EQUITY UPDATE – 14 AUGUST 2012

ASIA

China Mengiu Dairy Co.- Dairy product producing firm is in talks to acquire China Modern Dairy Holdings Ltd. (Bloomberg)

INDIA

Investments by Private equity funds in India declined 39 percent on a y/y basis for 1HY12 period. Total investments totaled USD 9.8 b vs prv USD 14.9 b. Fundraising totaled USD 17.2 b and could be in line to achieve a target of USD 38.5 b, an amount raised in FY11. Fund raising in China also declined 8 percent, saw a 53 percent increase in Brazil with 42 percent in the Mid-east. Indian investments declined on account of volatility in the rupee, investment and regulatory policies. (Economic Times)

Maruti Suzuki India – Co. plans to resume partial operations at its Manesar plant next Tuesday. Initial work is expected to start with automated operations before workers resuming work. (Economic Times)

ONGC – Co. discovered an oil field in Tamil Nadu, India. The exploratory well produces 115 cu. Mt per day and 11,500 cu mt of gas in the Cauvery Basin block. (Economic Times)

EUROPE

The Euro Zone GDP for the 2Q12 period declined 0.2 percent, in line with estimates. Many major economies such as Spain and Italy undertaking budget cuts and implementing austerity measures weighed in on the data. Germany’s better than expected growth offset the negative growth of Spain. Italy also saw its GDP decline 0.7 percent while Spain’s GDP fell 0.4 percent on a q/q basis. As many as six nations face q/q GDP declines leading to a technical recession. (Bloomberg)

Greece raised EUR 4.06 b worth of T-bills today to repay a EUR 3.2 b bond loan to the ECB. Yields on the 3 month bills came in at 4.43 percent vs 4.28 percent from prv auction. Bid to cover ratio, a gauge of demand came in lower at 1.36 vs 2.12 previously.  The nation is expected make an obligation payment on 20th August to the ECM which rejected the nation’s proposal to delay the repayment by a month but raised the ceiling on the amount of bills used as collateral for obtaining additional loans. (Financial Times)

AP Moller Maersk – Container ship operating firm saw its 2Q12 profit come in at USD 227 m vs prv loss of USD 599 m. On a consolidated basis, the firm saw profits decline 39 percent y.y to USD 965 m. But the strength of its shipping business saw the co. raise its earnings guidance to around USD 3.4 b. (Financial Times)

Manganese Bronze – London’s black cab manufacturer saw its shares decline 32 percent to GBP 0.17 a share in trade on IT system errors after discovering a GBP 3.9 m deficit in its accounts. (Financial Times)

RWE – Electric utility firm stated that its plan to cut annual costs by upto EUR 1 b by 2014 could see around 2400 job cuts. (Financial Times)

NORTH AMERICA

U.S Retail Sales rose more than forecast for July on higher spending seen at department stores, electronic stores. Sales rose 0.8 percent in July vs expectations of a rise of 0.3 percent vs  decline of 0.7 percent in June. The 13 major categories of the index also registered growth, mitigating fears of slowdown in the economy. Same store sales rose 4.4 percent vs exp. Gain of 0.3 percent. (Bloomberg)

Home Depot – Co. saw its 2Q12 profit rise 12 percent to USD 1.53 b vs USD 1.36 b previously. EPS came in at USD 1.10 a share vs exp. 97 cents. These results prompted the co. to raise its forecasts to USD 2.95 a share vs exp. USD 2.92 a share. Revenues for the firm rose 1.7 percent to USD 20.6 b. (Bloomberg)

EQUITY UPDATE – 9 AUGUST 2012

ASIA

Cathay Pacific Airways Ltd – Co. reported its 1HY12 results at a loss of HKD 935 m (USD 121 m) vs exp. Profit of HKD 490 m vs. profit of HKD 2.8 b a year ago, on lower freight traffic, higher fuel costs and decline in demand for premium travel. Slowdown in global trade led to declining volumes and intense competition from other airline firms reduced its profit margins. Stock price declined 4 percent to HKD 12.36 in trade and will not pay an interim dividend to shareholders. Cargo revenues declined 7.6 percent to HKD 11.9 b on 64 percent of luggage capacity, which was lower than the previous period. Sales rose 4.4 percent to HKD 48.9 b. (Bloomberg)

INDIA

According to a FICCI survey of 418 manufacturing units and associates, the July-September quarter is expected to register lower growth as compared to the previous quarter. (Business Standard/PTI)

FII’s made gross purchases of INR 2,751.60cr and gross sales of INR 1,637.39cr. DII’s made gross sales of INR 794.71cr and gross purchases of INR 928.83cr. (Business Standard)

Coal India – Co. to supply 8.8 per cent more coal in FY 12-13. The co. is expected to supply 470m tons of coal in the current fiscal compared to 432.94m tons in FY11-12.  (Yahoo/Reuters)

Maruti Suzuki India Ltd – According to industry body Assocham, the ongoing strike at the firm’s Manesar factory is expected to cost the co. upto INR 90 cr a day as the impending strike continues. The strike has affected around 650 units and could affect around 270 auto parts suppliers. (Economic Times)

