WEEKEND EQUITY COVERAGE – 26 MAY TO 27 MAY

ASIA

According to China’s national Bureau of Statistics, showed that net earnings of industrial co.’s in the country declined 2.2 percent on a y-o-y basis to RMB 407.6 b (USD 64.2 b) in April 2012 vs gains of 4.5 percent in March. Slowdown in the economy and lack of demand were the main factors cited. It also stated that industrial growth for the FY2012 period could range between 10 – 20 percent vs growth of 25.4 percent in 2011. (Bloomberg)

 INDIA

According to experts, India’s equity markets will experience volatile trading sessions this week on account of GDP data release, co. specific trading on earnings and movement of the rupee. Another factor to watch out for would be the government’s decision on the hike in price of diesel. Settlement of the May F&O segment will add to the volatility in trade. GDP data is expected on Thursday. (Economic Times)

Six of the top 10 firms by market share on the BSE Sensex added a total of INR 21339 cr to their market capitalization for week ended 25 May 2012. ONGC gained INR 7144 cr, on higher fuel prices. Coal India (CIL) gained INR 6380 cr for the same period. ITC, HDFC Bank and NTPC saw a decline in their market cap of a total of INR 9463 cr. (Economic Times)

Fertilizer co.’s- Co.’s in India plan to raise prices of urea, potash and diammonium phosphate (DAP) fertilizers by upto 30 percent as falling rupee made imports more expensive. (Economic Times)

The Indian government would purchase natural gas from the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline at USD 13 per mmBtu. (Business Standard)

Foreign Institutional Investors (FII) have withdrawn INR 435 cr from equity markets in May 2012 vs a withdrawal of INR 1100 cr in the previous month. Gross purchases made by FII’s in May totaled INR 36228 cr while redemptions worth INR 36663 cr have taken place. Bullish sentiment has been observed in the debt markets by the FII’s as they invested INR 1660 cr. (Business Standard)

According to Finance Minister Pranab Mukherjee, direct tax collections could account for 12 percent of the country’s GDP for FY2012-13 period. The govt. has targeted collections of INR 570,000 cr. (Business Standard)

NMDC / Tata Steel – Co’s plans of an agreement to form a joint-venture in 2010 to construct steel mines and plants has hit a snag after several rounds of talks yielding no result. Both co.’s have not given out reasons regarding the JV operation. (Business Standard)

Reliance Industries – Co. has bought back stock worth INR 1481cr since February 2012. The stock purchases are part of the co.’s INR 10,440cr stock buyback program announced earlier in the year. (Economic Times)

LIC – According to Kotak Institutional Equities, some of the co.’s top holding included ITC (7.8 per cent), ONGC (6.5 per cent), RIL (6.4 per cent), SBI (5.7 per cent), L&T (5.3 per cent), ICICI Bank (3.5 per cent) and Infosys (3 per cent). Co. in the 4Q11-12 increased the share purchases of PSU companies, while sold shares worth INR 8000cr in mostly private companies including Tata Motors, ICICI Bank, ITC, Reliance industries, Bajaj Auto, Maruthi Suzuki, L&T and HDFC. Co.’s major share purchases in the 4Q11-12 included ONGC (INR 10,800cr), PNB (INR 1900cr), Bank of Baroda (INR 1400cr), and Bank of India (INR 1000cr). (Business Standard/PTI)

Bharti Airtel – Co. to enter the mobile advertising space through its ‘m-advertising’ platform. (Economic Times/PTI)

Tata Motors – Co.’s luxury car segment is expected to achieve a pre-tax-profit of around GBP 1.5b to GBP 1.6b for the year up to 31 March  vs. previous GBP 1.1b last year, according to a source close to the co. (Financial Express)

Reliance Infrastructure – Co. expects its revenue growth at INR 1000cr in FY12-13 and INR 2000cr in FY12-14. (Business Standard/PTI)

SAIL – Co. signed a JV with Burn Standard Co. Ltd for setting up an INR 200cr wagon component manufacturing facility in West Bengal to produce 10,000 bogies and couplers p.a. (Domain-b)

TTK Prestige – Co. to tie-up with Schott AG to launch new range of cooking appliances. (The Hindu Business Line)

Texmaco Rail & Engineering – Co. received an order worth INR 117.03cr from Bangladesh Railways for 255 wagons and a INR 12.43cr 70 wagon order from Africa. (The Hindu Business Line)

