EQUITY UPDATE: 22 AUGUST 2012

ASIA

CnooC – China’s offshore drilling firm saw its 1HY12 profit decline 19 percent on a y/y basis to RMB 31.9 b vs prv RMB 39.3 b on higher costs and lower gas output. The co. reduced its interim dividend by 40 percent to HKD 0.15 a share to save up for its USD 15.1 b takeover deal of oil firm Nexen. Oil production output declined 4.6 percent to 161 m barrels. The oil spill at its Penglai field contributed to the fall in output. (Financial Times)

Thailand’s 2Q12 GDP expanded 4.2 percent vs growth of 0.3 percent in the prv quarter. The emergence of the nation from the flood crisis affecting it last year saw a strong comeback from sectors such as tourism, manufacturing and construction. (Financial Times)

INDIA

According to the Reserve Bank of India’s minutes, five of the seven external members of the advisory committee favored the governor’s decision to keep interest on hold in July. The advisory committee members were in opposition to the bank’s surprise rate cut in April. (MoneyControl)

The research firm Dun & Bradstreet, expects Indian economy to grow at a 6 per cent rate during the current fiscal.  Research firm cited unsatisfactory progress in monsoon, posed an upside risk to overall inflation. As food prices remained elevated. (MoneyControl/PTI)

FII’s made gross purchases of INR 2,220.91cr and sales of total of INR 2,079.54cr. DII’s made gross purchases of INR 1,022.73cr and gross sales of INR 1,164.37. (Business Standard)

Bharti Airtel – Telecom firm saw its stock downgraded by Morgan Stanley to equal weight from overweight with a price target of INR 280. Pressures on operating margins arising from expansion and higher traffic coupled with intensity in tariff competition could affect the co. further. Lowering 3G rates was also cited weighing on its dismal results. (Economic Times)

ONGC – Offshore drilling firm is to extract geothermal energy from the South Cambay basin in Gujarat with a 50:50 joint venture with Talboom. (Economic Times)

Tata Steel – Co. to pay USD 471.17m to redeem its FCCBs maturing on 5 September 2012. (Business Standard/PTI)

Gail – Co. has cut its stake in ONGC’s Dahej project to 15.5 per cent from 19 per cent as project cost escalated by 9.5 per cent. (Business Standard/PTI)

L&T – Utility and engineering firm’s subsidiary L&T Const. saw its orders received rise to INR 2044 cr in the second quarter period. (Economic Times)

Wockhardt – Pharma firm received US FDA permission to market the generic version of the Felodipine tablets in the U.S.(Business Standard)

Tata Global Beverages – Co.  and European Bank of Reconstruction and Development, together acquired the remaining 49 per cent shares of SuntyCo Holdings. (The Hindu Business Line)

EUROPE

Great Britain posted a budget deficit of GBP 557 m (USD 878 m) vs a surplus of GBP 2.84 b a year ago for the July 2012 period on a y/y basis. Expectations came in at a surplus of GBP 2.2 b. Lower corporate tax collections partly on closure of the Elgin gas field in the North Sea contributed to the deficit. Government spending rose by 5.1 percent and tax revenues declined 0.8 percent. (Bloomberg)

According to PIMCO’s Mohamed El-Erian, capping interest rates to control the borrowing costs of European countries was a not a likely option for the ECB to adopt. Mohamed EL-Erian further added that, capping yield levels signaled unlimited intervention. (Economic Times/Reuters)

Glencore International plc – Miner did not back down to demands from Qatar’s Sovereign wealth fund to improve terms of its takeover plan of Xstrata plc. The sovereign fund is a 12 percent stakeholder in Xstrata which collectively negotiated better terms from Glencore. The deal was stated by Glencore Chief Ivan Glasenberg as not a must-do deal which explains its firm stance. In related news, the co. reported a 26 percent decline in its 1HY12 profit to USD 1.8 b vs exp of USD 1.6 b on lower prices of commodities. The co. declared a dividend of 5.4 cents a share. (Financial Times/Bloomberg)

Julius Baer – Asset management firm plans to reduce its rights issue from Swiss Franc (SFr) 750 m to SFr 500 m on shareholder backlash. (Financial Times)

NORTH AMERICA

Best Buy Inc – Retailer saw its 2Q12 profits drop 91 percent on higher restructuring costs which prompted the co. to suspend its earnings guidance. Shares declined 10 percent to USD 18.16 a share over prv period’s decline of 10 percent over the failure of the co.’s former chairman’s r takeover plans. Sales came in 3 percent lower at USD 10.5 b. Profits came in at USD 12 m vs USD 128 m a year ago. EPS came in at 4 cents vs 34 cents a year ago. Restructuring charges amounted to USD 91 m. EPS excl charges came in at 20 cents vs exp. 31 cents. (Financial Times)

EQUITY UPDATE – 10 AUGUST 2012

ASIA

China’s Industrial output for July rose slower than expected by 9.2 percent to near three year lows, adding to concerns that the country is slowing in its recovery process. Inflation in the county declined for the fourth consecutive month in July to 1.8 percent vs 2.2 percent a year ago. On a m/m basis, inflation rose 0.1 percent vs -0.6 percent previously. (Bloomberg)

The Bank of Japan kept benchmark interest rates unchanged at 0.10 percent, in line with expectations. The bank stopped short of lowering its monetary policies and kept its asset purchasing fund at JPY 45 t (USD 573 b) and the lending fund at JPY 25 t. Stimulus measures would only come into force if the yen appreciated significantly against the US dollar. (Bloomberg)

