DAILY MARKET REPORT – 31 JULY 2012

RBI kept rates unchanged and the choppy markets rose to end the day on a positive note. The markets were taken aback not by the decision to hold rates, rather the reasons given by the RBI for the decision. The central bank stated that inflation would rise to 7 percent from its previous number of 6.5 percent and that the GDP for FY12-13 would be lowered to 6.5 percent from 7.3 percent. Eurozone market stability before the ECB meet saw Indian markets rise before today’s close.

The Sensex closed 92.5 points (0.54%) higher at 17236.18 points, with highs of 17253.67 and a lows of 17004.09 in intraday trade today. The Nifty closed 27.2 points (0.52%) higher at 5227 points on highs of 5234.55 and a lows of 5154.05 points.

Among the sectoral indices on the BSE,  the Midcaps closed 0.71 percent higher and the Small Caps inched higher by 0.11 percent.  The Oil & Gas Index rose 1.89 percent, the Realty Index upped 1.24 percent, Healthcare Index advanced 0.85 percent. However, Bankex was down 0.21 per cent on account of RBI’s stance and the Power Index declined 0.21 percent.

Globally, Asia closed higher on hopes of a stimulus provision from Europe’s banks. Europe, too, followed on the same news as it is trading marginally higher.

Power outage in North India dominated news again which is why the BSE Power Index declined.

Kindly check the Market Summary tab for further information on stock-related data.

(Economic Times, Business Standard and CNBC)

RBI KEEPS RATES UNCHANGED

India’s central bank The Reserve Bank of India (RBI)  interest rates at unchanged at 8 percent (Repo rate) citing rising inflation. SLR rate cut to 23 percent from 24 percent.

Bond yields on the 8.15% bond due 2022 is at 8.182 percent.

Bank Nifty down 111 points while Nifty down 15 points.  (CNBC TV 18)

FIRSTSOURCE SOLUTIONS 1Q12 PROFIT AT INR 141.19 m vs prv INR 71.37 m

Firstsource solutions Limited – co. reported 1Q12-13 PAT at INR 141.19m vs. previous 1Q11-12 at INR 71.37m.  Total income from operations at INR 1,955m vs. previous INR 1,828.42m. EPS at INR 0.33 per share vs. previous INR 0.17 per share.

On consolidated basis: net profit for 1Q12-13 at INR 289.80m vs. previous INR 106.45m. Total income at INR 6,751.70m vs. previous INR 5,230.76m.
(NSE Filings)

UBS 2Q12 PRE TAX PROFIT AT CHF 951 m vs prv CHF 1654 m

Swiss Bank UBS posted 2Q12 pre tax profit at Swiss Franc (CHF) 951 m vs CHF 1654 m a year ago. The co. also saw its net interest income decline 12 percent y/y to CHF 1393 m.

What is to be seen is that its Net profits declined by more than half to CHF 698 m vs CHF 1278 m a year ago.

It wealth management business saw inflows rise to CHF 13.2 b. Its Tier I capital ratio came at 19.2 percent from 18.7 percent a year ago. Customers deposits rose CHF 19 b to CHF 362 m on higher inflows into the wealth management and retail and corporate banking divisions. The co. also recorded a loss of CHF 349 m in equities linked to Facebook’s IPO. (IR, UBS AG)

EQUITY UPDATE: 31 JULY 2012

ASIA

China’s Railways ministry announced an increase in spending on railways and related infrastructure for the second time in the year to prop up the slowing economy. The ministry plans to issue RMB 470 b (USD 74 b) worth of investments on railroads, bridges and other related infrastructure vs July’s spending of RMB 461 b. The Cabinet has also called for investments from private entities and investors to make investments in the railway’s related project. (Bloomberg)

Hang Seng Bank Ltd – Co.’s 1HY12 profit saw a 14 percent increase to HKD 9.3 b (USD 1.2 b) vs HKD 8.16 b a year ago. Estimates came in at HKD 8.26 b Rise in the number of mortgages, credit cards and increased lending to firms boosted its results. Net interest margin, a measure of lending profitability, rose to 1.85 percent vs 1.75 percent previously. (Bloomberg)

South Korea’s confidence Index declined to 70 for August vs 81 in July on domestic concerns which are affected by the ongoing slowdown in the global economy. The index of sentiment declined to 100, for July meaning that the outlook was mixed. (Newstrack India)

INDIA

A survey of Professional Forecasters conducted by the RBI revealed a lower revised GDP forecast to 6.5 percent vs previous 7.2 percent for FY2012-13. Higher inflation, lower than expected monsoon were the reasons for the lower forecast.  In related news, according to Deloitte, India’s GDP is likely to grow between 6 per cent to 6.5 per cent in the current fiscal, poor monsoon and higher inflation. (Economic Times/PTI/Business Standard)

