DAILY MARKET REPORT – 09 JULY 2012

The Indian markets closed on a lower note to start the week on global cues and lower data from the US and inflation cooling in China. The Sensex closed 129.14 points or 0.74 percent lower at 17391.98 today. Sensex touched an intraday highs of 17485.79 and a low of 17343.55 points in trade. The Nifty closed 41.80 points or 0.79 percent lower at 5275.15 points. It touched an intraday high of 5300.60 and a low of 5257.75 points.

On the global scenario, Asian indices closed on China’s inflation and US data (Friday) which fuelled concerns of growth. Europe has also opened lower in trade today with investors keeping an eye on the earnings season.

On the sectoral indices front, BSE Midcap Index declined 1.30 percent and the BSE Smallcap Index fell 1.13 percent lower today.  The Auto Index also fell 1.3 percent, the Metal Index moved 1.7 percent lower, the Power Index was 1.6 percent down and the BSE Capital Goods Index was 1.3 percent lower in trade today.

On the currency front, the Indian rupee hit an intraday low of 56.06 to the Dollar, but got recovered to 55.84 at close.

On a report by the Intelligence Bureau, there were suggestions that Ketan Parekh (KP) and his associates falsely drove up prices of certain shares  on higher volumes. The companies which were targeted were Dewan Housing (which was down 14.5%), Goenka Diamond (plunged 20%), Orchid Chemical (down 5%), IVRCL (down 6.7%), Pantaloon (down 3.5%), TBZ (down 6%) and GMR Infra (tanked 5%).

Shares of IGL rose 5.5 percent on hiking CNG prices. SKS Microfinance also rose 12 percent to INR 94.95 for the third consecutive trading session on higher volumes of 9.78 m shares as RBI Governor D. Subbarao hinted at a possibility in relaxation on norms for microfinance firms.Bajaj Auto declined 3 percent as it cut prices of its products in Sri Lanka in the range of  5 to 14 percent to boost sales as the country hiked its excise duty.

Commodities inched higher during the session with WTI at USD 84.85 up 0.47% and Brent trading at USD 98.64 up 0.46%. On the weather front, slow moving thunderstorms are expected to erupt from Virginia to South Carolina.

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

(Business Standard, Economic Times and Moneycontrol)

FY13 TO AFFECT EMERGING & BRIC’s MARKETS : JULIUS BAER

Research firm Julius Baer stated that FY13 period would see suboptimal performance in the markets for BRIC nations. The firm cited lower economic numbers from China and North America and skeptical attitude of investors to the ongoing crisis in the eurozone.

The rally in the markets would soon end in the emerging markets to trade in a range. The markets are currently in the upper end of the range of 7 – 8 percent and could continue to decline.

ASIAN ECONOMIES WILL DETERIORATE IN 2HY12 : NOMURA

According to Nomura, Asian economies will slowdown in the 2HY12 period on lower demand from domestic and overseas traders. China, however, could buck the trend on effects of monetary easing and fiscal policies taking effects.

Exports to traditional markets such as Europe and America would continue to experience weakness owing to the ongoing crisis. Firms will also reduce investments, which is widely noticeable in Taiwan and South Korea.

India will also be vulnerable in the coming future on the effects of the crisis hitting the nation. It slashed its growth estimate for FY13 to 5.8 percent from 6.7 percent.

Singapore and South Korea are expected to see expansion in their GDP by 2.7 percent in FY12 period.