South Korean central bank The Bank of Korea (BoK) kept its benchmark seven day repo rates unchanged at 3.00 percent which was unanimously taken by the members. The central bank would give more focus to propping up domestic demand. (Reuters)

Sale of passenger vehicles in China for July rose slower than forecast on a m/m basis on slowing demand and buyers postponing purchases on expectations of stimulus measures from the government. Deliveries of vehicles incl. multipurpose and utility vehicles rose 11 percent to 1.12 m units vs expectations of 1.16 m units. Sale of mini-commercial vehicles saw the biggest decline which could impact logistic operations in the country. Sale of vehicles incl. trucks and buses rose to 1.38 m units, a 8 percent m/m rise. Customers who held back on purchase are due to expectations of various subsidies and other incentives to be offered by the government. (Bloomberg)

INDIA

The Reserve Bank of India has transferred surplus profit of INR 16,010cr in 1Q12-13 (vs. previous INR 15,009cr) to the government of India. (The Hindu Business Line)

Fitch has downgraded India’s 2H12 outlook on the retail sector to negative. The rating agency cited sustained deterioration in discretionary spending ability and its unlikely recovery in the short term. Fitch revised FY13 and FY14 real GDP forecast to 6.5 per cent and 7 per cent from the earlier 7.5 per cent and 8 per cent respectively. (The Hindu Business Line)

Reliance Industries – Co. has slashed its natural gas reserves in its KG-D6 gas field by 70 per cent to 3.10tr cubic feet due to unforeseen geological surprises. (Business Standard/PTI)

Infosys – IT firm secured a USD 700 cr deal with India’s Department of Post for provision of core banking and insurance services across various post offices in India. It will also assist in installing ATM’s in these post offices. (Economic Times)

JSW Steel – Co. and other steel co. that depend on iron ore from Karnataka could face closure due to severe shortage of iron ore, if mining did not resume in the state. The state’s steel industry, whose 21m ton output accounts for 25 per cent of the national production, is operating with just a 45-day supply of iron ore. According to JSW Steel’s management it would be difficult to operate its plants if mining operations didn’t resume. JSW Steel has purchased about 14m ton of iron ore sold at the e-auctions. (Business Standard)

Sail – Co. to outsource the development of its two virgin iron ore mines in Chatisgarh and Jharkand. The mines will have a capacity of 14m tons per annum and 15m tons per annum respectively. (Business Standard/PTI)

INDIAN EARNING

HPCL – Co. reported 1Q12-13 net loss at INR 9,248 cr.vs previous INR 3,080 cr. Net Sales of the co. rose to INR 44,076.5 cr. vs INR 40,795 cr on a YoY basis. (Moneycontrol)

Tech Mahindra – Co. reported 1Q12-13 consolidated Profit After Tax (PAT) at INR 338 cr vs estimated INR 310.73 cr. Sales for the firm increased by 8.7 percent  on a QoQ basis and 19 percent on a YoY basis to INR 1,543cr vs estimated INR 1,539 cr. EBITDA margins increased by 38.66 percent on a q/q basis to INR 330 cr vs estimated INR 295 cr. (Moneycontrol)

Jindal Stainless – Co. reported 1Q12-13 net loss at INR 231.41cr vs. previous 1Q11-12 net profit at INR 85.79cr. Net sales at INR 2,206.69cr vs. previous INR 1,976.93cr. (MoneyControl)

GE Shipping – Co. reported 1Q12-13 net profit at INR 181cr vs. previous INR 162.59cr. Income from operations at INR 802.42cr vs. previous INR 680.53cr. (MoneyControl)

Eicher Motors – Co. reported 2Q12 net profit at INR 75.96cr vs. previous INR 76.31cr. Income from operations at INR 1573.05cr vs. previous INR 1,268.75cr. (MoneyControl)

EUROPE

According to the ECB governing council member Christian Noyer, ECB was ready to intervene in secondary bond markets very soon, to bring down the excessive borrowing costs of Spain and Italy. (Reuters)

U.K Trade Deficit for 2Q12 ended June increased to GBP 28.3 b vs GBP 25 b in the previous quarter on lower exports. The ongoing euro crisis saw lower demand for Britain’s goods which declined 4.9 percent on a q/q basis while imports also lowered by 0.5 percent. The trade deficit for June came in higher than expected at GBP 10.119 b vs a deficit of GBP 8.364 b previously vs estimates of a deficit of GBP 8.73 b. Exports to Germany declined by GBP 525 m, while Netherlands trade declined the most to GBP 819 m. Exports for June declined 8.4 percent over May and imports fell 1.2 percent for the same period. (Bloomberg)

NORTH AMERICA

According to estimates, the trade deficit in the U.S for June narrowed to USD 47.5 b vs USD 48.7 b in May on lower oil prices reducing the country’s imports. The lower oil prices are attributed to low demand emanating from the global crisis. (Bloomberg)

U.S Non farm productivity rose 1.6 percent on an annualized basis for the 2Q12 period vs exp advance of 1.3 percent vs prv rise of 0.7 percent. Co.’s and businesses expanded their operations but still saw hourly work rate output rise by just 0.4 percent. (Bloomberg)

U.S Initial Jobless claims for unemployment benefits declined by 6000 applications to a seasonally adjusted number of 361,000 for week ended 3 August. Expectations came at 370,000 and prv period’s claims were revised to 367,000 applicants. The four-week moving average for fresh claims rose by 2250 applicants to 368,250. Nonfarm payrolls rose by 163,000 in July, but the unemployment rate rose to touch 8.3 percent. (Reuters)