FII’s made gross purchases of INR 2,446.40cr and gross sales of INR 1,517.45cr. DII’s made gross purchases of INR 882.49cr vs. previous gross sales of INR 1,116.21cr. (Business Standard)

The BSE will delist 52 stocks from trading in the Securities Lending and Borrowing Segment (SLB) from 28 September 2012. The move comes on the back of NSE’s decision to remove around 51 stocks from the F&O segment to stem illiquid stocks. SLB segment permits short sellers to borrow securities to make delivery of shares. (Business Standard)

Exports of agricultural products rose 88 percent to INR 82,000 cr in FY2011 vs INR 43,627 cr in FY10 on rising exports of processed foods, basmati and non basmati rice, guar gum and buffalo meat. Rise in shipments also aided higher exports. Guar gum saw higher demand in the US on account of rising exploration of shale gas. Agri-based exports are expected to rise 15-20 percent in FY12. (Business Standard)

Maruti Suzuki – Macquarie has downgraded co. to ‘neutral’ from ‘outperform’. Price target cut to INR 1,200 from INR 1,665. (Economic Times)

DLF – Co. to sell its 17.5acre land in Lower Parel, Mumbai to Lodha Group and a private equity firm for INR 2,800cr, (Economic Times)

Spicejet – Rare Enterprise has acquired 25 lacs shares of co. for INR 7.69cr through an open market transaction. Shares were purchased at price of INR 30.77. (Money Control/PTI)

KNR Constructions Ltd – Co. secured orders worth INR 49.25cr, as per BSE Filings. (MoneyControl)

INDIAN EARNINGS

GAIL – Co. reported 1Q12-13 net profit at INR 1,134cr vs. previous 1Q11-12 INR 985cr. Turnover up 25 per cent at INR 11,089cr. 1Q12-13 LPG subsidy at INR 700cr vs. previous INR 682cr. (Financial Express)

Cholamandalam Investment and Finance – Co. reported 1Q12-13 net profit INR 69.65cr vs. previous INR 37.88cr. Total income at INR 558.07cr vs. previous INR 381.41cr. (Business Standard)

Kansai Nerolac Paints – Co. reported 1Q12-13 net profit at INR 63.3cr vs. previous 1Q11-12 net profit at INR 61.2cr. Total revenue for the period at INR 723.5cr vs. previous INR 652cr. (Financial Express)

Greaves Cotton – Co. reported 1Q12-13 net profit at INR 32cr vs. previous 1Q11-12 net profit at INR 35cr. Revenue at INR 412cr vs. previous INR 403cr. (Business Standard/PTI)

Bharat Electronics – Co. reported 1Q11-12 net profit at INR 19.32cr vs. previous INR 122.8cr. Total income at INR 960.2cr vs. previous INR 1084.9cr. (The Hindu Business Line)

Shanthi Gears – Co. reported 1Q12-13 net profit at INR 3.5cr vs. previous INR 7cr. Total income at INR 32.91cr vs. previous INR 41.27cr. (Financial Express)

EUROPE

According to ratings agency Standard & Poor’s, deleveraging process was underway in Europe’s public, household and banking sector, which was dragging Europe deeper into recession. The rating agency saw a 40 per cent chance of European economies sinking into a genuine double-dip recession in 2013. Particularly in a scenario of hard landing in some emerging markets delaying recovery in world trade, if one of the main euro-zone countries lost access to capital markets for a prolonged period and if consumer demand sunk substantially. S&P revised the GDP growth forecast for Euro Zone to a contraction of 0.6 per cent in 2012 versus a previous estimate of zero per cent; 2013 growth at 0.4 per cent versus 1 per cent growth. (Fox Business/Dow Jones Newswire)

Lower than expected mortgages were approved in the U.K as the ongoing eurozone crisis weighed on the British economy, which is concerned with its own deepening recession. Loans granted for June include 44,192 loans vs a revised number of 50,544 in May vs expectations of 48,000. Stricter terms of lending, lower consumer confidence and eurozone happenings could have been responsible for the decline. The Bank of England plans to boost the decline by lowering mortgage rates and borrowing costs. (Bloomberg)

Air France KLM – Airline firm faced a second quarter loss of EUR 895 m vs a loss of EUR 197 m a year ago. It faced a one-time charge of EUR 368 m related to its redundancy programme where it had axed around 5000 jobs earlier this year. The co. predicted that its operating profits would exceed previous year’s profits. The co. also lowered its operating losses by more than half, which exceeded expectations. Shares of the firm rose 18 percent to EUR 4.62 in trade. (Financial Times)

