EQUITY UPDATE – 14 AUGUST 2012

ASIA

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

INDIA

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

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

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

EUROPE

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

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

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

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

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

NORTH AMERICA

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

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

EQUITY UPDATE: 27 JULY 2012

ASIA

Nomura Holdings Inc – Co. named Koji Nagai as their new CEO after the insider trading charges faced by the co. saw former CEO Kenichi Watanabe’s resignation today. His lieutenant Takumi Shibata also resigned as part of the shake-up. (Reuters)

INDIA

According to a Reuters poll, the Reserve Bank of India is expected to hold its policy rates steady at its upcoming quarterly review. The poll showed 19 out of 20 economists expected repo rates to remain unchanged at 8 per cent. (Reuters)

The Indian government could ask Coal India to import coal in order to meet rising domestic demand especially for power companies. (Economic Times)

FII’s made gross purchases of INR 2,831.49cr and sales of total INR 4,012.19cr. DII’s made gross purchases of INR 1,634.25cr and sales of INR 1,211.55cr. (Business Standard)

Maruti Suzuki – Co.’s problems arising from the strikes is set to extend further, affecting its sales and affect its profits. Shutdown of its Manesar factory costs the co about USD 15 m a day as forecasted by analysts hampering its sales in October, a key period. Co. is slated to report its 1Q12 earnings this Saturday and is expected to report a fourth consecutive loss on weaker demand and rupee depreciation. (Economic Times)

Tata Steel – The rating agency Standard and Poor’s cut co.’s and its European subsidary’s outlook to ‘negative’ from ‘Stable’ due to weak financial position of the firm. The rating agency affirmed co.’s long terms credit rating at ‘BB’. (Yahoo/IANS)

Suzlon – Co. has successfully completed the sale of its wind farms assets. Co. was expected to raise approximately USD 40m from the sale. (The Hind Business Line)

MTNL/BEML/Orchid/Sintex Industries/IRB Infrastructure/Shree Renuka – Macquire sold 2.54 lacs shares in BEML for INR 8.28cr; 17.28 lacs shares in MTNL for INR 5.13cr and 4.18 lacs shares in Orchid chemicals for INR 4.58cr. Additionally the co. sold 35.96 lacs in Sintex Industries for INR 20.83cr; 18.83 lacs shares in IRB Infrastructure for INR 22cr and sold 44.89 lacs shares in Shree Renuka Sugar for INR 14cr. (MoneyControl)

SKS Microfinance – Deutsche Securities Mauritius picked up 9.15 per cent stake in co. for estimated value of INR 78cr. (Business Standard)

INDIAN EARNINGS

Sterlite Indistries – Co, reported 1Q12-13 net profit at INR 1,202cr vs. previous INR 1,640cr. Net Sales at INR 10,591cr vs. previous INR 9,863cr. (Financial Express)

ACC Cement – Co. reported 2Q12 net profit of INR 415cr vs. previous INR 328cr. Total consolidated turnover at INR 2,918.98cr vs. previous INR 2,539.41cr. (The Hindu Business Line)

Ambuja Cement – Co. reported 2Q12 net profit at INR 468cr vs. previous INR 348cr. Net sales at INR 2,566cr vs. previous INR 2,176cr. (Business Standard/PTI)

Bajaj Electricals – Co, reported 1Q12-13 net profit at INR 11.98cr vs. previous INR 11.06cr. Net income at INR 666.19cr vs. previous INR 544.36cr. (Financial Express)

Alstom India – Co. reported 1Q12-13 net profit at INR 12.88cr vs. previous INR 6.30cr. Total income at INR 441.36cr vs. previous INR 281.11cr. (Business Standard/PTI)

Excel Crop – Co. reported 1Q12-13 net profit at INR 10.96cr vs. previous 1Q11-12 at INR 6.27cr. Sales turnover at INR 213.58cr vs. previous INR 164.05cr. (MoneyControl)

Forbes Gokak – Co. reported 1Q12-13 net profit at INR 52.62cr vs. previous INR 3.39cr in 1Q11-12. Sales turnover at INR 63.92cr vs. previous INR 68.42cr. (MoneyControl)

Uflex – Co. reported 1Q12-13 net profit at INR 41.15cr vs. previous 1Q11-12 at INR 33.10cr. Sales at INR 865.11cr vs. previous INR 789.82cr. (MoneyControl)

Zensar Tech – Co. reported 1Q12-13 net profit at INR 40.86cr vs. previous INR 20.39cr. Sales at INR 213.06cr vs. previous INR 196.39cr. (MoneyControl)