INDIAN EARNINGS

Oil India – Co. reported 1Q12-13 net profit at INR 929.93cr vs. previous 1Q11-12 net profit at INR 849.61cr. Turnover up 8.22 per cent at INR 2,439.63cr. 1Q12-13 fuel subsidies at INR 2,015.52cr vs. previous INR 1,780.65cr. (Financial Express)

Mahindra – Co. reported 1Q12-13 net profit at INR 726cr.vs expected INR 625cr. Total revenue came in at INR 9248cr. vs estimated INR 9045 cr. M&M’s exports in 1Q12 were up by 37% to 7,845 units. EBITDA margin decreased by 150 basis points on a q/q basis to 11.80 percent for the 1Q12 period.  (Moneycontrol)

Tata Power – Co. reported 1Q12-13 net profit at INR 312.30cr vs. previous INR 281.56cr. Total income from operations at INR 2284.10cr vs. previous INR 1,921.24cr. (Financial Express)

Abbott India – Co. reported 2Q12 net profit at INR 29.52cr vs. previous 2Q11 net profit at INR 17.10cr. Net sales at INR 402.83cr vs. previous INR 351.50cr. (Business Standard/PTI)

Puravankara Projects – Co. reported 1Q12-13 net profit at INR 50cr vs. previous 1Q11-12 net profit at INR 31cr. Revenue at INR 248cr vs. previous INR 191cr. (Financial Express)

United Breweries – Co. reported 1Q12-13 net profit at INR 1.32cr vs. previous 1Q11-12 net profit at INR 1.88cr. Net sales at INR 98.64cr vs. previous INR 70.03cr. (Financial Express)

EUROPE

Germany’s exports for June declined 1.5 percent vs May’s gain of 4.2 percent vs expectations of a gain of 1.3 percent. Falling demand in the euro zone, which is Germany’s biggest markets, contributed to lower exports. The trade surplus rose to EUR 17.9 b vs EUR 15.6 b in May. Current account surplus rose to EUR 16.5 b vs EUR 8.1 b a month ago. The data rose on account of rising wages in the country coupled with low unemployment levels. (Bloomberg)

Germany’s Industrial Production declined 0.9 percent in June on a m/m basis on lower output from the construction sector. Expectations came in at a decline of 0.8 percent. Factory orders declined more than twice as forecasted. Manufacturing output declined 1 percent, while capital goods saw lower output by 1.6 percent. Construction sector saw its biggest fall in June’s data to 2 percent vs 2.6 gain in May. (Bloomberg)

Bank of England’s Governor Mervyn King supported U.K Prime Minister’s budget curtailment plans as he stated that growth in the UK would be a slow process. He also lowered his GDP forecast for the coming two years that it would expand by 2 per cent , lower than his earlier forecast of 2.5 percent expansion in May. Lack of policies undertaken by the government could also substantiate this lower forecast. Bond purchases would continue for the same level and that interest rates could be reduced in the 2Q13 period. (Bloomberg)

According to the French central bank, French GDP was expected to shrink 0.1 per cent in the 3Q12. (Reuters)

Greece’s credit rating could be cut further from CCC by S&P on concerns that the nation would need more than expected financial assistance from the EU. The outlook on the credit rating was lowered from stable to negative. The nation is deadlocked in talks with the international troika of IMF, ECB and EC to decide on the funding available to the nation. (Bloomberg)

ArcelorMittal – Fitch downgraded co. to ‘BBB-‘ from ‘BBB’, citing challenging short-term outlook for steel markets, particularly in Western Europe. (FoxBusiness)

 

 

 

 

EQUITY UPDATE – 7 AUGUST 2012

ASIA

China Vanke Co. – Property developer reported 1HY12 profit to RMB 3.73 b (USD 585 m) vs RMB 2.98 b a year ago. EPS came in at RMB 0.34 a share vs RMB 0.27 a share a year ago. Revenues rose 54 percent to RMB 30.72 b as co. cut its property prices by 10.6 percent on average to increase sales in a market under strict government regulations. (Bloomberg)

Taiwan Semiconductor Manufacturing Co. – Co. will infuse EUR 1.11 b (USD 1.4 b) in ASML Holding NV for a 5 percent stake to develop technology in lithography. TSMC would join Intel Inc which has already acquired a stake in the co through a USD 4.1 b investment. (Bloomberg)

According to a report by UBS AG, China’s stock index is expected to rise 20 percent by the end of FY12. The firm also expects another rate cut by the central bank to stimulate the economy. (Bloomberg)

HTC Corp – Taiwan based smartphone manufacturer saw its stock price decline almost 7 percent to NTD (New Taiwan Dollar) 258.50 as it forecasted lower than expected revenues for the 3Q12 period. Estimates came in at NTD 70 – 80 b vs expectations of NTD 87 b. The co.’s One Series is expected to face stiffer competition from Samsung’s Galaxy phone which could be one of the reasons for the lower estimate. (Reuters)