Moody’s downgrades of US municipal bonds issuers hit a 10 year quarterly high in 2Q12. The rating agency cited stressed budgets and weaker liquidity. (Reuters)

Google Inc – Co. is to pay Apple Inc a total of USD 22.5 m in settlement charges for bypassing the privacy settings of customers who used Apple’s safari web browser. (Reuters)

Research in Motion – A US judge has overturned the USD 147.2m for patent infringement in favors of co. (Boston.com/AP)

COMMODITIES

OPEC forecasted FY 2012 oil demand at 88.72m barrels per day vs. previous estimate of 88.68 barrels per day in July. FY 12 demand forecasted at 89.52mbpd vs. previous estimate of 89.50mbpd in July. (MoneyControl)

EQUITY UPDATE: 1 AUGUST 2012

ASIA

China’s steel factories saw a 96 percent decline in profits for the 1HY12 period on economic slowdown lowering demand. The China Iron and Steel Association revealed that profits came in at RMB 2.39 b (GBP 376 m) on rising costs and lower demand. (Financial Times)

INDIA

FIIs saw net buying of INR 879.97 cr in trade today on a provisional basis with gross purchases of INR 2940.75 cr and gross sales of INR 2060.79 cr. DIIs became net sellers of INR 493.48 cr on gross purchases of INR 827.81 cr and gross sales of INR 1,321.29 cr. (Business Standard)

The Reserve Bank of India relaxed foreign exchange retention rules, by allowing corporate and exporters to keep entire foreign exchange earnings in respective currencies for a limited period versus a existing provision of 50 per cent conversion to Indian rupee. In other news, RBI lowered India’s growth forecast for the current financial year to 6.5 per cent versus previous estimate of 7.5 per cent. (MoneyControl/BBC)

Reliance Power – Co. is set to utilize USD 800 m as four international banks sanctioned its loan for its power project in Sasan, India. (Business Standard)

Maruti Suzuki – Rating agency ICRA will scrutinize around 14 auto parts suppliers to Maruti Suzuki India on account of the ongoings at the co.’s Manesar plant. Violence at its factory in Manesar has severely affected the co.’s production, thus affecting its suppliers. (Economic Times)

Tata Steel – Co. is stated to have lowered its operating capacity on account of power outages in the northern region of India. (Economic Times)

Bharti Airtel – Co. is exploring options of issuing new shares to raise funds, citing two people aware of the situation. (Business Standard/Reuters)

Tata Motors – Jaguar Land Rover is recalling 2,229 Freelander 2 SUV’s in China due to a potential perforation in power steering hose. (The Hindu Business Line)

Power Co.’s – According to the rating agency Fitch, the outlook on domestic power sector was stable, due to some progress in availability in fuel and a possibility of debt restructuring of SEBs. In related news Coal India agreed to supply at least 80 per cent of coal requirements for new power projects.  (Financial Express/Money Control)

INDIAN EARNINGS

IDBI Bank – Co. reported 1Q12-13 net profit at INR 427.34cr vs. previous INR 335.10cr in 1Q11-12. Total income at INR 6,786.81cr vs. previous 6,059.83cr. (The Hindu Business Line)

Cipla – Co.reported 1Q12-13 net profit at INR 400.76cr vs. previous 1Q11-12 net profit at INR 253.34cr. Net sales at INR 1,917.34cr vs. previous INR 1,550.33cr. (Financial Exprees)

Petronet LNG – Co. reported 1Q12-13 net profit at INR 270.85cr vs. previous INR 256.71cr. Turnover up 52 per cent to INR 7,030.41cr. (The Hindu Business Line/PTI)

Bhushan Steel – Co. reported 1Q12-13 net profit at INR 205.97cr vs. previous INR 209.96cr. Net sales at INR 2747.34cr vs. previous INR 2165.85cr. (Business Standard/PTI)

Titan Group – Co. reported 1Q12-13 net profit at INR 156.09cr vs. previous INR 143.51cr. Net income at INR 2,205.81cr vs. previous INR 2020.60cr. (Business Standard/PTI)

Karur Vysya Bank – Co. reported 1Q12-13 net profit at INR 145.95cr vs. previous INR 116.70cr. Total income at INR 1,109.81cr vs. previous INR 768.72cr. (Business Standard)

Jaiprakash Associates – Co. reported 1Q12-13 net profit at INR 138.84cr vs. previous net profit at INR 184.06cr. Net sales at INR 2,963.57cr vs. previous INR 2,902.30cr. (Business Standard/PTI)

EID Parry – Co. reported 1Q12-13 net profit at INR 22.47cr vs. previous net loss of INR 7.18cr. Total income at INR 578cr vs. previous INR 398.49cr. (Financial Express)

GTL – Co. reported 1Q12-13 net loss of INR 203.95cr vs. previous 1Q11-12 net profit of INR 12.93cr. Revenue at INR 615.98cr vs. previous INR 820.62cr. (The Hindu Business Line)

Man Industries – Co. reported 1Q12-13 net profit at INR 26cr vs. previous INR 24cr in 1Q11-12. Net Sales at INR 326cr vs. previous INR 466cr. (The Hindu Business Line)

Shoopers Stop – Co. reported 1Q12-13 net profit at INR 50 lac vs. previous INR 11.7cr. Gross retail revenue at INR 516.9cr vs. previous INR 448.5cr. (Business Standard/PTI)

Muthoot Capital Services – Co. reported 1Q12-13 net profit at INR 4.93cr vs. previous INR 2.35cr. Revenue at INR 22.17cr vs. previous INR 12.23cr. (Business Standard/PTI)

