DELAY IN REFORMS COULD SEE OIL SUBSIDY SPIRAL TO INR 190,000 cr IN FY12 : MORGAN STANLEY

Investment bank Morgan Stanley reports that a delay in reforms on fuel subsidy could see the outlay rise up to around INR 190,000 cr during FY2012-13. Lack of price rises in that of petrol and diesel would see the subsidy bill spiral out of control in India, which heavily subsidizes fuel.

As a result of these events, the firm is negative in its outlook on oil stocks and has downgraded ONGC to equalweight from overweight. GAIL, meanwhile has an underweight rating on its equity on declining oil volumes and higher imports. (Moneycontrol)

EQUITY UPDATE – 21 JULY 2012

ASIA

Citic Securities Co. – Chinese brokerage firm will acquire Credit Agricole’s Asian CLSA unit for USD 1.25 b. Citic will purchase a 19 percent state in the brokerage unit for USD 310 m and the remaining 80.1 percent stake in CLSA for USD 941.7 m. (Bloomberg)

De Beers – Diamond jewelry maker’s 1HY12 profits before charges and tax declined to USD 502 b vs USD 1 b a year ago on declining demand for diamonds and financing difficulties. Slowdown in the economy, unemployment and suboptimal economic recovery has impacted consumer’s discretionary spending patterns, which affected De Beers. (Financial Times)

INDIA

FII’s made gross purchases of INR 1,691.17cr and sales of INR 1,513.06cr. DII’s made gross purchases of INR 804.38cr and sales of INR 868.78cr. (Business Standard)

Madras Fertilizer Ltd – Co. aims to achieve profits of INR 180 cr in FY2012-13 with a sales target of INR 3000 cr. The co. plans to import around 100,000 tonnes of Diammonium phosphate and potash based fertilizers for the same period. The co. is also on the lookout for partners for a power plant construction project and a container freight station in Ennore, India. (Economic Times)

Reliance Communications – Co. has put the initial public offering of its subsidiary Flag Telecom on hold on account of adverse market conditions. The USD 1 b IPO was to be listed on the Singapore Stock Exchange. (Economic Times)

Tata Power – Co. signed a coal supply agreement with Indonesian firm PT Antang Gunung Meratus. The agreement spanning the next 5 years would help Tata procure its supply of coal for its thermal power plants. (Economic Times)

Tata Group – Co. plans to hold negotiations with the Vietnamese government to set up a steel factory for USD 5 b. (Economic Times)

INDIAN EARNINGS

Reliance Industries – Co. posted its 1Q12 results which declined for the third consecutive quarter but exceeded estimates. Refining margins of the co. fell less than expected and treasury gains on its cash boosted profits. Net earnings came in at INR 4473 cr vs INR 5661 cr on a y/y basis vs expectations of INR 4250 cr. Sales rose 13 percent to touch INR 91875 cr vs INR 81081 cr on a y/y basis. Petrochemical and refining revenues came in at INR 21839 cr and INR 85383 cr respectively. Gross refining margins came in at USD 7.6 a barrel vs USD 7.2 a barrel. Cash and cash equivalents came in INR 707.32 b (USD 12.7 b) vs INR 705.52 b in the previous quarter. (Economic Times)

Ultratech – Co. reported 1Q12-13 net profit at INR 778cr vs. previous INR 683cr. Net sales at INR 5,075cr vs. previous INR 4352cr. (MoneyControl)

EUROPE

Yields on Spanish bonds rose to almost touch record highs on investor’s concern about the cuntry’s deteriorating economy.  10 yr bond yields rose to 7.284 percent, falling short of the euro area high of 7.285 percent. Yields on the 5 yr bond rose sharply to 5.76 percent while 3 yr debt yielded at 6.54 percent, all record highs. Credit default swaps which insure against a default on Spanish debt also rose by 6.10 percent, a record high. (Financial Times)

European Central Bank to stop accepting Greek bonds and other collateral used by Greek banks to tap funding, if Greece did not adhere to the bailout conditions set up by EU/IMF. (MoneyControl)