Linc Pen & Plastic – Co. ups its growth forecast to at least 20 per cent in the FY12-13 vs. previous 9 to 10 per cent in FY11-12. Co. expects to net in revenue of INR 325cr in FY12-12 vs. previous INR 270cr in FY11-12. Also co. is planning to set up a manufacturing facility in Gujarat with an investment of INR 25cr. (The Hindu Business Line)

EUROPE

The Spanish national government will inject a fresh round of capital of EUR 19 b in Bankia. The latest amount takes the total capital injection in Bankia to EUR 23.5 b which gives the government a 90 percent stake in the bank. Capital will be used to restructure its real estate mortgage loans with its core tier one capital ratio rising to 9.6 percent. In order news, Bankia to sell its stake in IAG. (Financial Times/Telegraph UK)

S&P cut rating of five Spanish banks:

• Banco Polular/ Bankinter/Bankia/ Banca Civica/Banco Financiero de Ahorros cut to BB plus from BBB minus. (Business Standard/Reuters)

Swiss National Bank president Thomas Jordan said, considering the worst case scenario of euro break-up, SNB could adopt capital control to influence the flow of capital in Switzerland. Thomas Jordan had predicted the euro zone crisis in 1994 in this doctoral thesis. (Reuters)

According to Belgium’s foreign minister Didier Reynders, co.’s and central banks should prepare themselves for the after effects of the outcome of the Greece debt crisis, in case it were to exit the Euro zone. He states that the contagion following Greece’s exit could affect Spain, Portugal and even Italy. (Reuters)

Lloyds – Insurance firm Lloyd’s has reduced its underwriting exposure to the euro-zone in preparation of a possible exit of Greece from the euro-zone. The co. would also have to take writedowns on GBP 58.9 b on its exposure in the euro zone. The region accounts for 18 percent of the co.’s GBP 23.5 b of gross premiums, with France, Germany, Spain and Italy accounting for a major portion of it. (Reuters)

NORTH AMERICA

Goldman Sachs – Co. to sale its Svenska Petroleum’s USD 2b stake in parts, due to lack of interest by oil majors like BP and Shell. (Reuters/ The Independent)

MORNING EQUITY

ASIA

An upcoming Bank of Japan’s Tankan survey of Japanese business sentiment on 2^nd April, states that manufacturers are less pessimistic about the economy. The quarterly index is expected to rise to  – 1 from – 4 in December, according to median estimates of economists. The survey is also expected to demonstrate that confidence among large service providers could rise to 5, from 4 the previous quarter, according to analysts’ median estimate. (Bloomberg)

Sharp, an electronics manufacturer is selling a 10 percent stake to Taiwan’s Hon Hai Precision Industry Co. for JPY 66.9 bn (USD 808 m). The deal also involves Hon Hai obtaining management and control of Sharp’s manufacturing plant in Sakai. Sharp will issue new shares to every four shares of Hon Hai to conclude the agreement. (Financial Times)

According to China’s National Bureau of Statistics, net income of companies declined by 5.2 percent to RMB 606 bn yuan (USD 96 m) on a Y-o-Y basis on account of slowing exports and rising property prices. Data for January 2011 were unavailable for now on account of a weeklong Chinese New Year holiday that disrupted production. Chances of a policy stimulus appear on cards based on this data. 41 types of companies were surveyed, out of which 23 reported increasing profits, 14 witnessed declines and one broke even. (Bloomberg)

INDIA

Air India – The company plans to directly import aviation fuel to save costs. It is also party to a bridge loan (short-term loan) of INR 1000 cr (USD 195 m) from Standard Chartered Bank to fund purchase of two of its 27 Dreamliner aircrafts. The Board also mulled restructuring  INR 11000 cr worth of working capital loans to be converted to long-term debt and INR 3400 cr cash credit facilities. (Economic Times)

Official auditor CAG may not alter the Rs 10.76 lakh crore loss to exchequer it had projected in the draft report on allocation of coal blocks in 2004-2009 but is likely to replace the term “loss” with a more acceptable usage “unintended benefit”. (PTI/Money Control)

According to Finance Minister Pranab Mukherjee, Gulf crisis has impacted prices and availability of oil and hinted that imports will become difficult if crude prices rise to $150-200 per barrel. (CNN_IBN)

