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Indian IT services: Strong Dec-Q and robust CY11 demand outlook
[Aniruddha Bhosale]
We expect the Dec-Q performance of most Indian IT services companies to be an
encore of the strong Sep-Q. However, the immediate catalyst for stocks is likely to
be management teams’ commentaries on the CY11/FY12 IT budgets of clients.
Our channel checks suggest that the demand environment across geographies for
offshore IT service vendors should continue to be robust in CY11 with clients
displaying an increasing preference for offshore. We reiterate our overweight
stance on the sector with Infosys and TCS being our top picks.
Sesa Goa: Spot iron ore price rises to 8-month high; positive for Sesa [Anuj
Singla]
Spot iron ore prices have reached US$180/tonne – the highest since Apr’10 –
driven by a combination of strong import demand from China and supply
constraints from India. The iron ore spot market continues to remain tight and any
disruption in supplies could push spot prices to a new high. Coal supplies from
Australia have been affected by heavy rains and flooding. Though iron ore supplies
from Australia have not yet been materially affected, supply disruptions on
account of Australia's wettest spring on record cannot be ruled out.
Reliance Industries: KG D9: Second exploratory well outcome disappoints
[Harshad Katkar]
Hardy Oil and Gas plc (LSE: HDY), RIL’s partner in KG D3 and D9 blocks with 10%
participating interest, in a press release today said that the second exploratory well
(KG-D9-B3) on KG D9 (KG-DWN-2001/1), which started drilling on Dec 20 2010,
has been plugged and abandoned. The first well KG-D9-A1 drilled in 2009 was also
plugged and abandoned. The RIL-operated deepwater D9 block is located in the
Krishna Godavari Basin on the East Coast of India and covers an area of approx
11,605 sq km.
FITT Research: India Power Sector Finance: A step-up transformer [Dipankar
Choudhury]
Deutsche Bank Company Research's Investment Policy Committee has deemed
this work F.I.T.T for investors seeking differentiated ideas. The specialized power
lenders Power Finance Corp (PFC) and Rural Electrification Corp (REC) are
benefiting from the increasingly harder-to-finance, capital-constrained power
sector, armed with low operating costs and benign regulatory disposition. We
initiate coverage on PFC and REC with Buy recommendations and higher-thanconsensus earnings estimates.
India steel update: Steel pricing momentum across world geographies
[Abhay Laijawala]
We have seen strong momentum in steel pricing globally since Dec'10, with the
strongest trends seen in the US, where prices have risen by ~17% MoM. While
prices in Europe have not moved up as sharply, we understand that companies are
planning price hikes, particularly for steel plates. CIS HRC export prices are also
set to rise to about USD670/tonne from USD640/tonne currently, which could give
Indian steel producers another opportunity to raise domestic prices (currently at
INR32,500/tonne) in line with the corresponding landed price.
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