WEEKEND EQUITY UPDATE: 4 AUGUST 2012 TO 5 AUGUST 2012

INDIA

FII’s investing through the Mauritius route has exited their holdings in about 24 Indian companies in FY12 on a YTD basis. Co.’s such as Yes Bank, Axis Bank, Bajaj Hindustan all saw selling pressure from the FII’s who have exited their positions from these companies. The total value of the sale of shares is about INR 3000 cr. (NDTV Profit)

According to the Centre for Monitoring Indian Economy (CMIE), an economic research organization, profits of Indian firms are expected to rise by around 25 percent in the FY13 period on lower commodity prices and stable interest rates. FY12 saw profits decline by 0.6 percent. The organization also stated that firms would have incorporated the impact of the fluctuation in the Rupee as well as compared to the previous fiscal. (NDTV Profit)

Indian foreign exchange reserves increased by USD 1.3b to USD 288b over the week ended 27 July. Foreign currency assets at USD 256b, gold reserves 25.7b, drawing at USD 4.3b and reserve position at the IMF at USD 2.1b. (Business Standard)

The top eight companies on the Sensex saw their market capitalization rise by INR 35,882 cr for week ended 3 August 2012. NTPC gained the most by adding INR 10,926 cr with Reliance Industries following the firm. SBI, Infosys, ONGC also rose but Coal India and Bharti Airtel saw a decline in their values. (Economic Times)

Coal India Ltd – Co. has entered into a fuel supply agreement with 29 power plants in India to supply these firms with fuels for power generation, based on a directive from the Indian Government. The co. will also import around 20 m tonnes of coal to meet the supply shortage gap. (Economic Times)

Jindal Steel and Power – Co. is in advanced talks to plan an investment of INR 100,000 cr to expand output at its plants in Raigarh and construct new plants in Odisha and Jharkhand in India. The total expected output by 2020 is about 20 m tonnes per annum, as stated by Chairman Navin Jindal. (Economic Times)

Emami – FMCG firm has voiced concerns that rising costs of raw materials and a higher inflation could affect the firm in FY12-13 period. However, the co. plans to implement certain cost efficient measures and strengthen its distributor network to overcome these challenges. (Economic Times)

NTPC – India’s power producer would conduct capital expenditures of INR 138,000 cr on various power projects to increase its power output to 27,000 megawatts. A total of INR 95,965 cr would be funded from issuing debt securities. (Economic Times)

Maruti Suzuki – According to Haryana Chief Minister Bupinder Singh Hooda, expected co.’s Manesar plant to resume production shortly. However he did not provide a time-line for the plant to resume its activities. (Financial Express)

Jet Airways – FII holdings in co. increased from 6.70 per cent to 7.12 per cent during the 1Q12-13. (Economic Times/PTI)

Kingfisher Airlines – FII holdings in co. increased from 0.34 per cent to 0.98 per cent during the 1Q12-13. In others news, Airport Authority of India (AAI) has refused aircraft lessors to take back their aircrafts leased to co., as co. owes INR 300cr to AAI.  (Economic Times/PTI/The Hindu Business Line))

SpiceJet – FII holdings in co. increased from 2.61 per cent to 3.59 per cent during the 1Q12-13. (Economic Times/PTI)

EUROPE

According to Italian Prime Minister Mario Monti, the Italian Government did not require German cash to recover from its current situation. (Reuters)

The Spanish finance minister Luis de Guindos, the Spain had covered 70 per cent of its 2012 financing need and will wait for clearer guidelines from ECB, before requesting for aid. (FoxBusiness DowJones Newswire)

Yields on Spanish two-year notes declined 1.35 percent to 3.96 percent and 10 yr bonds fell below 7 percent on speculative news of the ECB buying short-term bonds to calm the bond markets. Spain’s bonds returned -6.3 percent while German debt provided returns of 4.5 percent and Italy with 6.5 percent. (Bloomberg)

