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India Equity Research Reports, IPO and Stock News
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Eye on India
Fasting and feasting
Event
Post Anna Hazare‟s campaign, many politicians have latched on to the idea of
“fasting”, with some even arguing that this may be the best way to control food
inflation! That aside, a recent report has raised the issue of increasing
incidence of NCDs (non-communicable diseases) amongst Indians due to
changing lifestyle and food habits, making India the diabetes capital of the
world. The government too launched a programme yesterday, touted as the
world's largest programme to combat NCDs, to address issues like obesity,
junk food and tobacco consumption.
This week we look at the changing diet and health trends of the Indian
population. Increased demand for packaged foods by the urban middle class
augurs well for companies like ITC. Some other players in this segment are
Nestle, Agro Tech, GSK Consumer and Jubilant Foods. Rising health
concerns could be played through Apollo, Fortis, Opto Circuits and Sun
Pharma. Other players in this segment include Biocon and Torrent.
What caught our eye
Bouncing on hope: This week markets across the globe bounced back in the
hope of Germany‟s support to enhance the EFSF, which it did yesterday.
Indian benchmark indices were up around 2-3% vs a 3.2% rise in the MSCI
World index. IT was the best performing sector (5.9%) while consumer
durables (-4.3%) was the worst performing. FIIs net sold US$625m while MFs
net bought US$8m worth of equities. Amongst our top-10 stocks, Infosys
(+8.4%) was the best performing while L&T was the worst performing (-8.2%);
the top-10 list continues to outperform MSCI India by 630bps since Aug-10.
High energy and food prices making RBI’s task difficult: The Deputy
Governor put part of the blame for the ineffectiveness of monetary tightening
in controlling inflation on persistent high global energy prices and continued
high food inflation in India, especially in protein foods. (Link)
Government to borrow more: The 10Y yield rose by 10bps as the
government announced its intention to borrow nearly US$10bn more than it
had budgeted for 2HFY12, ostensibly to cover the shortfall in small savings.
Our economist, Tanvee Gupta Jain, expects FY12 headline fiscal deficit to be
5.8% of GDP (including oil subsidy). (Link)
Data corroborates weak infra activity: The core infra sector, which includes
8 industries and constitutes 38% of India‟s factory output, showed 3.5% yoy
growth in August compared to 7.5% in July. Watch out for the Aug IIP data on
12th Oct, 2011. (Link)
Outlook
Markets as volatile as they can be: Markets have managed to see-saw with
global news and most domestic fund managers we met last week seem to be
buying on dips. Some old hands are adding beta (read beaten down stocks) in
the hope of a turnaround because defensives in any case look expensive.
This might work over a 2yr period but right now it appears to be 6 months too
early for this trade. Remain defensive.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Eye on India
Fasting and feasting
Event
Post Anna Hazare‟s campaign, many politicians have latched on to the idea of
“fasting”, with some even arguing that this may be the best way to control food
inflation! That aside, a recent report has raised the issue of increasing
incidence of NCDs (non-communicable diseases) amongst Indians due to
changing lifestyle and food habits, making India the diabetes capital of the
world. The government too launched a programme yesterday, touted as the
world's largest programme to combat NCDs, to address issues like obesity,
junk food and tobacco consumption.
This week we look at the changing diet and health trends of the Indian
population. Increased demand for packaged foods by the urban middle class
augurs well for companies like ITC. Some other players in this segment are
Nestle, Agro Tech, GSK Consumer and Jubilant Foods. Rising health
concerns could be played through Apollo, Fortis, Opto Circuits and Sun
Pharma. Other players in this segment include Biocon and Torrent.
What caught our eye
Bouncing on hope: This week markets across the globe bounced back in the
hope of Germany‟s support to enhance the EFSF, which it did yesterday.
Indian benchmark indices were up around 2-3% vs a 3.2% rise in the MSCI
World index. IT was the best performing sector (5.9%) while consumer
durables (-4.3%) was the worst performing. FIIs net sold US$625m while MFs
net bought US$8m worth of equities. Amongst our top-10 stocks, Infosys
(+8.4%) was the best performing while L&T was the worst performing (-8.2%);
the top-10 list continues to outperform MSCI India by 630bps since Aug-10.
High energy and food prices making RBI’s task difficult: The Deputy
Governor put part of the blame for the ineffectiveness of monetary tightening
in controlling inflation on persistent high global energy prices and continued
high food inflation in India, especially in protein foods. (Link)
Government to borrow more: The 10Y yield rose by 10bps as the
government announced its intention to borrow nearly US$10bn more than it
had budgeted for 2HFY12, ostensibly to cover the shortfall in small savings.
Our economist, Tanvee Gupta Jain, expects FY12 headline fiscal deficit to be
5.8% of GDP (including oil subsidy). (Link)
Data corroborates weak infra activity: The core infra sector, which includes
8 industries and constitutes 38% of India‟s factory output, showed 3.5% yoy
growth in August compared to 7.5% in July. Watch out for the Aug IIP data on
12th Oct, 2011. (Link)
Outlook
Markets as volatile as they can be: Markets have managed to see-saw with
global news and most domestic fund managers we met last week seem to be
buying on dips. Some old hands are adding beta (read beaten down stocks) in
the hope of a turnaround because defensives in any case look expensive.
This might work over a 2yr period but right now it appears to be 6 months too
early for this trade. Remain defensive.
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