EQUITY UPDATE – 13 AUGUST 2012

INDIA

According to RBI Governor D. Subbarao, domestic factors could have accounted for the economic slowdown in India. The varying severity of the global crisis meant that the central bank had limited options at its disposal to respond. Declining investments in the nation were also a worrying situation for the nation. (Economic Times)

Sun Pharmaceuticals – Co. has agreed to buy the remaining stake in Taro Pharma, a U.S based firm for USD 580 m. Sun Pharma already owns a 66 percent stake in the co. (Financial Times)

According to data by the National Housing Bank (NHB), home prices rose by an average of 10.5 percent in 16 cities in India for the 2Q12 period out of 20 countries covered. Pune saw the maximum price rise followed by Bangalore, Mumbai saw its prices rise by 3.7 percent as compared to others. (Economic Times)

Reliance Communications – Anil Ambani led RCom plans on investing a total of INR 1500 cr to expand its network and data services. (Economic Times)

Go Air – Budget airline firm has entered into a 10 year parts supply and maintenance programme with Lufthansa Technik. (Economic Times)

ONGC Ltd – Oil exploration firm would set up a urea manufacturing plant in Tripura, India in a joint-venture operation which is expected to have an outlay of INR 5000 cr.

INDIA EARNINGS

Tata Steel – Co. saw its 1Q12 profit decline almost 89 percent to INR 597.88 cr on a y/y basis vs estimates of INR 670 cr.  Sales rose 1.89 percent y/y to INR 33547 cr. The co. was affected by weak demand for steel and lower commodity prices in Europe. (Business Standard)

Coal India – Coal mining firm saw its 1Q12 profit rise 8 percent y/y to INR 4469 cr vs expectations of INR 4440 cr.  Sales rose 15.5 percent to INR 18572 cr on a y/y basis vs exp. of INR 16650 cr. The co. plans to hit a target of 470 m tonnes of coal supply in FY2012-13. The co. is also under pressure from the government of India to supply coal compulsorily to state-owned power generating firms. (Business Standard)

EUROPE

British Petroleum plc – Co. is to sell its stake completely in its oil refinery in California for USD 2.5 b. The co. acquiring the refinery is Tesoro Corp. BP is in the process of selling many of its oil refineries incl. the Carson and Texas city refinery. It plans to cut its downstream operations and focus on the more profitable segments. The co. is also under pressure to divest assets to raise cash to fund expenses from its Deepwater Horizon oil spill. (Financial Times)

Greece reported its 2Q12 GDP data which contracted 6.2 percent vs a fall of 6.5 percent in the prv quarter. The minor improvement still did not convince the markets that Greece would turnaround the corner. (Financial Times)

NORTH AMERICA

Google Inc – Co. plans to cut around 4000 jobs at its Motorola Mobility unit to focus more on production of high-end smartphones. The loss making division was acquired in 2011 for USD 12.5 b. (Financial Times)

Julius Baer – Co. is to purchase wealth management operations of Merrill Lynch outside the U.S for USD 840 m. (Financial Times)

DAILY MARKET REPORTS – 9 AUGUST 2012

The day saw markets start on a positive note on global cues, but the disappointing economic data saw the markets end lower and flat today. Major market moving event for the day was the disappointing IIP numbers. After a barrage of lowering GDP forecasts, everyone talked of policies and stimulus but now only see more gloom on the Indian front. Nevertheless, it looks like a long path to recovery to normalcy.

On the Indian markets, the Sensex closed down 39.69 points at 17560.87 points today on highs of 17702.98 and lows 17516.99 points. The Nifty closed 15.05 points lower at 5322.95 points. It touched a high of 5368.20 points and a low of 5312.10 points in intra day trade today.

The Midcap Index on the BSE declined 0.18 percent and the Smallcap Index fell 0.30 percent. Among sectoral indices, the Oil & Gas Index declined 0.99 percent, the Bankex declined 0.49 per cent and the Healthcare Index fell 0.12 percent. The FMCG Index gained 1.37 percent and the Auto Index rose 0.69 percent.

On the earnings front, Tata Motors, Indian Oil Corp. and Ranbaxy were some of the major ones. IOC saw a heavy duty loss this quarter.

On the macro front, institutions right from CLSA, Citi and now Moody’s Analytics have panned the country for its GDP growth. Macquarie also has advised investors to stay away from the PSU banks.

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

(Economic Times, Moneycontrol ,Business Standard)

MOODY’S LOWERS INDIA’S FY2012 GDP FORECAST

Moody’s Analytics reduced their GDP growth forecast for India for the FY12 on inaction by the government in terms of policy and also on lack of options available to the RBI. The news comes on the back of CLSA and Citi lowering their GDP forecasts for India this fiscal.