According to the inspectors from IMF, the European Commission and the European Central Bank said that, Greece had made some progress in finding budget cuts needed to continue its bailout programme. However the international inspectors said that, not all work had been done and inspectors will return early September for a final verdict. Greece has a EUR 3.2b bond maturing in August. (The Telegraph UK)

Standard and Poor’s downgraded Slovenia’s long term credit rating to ‘A’ from ‘A+’; short term rating affirmed at ‘A-1’. Outlook: negative. (Economic Times/AFP)

Marks & Spencer – According to an Sunday Times reports, Bank of America Merrill Lynch have been assessing possibilities of providing debt financing for a speculative bid for co. Co. is been viewed as a GBP 6b bid target, as shares in co. have tumbled 50 per cent since 2007. (FoxBusiness/Sunday Times)

NORTH AMERICA

U.S Trade Deficit for June is expected to have lowered as the nation imported less oil  and slower growth reduced demand for U.S made goods abroad. Data due on 9 August forecasts deficit to come in at USD 47.5 b vs USD 48.7 b in May. Lower outlay on imports are due to lower prices of crude oil and lower exports due to slowing economies in Asia and Europe exhibiting lower demand for U.S made goods. (Bloomberg)

Boeing Co. – Airplane manufacturer secured orders to conduct the sale of 94 single-aisle 737 airplanes to Asian airline firms including 54 jet deal with Singapore Airlines Ltd. The deals are expected to touch USD 8.4 b. (Bloomberg)

 

 

EQUITY UPDATE – 24 JULY 2012

ASIA

Sinopec – Oil refining co. is to purchase a 49 percent stake in UK subsidiary of Talisman Energy Inc. for USD 1.5 b. The deal would provide Sinopec with access to oil fields in the North Sea. (Reuters)

INDIA

Consumer price index based on inflation for agriculture labourers stood at INR 8.03 per cent in June vs. previous 7.7 per cent in May. Rural labourers, all India CPI inflation at 8.54 per cent in June vs. 8.11 per cent in May. (The Hindu Business Line)

FII’s made gross purchases of INR 1,530.54cr and sales of INR 1,421.37cr. DII’s made gross purchases of INR 701.25cr and sales totalled INR 1,055cr. (Business Standard)

Pharmaceutical Co.’s – Inter-ministerial group is likely to come up with a final decision on FDI in pharmaceutical sector on 24 July 2012. (MoneyControl)

EUROPE

The Spanish stock market regulator CNMV has banned short selling of listed stock for three months, in order to maintain financial stability. The regulator cited extreme volatility across European markets had chances of interfering with smooth functioning and normal activities. In other news Spain’s 10 year borrowing rate rose by 0.21 per cent to close at 7.43 per cent. After having reached a high of 7.51 per cent; its highest level since 1999. According to market experts these high rates were unsustainable, as Spain will find it difficult to fund itself and will likely need a financial rescue. (Economic Times/AFP/Boston.com/AP)

The IMF dismissed its weekend report of refusing to support Greece, instead it will help Greece to overcome its economic difficulties. (Economic Times/Reuters)

Joh A Benckiser – Co. is to acquire US based coffee and tea maker Peet’s Coffee & Tea Inc. for USD 1 b. The co. offered to pay USD 73.50 a share, representing a 30 percent premium over Friday’s closing price. (Bloomberg)

NORTH AMERICA

Yields on government bonds declined to record lows, stocks declined in trade and the euro traded at its lowest to the dollar on the intensifying eurozone crisis. US Treasury yields for the 10 yr notes declined to 1.43 percent, touching record lows of 1.40 percent. German 2-yr bonds saw yields as low as -0.08 percent. Yields on Spanish and Italian bonds rose higher as investors were concerned about the stability of these countries. Euro declined to other currencies such as the US Dollar as news of more than expected Spanish regions asking for financial aid from the government. (Bloomberg)