NORTH AMERICA

U.S Treasury Secretary Timothy Geithner and German Finance Minister Wolfgang Schaeuble praised the efforts taken by the leaders of the European Union to maintain stability in the region. Greece, however, didn’t get a mention by the leaders while Ireland, Portugal, Italy and Spain were appreciated for their efforts to mitigate rising debt and implementing austerity measures. (Bloomberg)

AT&T – Board of the co. approved its USD 11.1 b worth of share buyback. (Financial Times)

CKE Inc – Co. a franchiser of burger chains in the U.S, stated that its initial public offering would be priced between USD 14 – 16 a share. The total no.of shares offered at 13.3 m of which half would be issued by the co. and Apollo CKE Holdings LP, the sole stockholder. (Bloomberg)

NORTH AMERICAN EARNINGS

TNT Express – Freight co. saw its 2Q12 profit rise to EUR 39 m vs EUR 3 m a year ago on increase in business from Europe and Asia, better performance of its Brazilian subsidiary and the weaker euro. Revenues rose 1.7 percent to EUR 1.83 b. EBIT came in at EUR 77m, 67 percent higher y/y. (Financial Times)

Chrysler LLC – Co. reported 2Q12 profits at USD 436 m vs prv loss of USD 370 m y/y. Profits rose on higher sales of its passenger car model, the Dodge Dart compact. The results of 2Q11 include a one time charge of USD 551 m as costs for repayment of government loans. Sales rose 23 percent y/y to USD 16.8 b. The co.’s results prompted it to forecast FY12 profits to rise by USD 1.5 b. U.S car sales rose 42 percent and Europe underperformed for the fifth consecutive period. The co. and its parent Fiat SpA plan to merge in an attempt to boost sales in excess of USD 123 b. (Bloomberg)

 

DAILY MARKET REPORT – 30 JULY 2012

Friday’s events also contributed to Monday’s sentiments. Positive data emanating from the US markets, their in-line GDP numbers had a positive impact. Greek ministers also agreed most of the austerity measures demanded by the creditors gave investors a reason to believe that efforts are on to stem the crisis in Europe. The ECB president Mario Draghi is expected to meet with the head of Bundesbank, Jens Weidmann over next couple of days, to discuss plans of joint rescue by ECB and European rescue funds, to purchase Spanish and Italian government bonds, according to persons familiar.

All eyes await the interest rate decision tomorrow by the RBI. Meanwhile, global cues combined with ECB’s plan to stabilize the region through bond purchases, rallied the markets to close higher. For the RBI event, participants do expect a cut in rates while some state that rates would not be changed. Hence, it remains to be seen how the market would take to the news over the week. Although the cut would boost banking stocks, macro-issues would take center stage (Europe and Europe as of now.)

The Sensex closed 304 points higher at 17143 points or 1.81 percent higher. The Sensex touched a high of 17163.95 and a low of 16919.14 points in intraday trade today. The Nifty closed 99.95 points, falling short of 5200, closing at 5199.80 points. The Nifty touched a high of 5206.60 and a low of 5129.75 points in trade today. Globally, Asia closed higher on the backdrop of the FOMC meet and ECB’s proposed stimulus package. Europe meanwhile, opened higher on expectation that the ECB would undertake some sort of action to provide stimulus to the Eurozone.

On the sectoral indices on the BSE, the Midcap Index rose 1.56 percent and the Smallcap Index gained 1.34 percent. The Power Index gained 3.48 percent, the Realty Index rose 3.24 percent, the Capital Goods Index inched 2.92 percent higher and the Bankex advanced 2.52 percent. The rate cut could prompt a rise in the Bankex tomorrow as well.

On the individual stock front, we saw many PSU banks report their first quarter numbers. Airline stocks rose on SpiceJet’s better than expected numbers. On the earnings, Havells India Ltd, Syndicate Bank, Corporation Bank, Muthoot Finance Ltd, Allahabad Bank, Oriental Bank of Commerce, Bank of Baroda reported their numbers today.

Globally, Spain saw its 2Q12 GDP data come out lower, affirming a continuity in recession in the region. Italy saw its short-term bond yields decline while longer term debt fell just short of 6 percent. HSBC Holdings plc reported better than expected numbers but kept aside USD 2 b to counter contingent liabilities.

On the currency front, the rupee closed at 55.23 to the Dollar, down 29 paise.

Kindly check the Market Summary tab for further information on stock-related data.

(Economic Times, Business Standard and CNBC)