Gandhi Special Tubes – Co. reported 1Q12-13 net profit at INR 6.78cr vs. previous 1Q11-12 net profit at INR 7.73cr. Sales turnover at INR 26.33cr vs. previous INR 26.68cr. (MoneyControl)

EUROPE

According to the ECB, deposits in Greek banks fell to six year lows as investors doubted the bank’s stability. Deposits declined to EUR 156.2 b for period ended June vs EUR 163.1 b a month ago. Private sector deposits declined 5 percent on m/m basis. (Reuters)

Spain has stated that it would not immediately seek assistance from the EU until the troika of institutions takes stock of its condition. (Reuters)

According to Greece’s finance ministry, Greece had identified EUR 11.6b in spending cuts over the next two years. (Economuc Times/AFP)

EUROPEAN EARNINGS

BG Group – Co. took a USD 1.3 b in writedown on its US natgas assets to report lower profits.  2Q12 revenues rose to USD 5.6 b vs USD 5.1 b previously. Operating profits excl charges declined marginally to USD 1.9 b vs USD 2 b a year ago. Otherwise, net profits came in significantly lower at USD 609 m vs USD 2.2 b. The co. raised its interim dividend by 10 percent to USD 11.88 a share. (Financial Times)

Banco Santander – Co. saw its 1HY12 profit decline to EUR 100 m (USD 122 m) vs EUR 1.39 b a year ago. The 93 percent decline was on rise in bad loans in the property market. Asset quality in its Brazilian and UK units suffered severe deterioration, which contributed to writedowns. The bank set aside EUR 2.78 b to mitigate the losses. (Bloomberg)

Roche – Pharma co. saw its 1HY12 profits decline 17 percent y/y as it was hit by a one-off restructuring charge of Swiss Franc (SFr) 1.68 b. Its attempts at job cuts cost the co. SFr 858 m and the overhaul of its diabetes and applied sciences amounted to SFr 289 m and other charges amounted to SFr 530 m. The impact drove down profits to SFr 4.4 b vs SFr 5.3 b a year ago. Diluted EPS came in lower from 6.04 to 4.99 a share. Revenues rose 3 percent y/y to SFr 21.7 b on higher demand for its cancer, hepatitis and rheumatoid arthritis medicines. The co. however maintained its sales target for FY2012 inspite of the market conditions. (Financial Times)

NORTH AMERICA

Index measuring resale of  homes in the U.S declined 1.4 percent to 99.3 in June vs a revised gain of 5.4 percent in May. Forecasts came in at a gain of 0.3 percent. Purchases decreased by 5.4 percent to 4.37 m units on an annual rate. (Bloomberg)

US durable goods orders rose more than expected for June on rising demand for aircraft and military hardware. Dat showed a 1.6 percent rise vs expectations of a 0.3 percent gain. Orders excl transport declined 1.1 percent. Business investments declined but were offset by other factors.

NORTH AMERICAN EARNINGS

Dow Chemical Co. – Co. reported 2Q12 net profits at USD 734 m vs USD 1.07 b a year ago. EPS came in at 55 cents vs 84 cents a year ago vs expectations of 64 cents. Revenues declined to USD 14.5 b vs expectations of USD 15.6 b vs prv USD 16 b. Co. saw the prices of plastic decline in the quarter and its plans to spend a total of USD 24 b on two projects, one in Saudi Arabia and one in Texas. (Bloomberg)

3M Co. – Co. saw its earnings come at USD 1.17 b vs USD 1.16 b a year ago as its healthcare, industrial and transportation businesses registered double digit growth. EPS came in at 1.66 a share vs 1.60 a share, beating expectations of 1.65 a share. Sales declined 2 percent y/y to USD 7.53 b vs expectations of USD 7.28 b. (Reuters)

Sprint Nextel Corp – Co. reported a 2Q12 loss of USD 1.37 b vs prv USD 847 m. EPS came in at loss of 46 cents vs 28 cents a share, previously. The co. took a one time depreciation charge of USD 782 m on network decommissioning and impairment charge related to Clearwire Corp as the co. tries to divest its operations with Nextel’s older networks, the co. saw a loss of 246,000 in customer base vs expectation of a loss of 203,000 customers. Operating revenue came in at USD 8.8 b vs USD 8.3 b previously vs expectations of USD 8.727 b. Co. raised its target for FY12’s adjusted operating income to range between USD 4.5 – USD 4.6 b from its previous forecast of USD 3.7 – USD 3.9 b. (Reuters)