According to a Citigroup Inc., the U.S Fed’s decision to purchase Treasury securities could end up leaving private investors without any instruments to purchase. Ben Bernanke, could in turn, purchase mortgage-backed securities or use additional tools for easing. (Bloomberg)

Genesee & Wyoming Inc – Co. is to acquire RailAmerica Inc. for USD 1.39 b. Genesse will pay RailAmerica USD 27.50 a share and plans to raise USD 2 b in debt to conduct the funding alongwith USD 800 m of equity. (Bloomberg)

Goldman Sachs – Co. stated in its report that the U.S housing market would make an attractive investment as a strong recovery would ensure a rise in new home sales. The co. raised its rating on the sector from neutral to attractive. Low mortgage rates, rising prices, job market growth and government policies contributed to the rise. (Bloomberg)

Valero Energy Corp – Co. has shut down operations at its oil refinery in Louisiana, U.S following reports of a fire on early Sunday morning. (Reuters)

NRG Energy – Co. is to acquire GenOn Energy in a stock deal worth USD 1.7 b. (Financial Times)

 

 

 

 

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!

EQUITY UPDATE – 17 JULY 2012

ASIA

China’s FDI inflows declined 3 percent in the Jan-June 2012 period on a y/y basis. Slowing global economy lowered the inflow of capital into China. FDI data came in at USD 59.1 b for the said period. FDI in June came in at USD 12 b, a 7 percent decline on a y/y basis. (Reuters)

IMF warned that Chinese economy could still be destined for a ‘hard landing’, cut China’s growth forecast by 0.2 per cent to 8 per cent.  The global think-tank cited slowing down of investment spending due to overcapacity in some industries. (Economic Times/AP)

ZTE Corp – Shares of the co. declined 17 percent in trade to three year lows on lower profit forecast given by the co. The co. announced that profits would decline 80 percent on a y/y basis. Lower investment income, exchange rates and lower domestic revenues were the causes for the declining profit margin. (Financial Times)

INDIA

Rating agency Fitch stated that India’s infrastructure sector would see a slowdown in activity on delays, regulatory problems and sector specific challenges. Infra co.’s will be constrained by capital raising issues, higher interest rates, depreciation of the rupee and other fuel constraints. (Business Standard)

According to a report by Deutsche Bank India, India’s GDP for FY12 period is expected at 6.3 percent on consistent pressure from inflation which hampered policy measures. (Economic Times)

FII made gross purchases of INR 1639.72cr, and sales of INR 1382.55cr. DII’s made gross purchases of INR 683.29cr, sales of INR 723.88cr. (Business Standard)

IMF lowers India’s growth forecast by 0.7 per cent to 6.1 per cent for 2012; FY13 forecast cut to 6.5 per cent, citing deteriorating of global economic situation. (Economic Times/PTI)

State own oil firms hiked the prices of aviation turbine fuels by 1.7 percent to keep in line with global rates. (Economic Times)

Rashtriya Ispat Nigam Ltd – Co.’s initial public offering of INR 2500 cr has been deferred by the Indian government on account of weaker market conditions which saw a weaker response to the issue. (Economic Times)

Reliance Industries – Co. repurchased 3.51 cr shares totalling INR 2515 cr. The programme is part of the INR 10,440 cr buyback until January 2013. (Economic Times)

Lupin – Citi raises price target for co. to INR 640 from INR 570, maintaining a ‘buy’ rating. However FY13-14 EPS lowered by around 5 per cent due to higher effective tax rate assumptions. (Financial Express)

Gujarat Pipavav Port – Co. raised INR 350 cr through a qualified private placement and preferential share issue. Co. raised INR 199.5 cr through 3.41 cr of share sale and INR 152.52 cr of sale of 2.58 cr of preferred shares. (Business Standard)