EUROPE

Italian PM Mario Monti, stated that the timely assistance from the ECB and the bailout funds could slowly help the country return to stability, ahead of his tour to Helsinki, Madrid and Paris this week. Italy is faced by rising government bond yields and surveys indicate that around more than half of the public believe that Monti would not be able to achieve the target of lowering the country’s fiscal deficit. (Financial Times)

ECB’s plans of staging a bailout program for troubled European economies, hit a resistance. As according to a Bundesbank source, most troubled European economies faced a fiscal problems and which should be addressed using fiscal instruments. (CNBC)

EU unemployment rate for the 17 country block rose to 11.2 percent or 17.8 m unemployed people in July vs. 10.2 percent in June 2011. Youth unemployment, the under-25 age group, rose to 22.4 percent. The results were affected mostly by Spain and Greece where the rates were 24.8 percent and 22.5 percent respectively. Germany, was more stable as the rate declined to 5.4 percent vs 5.5 percent previously. The data would weigh on the ECB meet this Thursday when it decides on its monetary policy and interest rates. (Financial Times)

Euro zone inflation for June was stubbornly stuck at 2.4 percent in July, similar for the last three months. The data, combined with the rising unemployment rates, could weigh in on the ECB meet this Thursday. (Financial Times)

Italian unemployment rate at 10.8 per cent in June versus 10.6 per cent in May. (Economic Times)

Moody’s lowered U.K’s GDP forecast to 0.4 percent for FY12 and 1.8 percent growth in FY13. However, the agency did not alter its AAA rating and its outlook on it. The agency stated that policies such as asset purchases, the government’s ability to reduce debt without hampering growth all prompted for the forecast. (Financial Times)

According to Fathom consulting, a Eurozone break-up could force UK into a deep recession, force governments to nationalise banks and trigger a GBP 1tr of QE. (Telegraph UK)

Deutsche Bank – Co. admitted that some of their staff was involved in LIBOR rate-rigging scandal. However an internal inquiry has cleared senior management. In other news, co. to cut 1,900 staff, mostly outside Germany, due to the European economic downturn. (BBC)

Tesco – Standard and Poor’s cut co.’s outlook to ‘negative’, warned on weakening profits. The rating agency has suggested that co. should sell off businesses. (Telegraph UK)

EUROPEAN EARNINGS

BBVA – Spanish bank saw its 2Q12 profit decline to EUR 505 m vs expectations of EUR 700 m. Profits declined 58 percent y/y on its property loan delinquencies. Net interest income rose 16 percent to EUR 3.74 b. The co. set aside EUR 1.43 b of the reqd. EUR 4.6 b to comply with Spanish regulatory laws. The bank’s Latin American division saw revenues rise to EUR 1.02 b vs EUR 774 m on stronger demand for loans and rise in deposits. (Financial Times)

British Petroleum plc – Co. saw its 2Q12 profits decline to USD 3.7 b vs USD 5.7 b a year ago, a 35 percent decline on lower production, higher writedowns on its shale gas unit and a tax charge in Russia. The numbers came in below estimates as lower crude oil and nat gas prices weighed on its earnings. The charges on its Deepwater rig oil spill could still weigh on profitability as it appeased shareholders with its strategy of delivering a 50 percent increase in cash flows by 2014. The co. was also affected by the sale of its Russian JV with TNK where income was lower by USD 700 m on a y/y basis. Lower output also hampered its operations. (Financial Times)

NORTH AMERICA

US consumer confidence for July at 65.9 versus estimated 61.5 versus previous 62.7 ; revised from 62. (FXStreet)

NORTH AMERICAN EARNINGS

Pfizer – Pharma co. saw its profits rise to USD 3.25 b, a 25 percent y/y rise on cost cutting vs USD 2.61 b previously. EPS came in at 43 cents vs 33 cents a year ago. EPS excl costs came in at 62 cents vs expectations of 54 cents. Overheads declined 17 percent with R&D expenses lowered by 24 percent. Revenues declined 9 percent to USD 15.1 b, declining 9 percent y/y on a 53 percent fall in the sale of Lipitor, its anti cholesterol drug, whose patent expired. The co. plans to sell its nutrition and animal health units to raise USD 3.0 b through 20 percent divestment to offset declining revenues of Lipitor. It reaffirmed its FY2012 earnings at USD 2.14 – 2.24 a share. (Financial Times)

 

 

RBI KEEPS RATES UNCHANGED

India’s central bank The Reserve Bank of India (RBI)  interest rates at unchanged at 8 percent (Repo rate) citing rising inflation. SLR rate cut to 23 percent from 24 percent.

Bond yields on the 8.15% bond due 2022 is at 8.182 percent.

Bank Nifty down 111 points while Nifty down 15 points.  (CNBC TV 18)

RBI TO KEEP REPO RATE UNCHANGED: REUTERS

According to a poll conducted by Reuters, participants expect the Reserve Bank of India to keep its repo rate unchanged at 8 percent when it meets tomorrow. The RBI is of the premise that unless the government reduces its fiscal deficit, a rate cut in the benchmark rates will not be of much effect in the near period. Lack of supply side solutions to tackling food supply could result in higher inflation. Lack of adequate monsoons would also contribute to the rise in inflation.