(CNBC)

WEEKEND EQUITY COVERAGE – 7 JULY 2012 TO 8 JULY 2012

ASIA

According to China’s Premier Wen Jiabao, the country’s economy was currently in a stable state; however the economy faced downward pressures to growth.  The premier has called for aggressive steps to keep growth on track. (Telegraph UK)

According to Hong Kong’s Financial Secretary John Tsang, the government could revise its GDP forecast for FY2012 in the next month on deterioration in global economy. Slowdown in Hong Kong’s traditional markets, the U.S and Europe coupled with a slowdown in Asian markets could lead to the country revising its outlook. (Bloomberg)

INDIA

Private Equity deals during the 1HY12 period declined 39 percent to USD 3.6 b in India. During the same period a year ago, deals were valued at USD 5.9 b. The report by Ernst & Young (E&Y) attributed the decline to regulatory hurdles, taxation policies for investments in India. No major transaction or deals took place in India. Infrastructure sector saw the highest investment in 2012 till the period ended June at USD 533 m. Retail and Consumer products saw inflows at USD 529 m. (Economic Times)

Market capitalization of top 5 companies by volume declined by INR 20,600 cr for the week ended 6 June 2012. TCS saw its value decline by INR 6136 cr, Infosys lost INR 3370 cr, ONGC’s value was lower by INR 5176 cr. On the other hand, Bharti Airtel’s capitalization rose by INR 6266 cr followed by HDFC Bank at INR 4959 cr and SBI also gaining INR 3949 cr. (Economic Times)

According to officials at the Central Electricity Authority, delay in signing agreements to procure coal supply for short-term use has affected around 6000 megawatts worth of projects in India. It was also pointed out that around 14 power units across various states in India were affected by the delay in supplies. As per regulations of the Coal Ministry of India, coal co’s are directed to supply coal to power plants until 31March 2012 and those commissioned during 2012-13 period. But only 2000 MW of projects out of the proposed 8800 MW have been signed so far. (Business standard)

According to a report by Macquarie India, corporate loans worth INR 19,000 cr were part of the loans referred for restructuring in 1Q12 period, leading to a 30 percent rise in such cases.  The biggest loan restructuring activities were of co’s such as Visa Steel (INR 3000 cr), Tayal Group (INR 2811 cr) and Indu Projects (INR 2800 cr). The report also states that iron, steel and textile sectors saw the biggest restructuring activity. Rating agencies are of the opinion that debt restructuring activity could rise by a further 6 – 7 percent in 2012-13 period. SME’s and mid-sized co.’s have been the most affected by deteriorating loans. (NDTV Profit)

According to RBI data Indian companies raised USD 3.37b from overseas markets in May versus USD 2.73b in April. (The Hindu Business Line)

Indian foreign exchange reserves grew by USD 1.36b (vs. a previous decrease of USD 0.76b) to USD 289.992b (vs. previous USD 288.62b) for the week ended 29 June 2012. (Yahoo/Reuters)

India’s Chief Economic Advisor to the Ministry of Finance Dr. Kaushik Basu, is of a opinion that Indian inflation could come down below 7 per cent in September from present 7.5 per cent. He also expects the rupee to stabilise around the 50 mark. (The Hindu Business Line)

Steel Co.’s – According to the Steel Ministry report steel consumption for June quarter grew by 18.195 million tonnes versus the consumption of 16.72 million tonnes last year, registering a 1.5 per cent growth.

• Finished steel production for the June quarter at 18.87 million tonnes versus 18 million tonnes in the previous year.
• Finished steel imports at 1.99 million toned in the June quarter versus 1.41 million tonnes last year.
• Exports at 1 million tonnes versus 1.18 million tonnes last year.

According to Sushim Banerjee the director-general of Institute for Steel Development and Growth (INSDAG) expects the offtakes for long products at 10 per cent and for flat products at 5 per cent. Further according to the chairman of SAIL, the Indian market has not been impacted by the fall in global steel prices and expects demand to be reasonable during the year.  (The Hindu Business Line)

Engineers India Ltd – Co. won INR 720cr contract from Bharat Petroleum to provided engineering consulting services. (Economic Times/PTI)

Natco Pharma – Co. begins sales of generic version of Nexavar in India. The generic version to cost INR 8,880 for a pack of 120 tablets versus INR 2.8 lakhs for original drug manufactured by Bayer. The co. is expected to add about INR 15cr of revenue from the product initially. (The Hindu Business Line)