INDIA

According to Fitch, the outlook on the Indian real estate sector will continue to be negative in second half of 2012. The rating agency cited the persistence of sluggish demand, high construction costs and liquidity pressures. High property prices and elevated inflation to keep demand sluggish. Further to this Fitch said that, real estate companies will continue to face margin compression from high construction costs for building materials and labour. (Financial Express)

The rating agency Fitch, downgraded its outlook on the Indian retail sector to ‘negative’ from ‘stable’. Fitch cited sustained deterioration in discretionary spending, which was unlikely to improve over the short-term. In addition to this, the funding requirement of most retailers were likely to increase, due to store expansions and possibly higher inventory-holding periods. Also private final consumption expenditure was the weakest in last seven years. (Business Standard/PTI)

FII’s made gross purchases of INR 1,738.14cr and made gross sales of INR 1,182.41cr. DII’s made gross purchases of INR 876.85cr and gross sales totalling INR 881.08cr. (Business Standard)

According to Bank of America Merrill Lynch, the worst was not over for rupee, as it stuck to it September end forecast of USD /INR at 57. The bank believed global risk flows and uncertainty over reforms will keep confidence fragile. (Yahoo/Reuters)

ICICI – ICICI ventures to sell its property in central Mumbai, according to sources. The deal is expected to fetch around INR 180cr. (MoneyControl/CNBC-TV18)

SAIL – A consortium of firms led by SAIL plan to make an investment of USD 75 m in the Hajigak iron ore mines in Afghanistan. (Economic Times)

INDIAN EARNINGS

DLF – Co. reported 1Q12-13 net profit at INR 292.79cr vs. previous 1Q11-12 net profit at INR 358.36cr. Consolidated income from operations at INR 2,197.71cr vs. previous INR 2,445.82cr. (Financial Express)

Essar Shipping – Co. reported 1Q12-13 net profit at INR 53.90cr vs. previous 1Q11-12 net profit at INR 18.83cr. Revenue at INR 925.18cr vs. previous INR 670.31cr. (Financial Express)

EIH – Co. reported 1Q12-13 net profit at INR 9.45cr vs. previous INR 15.45cr. Total income from operations at INR 241.55cr vs. previous INR 231.37cr. (Business Standard/PTI)

Uttam Galva – Co. reported 1Q12-13 net profit at INR 10.24cr vs. previous net profit at INR 9.10cr. Net sales at INR 2,057.72cr vs. previous INR 1,533.21cr. (Business Standard/PTI)

Cadila Healthcare – Co. reported 1Q12-13 net profit at INR 194.79cr vs. previous 1Q11-12 net profit at INR 229.82cr. Net sales from operations at INR 1,516.10cr vs. previous INR 1,173.51cr. (Financial Express)

Wockhardt – Co. reported 1Q12-13 net profit at INR 377.97cr vs. previous INR 193.96cr. Consolidated net sales at INR 1,425.82cr vs. previous INR 1,053.21cr. (Economic Times/PTI)

Britannia Industries – Co. reported 1Q12-13 net profit at INR 43.45cr vs. previous INR 41.80cr. Net Sales at INR 1,221.62cr vs. previous INR 1,102.97cr. (Financial Express)

EUROPE

The standoff between the ECB and the European Union over the provision of a bailout package to Italy and Spain could see a breakup of the eurozone, said Italian PM Mario Monti. The leaders of Spain and Italy will await the ECB’s plan of action on government bond purchases as they fear that a request for a full fledged bailout package could mean imposition of ECB’s strict conditions and austerity measures. (Bloomberg)

Greece and the troika of the European Commission, ECB and IMF have reached an agreement on the need for stronger policies to stabilize the economy. The discussions follow two weeks of talks to determine whether the nation would continue to receive international funding worth EUR 240 b from the rescue funds designed for the crisis. The country would have to reduce its budget for 2013 and 2014 by EUR 11.5 b in order to receive international aid. (Bloomberg)

Siemens AG – Co. won a INR 1988 cr supply contract from India-based miner NMDC. The project, which involves the construction of a steel plant in Chattisgarh, India, is expected to be completed by HY2015. (Economic Times)

Standard Chartered plc – Co. could have its U.S unit suspended over allegations that it conducted over USD 250 b worth of transactions with Iranian entities which violated money laundering laws. The imposition of sanctions on Iran saw most banks curtail or stop its funding or lending activities to Iran. (Bloomberg)

NORTH AMERICA

According to Federal Reserve Chairman Ben Bernanke, broader economic data, which may point to a recovery in the U.S, the economy could still witness subdued consumer spending and business activity. He stated that the financial conditions in the country had still not improved as individuals and businesses continue to witness lower demand. (Reuters)

Lending by banks in the U.S rose to its highest since June 2009 to USD 7.1 t for week ended 25 July 2012. New auto loan issuance saw a 56 percent rise to USD 134 b for the Jan-Apr period on a y/y basis over 2009. Easier regulations to access credit for buyers of automobiles could have contributed to the higher lending data amongst other reasons. (Bloomberg)