Scania – Swedish truckmaker’s order book declined lower than expected which saw a rise in the stock price. Stock price rose 5.5 percent to SKr 121.90 in trade after its order book declined 14 percent in the 1Q12 period vs expectations of a decline of 21 percent. (Financial Times)

RWE – German power generating firm was saw its stock price decline 4 percent as it was downgraded by UBS. Stock price traded at EUR 32.57 a share. Since a rise in demand for solar and wind power in Central Europe, UBS projectsthat traditional power co’s using lignite coal and nuclear fuel could see a slowdown in operations when compared to other forms of power generating sources. (Financial Times)

Nokia – Fitch downgraded co.’s long term rating to ‘BB-‘ from ‘BB+’ and outlook to negative. The rating agency was concerned about co.’s ability to stabilize its revenue decline and being able to generate single digit operating margin in its Devices and Services division. (Economic Times/AFP)

NORTH AMERICA

Morgan Stanley – Co. in talks with Qatar sovereign wealth fund to acquire a minority stake in co.’s trading division. (MoneyControl)

NORHT AMERICAN EARNINGS

Xerox Inc – Co. reported 2Q12 earnings at USD 309 m vs USD 319 m previously on a y/y basis. EPS came in at 22 cents and EPS excl. items came in at 26 cents, in line with expectations. The co. however cut its earnings forecast for FY12 as slowdown in the economy weighed on demand for its products. Net profit would come at USD 1.07 – 1.12 a share, down 5 percent from its previous forecast of USD 1.12 to USD 1.18 a share. Analysts estimate a per share measure at USD  1.11 a share. (Financial Times)

Schlumberger – Co. reported 2Q12 net income at USD 1.4b (USD 1.05 per share) vs.  (estimated USD 1 per share) vs.  previous 2Q11 net income at USD 1.34m (USD 98 cents per share). Revenue at USD 10.45b vs. estimated USD 10.47 vs. previous USD 9b. (CNBC)

 

 

US EARNINGS : MORGAN STANLEY, VERIZON,TRAVELERS

Morgan Stanley – Co. reported 2Q12 EPS exclusing items at USD 28 cents per share vs. estimated USD 43 cents per share vs. previous loss of USD 38 cents per share in 2Q11. Revenue at USD 7b vs. estimated USD 7.7b vs. previous USD 9.28b. (CNBC)

Verizon – Co. reported 2Q12 EPS excluding items at USD 64 cents per share vs. estimated USD 64 cents vs. previous USD 57 cents per share in 2Q11. Revenue at USD 28.6b vs. estimated USD 28.549b vs. previous 1Q11 at USD 27.54. (CNBC)

Travelers – Co. reported EPS excluding items of USD 1.26 cents per share vs. estimated USD 1.35 per share vs. previous loss of USD 91 cents per share in 1Q11. Revenue at USD 6.36b vs. estimated USD 5.95b vs. previous USD 5.82b. Net income at USD 806m vs. previous 1Q11 at USD 839m. (CNBC)

EQUITY UPDATE 14 JULY 2012

ASIA

According to Chinese Central Bank’s recent stress test, capital adequacy ratio to be maintained by the overall banking system dropped to 10.89 per cent versus 12.33 per cent. (FoxBusiness/Dow Jones Newswire)

INDIA

According to the Builders’ Association of India, cement companies continue to form a price cartel inspite of the CCI imposing fines on the co.’s. (Economic Times)

FII’s made gross purchases of INR 1957.01cr and made sales totalling INR 1675.88cr. DII’s made gross purchases of INR 611.04cr and made gross sales totalling INR 981.45cr. (Business Standard)

According to a senior RBI official, Reserve Bank of India could raise capital requirements for new banks to 10 billion rupees from the currently proposed 5 billion rupees. (Reuters)

Infosys – LIC has hiked its stake in co. to a record 6.3 per cent (from 4.9 per cent previously) with purchase of shares worth about INR 2000cr in 1Q12-13.  (The Hindu Business Line/PTI)