(Reuters)

EQUITY UPDATE – 20 JULY 2012

ASIA

According to KPMG, China’s imposition of restrictions on borrowing through trust companies and property sales could affect property and real estate developers in the region. The report came on the back of data which showed a decline in new funding available to developers as loans declined to 5.7 percent for the 1HY12 period. Additionally, home sales also declined 6.5 percent as the government maintains restrictions on property prices and purchases. Funds channelled through real estate funds declined more than 50 percent to RMB 84.6 b. (Bloomberg)

Chinese President approved a USD 20 b to various African countries in the coming three years, to boost ties with nations in the continent. (Reuters)

Hong Kong’s government warned that unemployment would continue to rise in the near term , affecting more graduates, as the economic crisis begins to tighten its effect on the country.  Unemployment rate for 2Q12 period ended June was unchanged at 3.2 percent, below expectations of 3.3 percent. The government stated that inspite of the encouraging data, the rate would rise to 4 percent by the end of 2012. (Bloomberg)

Temasek Holdings and China Investment Corp and two other firms have expressed interest in RCom’s IPO which would be launched in Singapore. RCom’s undersea cable unit Global Telecommunication Infrastructure Trust (GTIT) is to be listed on the Singapore Stock Exchange. Investors have proposed to invest a total of USD 250 to 300 m in the IPO. (Business Standard)

Australia’s index of business conditions for the next three months declined to 5, its lowest since 2Q09 and its confidence index for the same period declined to -2. Near term optimism on business dimmed as analysts and managers expect the Reserve Bank of Australia to cut its benchmark cash rate by atleast 25 basis points. (Bloomberg)

INDIA

According to a Reuter’s poll, India’s gross domestic product is expected to grow 6.3 per cent during FY12-13 vs. previous estimate of 7.1 per cent and 7 per cent in FY13-14 vs. precious estimate of 8 per cent. (FirstPost/Reuters)

Based on provisional details, DII’s made gross purchases of INR 924.56 cr vs sales of INR 1153.40 cr, making them net sellers of INR 228.84 cr. Meanwhile, FII’s conducted gross purchases of INR 2021.60 cr vs gross sales of INR 1895.82 cr, making them net buyers of INR 128.78 cr. (Business Standard)

According to Barclays, the Reserve Bank of India to slash policy rates by 0.25 percent in the upcoming policy meeting. (FirstPost/PTI)

Exports of Indian garments to non-traditional markets such as Latin America and Africa rose by 16 percent to touch USD 3.15 b in FY11-12. Slowdown in demand from Europe and Asia made exporters look for newer markets, stated the industry body, Apparel Export Promotion Council. (Economic Times)

Maruti Suzuki – Shares of co. dropped 9 per cent as violence between workers and management erupted at its Manesar plant. According to co.’s management the plant has been shut down. (Business Standard/PTI)

Sail – Indian government has approved the disinvestment of 10.82 per cent in co.; which at current price of INR 93.40 would fetch USD 750m. (FirstPost/Reuters)

Indian Overseas Bank – Co. plans to raise around INR 1500 cr in capital from the Indian government. (Economic Times)

Cairn India – Co. stated that output at its Rajasthan’s oil fields could rise by over 70 percent if the government does not block or delay its investment approvals. Output could rise to 300,000 barrels a day, totalling 15 m tonnes annually vs current output of 175,000 barrels a day. (Economic Times)

INDIAN EARNINGS

Hero MotoCorp – Co. declared net profits of INR 615 cr vs INR 558 cr from a year ago for its 1Q12 earnings. Revenues rose 10 percent to INR 6351.7 cr vs INR 5775.5 cr on a y/y basis. Co. sold around 1640,000 units for the quarter. (Business Standard)

Dr Reddy’s Laboratories – Co. reported 1Q12-13 net profit of INR 335.98cr vs. previous 1Q11-12 net profit of INR 262.74cr. Net income at INR 2,541cr vs. previous INR 1,978cr. (Financial Express)

NIIT Technologies – Co. reported 1Q12-13 net profit at INR 57.5cr vs. previous INR 41.2cr in 1Q11-12.  Revenue at INR 496.6cr vs. previous INR 328.8cr. (Financial Express)

BOC India Ltd – Co. reported 1Q12-13 net profit at INR 20.3cr vs. previous INR 27cr. (The Hindu Business Line)

EUROPE

France conducted an auction of about EUR 8.96 b (USD 3.68 b) at the top end of its target inspite of demand weaker than the previous period. Bond yields declined as compared to Spain’s auction, which saw a rise during their auction. Yields on French bonds due 2014 came in at 0.12 percent vs 0.83 percent previously. 4 yr BTAN’s yielded at 0.53 percent, down from 1.05 percent. 5 yr bonds had yields of 0.86 percent vs 1.43 percent previously. (Reuters)

Czech Republic auctioned around 6 b koruna (USD 292 m) of bonds due 2017 and 2021 for record low yields.  Yields on the 2021 nots declined to 2.316 percent vs 3.109 percent from its previous auction. Investors bid more than three times the amount offered. The effect of Moody’s previously upgrading the sovereign rating of to A1 boosted sentiment in the region saddled by nations with rising yields. (Bloomberg)

Credit Suisse – Co. to lay-off another 138 employees in the United States, co. said in its filings. (Reuters)

EUROPEAN EARNINGS

Nokia – Co. reported 2Q12 loss of EUR 1.41b vs. estimated EUR 654m vs. previous loss of EUR 368m. However co.’s sales of its flagship Lumia phone double to 4m units and also co.’s reserve cash improved by EUR 306m. (Fox Business)

NORTH AMERICA

Textron Inc – Co. an industrial conglomerate, would consider bidding for Hawker Beechcraft, to counter a deal proposed by China’s Superior Aviation Beijing Co. (Bloomberg)

Oracle Corp – Co. to acquire privately held Skire Inc for an undisclosed amount. (Yahoo/Reuters)