The Indian government stated that it would borrow a total of INR 3.79 lakh crore from the market in the first half of the FY13, which will be over 65 per cent of the total borrowings it plans to raise during 2012-13. (Economic Times)

GAIL – Co. has set a target of transporting 121.55 mmscmd and market 85.75 mmscmd of natural gas during the financial year 2012-13. The firm company has pegged its gross sales for 2012-13 at Rs 43,430 crore and gross margin at Rs 6,287 crore.  (thehindubusinessline)

Kingfisher Airlines – Co. suspended operations to several cities as per a new holding plan and asked the staff to stay home till the time it manages fresh funding. Co. said there would be no lay-off of employees, and added that it would operate 120 flights daily with the help of 20 dedicated planes during the summer schedule. (ANI/Yahoo)

L&T Finance Holdings – Co. has acquired Fidelity Worldwide Investment’s India mutual fund business. (Reuters)

Central Bank of India – Co. is hopeful of maintaining its Net Interest Margin at the current level of around 2.53 per cent in the 4Q, according to top bank officials. (Business Standard/PTI)

Jindal Steel & Power Ltd – Co. yesterday said one of its promoter entities has pledged 1.3 million shares. (Business Standard/PTI)

GTL – Co. has admitted to undisclosed income of more than INR 500cr to the Income Tax department, according to the minister of state for Finance S S Palanimanickam told the Rajya Sabha. (Business Standard/PTI)

Competition Commission of India has approved the proposal of Reliance Infrastructure Ltd to merge five wholly-owned subsidiaries with itself. It has also approved the demerger of the container business of Reliance Infrastructure Engineers Pvt Ltd (RIEPL) from the company. The five subsidiaries are: Reliance Energy Ltd (REL), Reliance     Energy Generation Ltd (REGL), Reliance Goa and Samalkot Power Ltd (RGSPL), Reliance Infraventures Ltd (RIVL) and Reliance Property Developers Ltd (RPDPL). (Business Standard/PTI)

iGate Patni – Rio Tinto has entered into an innovation partnership with IT firm iGate Patni for developing next-generation technologies and expects to invest up to USD 80 million towards this initiative. (Business Standard/PTI)

Power distribution companies – According to an ICRA report, Co.’s are projected to have incurred a whopping loss of Rs 80,000cr, before accounting for government subsidies. (Economic Times/PTI)

Larsen & Toubro – Co. yesterday said it has bagged an order worth INR 1,700cr from Tata Steel for its new 6-million tonne per annum steel plant in Odisha. (Business Standard/PTI)

Public sector banks – According to the Finance Minister Pranab Mukherjee Co.’s posted 3.06 per cent dip in net profit at INR 31,688cr in the December quarter of this fiscal due to higher provisioning and exposure to sectors such as aviation and telecom. (thehindubusinessline)

Reliance Industries Ltd – The Directorate-General of Hydrocarbons (DGH) has rejected Co.’s contention that geological complexities stopped it from firming up appropriate drilling locations in D6 block.  (thehindubusinessline)

Nalco – According to Minister of State for Finance S S Palanimanickam, government is considering a disinvestment of 10 per cent in the co. (Economic Times/PTI)

In a government announcement, the government will not target Participatory Notes (P-notes) under the new General Anti-Avoidance Regulation (GAAR) regulations. (Rediff)

Suzlon – REpower Systems has signed a contract with PNE Wind AG for supplying 54 wind turbines in Germany. (Business Standard/PTI)

TVS – Co. has acquired Universal Components UK Ltd, a wholesale distributor of commercial vehicles’ parts and accessories in Britain, for INR 100cr. (thehindubusinessline)

Gammon Infrastructure Projects – Co. yesterday said it has bagged a INR 778.15cr project from National Highways Authority of India (NHAI) for upgrading a section of NH-23 in Orissa. (Business Standard/PTI)

Tata Global Beverages  – Co. will purchase an additional 1.417 million shares (or 4.17% stake)  in Mount Everest Mineral Water for around INR 28cr. (Business Standard/PTI)

SBI – Co. hikes interest rate on short-term deposits to 8%. (thehindubusinessline)

Linc Pens – Co. to raise INR 20cr through a fresh issue of equity shares to Mitshubishi Pencil Co. Ltd. Mitshubishi Pencil Co Ltd. will pick up 13.53 per cent stake in co. (thehindubusinessline)