It is observed that the slowdown had affected the output in the country, evident through the disappointing IIP numbers. The agency, Moody’s also cited lower than expected monsoons to impact the economy and weigh in on India’s growth. It also reduced its GDP forecast for FY13 to 6 percent from 6.2 percent.

ITALY’S 2Q12 (Q/Q) GDP -0.7% vs exp -0.6% vs prv -0.8%

Italy’s GDP for the 2Q12 period ended June 30, contracted 0.7 percent vs expectations of a decline of 0.6 percent. The disappointing data means the country is plunged further into a recession causing further problems to the Mario Monti’s technocrat government in terms of stabilizing the economy. 1Q12 GDP declined 0.8 percent and on a y.y basis, GDP declined 2.5 percent on a decline of 1.4 percent in 2Q11. (CNBC)

25 BPS RATE CUT EXPECTED BY RBI TOMORROW: BOA-ML

Bank of America Merrill Lynch India – Co. stated that it expects a 25 basis point or 0.25 percent cut in benchmark rates at the RBI policy meet tomorrow. Thereafter, the RBI would hang onto rates until December 2012 and cut rates by another 75 basis points in March 2013.

The investment bank expects GDP growth to be below RBI’s target of 7.3 percent on account of the effect of a suboptimal monsoon. Core Inflation, which is expected to hover around 5 percent, while main inflation could rise to 8 – 9 percent on account of higher food prices and diesel prices. (Moneycontrol)

GERMAN IFO BUSINESS CONFIDENCE FOR JULY AT 103.3 vs exp 104.5 vs prv 105.2

German IFO Business Confidence Index declined more than expected on account of worsening outlook created by the euro debt crisis. The index declined to 103.3 in July from 105.2 in June. Expectations came in at 104.5.

The previous news of Moody’s lowering its outlook on Germany and this data could increase the likelihood of the country expanding moderately in the second quarter.

In related news, the German current assessment index declined to 111.6 vs exp 113  vs prv 113.9 in June.

Business expectations index, which presents outlook for the next six months, also declined to 95.6 in July vs expectations of 96.7 vs previous month’s data of 97.2. (Bloomberg)

SINGAPORE’S 2Q12 GDP AT -1.1% vs exp 0.3% vs prv 1.9%

Singapore’s 2Q12 GDP came in lower by 1.1 percent on a seasonally adjusted basis vs a growth of 1.9 percent a year ago. The median forecast came in at a growth of 0.3 percent for the 2Q12 period and a 2.4 percent growth on a y/y basis.

Manufacturing contracted the most on declining biomedical output and gains in transport sector. (CNBC)

DAILY MARKET REPORT – 06 JULY 2012

A flat market for the week in a week which saw interest rate cuts, QE and the resignation of a CEO of a bank embroiled in a rate manipulating scandal. The rate cut did not do much to calm investors as more aggressive measures were not discussed on containing the debt crisis.To add to the crisis, Slovenia‘s Finance Minister did not rule out that the country would not require a bailout package in future.

However, the Indian indices, the Sensex and the Nifty closed at 17521.12 (-0.10%) and 5316.95 (-0.19%) respectively. The Sensex touched a high of 17554.55 and a low of 17425.47 points in trade today. The Nifty touched a high of 5327.20 and a low of 5287.75 points in intraday trade.

On provisional data on sectoral indices on the BSE Index, the Realty Index declined 1.35 percent, Metal Index lowered by 1.14 percent; Capital Goods Index slipped lower by 1.06 percent. The FMCG Index and Bankex gained 0.71 percent and 0.31 percent respectively.

On the stock front, SBI, ICICI and Tata Motors alongwith HDFC, USL and HDFC Bank were the most actively traded by volume today. Morgan Stanley cut the price target on Tata Motors. Credit Suisse downgraded MindTree to neutral. Thermax was downgraded by Morgan Stanley as well.

State-run oil retailers received subsidies from the government totalling INR14,000 cr for the period ended March. They will also receive INR 24,500 cr to be paid out by August-end.

India’s GDP growth seems to be a matter of concern for everyone. Montek Singh Ahluwalia states that GDP numbers in the next five years will slow down. Nothing new in That!!

The Rupee closed 51 paisa higher at 55.45 to the Dollar. In related news, Stanchart forecasts rupee at 56.50 from 57 previously.

Commodities moved lower during the session with WTI at USD 85.78 down 1.65% and Brent trading at USD 99.38 down 1.31%. On the weather front, thunderstorms are expected over the upper Midwest region.

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

(Business Standard, Economic Times and Bloomberg)