NORTH AMERICAN EARNINGS

Southwest Airlines – Co. saw its 2Q12 profits rise by 42 percent on record revenues offsetting the higher expenditure on fuel. Profit came in at USD 228 m vs USD 161 m a year ago. Earnings came in at 30 cents vs 21 cents a year ago. Adjusted earnings, which excluded USD 45 m in one time charges, came in at 36 cents a share, exceeding analyst’s forecasts of 33 cents. Revenues rose 4.7 percent to USD 4.62 b vs expectations of USD 4.59 b. The co. is monitoring the ongoings of the economy while it reported that demand hasn’t declined, it stated. (Bloomberg)

Freeport McMoRan – Co. reported 2Q12 net profit at USD USD 710m vs. previous 2Q11 at USD 1.37b. EPS at USD 74 cents a share vs. estimated USD 75 cents vs. previous USD 1.43 a share. Revenue at USD 4.48b vs. previous USD 4.43b. (FoxBusiness)

Fifth Third Bancorp – Co. reported 2Q12 EPS at USD 40 cents vs. estimated 1Q11 at USD 35 cents. Revenue at USD 1.58b vs. estimated USD 1.54b. (Fox Business)

BB&T – Co. reported 2Q12 EPS at USD 72 cents vs. estimated 1Q11 at USD 69 cents. Revenue at USD 2.47b vs. estimated USD 2.41b. (Fox Business)

COMMODITIES

Brent Crude Oil prices rose to USD 107 a barrel on crisis in Syria and Iran. (Reuters)

GLOBAL

Regulators in Sweden, Japan and South Korea are examining their respective interbank lending or benchmark borrowing rates amid concerns of them being susceptible to manipulation like the Libor. The main premise being that these rates are set based on estimations of banks rather than actual trade could make it easier to manipulate. (Bloomberg)

 

 

EQUITY UPDATE – 6 JULY 2012

ASIA

China’s central bank, People’s Bank of China cut its benchmark one-year lending rates by 31 basis points to 6 per cent and its one year deposit rates by 25 basis points to 3 per cent. In other news Reuters poll showed that the Chinese economy grew by 7.6 per cent in 2Q12 versus 8.1 per cent in 1Q12, registering a straight six quarters of slowing growth. (Financial Times/Telegraph UK)

Banks in China saw heightened lending activity in May, exceeding expectations, but new loans issued in 2012 fell short of the targeted range of RMB 8 – 8.5 t. Banks gave fresh loans in the range of RMB 7.3 – 7.5 t. Chinese banks lent a total of RMB 793.2 b (USD 125 b) vs forecasts of RMB 700 b vs RMB 681.8 b in April. (Bloomberg)

China could attempt to put a maximum limit or a cap on loans at 75 percent of deposits  on top of imposition of additional requirements. A senior banking official quoted on behalf of the regulator that liquidity risk-management rules would lay more focus on the loan-to-deposit ratio as one of its measures. (Bloomberg)

Nissan Motors – Moody’s raised co.’s ratings to A3 from Baa1 with stable outlook, on back of launch of new models and rising profit margin. (Boston.com/AP)

INDIA

The Reserve Bank of India would continue to buy back FCCBs issued by Indian companies through the approval route. RBI will consider proposals from companies in the case of buyback value being at minimum discount of 5 per cent of accreted value. The central bank will conclude the buyback process by 31March 2013. (Money Control/Reuters)

FII made gross purchases of INR 2659.08cr and gross sales of INR 2229.86cr. DII gross purchases at INR 995.17cr and gross sales at INR 1198.20cr. (Business Standard)

According to Credit Suisse, RBI could cut interest rate by another 125 basis points by March 2013. The bank expects RBI to start cutting rates in October and also expects WPI to drop below 6 per cent by end of March 2013. Credit Suisse also stated that yields on 10-year government bonds to fall to 7.5 per cent next year and expects the rupee to strength to 50. (Economic Times/Reuters)

ONGC – Co is to conduct a sale of its stake in four of its coal- bed methane (CBM) blocks. The co. plans to divest around 35 percent of its stake in the blocks it owns. (Business Standard)

Retail Co.’s – Shares in co. soared after a market report that government may allow foreign direct investment in multi brand retail, after the new presidential elections later this month. (Financial Express)

Grasim Industries – Aditya Birla group to acquire Terrance Bay Pulp Inc for USD 110m. Co. would acquire a 40 per cent stake in a special entity, while the reminder would be held by Thai Rayon Public Company.  (The Hindu Business Line)

Eicher – Co. got an order for 1019 bus chassis from Gujarat State Road Transport Corporation. (The Hindu Business Line)

Kingfisher Airlines – Debt ridden airline firm won an additional grace period from lenders to come up with plans to restructure its debt and to come up with a restructure its operations. Co. to raise funds by selling non-core asset which includes its corporate headquarters in Mumbai and a villa in Goa. (NDTV Profit/Reuters/Yahoo)

 EUROPE

The European Central Bank cut interest rates to all time low of 0.75 per cent, the decision to cut rates was unanimously taken by the 23 ECB governing council members. However ECB president Mario Draghi did not discuss any ‘non-standard’ measures to counter the crisis. According to Mario Draghi the funds under ESM and EFSF were enough to cope up with the risks.  The euro declined 1.1 percent to 1.2386 to the US Dollar after the news of the rate cut. The yields on Spanish and Italian bonds increased by 21 basis points on the news today as the ECB did not convince investors by announcing more stimulus measures for Spain and Italy. (Economic Times/AFP/Bloomberg)