INDIAN EARNINGS

Tata Coffee – Co. reported 1Q12-13 net profit at INR 31.84cr vs. previous 1Q11-12 net profit at INR 13.59cr. Consolidated total income from operations at INR 413.73cr vs. INR 334.82cr previously. (Financial Express)

DCB – Co. reported 1Q12-13 net profit at INR 18.9cr vs. previous 1Q11-12 net profit at INR 8.8cr. Income at INR 92cr vs. previously INR 76cr. NII at INR 64cr vs. previous INR 52cr. (Business Standard/PTI)

MindTree – Co. reported 1Q12-13 net profit at INR 89cr vs. previously INR 34.6cr in 1Q11-12. Revenue at INR 563cr vs. previous INR 413.1cr. (Financial Express)

Exide Industries – Co. reported 1Q12-13 net profit at INR 152.03crcr vs. previously INR 163.26cr in 1Q11-12. Revenue at INR 1551.08cr vs. previous INR 1243.28cr. (Business Standard)

EUROPE

European Central Bank President Mario Draghi declined to make a statement on reporting losses on holders of debt issued by Spanish banks severely affected by the crisis in Europe. (Reuters)

The Chairman of the European banking Authority Andrea Enria stated that banks would have to meet stringent capital requirements to prevent them from stalling on lending, to stop the crisis from spreading. The capital adequacy ratio, which was temporarily set to 9 percent, would be made a permanent requirement for banks. He stressed on conservation of capital for banks as a top priority. (Financial Times)

According to a recent IMF forecast Spanish economy is expected to contract 1.5 per cent in the current years and another 0.6 per cent in 2013 versus a previous expansion in 2013, citing lack of confidence in the Spanish economy despite the EU banking bailout and continued outflow of private-capital. (Economic Times)

GlaxoSmithKline – Co. is set to acquire Human Genome Sciences for around USD 2.8 b. The three-month hostile pursuit by GSK would come to an end as the co. rose its offer from USD 13 a share to USD 14 a share.  GSK would access the rights to market Benylsta, a drug treating immune system related diseases and other medicines related to heart disease treatment. (Reuters)

Nokia Oyj – Shares of the co. declined over 3 percent on the co. reducing the price of its Lumia 900 phone by 50 percent in the US for the weekend. With the co. also set to announce its 2Q12 results, investors exercised caution over the co.’s stock purchase. Shares of the firm neared its 16 yr lows at EUR 1.434 a share. (Reuters)

PostNL – Co. shares declined more than 5 percent after TNT Express announced that UPS would delay its EUR 5.15 b takeover of TNT until the fourth quarter 2012. PostNL owned a 29.9 percent stake in TNT Express. (Financial Times)

NORTH AMERICA

Citigroup Inc – Co.s second quarter profit declined on slowing economy. Net earnings came in at USD 2.9 b on a y/y basis, a 12 percent decline. Earnings excl partial stake sale of Akbank, declined to USD 1 a share vs expectations of 89 cents. Citi reduced its positions in troubled euro zone countries from USD 50.5 b to USD 20.1 b. Revenues declined 10 percent to USD 18.4 b on account of write downs of bas assets of Citi Holdings. (Financial Times)

Comcast Corp – Co. is to buy Microsoft’s 50 percent stake in MSNBC for about USD 300 m. (Reuters)

GLOBAL

According to a survey conducted by the National Association for Business Economics, only 23 percent of the co.’s participating, planned on hiring staff in the next six months vs previous number of 39 percent. Slowdown in hiring, on account of a slowing economy and the euro crisis, would all affect the job markets, the study revealed. It also revealed that hiring may have slowed down due to co.’s exercising caution rather than seeing a decline in operations. (Reuters)