Tata Steel – Co.’s 1Q12-13 sales at 1.59 million tonnes versus 4Q11-12 sales at 1.79 million tonnes. Saleable steel production in 1Q12-13 at 1.74 million tonnes versus 1Q11-12 steel production at 1.75 versus 1.78 in 4Q11-12. However crude steel production at 1.82 million tonnes versus 1.79 million tonnes in 4Q11-12;  hot metal production at 2.05 million tonnes versus 1.94 million tonnes in 1Q11-12. (Business Standard/PTI)

Tube Investments – Murugappa Group’s subsidiary Tube, is to acquire a 44 percent stake in industrial power transmission firm Shanthi Gears. The co. signed a share purchasing agreement with Shanthi today. The total cost of the acquisition could rise to INR 464 cr. (Economic Times)

Adani Power – Co. is to raise INR 5000 cr in capital to fund its operations on receiving shareholder approval. The co. plans to issue depository receipts and convertible preference shares. (Economic Times)

Welspun Global Brands – Krishiraj Trading and Welspun Mercantile Limited co.’s promoters made an open offer to co. to acquire 14,50,000 equity shares representing 13.84 per cent at a price of INR 42 per share. (MoneyControl)

INDIAN EARNINGS

Sintex Industries Ltd – Co. reported standalone sales 1Q12-13 at INR 606.46cr vs. previous 1Q11-12 sales at INR 555.66cr. Net profit at INR 32.88cr vs. previous INR 69.13cr. According to co.’s management co. to redeem FCCB’s liability at the end of FY 13. (The Hindu Business Line)

EUROPE

The Bank of England provided confirmation that it had received a recommendations from US Treasury Secretary Timothy Geithner to make changes to the setting of the Libor rate. BoE passed on this letter to the British Bankers Association, which sets the Libor rate used globally by firms. (Reuters)

According to a survey conducted by ZDF-Politbarometer showed 63 per cent of German backed German chancellor Angela Merkel’s handling of euro crisis, which is up from 60 per cent in May. (Economic Times/Reuters)

Volkswagen – Co. reported 8.9 per cent jump in group sales in 1H12 to 4.45 million vehicles, putting the co. on track to beat last year’s record 8.3 million sales. (Reuters)

PSA Peugeot Citroen – Co. share prices declined 9 percent in trade to 23 year lows after the firm announced negative cash flows of EUR 200 m a month and job cuts. The share price touched lows of EUR 6.37 a share. (Financial Times)

NORTH AMERICA

Federal Reserve’s Dennis Lockhart stated that the central bank would have to conduct a fresh round of asset purchasing programme if weakness in the economy persisted. A failure of the economy to rise in the second half of the year and weaker economic data could point towards a fresh round of stimulus, as per his statements, revealed yesterday. (Bloomberg)

According to Morgan Stanley, a total of USD 22 b in fines could be imposed on twelve global banks involved in the Libor manipulation scandal.  Regulatory authorities are investigating the matter which was formed when banks formed a cartel to keep rates low. The co. added that fines would be about 10 percent of the bank’s turnover or 4 – 13 percent of their EPS for 2012. (Financial Times)

The University of Michigan-Thomson Reuters consumer sentiment index for July declined to 72 from 73.2 in the previous month. Median forecasts had predicted a gain of 73.5. The measure of expectations also declined to 64.8 for July from 67.8 in June. (Financial Times)

Wholesale Producer Price Index in the US rose 0.1 percent in June on a seasonally adjusted basis vs expectation of a decline of 0.4 percent. Lower energy prices were offset by an increase in food prices. Energy prices declined 0.9 percent on a m/m basis while food prices rose 0.5 percent on higher price of meat. Core producer prices excl food and fuel rose 0.2 percent for the fourth month in a row. (Financial Times)

Wells Fargo – US based mortgage provider reported a 17 percent rise in 2Q12 profits at USD 4.6 b. Earnings per share came in at 82 cents, marginally exceeding expectations of 81 cents vs 70 cents a year ago. Issuance of new mortgages combined with cosut cutting measures saw the profits of the co. rise even in a challenging market. Revenues also rose on the back of the U.S Government’s plan aimed at helping homeowners to refinance their mortgages. Net interest margin declined to 3.91 percent from 4.01 percent on a y/y basis. (Financial Times)