Bank of England increased its asset purchase program by GBP 50b, the will hike its QE stimulus policy to a total of GBP 375b over the next four months. The bank maintained interest at 0.50 per cent. (Economic Times/AFP)

Denmark’s central bank cut its interest rates to record lows to test uncharted territories. The benchmark rate was cut to 0.2 percent from 0.45 percent and the deposit rates were reduced to -0.20 percent from 0.05 percent. (Reuters)

EADS – Airbus delivered 109 737 planes in 2Q12 versus 94 in 2Q11. (Reuters)

Barclays – S&P rating agency downgraded the outlook on the co. to negative from stable, dude to the ongoing interest rate rigging scandal. (Economic Times/AFP)

 NORTH AMERICA

US Initial Jobless Claims for week ended 30 June declined by 14,000 to touch 374,000 which exceeded estimates forecast by analysts. Private sector payroll data rose by 176,000 in June over May. (Bloomberg)

The Institute for Supply Management’s index for services in the U.S declined to 52.1 in June vs 53.7 in May.  The data came below forecasts which predicted the index to decline to 53. Even though activity in the services industry grew at a slower pace, the decline would be a cause of concern, which could affect the economy. (Bloomberg)

Boeing – Co. delivered 150 planes in the 2Q12 versus 118 in 2Q11. Co. delivered 22 777 palnes, seven 747 jumbo jets, six 767s and six 787 planes. The co. also delivered 36 defense and space products in 2Q. (Reuters)

EQUITY UPDATE – 5 JULY 2012

GLOBAL

IMF’s report stated that Brazil, Russia, India and China (BRICs) would comprise 20 percent of the global economy in 2012. (Economic Times)

ASIA

HTC Corp – Co. won a court case against Apple Inc over touchscreen patented technology for its mobile phones. Apple’s slide-to-unlock technology was also at the centre of the case. (Bloomberg)

INDIA

FII’s made gross purchases of INR 2135 cr and gross sales of INR 1896.11 cr. They were net buyers at INR 239.19 cr as per provisional data released for 04 July 2012. DII’s made gross purchases of INR 1185.24 cr with sales of INR 1347.01 cr, making them net sellers at INR 161.77 cr. (Business Standard)

The Reserve Bank of India (RBI) is due to relax certain regulatory requirements pertaining to net worth, capital adequacy and provisioning for microfinance institutions. Certain regulations pertaining to compliance issues will also be relaxed as it would enable the co.’s to register as Non Banking Finance Co’s. (Business Standard)

The state government of Karnataka withdrew the bans on eight iron ore mines having a total capacity of 5.5 m tonnes a year. The Supreme Court’s decision is awaited today on the matter. The news would benefit Sesa Goa, which accounts for almost 2.2 m tonnes of output from the mines under review in the region. (Business Standard)

Citigroup India’s brokerage unit recommended a ‘sell’ rating on infrastructure stocks on account of a decline in the number of new projects. Lack of fundamental support on the price rises of the stocks in these sectors and declining projects by 27 percent q/q and 39 percent on a y/y basis. A 39 percent q/q decline and 35 percent y/y decline in private sector projects showed that the sector would underperform in the coming periods. (Business Standard)

The total subscriber base for mobile phones increased by 8.5 m to touch 929.37 m users in May over 921.02 m users in April. Telecom regulatory authority TRAI stated that Bharti Airtel account for the highest increase in subscriber base as it added over 2 m users to touch 185.3 m for May. Idea cellular added 1.75 m customers, coming second after Airtel, in subscriber additions. BSNL and MTNL both saw their customers decline by 81,000 and 0.17 m respectively. (Economic Times)

Petronet LNG – Co. will operate its Kochi terminal by 2014 at a full capacity of 5 m tonnes by 2014. The terminal is expected to cater to cities such as Bangalore, once it commences operations. (Economic Times)

Educomp – So axes 750 jobs of the total workforce of 15,000. However according to co.’s management this was a regular practice during appraisals, while the co. claims to have hired 8,000 personals during 2011-2012. (Business Standard)

EUROPE

According to Italian Prime Minister Mario Monti, Italy’s public deficit will be at 2.0 per cent of GDP versus previous estimate of 1.3 per cent. The deficit stood at 3.9 per cent in 2011 and Italy aims to bring it down by 0.5 per cent next year. (Economic Times/AFP)

Preliminary surveys ahead of ECB’s monetary policy today predict a cut in rates to prop up the eurozone. A rate cut, taking benchmark rate below 1 percent to 0.75 percent and a possible cut in deposit rates to zero percent is also expected. (Bloomberg)

Poland’s central bank The Narodowy Bank Polski kept benchmark rates unchanged at 4.75 percent which was in line with forecasts. The central bank would not raise rates until it completely assesses the impact of the eurozone debt crisis. The forecasts for inflation and price growth for 2012-14 periods were cut by the bank as well. Inflation would average between 3.6 – 4.2 percent in 2012 and price growth to range between 2 – 3.4 percent in 2013. GDP is expected to expand between 2.3 – 3.6 percent in 2012 and 1.0 – 3.2 percent for 2013. (Bloomberg)

France’s government raised taxes on richer individuals and corporate entities to generate EUR 7.2 b (USD 9 b) to reduce deficit in the country. The Finance Minister Pierre Moscovici stated that the nation would do all it could to avoid bond market punishment and brace itself for further cuts in 2013 to come out of the eurozone crisis. Government’s auditor forecasted savings of EUR 6 – 10 b in 2012 and EUR 33 b in 2013 to achieve its deficit target of 4.5 percent and 3 percent of GDP. Corporates earning EUR 250 m and more in revenues  will pay taxes early and a 30 percent tax on stock options. Income tax on earnings in excess of EUR 1 m will be at 75 percent. (Bloomberg)