EQUITY UPDATE – 4 JULY 2012

ASIA

Malaysia’s IHH Healthcare Berhad plans to launch its initial public offering of USD 2b simultaneously on the Kuala Lumpur and Malaysian stock exchanges. The shares are expected to be priced at Malaysian Ringgit (MYR) 2.85 (USD 0.9) a share on the Malaysian exchange and at Singapore Dollar (SGD) 1.18 (USD 0.93) a share. The co. will offer 2.2 b shares comprising of 1.8 b freshly issued shares and 434 m shares owned by Abraaj, a Cayman Island incorporated firm. (Financial Times)

INDIA

Nomura lowered India’s growth forecast to 5.5 per cent (from 6.1 per cent) in 2012 and to 6.6 per cent (from 7.1 per cent) in 2013, citing slowdown in monetary and fiscal policy and global financial service. Nomura also revised its WPI inflation forecast to 7.6 per cent from 7.1 per cent.  In another report Nomura said that Indian economy may enter into stagflation due to evaporating of demand and elevated inflationary expectations. (Economic Times)

Associated Chambers of Commerce and Industry suggested that Reserve Bank of India should lower interest rates by at least 100 basis points to spur economic activity. (The Hindu Business Line)

SAIL – Co. will sign an agreement with Kobe Steel in the next week for their joint-venture operations for a iron ore plant. The 50:50 JV will see an investment of INR 1500 cr. In other news Fitch rating affired co.s BBB- rating with outlook negative. (Economic Times)

Cairn India – LIC hiked its stake in co. to over 5 per cent. (Economic Times/PTI)

Educomp Solutions – Co. has sacked 800-900 employees and more may have to leave, according to a source. The source cited that existing employee’s salaries have been deployed. (Economic Times)

Ashok Leyland – Co.’s sales rose 27.9 percent in June at 10,244 units on the back of its light commercial vehicle range ‘Dost’.  For the April-June 2012 period, the co. sold 27,585 units vs 19,277 units a year ago, leading to a rise of 43.09 percent. (Economic Times)

Power Trading Co.’s – The government has allowed co.’s to supply power directly to smaller industrial units. (Money Control/CNBC-TV18)

EUROPE

Spain’s unemployment for June declined 2.1 percent to 4.62 m. No. of registered unemployed people declined by 98,853 on a m/m basis. On an annual basis, Spain’s unemployment rose by 493,468 citizens, the highest in the EU region. Youth unemployment, unemployment of people below 25 yrs, declined 7.6 percent. (Financial Times)

The IMF raised the forecast on Germany’s GDP to an expansion of 1 percent vs. prv. forecast of 0.6 percent. The IMF cited strong domestic demand on the back of a strong labour market would help the country manage structural reforms to mitigate the effects of the eurozone crisis. The country is expected to grow by 1.4 percent in FY2013. (Economic Times)

Portugal’s Prime Minister Pedro Passos Coelho stated that citizens of the country should look for employment abroad as youth unemployment (under 24 yrs) rose to 36.6 percent. (Financial Times)

Eon – Energy firm doubled its outlook for the FY12 period to EUR 4.1 – 4.5 b adjusted for one-off effects, from previous forecast of EUR 2.3 – 2.7 b. The forecast was raised as the co. reached a price concession deal with Gazprom on energy supply contracts believed to extend into the longer term. EBITDA was forecasted to touch EUR 10.4 – 11.0 b in the same period. The deal with Gazprom had positive impact on the stock price which rose 2.7 percent in afternoon trade at EUR 17.50 a share. (Financial Times)

Barclays Plc  – The Chief Operating Officer Jerry del Missier quit from co., becoming the third high profile person to exit the bank faced with charges of rigging the Libor rate. (Economic Times)

 NORTH AMERICA

Microsoft Inc – Co. recorded a USD 6.2 b write down on its online advertising business whose operations commenced five years ago. Microsoft purchased AQuantive, to compete with Google Inc, which strengthened its operations in the online advertising industry. In related news according to Nomura equity research co. could be willing to sell its online businesses, due to diminishing prospects and mounting losses. Nomura added that co. could be willing to sell its businesses if right partner like facebook emerged. (Financial Times/Reuters)