Best Buy Co. – Co.’s founder Richard Schulze has offered to purchase the co. at USD 24 – 26 a share valuing the deal at around USD 8.5 b. Schulze could finance the deal with USD 1 b in equity contribution from the stake sale in which he owns 20 percent. The rest of the funding would be through PE firms. (Bloomberg)

Knight Capital Group – Electronic trading firm received funding worth USD 400 m in cash through sale of convertible securities. The sale of these instruments is due to make do for the huge losses it suffered due to software errors during a trading session on 1 August 2012. (Bloomberg)

WEEKEND COVERAGE : 28 JULY 2012 TO 29 JULY 2012

ASIA

China’s shipyard’s are piled on with a larger number of ships on account of declining orders experienced in the 1HY12 period. Orders for new ships declined on rising prices of commodities, fluctuating cargo rates and the uncertainty in the economy. Orders have declined by almost 50 percent to see some of the smaller firms file for bankruptcies. (Bloomberg)

China’s banking regulator, The China Banking Regulatory Commission would keep a watch on its property markets by enhancing risk management and lending activities. The regulatory body planned to increase lending activities to construction projects, smaller businesses and other housing projects. (Bloomberg)

INDIA

The chairmen’s of Central Bank and Union Bank , expect a 50 bps reduction in CRR to ease money supply. However the MD of Yes Bank and the Indian chief economist of HSBC, did not expect RBI to cut CRR or the Repo rate in the coming policy meet.  (Financial Express)

According to the Agricultural and Processed Foods Export Development Authority, exports of organic textile products are expected to rise to INR 1500 cr in FY2012-13 vs INR 1027 cr in the previous year. Uniformity in standards and regulations across major markets such as Europe and Japan would smooth the path for exports of goods. (Business Standard)

Market capitalization of top 7 co.’s in the Sensex declined by INR 31792 cr for the week ended 27 July. SBI led losses followed by Coal India, ONGC and Bharti Airtel and NTPC. TCS, ITC and HDFC Bank gained their market cap during the same period. (Economic Times)

Indian foreign exchange reserves grew by USD 580m (versus a previous decline of USD 872.27m) to USD 287.34b for the week ended 20 July. (IANS/YAHOO)

For the month of July (3rd to 27th) FII’s made a gross purchases of INR 44,192cr shares and sold equities worth INR 35,768cr. (Economic Times/PTI)

Steel Co.’s – According to CMIE, steel prices are expected to rise by 7.2 per cent this year and rates are expected to firm up from October due to rise in demand, despite the weakness in the international markets. However, prices were likely to remain under pressure during the July-September monsoon season. (Financial Express)

Reliance Industries – Infotel Broadband is likely to procure over USD 1b of network gear from Samsung Electronics, to meet its 4G equipment requirements. (Economic Times)

Petronet LNG – Co. is to construct a power plant project near its upcoming LNG import port in Kerala, India. The co. will construct a 1200 megawatt gas-fired power plant in a 50:50 joint venture with the state government. The outlay is expected at around INR 3500 cr. (Business Standard)

Sesa Goa – Co. plans to extract around 10 m tonnes of iron ore in the first phase from its Liberian Western Clusters project for FY2013-14. The co. expects a higher output on account of higher projection of reserves in the Liberian plant. Reserves are expected 3x higher than its original estimate of 1 b tonnes. (Business Standard)

Nalco – Co. is likely to take a hit of INR 300cr annually as it is forced to keep 5 per cent of production capacity idle due to lower metal price and shortage of coal. (The Hindu Business Line)

Godrej – Consumer product maker stated that it observes a slowdown in sales in the rural markets of India.  Rise in the cost of living, higher inflation and high interest rates could contribute to the slowdown inspite of the FMCG industry seeing a rise at a CAGR of 11 percent in the last ten years. (Business Standard)

Lupin – According to co.’s management, co. is looking to acquire brands and technology firms in US markets, as co. aims to grow its sales over 20 per cent over the next two years. (Business Standard/PTI)

Walmart Inc and Prudential Finance have started lobbying with the U.S government and legal policymakers to gain support for its retail venture in India. FDI in multi-brand retail has been kept on hold by the Indian government on account of the strong opposition by political parties. (Economic Times)

Firms NCC and IL&FS Engineering have decided to exit from the INR 850 cr hydro electric construction project on a tributary of the Sutlej River in India. (Economic Times)

INDIAN EARNINGS

Maruti Suzuki – Co. reported 1Q12-13 net profit at INR 423.8cr vs. previous INR 549.2cr. Total sales at INR 10,529cr vs. previous INR 8,256.6cr. (Indian Express)

HDFC Ltd – Co. reported 1Q12-13 bet profit at INR 1,275.86cr vs. previous INR ,1020.06 in 1Q11-12. Total income at INR 11,656.50cr vs. previous INR 7,268.79cr. (Indian Express)