Canadian pension fund The Ontario Teacher’s Pension Plan is to acquire a 75 percent stake in Norwegian retailer Helly Hansen for around NKR (Norwegian Kronor) 2 b (USD 326 m). The pension fund will purchase the stake from private equity firm Altor, which purchased Hansen for one-fourth the current purchase price. (Financial Times)

Berkshire Hathaway Inc’s Chairman Warren Buffett stated that bankruptcies in municipal bonds could increase in the shorter term. His statement came on the back of three cities in California filing for bankruptcies in the span of a few weeks. City Council of San Bernardino filed for bankruptcy recently. Falling property tax revenues, rising costs of labour and the severity of the slowdown could all contribute to further defaults. (Bloomberg)

J P Morgan – Co.’s Chairman Jamie Dimon stated that the losses occurred on its derivatives trades could mount to USD 7.5 b. The results of the co. were declared today and Dimon blamed the losses caused by the trade as an isolated event. (Bloomberg)

Ford Motors – Co.’s June sales down 16.1 per cent on a Y-O-Y basis in its 19 western European markets. (Reuters)

Bain Capital and the Government of Singapore are in advanced talks to make a joint bid to acquire a 40 percent stake in Genpact for USD 1.5 – 2 b. (Reuters)

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)

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 – 3 JULY 2012

ASIA

Kawasaki Heavy Industries has asked underwriter Daiwa Securities to cease from underwriting the co’s bond issuance on account of Daiwa being involved in an insider trading case. (Financial Times)

Nissan Motors – Co.’s Indian car sales at 4167 units in June 2012 versus 1632 units in June 2011. (Economic Times/PTI)

Hyundai Motors – Co. India car sales at 54,354 units in June 2012 versus 52,521 units in June 2011. (The Hindu Business Line)

INDIA

According to a Crisil report, there exists a two in three chance for the rupee to appreciate to the 50 level against the dollar by the end of current fiscal, which is subject to government taking right measures to revive growth. However the report also states that there was a one-third possibility of rupee to continue trading in the 55-57 band if the current domestic policy setting environment prevailed and there was no change in the Euro-Zone problems and ongoing global turbulence. (Indian Express)

Oil PSUs – Co.’s losses on the sales of diesel and cooking fuels have halved due to the drop in the international oil rates and rupee strength. Co.’s are losing INR 372cr versus previous INR 670cr per day. (Economic Times/PTI)

ITC – Uttar Pradesh government increased taxes on tobacco products from 12.5 per cent to 50 per cent. (Financial Express)

Hero MotoCorp –   Co.’s June 2012 sales at 534,091 units versus 512,244 units in June 2011. (Financial Express)

ACC/Ambuja Cement – Co.’s production growth in June recorded at 1.97 million tonnes (vs. previous 1.96 m.t in June 2011) and 1.78 m.t (previous 1.65 m.t in June 2011). Despatches for ACC at 1.96 m.t vs. previous 1.91 m.t in June 2011 and for Ambuja at 1.79 m.t versus 1.66 m.t in June 2011. (The Hindu Business Line)

GVK – Co.’s Alpha coal project is expected to get environmental clearance from the Australian Government by the end of this month or latest by early August, according to Hancock executive. (Firstpost/PTI)

Kingfisher Airlines – Over 200 pilots of the co. prolonged their two-day strike on failure to resolve their issues with the management over non-payment of salaries.  In other news promoter holding in the co. dropped to a record low of 35.86 per cent. (Economic Times)

Elecon Engineering – Co. received orders worth INR 104.4 cr from BHEL to supply rail accessories, hydraulic drivers, clamps and other equipment. (Economic Times)

EUROPE

The European Commission has forecasted that the Polish economy is expected to expand by 2.7 percent in 2012, making it the fastest in the European Union. (Financial Times)