EUROPE

Germany’s overall debt declined to EUR 2.021 trillion at the end of last year. The debt declined by EUR 5.7 billion or 0.3 percent from the EUR 2.027 trillion recorded at the end of September, according to the national statistics office Destatis.  (Economic Times/AFP)

Bank of Spain’s report affirmed that Spain would enter into another recession on forecasts of a second consecutive quarterly slide in output. A contraction in activity, private consumption and rising unemployment rates for the first 3 months of 2012 are likely to push forth for massive cuts in its budget on Friday. Fiscal deficit for 2011 was 8.5 percent of Spain’s GDP, which is higher than the 6.0 percent target. Spanish government pegged its deficit target at 5.8 percent this year, above the 4.4 per cent demanded by the EU, but reached a compromise of 5.3 percent. (Economic Times)

Policy advisor, The Organization for Economic Co-operation and Development (OECD) stated in its report that the euro zone needed to undertake ‘ambitious’ structural reforms to bolster economies. It warned that lack of lending by banks coupled with fiscal consolidation could pose short-term problems in Europe. OECD forecasted a moderate growth of 0.2 percent in Europe in 2012. An increase in the financial ‘firewall’ was also suggested and that Spain and Italy should pursue further consolidation should anything adverse come up. (Financial Times)

According to ECB’s Jozef Makuch the euro zone economy is still in a fragile state (Reuters)

BP PLC – Co.  Co. to sell a package of North Sea gas assets in a USD 400 million deal with privately-held Perenco U.K. Ltd. (WSJ)

Rio Tinto – The Company plans to put up its diamond mining business for sale by inviting offers on its diamond mines in Australia, Canada and Zimbabwe and a project in India. Trade sale and a flotation are considered by the company. Bidders include Harry Winston Diamond, a Canadian firm that already owns a 40 percent stake in Rio’s Diavik mine in Canada, and private equity groups KKR and Apollo Global Management. Bids from Alrosa and De Beers are considered unlikely on account of opposition from competition regulators. (Financial Times)

Deutsche Bank AG – The bank claimed the title of becoming Europe’s largest bank by assets after it leapfrogged France’s BNP Paribas SA. Assets of the German bank are pegged at EUR 2.16 tn (USD 2.88 tn), according to Bloomberg data, making its balance sheet about 40 percent larger than in 2006 and   more than 80 percent of the German economy. The bank’s price-to-book ratio is at 0.65, seventh lowest among the 50 global banks with similar market values. (Bloomberg)

Total – Co. is considering drilling a relief well as one of the options to stem a massive gas leak at its Elgin platform in the North Sea, which could take six months. (Telegraph)

UniCredit SpA – Co.’s 4Q net profit fell 65 per cent but beat analysts’ expectations. (WSJ)

NORTH AMERICA

The Conference Board showed the index of consumer attitudes eased to 70.2 vs. prev. 71.6 vs. exp.  70.3. (Reuters)

S&P/Case-Shiller Home Price Indices (YoY) data (Jan) -3.8 percent vs. previous – 4.0 percent. (Dow Jones Newswires)

McCormick – Co. 1Q EPS USD 0.55 vs. est. USD 0.53. Sales rise 16 pct to USD 906.7mn. FY12 guidance at EPS USD 3.01-3.06 vs. est. USD 3.04. (Reuters)

Walgreen Co – Co. reported second quarter results which exceeded analysts’ estimates. Net income for quarter ended Feb. 29 declined 7.6 percent from USD 739 m to USD 683 million on a Y-o-Y basis. Earnings were at 78 cents a share (80 cents Previous) against analysts estimates of 77 cents a share. Convenience/fresh food, household items and personal care products boosted sales for the second quarter. The company’s total net sales stood at USD 18.7 bn, exceeding analyst’s median estimates of USD 18.6 bn. (Bloomberg)

COMMODITIES

Deutsche Bank yesterday raised FY12 Brent crude oil forecast by USD 2 sighting partly due to supply disruptions, but lowered its U.S. natural gas price forecasts due to plentiful supply. (Economic Times/Reuters)

According to the World Steel Association global steel production was up 1.9 per cent in February at 119 million tonne, with India’s contribution at 5.7 million tonne. (Business Standard/PTI)

According to the International Energy Agency, oil consuming nations are set to pay a record USD 2 trillion this year for oil imports if crude prices do not fall. (Reuters)