Birla Corp – Co. reported 1Q12-13 net profit at INR 84.74cr vs. previous INR 111.88cr in 1Q11-12. Net Sales at INR 658cr vs. previous INR 556.97cr. (Indian Express)

United Spirits – Co. reported 1Q12-13 net profit at INR 144.95ce vs. previous INR 137.71cr in 1Q11-12. Net sales at INR 2,057.29cr vs. previous INR 1,935.42cr. (Financial Express)

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. (WSJ)

Greece political leader have agreed on most of the austerity measures demanded by its creditors and now are looking at pension and wage cuts to find the Final EUR 1.5b. Greece requires to find savings worth EUR 11.5b for 2013 and 2014 to satisfy the demands of its lenders. In related news the ECB and national central banks are expected to take losses on their holdings of Greek government bonds. As official aims to reduce Greece’s debt by EUR 70b to EUR 100b, cutting its to about 100 per cent of annual GDP, according to several eurozone senior officials. (Reuters/Yahoo/Telegraph UK)

The Emnid poll for the Bild am Sonntag mass circulation weekly showed, 51 per cent Germans believed that, Germany would be better off outside the eurozone. The poll also showed that 71 per cent of Germans wanted Greece to leave euro if it did not live up to its austerity promises. (Telegraph UK)

The ratings agency Standard and Poor’s has affirmed UK’s ‘AAA’ credit grade, and expects the economy to recover in the second half of the year. (AP/ Boston.com)

Aviva Plc – Co. plans to divest its stake in U.S life insurance business division which it had purchased for USD 2.8 b in 2006. Buyers include private equity firms and financial firms. (Bloomberg)

NORTH AMERICA

President Barack Obama’s Office of Management and Budget has forecasted a budget deficit of USD 1.21 t in FY12, lower than the USD 1.33 t forecasted in February. It also forecasted that unemployment rate would average 8 percent and 4Q12 GDP is expected to grow 2.6 percent on a y/y basis. (Bloomberg)

The first year of recovery of the U.S economy from the recession was weaker than estimated as GDP rose only 2.5 percent in the period ended June 2010, vs 3.3 percent expansion previously. (Bloomberg)

Boeing – Co. won a USD 339m US Air Force contract to build the 10th satellite in the Wideband Global Satellite Communications program. (Economic Times/Reuters)

 

DAILY MARKET REPORT – 23 JULY 2012

Spain‘s woes frightened investors today as the cascading effect of the debt ridden nation spilled on the global markets. Spain’s GDP data also came in lower, which added to the fact that the nation would soon suffer the fate Greece does. The week has started with the Sensex recording its biggest fall in over 2 months on global cues. Another news which also hurt investor sentiment in India was that multi-brand retail FDI policy would take longer than expected to pass through now that many other parties joined hands to oppose the move.

On the political front, Pranab Mukherjee will be sworn as President of India from tomorrow.

The Sensex declined 281.09 points to close at 16877.35 points (-1.64%). The index touched a high of 17047.73 and a low of 16849.28 points in trade today. The Nifty closed at 5119.95 points, lower by 87.15 points (-1.67%).

On the sectoral index front on the BSE, Midcap Index returned 1.26 percent lower today while the Smallcap Index declined 1.10 percent. The Metal Index lowered 3.30 percent, the Realty Index fell 2.80 percent, the Power Index declined 2.69 percent and the Auto Index was down 2.43 percent.

Global events dominated as Spain, Greece took centrestage. More than expected no. of regions could apply for aid, which shook investors on Monday. The contagion would spread on from Asia to Europe as these markets opened a percent lower in trade. Greece echoed words of the “Great Depression” of the 1930’s which struck the U.S, stating that their current crisis was similar to that. Italian markets declined 5 percent and over in trade on contagion. Italian banking stocks declined the most. The U.S markets would also most likely open lower in trade today.

On the individual stock front, L&T reported its 1Q12-13 earnings which exceeded expectations while EBITDA failed to, seeing the stock tank 3 percent to INR 1352 a share. Zee Entertainment hit a 52 week high of INR 155 on stronger 1Q12 earnings.  Godrej Industries, declined 4 percent to INR 236 ahead of its qualified institutional buyer issue starting tomorrow. The price band is kept between INR 210 to 235 a share. Bajaj Finance gained 7 percent to INR 1075 on better than expected results declared last week. Other firms reporting today were Indian Bank, Dabur, Colgate Palmolive amongst others.

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

(CNBC, Business Standard, Economic Times and Moneycontrol)

EURO MARKETS TO OPEN LOWER ON SPAIN

Spain dominates market sentiment again, as investors expect the European markets to open lower in trade today. News that upto 6 Spanish regional governments have requested for financial aid from the central government to meet its debt obligations.

The regional governments of Catalonia, Castilla-La Mancha, Baleares, Murcia, Canary Islands and even Andalusia could ask for aid to meet its repayments.