The leaders in Finland and the Netherlands may decide to block the European Union’s move to utilize eurozone’s bailout funds to purchase sovereign bonds in the secondary markets. Even though a clause in the fund requires an 85 percent majority approval, the statement by Finland’s Prime Minister Jyrki Katainen’s statements would affect the markets. These nations reiterated that bond buying measures would still be insufficient to counter the crisis. (Reuters)

Morgan Stanley raised its outlook on the equity market in Europe on the back of a successful conclusion at the EU Summit which concluded last week, stating that the measures would improve the risk-reward of investing in the equity markets. The sector was upgraded to ‘neutral’.  The co raised ratings on the European insurance sector to “overweight” and the financial sector to “neutral.” It also downgraded the outlook on the consumer staples sector to ‘underweight,’ on high valuations and relatively high earnings growth. (Economic Times)

Turkey’s GDP for 1Q12 period expanded 3.2 percent as against expectations of an expansion of 2.8 percent. On a seasonally adjusted basis, the GDP for the country rose 0.2 percent on a q/q basis. In related news, the country’s HSBC Manufacturing Purchasing Managers’ Index (PMI) index rose to 51.4 in June from 50.2 in May. (Financial Times)

GlaxoSmithKline plc – Co. has agreed to plead guilty to charges of misdemeanor in the U.S as it sold drugs to patients which were against U.S laws. The co. has agreed to settle the litigation through payment of USD 3 b to the U.S authorities. The co. sold its anti-depressant drug Paxil to patients under the age of 18 years when it was only approved for adults and that its drug Wellbutrin was sold to treat diseases it didn’t have permission for. (Reuters)

Volkswagen – Co.’s Indian unit posted a marginal decline in its sales at 5371 units for June 2012 vs 5397 units sold in June 2011. In related news Audi India – Co. recorded a 75 percent rise in vehicle sales at 718 units vs 408 units sold a year ago. (Economic Times)

NORTH AMERICA

The Institute for Supply Management’s index which gauges manufacturing activity in the US, declined to 49.7 in June vs 53.5 in May. Production and orders for new goods saw greater than expected declines in the month, signaling a slowdown in activity. Production declined to 51 from 55.6, new orders fell to 47.8 from 60.1 in May, its steepest decline, which indicates that demand is falling quicker than expected. (Financial Times)

Ford Motors – Co.’s Indian sales down by 21.20 per cent at 7281 units in June versus 9228 in June 2011. (Money Control/PTI)

The Linde Group – Co., an industrial gas producer, will acquire Lincare Holdings, a US based provider of oxygen and respiratory services for USD 4.6 b. The co. has offered USD 41.50 a share, 64 percent premium to its previous period’s closing price. Linde could finance the transaction via a USD 4.5 b loan plus cash, and would refinance the purchase through debt and up to EUR 1.5 b in funds from an equity issuance. (Financial Times)

Micron Technology – US chip manufacturing co. Micron Technology will acquire bankrupt firm Elpida Memory in a deal worth JPY 200 b (USD 2.5 b). The co. would pay JPY 60 b in cash with the rest JPY 140 b in yearly installments until 2019. (Financial Times)

COMMODITIES

According to an Iranian MP Ibrahim Agha Mohammadi, Iran’s National Security and Foreign Policy Committee has drafted a bill to stop oil tankers from shipping crude through the Strait of Hormuz to countries supporting sanctions against it. (Fox Business)

EQUITY UPDATE – 29 JUNE 2012

GLOBAL

Dealmaking activity declined by 2 percent in the January – March period for FY2012 on account of the euro debt crisis and volatility in the equity markets. M&A deals worth USD 450 b have taken place in the said period with European dealmaking declining 20 percent. Asia showed a 3 percent rise in activity. (Bloomberg)

ASIA

According to Jia Kang, the director of the China’s Research Institute for Fiscal Science at the Ministry of Finance, a 7.5 per cent growth for the year was attainable. As the Chinese economy could stabilize in the third quarter. (Reuters)