EUROPE

Italian GDP to shrink around 2 per cent this year versus the previous forecast of around 1.5 per cent as forecasted by the Italian Central bank.  The Italian Central bank expects 2012 to be negative. (Economic Times/AFP)

Vedanta plc – Co. has expressed its interest in acquiring a stake in Cairn India’s refinery in Rajasthan. The Chairman Anil Agarwal discussed the matter with various government officials including Prime Minister Manmohan Singh to increase output at the Barmer oilfield in Rajasthan. (Business Standard)

Total SA – Co. has anchored an invest of USD 20b (vs. USD 22b in 2011) this and more in 2013 at the oil price of USD 100 a barrel, according to the co.’s CEO. (Business Standard/Bloomberg)

British Petroleum plc – Co. signed an agreement with JBF Petrochemicals, a subsidiary of JBF Industries, to supply purified terepthalic acid technology. JBF would utilize the technology in its 1.25 metric tonne plant in Bangalore, India. (Business Standard)

BAE Systems – According to the co.’s management, co. has emerged as frontrunner in supplying the US Air Force with 350 training jets. The contract is estimated to be worth more than USD 11b. (Telegraph UK)

NORTH AMERICA

The U.S Trade data is to be released on 11 July by the Commerce Department in the U.S. Economists polled by Bloomberg predict the trade deficit in May to narrow on cheaper prices of crude oil and lower demand, both of which contributed to reductions in imports. Forecasts are polled at the gap to decline to USD 48.5 b vs USD 50.1 b for April 2012. (Bloomberg)

Yields on 10 yr Treasury notes declined 10 basis points to 1.55 percent for week ended 8 July vs 1.65 percent a week ago. The decline is attributed to slowdown in the labour markets with lower than forecast employment growth which could prompt the U.S Fed to conduct quantitative easing. (Bloomberg)

According to Peter Schiff the CEO of Euro Pacific Capital, expects stock markets to collapse to the worst levels than previously seen in 2008. Schiff is of an opinion that US economy is in the middle of a phoney recovery and the US dollar and the Treasury securities were not as safe as conceived by the markets.  Further Schiff believes that increasing interest rates is a painful but realistic solution to the ongoing situation. (Economic Times/PTI)

Boeing – According to Co.’s CEO, co. is expected to do better as compared to Airbus, in the current year or the coming years.  In addition industry analysts expect co.’s 737 Max airplanes to be a tough competitor for the Airbus A320neo airplane, Airbus admitted early this year that it could keep up with the momentum for the A320neo.  (FirstPost/Reuters)

Heibei Iron & Steel Group – Co. received approval from regulatory authorities to invest in Canadian iron ore firm Alderon Iron Ore Corp. Heibei is expected to acquire a 20 percent stake in the co. for CAD 194 m (USD 195 m) in its plant located in Canada. (Reuters)

COMMODITIES

According to the head of Iranian oil exporters union Hassan Khosrojerdi, Iran reached an agreement with European refiners to sell some of its oil through a private consortium.  In accordance to the agreement around 20 per cent of Iranian oil is expected to go through the private consortium. (Business Standard/Reuters)

GEOPOLITICAL

The US Navy has increased its presence in the Gulf by deploying USS Ponce to help in the mine-clearing operations. USS Ponce will aid the four US minesweepers stationed in the Gulf that will ensure the safety of the oil shipping route. (MoneyControl/Reuters)

GLOBAL

According to a report by research firm Prequin, activity in the private equity deals rose for the April – June quarter in 2012 on a global scale. Deals rose to USD 48.5 b spanning over 145 PE fund investments vs USD 33.7 b over the previous quarter. On an average, the time taken by firms to close out a deal declined by 2 months over the 2011 period. PE markets remain constrained by the economic scenario while some sections of the industry have been successful in attracting funds. (Economic Times)