The gloom did not end there with Greek PM announcing that its country was facing its version of the Great Depression which affected the U.S in the 1930’s. The debt-laden country aims to attain some leniency on the conditions of the bailout package which the country would take from the IMF and EU. (CNBC)

 

WEEKEND COVERAGE : 21 JULY TO 22 JULY

ASIA

China’s 3Q12 GDP growth could slow to 7.4 percent on a y/y basis, as stated by an advisor to China’s central bank.  A short term deflationary period could also be posed to provide problems to the economy. (Bloomberg)

INDIA

According to economic think tank CMIE, the agricultural sector would perform well in FY2012-13 but major crop production is expected to decline 0.5 percent. The drop is due to decline in production of soyabean, cotton and rapeseed. Livestock, fisheries and forestry products are also expected to rise marginally by 4 percent, with agriculture industry expected to rise 2.4 percent. Delayed and insufficient monsoon is also expected to affect crop output. (Business Standard)

The market capitalization of top seven co.’s on the Sensex reduced by INR 14,931 cr for the week ended 21 July 2012. Major co.’s such as TCS, which led the losses by INR 5207 cr, saw ONGC, Infosys, ITC, SBI, HDFC Bank and NTPC post in loss of m-cap. However, Reliance Industries, Coal India and Bharti Airtel saw their market cap gain marginally over the week. (Economic Times)

FII’s have lowered their exposure (stake) in stocks of the co.’s under the umbrella of Reliance, owned by Anil and Mukesh Ambani. FII’s sold a total of INR 1500 cr worth of shares in Reliance industries owned by Mukesh Ambani and in four listed co.’s owned by Anil Ambani. Other investors which reduced their stake include offloading shares worth INR 500 cr, taking the total to INR 2000 cr. FII’s offloaded stakes on a marginal basis. (Economic Times)

Funds based in Mauritius which invest in the Indian equity markets will be under the purview of SEBI and RBI for possible transfer of illegal wealth of Indian and non-resident Indian’s back into India. Many funds have been identified as part of market regulator’s investigations. (Business Standard)

Sail – A proposed merger of SAIL and Neelachal Ispat Nigam will not go ahead as the government does not want to retain complete stakeholding in the co., as opposed to its earlier stance of divestment. Meetings with the Ministry of Commerce revealed its message of not going ahead with the merger. NINL is the largest producer of pig iron and divestment talks were on about the merger for over seven years. (Business Standard)

Sail/Nalco/JSPL/Monnet Ispat/MECL/Others – Co.’s to bid for developing copper deposits in Afghanistan. (Economic Times/PTI)

Maruti Suzuki – According to co.’s management dispatch operations to continue from the stockyard of Manesar plant, which has a inventory of about 26,000 units

Tata Power – Co. expects its hydel power project in Bhutan to commence operations by FY2013-14 period. The 126 megawatt Dagchu project accounts for USD 200 m in which Tata Power has a 26 percent stake. (Economic Times)

Bajaj Auto – Co. expects that exports would account for almost 50 percent of its revenues in the next three years. Co. plans to explore markets such as Latin America, viz., Chile and Argentina. Its motorcycle sales are also expected to pick up in the said period, which accounts for 35 percent of their sales. (Economic Times)

JSPL – Co. is to acquire Canada-based coal firm CIC Energy in a deal worth USD 115 m (INR 600 cr). The co.’s will sign a binding agreement in the next few weeks. JSPL will get access to CIC’s 2.6 b tonne thermal coal plant for its power projects. (Business Standard)

EUROPE

According to Greece PM, Greece was in a ‘Great Depression’, similar to the one faced by the United States in 1930. The PM wants the budget below 3 per cent of GDP by the end of 2014 from the previous 9.3 per cent in of GDP in 2011. In related news, IMF is expected to cut off further rescue aid to Greece. (FirstPost/Reuters/FoxBusiness)

U.K’s 2Q12 GDP data, expected on 25 July, is expected to decline 0.2 percent, based on median estimates, deepening the double-dip recession. Previous quarter decline was 0.3 percent and 0.4 percent in 4Q11. (Bloomberg)

BP – Co. has proposed that its joint venture TNK-BP pay shareholders a USD 1b interim dividend. (Fox Business)

NORTH AMERICA

Argentina’s Factory output (Industrial Production) declined 4 percent in June, a second successive m/m decline. Slowdown in trade with Brazil affected Argentina in terms of exports of automobile and steel. Previous month decline stood at 4.7 percent and 0.1 percent drop in May. Estimates came in at a drop of 4.5 percent. (Bloomberg)

GEOPOLITICAL

According to Iran’s head of Atomic Energy Organization, Iran has sent a new batch of enriched uranium to fuel a medical research reactor in its capital. (Yahoo/ Reuters)

 

 

SELL SPANISH STOCKS, WARNS S&P

S&P analysts have stated that investors should sell any holdings in Spanish stocks before it receives its pre-decided bailout package from the IMF and the EU. The report stated that Spain would require around EUR 280 b (USD 343 b) in funding for the next 18 months, higher than the bailout fund of EUR 260 b.