INDIA

According to the Reserve Bank of India (RBI), banking institutions’ borrowings from overseas sources could be affected if the country’s rating suffered a downgrade. Rating cuts of 1-in-3 was forecasted by S&P, while Moody’s and Fitch also have lowered their outlook on the country from stable to negative.  In other news RBI approved FII to invest 23 per cent in commodities exchange without seaking prior approval. (Economic Times)

The Indian Government is to publish a draft regarding the rules of the General anti-avoidance rule (GAAR), according to Finance Secretary R.S Gujral.  The Prime Minister Manmohan Singh is expected to take two or three weeks to interpret the rules of the GAAR policy. (Business Standard)

India looks to export 2 m tonnes of surplus wheat to 17 nations which include Netherlands, Japan and Iraq. (Business Standard)

Coal India – Co. received 2 of NTPC’s de-allocated mines and another in India to commence coal extraction operations. (Business Standard)

PowerGrid Corp – Co. raised a total of around INR 4000 cr in bond issues at a coupon rate of 9.30 percent which is due in 2027. The co. plans to utilize the proceeds of the issue to finance part of its INR 20,000 cr capital expenditure plans. (Economic Times)

Cairn India – Cairn Energy is selling 66m shares in co. at a price range of INR 307.40 to 317.50, according to a source. (Reuters/FirstPost)

Private Equity firm Sequoia Capital made an investment of INR 305 cr in local search engine services provision firm, Just Dial. The investment makes it Sequoia’s third investment in the co. (Economic Times)

Out of the 34 blocks offered to oil co’s under the New Exploration Licensing Policy (NELP), only 13 blocks succeeded in drawing bids worth USD 582.3 m. The offered included eight deepwater blocks, seven shallow water blocks and 19 land exploration blocks. (Economic Times)

Birla Corp – Co. plans to set up an overseas cement, the first of its kind, in Ethiopia. (Economic Times)

NCC – Rare Investments and its related entities have increased their stake in co. by acquiring  750,000 shares (0.3 per cent). Prior to this transaction Rare Investments and entities held 7.69 per cent stake in co. (The Hindu Business Line)

EUROPE

According to the German finance minister Wolfgang Schaeuble, Germany could agree on shared liability of euro-zone debt, if path for a centralized European control was irreversible and well coordinated.  (FoxBusiness/Dow Jones Newswire)

Germany’s think tank IMK said, Germany’s economic growth to slow to 0.3 per cent in 2013 from a 0.6 per cent in 2012, due to austerity measures impacting trade partners. (Economic Times/Reuters)

Italy conducted its bond auctions of EUR 5.4 b for 5 yr and 10 yr bonds. Yields on the 10 yr bonds rose to 6.19 percent vs 6.03 percent in the auction held in May.  The 5 yr bonds yielded at 5.84 percent vs 5.66 percent. The auctions were conducted with investors keeping one eye open on the EU Summit which takes place today. (RIA Novosti)

NORTH AMERICA

US conducted an auction of its 7 year notes at an average yield of 1.075 percent vs median forecasts of yields of 1.056 percent. Bid-to-cover ratio, a gauge of demand, came in at 2.64, the lowest since October 2011. Indirect bidders which include foreign central banks, purchased 42 percent of the notes vs an average of 40.6 percent in the past 10 auctions. (Bloomberg)

Pimco’s Bill Gross stated that it would take decades for the markets and the financial system to return to normalcy after the crisis. He also stated that U.S securities would still be considered the safest instruments in the advent of the ongoing crisis in the markets. (Bloomberg)

JP Morgan – Co. to announce about USD 5b losses related to its derivative trading, during the release of its second quarter earnings, according to people familiar. In other news Citi Research cut co.’s price target to USD 43 from USD 45. (FT/Reuters)

Goldman Sachs – Price target cut by Citi Research to USD 110 from USD 145. (Reuters)

BofA – Price target cut by Citi Research to USD 8 from USD 9. (Reuters)

Morgan Stanley – Price target cut by Citi Research to USD 16 from USD 20. (Reuters)