BlackRock – Co. is in talks to acquire Swiss Re’s private equity fund of funds unit at an undisclosed amount. The acquisition will see BlackRock’s assets in the private equity space double to USD 15 b. (Financial Times)

US Factory orders saw a rise for the first time in three months with a 0.7 percent gain in May vs a 0.7 percent decline in April. Median forecasts came in at a gain of 0.1 percent. Factory orders excluding transportation equipment saw a rise of 0.4 percent vs April’s revised number of -0.6 percent. Durable goods orders saw a 1.3 percent rise, which makes up over 50 percent of total factory demand. Factory inventories declined 0.2 percent in May. Shipments of equipment and products saw a 0.5 percent rise in May. (Bloomberg)

The International Monetary Fund (IMF) reduced its GDP forecast for the US economy to 2 percent vs prv forecast of 2.1 percent. Steep cuts in spending and increases in tax rates combined with the worsening of the euro crisis could see the US worse off by the end of 2012. (Economic Times)

JP Morgan Chase & Co. – Co. is under investigation on allegations of a potential manipulation of electricity contracts. The co. was questioned by the Federal Energy Regulatory Commission over bidding process leading to USD 73 m in improper payments. (Bloomberg)

Morgan Stanley – Investors, who filed a lawsuit against Morgan Stanley, claim that the co. successfully lured rating agencies S&P and Moody’s to give an investment grade credit rating in 2006 to over USD 23 b of subprime mortgage notes. The case pertains to notes issued by Cheyne Finance Plc, a structured-investment vehicle that filed for bankruptcy in 2007. (Bloomberg)

GEOPOLITICAL

According to Iranian media reports, Iran successfully tested medium-range missiles capable of hitting Israel.  (Yahoo/Reuters)

EQUITY UPDATE – 28 JUNE 2012

INDIA

FII made gross purchases of INR 1,914.47cr and made gross sales totaling INR 1,828.38cr. DII made gross purchases of INR 709.31cr and gross sales totaling INR 724.38cr. (Business Standard)

Oil Co.’s – Co.’s to cut petrol prices by INR 4 a litre from 1 July due the fall in oil rates in the international markets. (Financial Express)

Axis Bank/Yes Bank – HSBC offered to sell 19.6m shares in Axis Bank for INR 950.0-970.9 and 16.8m shares in Yes Bank for INR 318.1-324.8; valuing the total deal at USD 429.5cr. (Economic Times/Reuters)

Tata Power – Co. is planning to explore overseas coal mines in the event of a shortage of coal supply in India. The co. is actively seeking opportunities in Indonesia and South Africa. (Economic Times)

Rallis India – Co. expects INR 500cr revenue in five years from its newly commissioned agriculture chemical plant at Dahej in Gujarat.  (The Hindu Business Line)

Strides Arcolab – Co. redeemed outstanding foreign currency bonds worth USD 80m. (Business Standard)

Indian Hotels Company – Tata Sons increased stake in co. by 4.78 per cent to 24.36 per cent through an investment of INR 497.47cr. (Financial Express)

EUROPE

According to ECB’s executive board member Peter Praet’s, interest rates could be cut further if they justified price stability in the medium term. In related news, a poll conducted by Reuters showed that 48 out of 71 analysts expect a rate cut, majority of them see rates cut by 25 basis points to 0.75 per cent. (Reuters)

Spanish Prime Minister Mariano Rajoy stated that the country would be unable to finance itself in the event of higher borrowing costs in the longer term. Yields on the Spanish government 10 yr bonds rose to almost 7 percent on rising concerns. In related news, Spain’s central bank, The Bank of Spain issued a warning that the recession in the country had intensified further. In other news euro zone finance ministers see Spain requiring EUR 51 to 62b and an additional safety margin. This was in response to the bailout request made by Spain yesterday. (Economic Times/Reuters)