It cited that since bond yields were around 7 percent, the bailout package would come in with austerity conditions attached, similar to Greece, Portugal and Ireland.

The report also predicted that European markets would fall towards the end of FY12 by around 5 percent as bailout packages and fiscal austerity measures continue to intensify. (CNBC)

Bad news for Spain!

WEEKEND EQUITY COVERAGE – 16 JUNE 2012 TO 17 JUNE 2012

ASIA

According to an adviser to the Chinese government, the country’s economy will most likely bottom out in the second quarter and pick up on the later quarters as government’s stimulus measures come into effect. FY12 GDP for China is expected to be above 8 percent. (Bloomberg)

Hyundai Heavy Industries – Co. receives orders worth USD 600 m to construct oil and gas offshore platforms scheduled for delivery by 2015. (Reuters)

INDIA

India’s Finance Minister Pranab Mukherjee was of the opinion that the central bank RBI should lower interest rates to stimulate growth into the economy inspite of rising inflation. He stressed on the situation in Greece which awaits the outcome of its general elections and its importance in the eurozone. Inspite of the depreciating rupee on euro crisis, the main strategy of the nation is to stimulate demand, is what he reiterated upon. He also stated that supply side constraints were preventing food inflation from decreasing, and that steps should be undertaken to ensure a stable supply. (Business Standard)

Havells India – co. plans to invest around INR 500 cr in the next three years to achieve a sales revenue of around INR 10,000 cr. The firm is planning to expand operations in the Latin American market inspite of the uncertainty in Europe. (Business Standard)

Insurance regulatory body IRDA has provided an approval for a transfer of 26 percent stake in Max New York Life Insurance to Mitsui Sumitomo Insurance Co. With the sale, Sumitomo will receive 16.63 percent stake from New York Life and 9.37 percent stake from Max India. (Business Standard)

India has gradually increased its exposure in American debt securities to USD 51.2 b until April on global uncertainties and on demand for safer investment instruments. During the previous period until January 2012, India held around  USD 42.8 b of US government securities. (Economic Times)

According to research firm CLSA, emerging markets would find it difficult to sustain GDP growth and expects a slowdown in the second quarter of 2012 before picking up in 2HY12. Economic indicators such as the PMI data, industrial output, commodity prices and GDP have slowed down or declined in emerging markets excl, Mexico. The unlikely implementation of stimulus measures in emerging economies and absence of Quantitative Easing from the U.S did not help matters when it came to stimulating demand.  It expects real GDP growth to slow down to 4.5 percent in 2Q12 for emerging economies. (Economic Times)

State Bank of India – Co. to raise USD 1b – 2b through overseas bonds sale in the next three months, according to a co.’s top official.  Co. to use the funds to augment its tier 2 capital adequacy. (Indian Express)

Power Co.’s – According to CMIE coal imports to grow by 28 per cent 127 million tonnes in the current fiscal. (Economic Times/PTI)

EUROPE

Greece Exit poll results:

  • New Democracy party secured 27.5 per cent and 30.5 per cent of the votes.
  • Syriza received between 27 per cent to 30 per cent votes.
  • PASOK received 10 per cent to 12 per cent votes. (Fox Business)

NORTH AMERICA

Yields on the US 10 year Treasury notes declined to its lowest as investors drove up demand for safer investments amid the European crisis and slowdown in the US economic recovery. Yields declined to 1.58 percent vs 1.64 percent a week before. (Bloomberg)

According to Mexican President Felipe Calderon, the leaders of the group of 20 nations (G-20) will aim to increase the USD 430 b firewall or bailout fund to tackle future economic crisis. (Bloomberg)

Lockheed Martin Corp. – Co. received 3 year contracts worth USD 1.91 b to manage U.S military’s global information grid networks on a daily basis. (Reuters)

GLOBAL

World Bank Chief Robert Zoellick warned emerging economies to be prepared to face the global crisis arising out of euro zone in case it fails on stability. The banking institution has provided further assistance to Bulgaria’s banking system as it has a very high degree of exposure to Greece and warned that the Greece crisis would send shockwaves through the entire financial system. (Reuters)

EQUITY UPDATE – 15 JUNE 2012

ASIA

Credit Suisse Group and Deutsche Bank AG cut China’s GDP forecasts on weaker exports and lower investments in the country. Credit Suisse lowered GDP forecast to 7.7 percent from 8 percent while Deutsche Bank cut its estimate from 8.2 percent to 7.9 percent. (Bloomberg)

INDIA

Rating agency Moody’s stated that Indian economy is currently facing rising unemployment and higher prices, leading to stagflation in the economy. In related news Moody’s Analytics said that reserve bank could cut rates without worrying too much about inflation. (Business Standard/ The Hindu Business Line)

According to the Centre for Monitoring Indian Economy (CMIE), has forecasted a GDP growth of 7.3 percent for FY13. It affirms the forecast by stating that an improvement in supply of essentials such as crude oil, natural gas and coal would benefit the industries in India, leading to a higher output this fiscal. It pegged industrial output and agriculture to expand by 6.3 percent and 2.4 percent respectively. (Economic Times)