Barclays Plc – Former co.’s CEO Bob Diamond apologized in court for the behaviour of the traders which were involved in manipulating the Libor interest rates. He also pointed out that Barclays had been singled out for publicly accepting to the rate manipulation charges. (Reuters)

 GEOPOLITICAL

Iran threatened to destroy US military bases and strike Israel within minutes, if the Islamic Republic was attacked.  (Huffingtonpost/AP)

EQUITY UPDATE – 30 JUNE 2012

INDIA

Indian foreign exchange reserves fell by USD 768m in the week ended 22 June versus increase of USD 2.01b in the previous week.  As of 22 June Indian’s foreign exchange reserves stood at USD 289.39b. (The Hindu Business Line)

According to Reserve Bank of India, Indian external debt increased by USD 39.9b to stand at USD 345.8b in 2011-12 (USD 305.9b in 2010-11). Increase in external debt was due to considerable increase in commercial borrowing, short-term trade credits and rupee denominated non-resident Indian deposits. External debt-to-GDP ratio at end of March 2012 increased to 20 per cent against 17.3 per cent in March end 2011. (The Hindu Business Line)

Indian infrastructure sector output growth at 3.8 per cent in May from a year earlier vs. prev. revised 3.1 per cent in the previous month vs. 5.0 per cent in the same period a year ago. (Reuters)

FII made gross purchases of INR 4,747.12cr (prev. 4,033.60cr) and gross sales of totaling INR 1,700.36cr (prev. INR 4,728.50cr). On the other hand, DII’s made gross purchases of INR 1,532.57cr and gross sales of INR 1783.28cr. (Business Standard)

HDFC Bank – Co. reduced its lending rate by 20 basis points; new benchmark prime lending rate will stand at 18.3 per cent and new base rate will be 9.8 per cent. (The Hindu Business Line)

Crompton Greaves – Co. proposed reduction in employee strength at its Belgium operations by about 260 of the total 730 employees. (The Hindu Business Line)

Maruti Suzuki – Jefferies upgraded co. to buy from hold and raised price target to INR 1446 from INR 1398. In related news BOFA-ML preferred co. as the best proxy on cyclical recovery in the sector. (Business Standard)

Tata Motors – Jefferies and BOFA-ML downgraded co. to hold from neutral. Jefferies cited adverse risk to demand and weakening product mix. While BOFA-ML cites reduced visibility in commercial vehicle segment. (Business Standard)

Larsen & Toubro – Co. construction arms won a project worth INR 3042cr for upgrading the Delhi-Agra highway. (Economic Times)

Power Grid – Co. to spend INR 6000cr for expansion of its transmission lines in the southern region, according to a senior official. (Business Standard)

Tata Global Beverages – Life Insurance Corporation of India sold 2.03 per cent of co.’s stake between 22 February and 27 June.  Lic’s current holding in the co. stands at 11.79 per cent. (Business Standard)

Gati Ltd – Co. to pay a 30 per cent special dividend for the financial year 2011-2012. (The Hindu Business Line)

Alembic Pharma – Pfizer filed a lawsuit against co. marketing of the generic version of Pfizer’s Pristiq depression tablet. (Business Standard/PTI)

EUROPE

According to Spanish PM Mariano Rajoy, the Spanish government does not plan to use European rescue funds to intervene in the bond markets to bring down borrowing costs. (Economic Times)

EU’s consumer price index Y/Y for June stood at 2.4 per cent vs. est. 2.4 per cent vs. prev. 1.9 per cent. According to Chistoph Weil of Commerzbank, the flat inflation number would present no obstacle for ECB to cut rates. (Economic Times/AFP)

NORTH AMERICA

According to Fed’s William Dudley, the employment growth had slowed down considerably due to the lack luster growth in US economy. In other news Fed’s Bullard, a third round of quantitative was possible only is economic activity dropped significantly or on a threat of deflation. Bullard anticipates a sluggish job growth in the coming months. (Reuters)

Ford Motors – Co.’s stock price dropped 4 per cent to USD 9.7, due to co.’s warning on wider losses in its overseas operations in the second quarter. (Fox Business/MarketWatch Pulse)

Research in Motion – Co. reported 1Q12-13 loss excluding items at 37 cents per share vs. est.  loss of 3 cents per share vs.  previous 1Q11-12 at USD 1.33 per share. Adj. net loss at USD 192m vs. prev.  net income of USD 695m. Revenue at USD 2.8b vs. est. USD 3.10b vs. prev. USD 4.91b. In related news co. will cut 5000 jobs and also delayed the launch of its new operating system to 2013. (CNBC/Reuters)

Constellation Brands – Co. reported 1Q12-13 profit of USD 72m vs. prev. 1Q11-12 profit at INR 74.5m. EPS at 38 cents vs. est. 39 cents vs.  prev. 35 cents. Net sales excluding excises taxes at USD 634.8m vs. est. USD 647m vs. prev. USD 635.3m. (Fox Business/Newswires)

Coty Inc – Co. to raise USD 700m via an initial public offering. (WSJ)

COMMODITIES

According to a Reuter’s survey, OPEC output slipped marginally in June averaging at 31.63m bpd versus a revised 31.70m bpd in May. Output slipped due to decline in Iranian crude supply, as result of current embargo situation.   The survey showed that Iran’s crude oil supply slipped by 180,000 bpd to 2.95 m bpd, which was the lowest output since 1989 (2.81m bpd). (Economic Times/Reuters)