSU OMCs to increase diesel prices by a small margin from time to time, a decision aimed at reducing the government's oil subsidy burden and fiscal deficit and improving the government's finances. Oil Minister Veerappa Moily said after a meeting of the Union Cabinet that there was an earlier proposal to deregulate diesel prices, and in pursuance of that, oil companies have been authorised to make price corrections from time to time. Finance Minister P. Chidambaram on 17 January 2013 said the government will factor in the reduction in subsidies and its impact on the deficit once the retailers say how much they intend to increase prices by.

The government on 17 January 2013 also said it has increased the limit of subsidized cooking-gas cylinders to nine per year a family from six now. Mr. Moily said that the raising of the cap will cost the government about an additional Rs 10000 crore a year.

RBI said after Third Quarter Review of Monetary Policy 2012-13 on 29 January 2013 that a staggered increase in diesel prices will percolate through to overall costs and inflation. However, these price pressures will dissipate over time, and the consequent reduction entailed in the fiscal deficit will bring about an enduring reduction in inflation and inflation expectations, the central bank said at that time.

Bahujan Samaj Party (BSP) chief Mayawati slammed the UPA government last month for its decision to deregulate diesel prices and said that it would affect prices and hit common man badly. She, however, ruled out the possibility of withdrawing BSP's support to the government, saying she did not want to destabilise it as the general election is not too far. BSP provides outside support to the Congress led UPA government which has already been reduced to a minority government after Trinamool Congress withdrew support to the government in September last year.

European stock markets staged broad-based gains on Friday, 22 February 2013, as investors moved back into risk assets on the back of recent days' heavy selloff after German business-climate data surprised to the upside. Key benchmark indices in UK, France and Germany were up 0.68% to 1.29%.

The Ifo Business Climate index jumped to 107.4 in February, exceeding expectations of a 104.7 reading. Germany is Europe's biggest economy.

National elections kick off in Italy this weekend.

Asian stocks were mostly higher on Friday, 22 February 2013. Key benchmark indices in Singapore, Indonesia, South Korea and Japan were off 0.02% to 0.68%. Key benchmark indices in Hong Kong, China and Taiwan were off 0.12% to 0.54%.

Trading in US index futures indicated that the Dow could gain 29 points at the opening bell on Friday, 22 February 2013. US stocks dropped on Thursday, 21 February 2013, as uncertainty over future US monetary policy hurt sentiment. Minutes from the Federal Open Market Committee's January meeting released on Wednesday, 20 February 2013, revealed that many Fed officials are worried about the costs and risks arising from the central bank's quantitative-easing program, with the Fed's balance sheet recently passing the $3 trillion mark. The Fed minutes indicated the central bank will review the program in March 2013.

The Fed, along with other global central banks, has provided massive amounts of liquidity to markets since the onset of the global financial crisis, which has worked its way through to various asset classes. The Fed's most recent addition to its liquidity-boosting moves came late last year, when it pledged billions of dollars a month of asset buying until the US jobs market picks up.