The government of India , faced with a bumper harvest and storage issues, plans to sell its surplus stock of wheat at lower rates before to prevent rotting of the stockpiles. It plans to offer the surplus to state-governments, food and agri-business co’s including biscuit maker Brittania Industries and flour mills across the nation. Production of 82.4 m tonnes as against storage space available for 63 m tonnes as on 1 June 2012 made the government undertake the move. (Business Standard)

Domestic Institutional Investors (DIIs) were net sellers and Foreign Institutional Investors (FIIs) were net buyers on provisional data for today.  DIIs purchases INR 655 cr and sold INR 939 cr to make them net sellers of INR 282 cr. Meanwhile, FIIs purchased INR 1254.3 cr and sold INR 1149.3 cr, net purchasers of INR 105.08 cr. Mutual funds were net buyers of INR 88 cr in trade today. (Business Standard)

The Indian government’s decision to defer the Fertilizer Ministry’s proposal to hike retail prices of urea saw fertilizer stocks surrender their early morning gains in trade today. Deferral on the proposed 10 percent hike in FY2012-13 saw RCF, National Fertilizers and Coromandel International trim their gains to trade marginally higher in trade. (Business Standard)

Macquarie’s equity research division downgrades ‘HDFC’ to ‘underperform’ with a price target of INR 550 on adopting questionable accounting practices and overstating revenues. The stock closed at INR 644.60 in trade, down 0.60 percent after the news was released. The policies in question are the aggressive accounting practices by provisioning through reserves and making adjustments for zero-coupon bonds through its reserves against the income statement.  The provision of non-performing loans on its balance sheet was observed to have not affected its income statement, is wha was cited as aggressive by the firm. (Business Standard)

Petroleum Minister Jaipal Reddy has asked the Saudi Arabian government to supply India with an additional 5 m tonnes of crude oil in 2012 to meet energy demands. Post-Iran sanctions, India looks at alternative sources to receive its supply of crude oil. India would also seek to import an additional 1.5 m tonnes of liquefied petroleum gas (LPG) in the same period as demand has increased on lower supply. (Economic Times)

Alstom T&D – Co. received two contracts from Powergrid Corp of India Ltd worth INR 225 cr. The co. plans to set up a power transmission system in Jharkhand, Chattisgarh and Maharashtra in India. (Economic Times)

Indian co’s raised a total of INR 254,000 cr through private placement of debt securities in FY11-12 vs the previous period’s amount of INR 192,225 cr. (Business Standard)

Reliance Industries – Gas output from KG-D6 for the week ended 3 June dropped to 31.57 mmcmd from 32.66 mmcmd in May, according to status report by the oil ministry. (Business Standard)

Wipro – Co. won a multi-million dollar deal spread over multiple years from MMG, an Australian unit of China Minmetals Corp. (Business Standard)

Jindal Steel – Co. likely to acquire SMS Meer for around INR 1500cr to INR 2000cr. (CNBC –TV18)

Bharti Airtel – Co. been ask to  pay INR 700cr for customs duty evasion under a Customs, Excise and Service Tax Appellate Tribunal, in an order issued by Bangalore bench. (The Hindu Business Line)

IT Co.’s – Nasscom maintained growth projections at 11-14 per cent for FY12-13, citing strong fundamentals. (The Hindu Business Times/PTI)

Wockhardt – Life Insurance Corporation of India sold 2.019 per cent stake in co. for INR 129cr. (Business Standard)

EUROPE

The interest rate on Spanish 10-year bonds hit 7.17 per cent, putting the country in the same league of Portugal, Ireland and Greece. (IBTimes)

According to the Bank of Spain, Spanish bank borrowing in May reached EUR 287.8b vs. EUR 263.5b in April. (Economic Times/AFP)

Italian Bond Auction Data:

  • Italian government sold EUR 3b in 3 year bonds at a yield of 5.30 per cent versus 3.91 per cent in May.
  • Bonds maturing in 2019 and 2020 yielded 6.10 per cent and 6.13 per cent, above the 6.0 per cent danger level. (Economic Times/AFP)

Volkswagen – Audi India rising automobile sales have prompted the Head of Indian operations, Michael Perchke to state that it could achieve a market share greater than that of BMW in the luxury car market. The Audi expects to overtake BMW by 2014 in India, a year ahead of its planned schedule. (Economic Times)

Unilever – Co. to close three plants and an office in the UK, giving way  up to 800 jobs. However the co. is to invest GBP 40m in its biggest factories. (Telegraph UK)

NORTH AMERICA

U.S Consumer Price index declined by 0.3 percent vs forecasts of a decline of 0.2 percent on cheaper fuel and commodities prices. Core inflation, which excludes food and energy, increased 0.2 percent for the third month in a row for May. (Bloomberg)

COMMODITIES

The OPEC kept oil output limit unchanged in its Thursday’s meeting.  However the OPEC members could meet again if oil prices drop below USD 90 per barrel. (CNBC/Reuters)