European Commission/European Central Bank/IMF have accepted Cyprus’ request for a financial aid and will begin the assessing the amount of bailout funds required. Cyprus had requested EUR 2.3b to shore up its two commercial banks namely: Bank of Cyprus and Cyprus Popular Bank. (Economic Times/AP)

According to former Bank of England’s governor Andrew Large, BoE’s power to include financial stability as one of its mandate could be manageable. BoE plans to handle additional responsibility, that of the Financial Services Authority. (Bloomberg)

Barclays – Co. to pay USD 452m penalty for labor rate manipulation. (CNBC- TV18/Money Control)

Glencore International plc – Mining giant Glencore will seek to conduct negotiations with Qatari based sovereign fund, Qatar Holding LLC, over its GBP 16 b (USD 25 b) takeover of Xstrata plc. The fund, which initially had backed the deal, overruled its previous decision by citing a lower offer. Glencore’s offer of 2.8 shares of the co. for each share of Xstrata is now wanted by the fund to be raised to 3.25 for the merger to go through. The deal, if concludes without any objections, is expected to occur by October. (Bloomberg)

BHP Billiton Ltd – Co. cut its forecast for the price of iron ore on slowdown in demand from China. Prices of iron ore declined 2.2 percent in 2012 till date on slowdown in the Chinese economy. (Bloomberg)

Commerzbank – Co. is to exit its noncore shipping finance operations on suboptimal market conditions. (Financial Times)

NORTH AMERICA

US Pending Home sales index, a sign of purchase of previously owned homes, rose by 5.9 percent 101.1 vs a 5.5 percent decline in April. The data exceeded expectations of a 1.5 percent rise, as forecasted. Lower mortgage rates coupled with lower prices of properties aims to revive the housing market in the US. (Bloomberg)

Orders for durable goods in the US rose 1.1 percent in May vs a decline of 0.2 percent in April. Median forecasts came in at a gain of 0.5 percent. New orders declined 6.8 percent for the first four months of 2012. Non-defense capital goods orders rose 1.6 percent in May vs a decline of 1.4 percent previously. (Bloomberg)

COMMODITIES

According to analyst surveyed by Reuters, oil prices are expected to average below USD 100 a barrel over the next two years, due to weak medium-term economic growth and concerns about oil supplies. (Economic Times)

EQUITY UPDATE – 20 JUNE 2012

INDIA

RBI Governor D. Subbarao blamed the domestic and global economy as the main factors contributing to the fall in the rupee. Higher trade deficit on increased imports due to oil and gold price rise were the major domestic factors while eurozone crisis was the global issue responsible for the trading pattern of the rupee. In related news, the RBI also stated that inflation in India, was above acceptable levels and called out to the government to undertake further measures to support the economy. This statement was also made to defend the RBI’s decision to not cut benchmark CRR and repo rates on Monday. (Economic Times)

The Reserve Bank of India is set to purchase government securities maturing in 2018, 2021, 2030 and 2032 for an aggregate amount of INR 12,000cr on 22 June 2012, according to a RBI statement. (Economic Times/PTI)

Indian Government pledged USD 10b to the IMF, along with Brazil and Russia, while South Africa contributed USD 2b. Highest contribution among the BRIC nations was made by China, pledging 43b. IMF’s total lending capacity stood at USD 430b. (FirstPost)

Foreign Direct Investment in India declined 41 per cent to USD 1.85b in April 2012 versus USD 3.12b in April 2011. (Economic Times/PTI)

Macquarie Bank – Co. sold 80,00,000 shares in IDFC for INR 102 cr in open market transactions. The deal was conducted at share price of INR 127.55 a share. (Economic Times)

India’s competition regulator CCI has detected that around 11 cement firms were found guilty of forming a price cartel on cement prices. CCI has imposed a penalty of 8 percent on the 11 co.’s average revenues (for last 3 years) which amounts to about INR 3000 cr. The collective turnover of the 11 firms stood at INR 37,500 cr for that period. (Business Standard)