Colgate-Palmolive – Toothpaste maker saw a 2 percent y/y rise in sales to USD 4.3 b, beating expectations, but was affected by exchange rate fluctuations. Diluted EPS came in at USD 1.33 a share, in line with expectations. Profits came 0.8 percent higher at USD 627 m. Co. stated that the impact of forex rates, in continuity, could see it report EPS data lower by 6-7 percent. Market share of the co. came in at 45 percent, its highest. (Financial Times)

Zynga – Co.’s saw its earnings decline, share price fall by 40 percent and slash its outlook for FY12. Net loss for 2Q12 came in at USD 22.8 m vs net profit of USD 1.4 m. Revenues came in 19 percent higher at USD 332.5 m, missing expectations of USD 344.8 m. The share price tanked 40 percent to USD 3.03 a share, as it stated that Facebook Inc. used a different software for its gaming network from Zynga’s competitors. Hence the co. slashed its FY12 EPS guidance to 4 – 9 cents from forecasts of 26 cents. (Financial Times)

United Airline – co. reported 2Q12 net income at USD 339m vs. previous 2Q11 net income at INR 538m. EPS at USD 1.41 per share vs. estimated USD 1.70 per share. Revenue at USD 9.9b vs. estimated USD 10b. (Economic Times/AFP)

DAILY MARKET REPORT – 23 JULY 2012

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

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

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

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

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

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

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

(CNBC, Business Standard, Economic Times and Moneycontrol)

EURO MARKETS TO OPEN LOWER ON SPAIN

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

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

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

 

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!

YEILDS ON SPANISH BONDS RISE DURING AUCTION

Spain auctioned about EUR 3 b of medium term debt today and yields rose on the bonds. Spain auctioned around EUR 2.98 b worth of bonds, nearing its higher end of the auction.

Bonds due 2014 or 1 yr debt yielded at 5.204 percent vs 4.335 percent in the previous auction on 7 June. Bid to cover came in at 1.9 x vs 4.26 in the previous period.

5 yr debt had yields at 6.459 percent vs 6.072 percent in the previous auction on 21 June. Bid to cover came in at 2.06 vs 3.44 previously

7 yr debt yielded at 6.701 percent.

(Bloomberg)

DAILY MARKET REPORT – 17 JULY 2012

Lacklustre day of trade, volatile index, sums up the day. The Sensex closed a measly 1.99 points up or 0.01 percent at 17105.30 in trade today. The Sensex touched a high of 17236.08 and a low of 17,074.63 points in trade today. The Nifty closed 4.4 points or 0.08 percent lower at 5192.85 points. Nifty touched a high of 5236.70 and a low of 5181.70 in trade today.

RBI governor D Subbarao stated that India should come up with a Producer Price Index to measure inflation rather the current procedure as it was able to capture price changes of goods and services better.

On the sectoral indices front on the BSE, the Realty Index was down 1.47 percent, the Auto Index declined 1.41 percent, the Power Index was 1.34 percent down and the Capital Goods Index also fell 0.88 percent. The FMCG and Healthcare Index rose 1 and 0.83 percent respectively.

On the stock front, stocks of the Tata Group declined in trade today for the second consecutive session. TCS declined 2 percent, Tata Motors was lower by 1.5 percent; Tata Steel and Tata Power declined 0.7 percent each. Reliance Industries declined in trade to INR 719.15, down 0.16 percent, on warnings that its output would lower from the KG-D6 basin if the its latest capex plan is not announced. Axis Bank was down 2 percent on rising NPA’s inspite of posting higher 1Q12 numbers. Bajaj Finance also reported its earnings. Aviation stocks declined on price hike of aviation turbine fuels.

On the global markets, most of them in Asia rose on account of hopes of the Fed announcing a stimulus package for the economy. Asia rose well by around 0.5-1.00 percent, Hang Seng being the biggest gainer amongst the Indices. Europe is marginally positive in trade.

It was shocking to see HSBC Holdings being involved in investigations which could seriously malign its image. The co. was accused of money laundering, bypassing sanctions by lending to Iran and to various terrorist organizations.

Spain auctioned its debt worth EUR 3.5 b worth of short term debt on lower yields.

All eyes on the Fed today as markets would look forward to stimulus inducing measures.

On the currency front, Rupee closed at 55.21, up 0.07 paise to the dollar.

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

(Bloomberg, Business Standard, Economic Times and Moneycontrol)