Advance Tax collection of top 100 co.’s in India rose 5 percent to INR 33,089 cr for 1Q12 period (April – June). This is against the targeted range of 15 percent growth rate for FY12-13. Co.’s such as Reliance Industries and BHEL have paid lower taxes in the period of collection as compared to 1Q11. (Business Standard)

ONGC – Co. signed a memorandum of understanding with China National Petroleum Corporation to explore business opportunities. (The Hindu Business Line)

BHEL – Co. plans to set up a fabrication unit and photovaltic manufacturing plant in Bhandara, India. The total outlay is estimated at INR 4000 cr. (Economic Times)

GMR – Co. allotted 1000 secured non-convertible debentures with a aggregate value of INR 100cr to ICICI Bank. (Economic Times)

HCL Infosystems – Co. to launch a third generation tablet PC in August 2012 priced at INR 18,000. (Indian Express)

Sterlite Technologies – Co. secured debt financing of INR 2,200cr from a debt syndicate for its two grid projects. (The Hindu Business Line)

Cement co.’s – Cement sales up 14 per cent to 16.26 million tonnes in May against 14.20 nillion tonnes in the same period last year. (The Hindu Business Line)

EUROPE

According to a senior European Union official, Spain will officially request aid for its banking sector in the coming days. (Fox Business/Dow Jones Newswire)

Spanish T-Bill auctions saw a sale of EUR 2.4 b worth of bills sold on higher yields. Yields averaged 5.074 percent vs previous rates of 2.985 percent in the auction in May.  Bid-to-cover ratio, which gauges demand, came in at 2.16x. It also auctioned EUR 639 m worth of bills due 18 months at 5.107 percent vs previous yields of 3.302 percent. Bid-to-cover was at 4.42x, exceeding previous periods ratio. The country would conduct an auction of medium term bonds on Thursday. (Financial Times)

UK Annual CPI declined to 2.8 percent in May against expectations of 3 percent, which hinged on previous period’s inflation number. Declining food and fuel prices led to the drop in the data, paving way for quantitative easing to stimulate the economy. Food prices rose 0.3 percent in May on a m/m basis a 1.3 percent on a y/y basis. Fuels and lubricants declined 3.1 percent on a m/m basis as prices of crude oil declined globally. (Financial Times)

Danone SA – Co. warned on lower profit margins in FY12 due to the ongoing European crisis. (Boston.com/AP)

NORTH AMERICA

Microsoft Inc – Co. launched a tablet called Surface to rival Apple’s Ipad.  The device will have a Windows 8 operating system. (Financial Times)

KKR – PE firm KKR has finalized its decision to acquire Prisma Capital Partners, a fund of hedge fund manager but did not disclose the financial terms of the deal. (Financial Times)

Air Products and Chemicals Inc. – Co. would acquire Chile’s Indura SA for USD 707 m, granting it a controlling stake of 67 percent. (Bloomberg)

Walgreens – Co. will acquire a 45 percent stake in retail and wholesale pharmacy co. Alliance Boot’s in a deal valued at USD 6.7 b. The deal would be conducted in cash and shares. The co. will look to acquire Boots completely in the next three years for an additional USD 9.5 b which would also include its outstanding debt. The co.’s would aim to target markets in China through the wholesale pharmacy distribution business of Boots and would look to gain a firm presence in the US. (Financial Times)

 

 

IMF STATES THAT THE YEN IS OVERVALUED, BoJ SHOULD CONDUCT MONETARY STIMULUS

The International Monetary Fund (IMF) stated that the Japanese Yen is currently  is overvalued and the central bank, The Bank of Japan (BoJ)  should consider undertaking a stimulus package which could involve purchase of longer-maturity bonds government securities and private securities. (Bloomberg)