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Bulls gaining grip Ø : CSEC Research

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Bulls gaining grip

Ø    The indices rallied to one-week highs in late trade after Finance Minister Pranab Mukherjee said holders of participatory notes, or P-notes, will have no tax liability in India.

Ø    The market breadth was strong. All the sectoral indices on BSE were in the green. Interest rate sensitive banking stocks edged higher on bargain hunting after recent fall triggered by fears banks' bad loans could increase in a slowing economy.

Ø    Shares of sugar companies rose on fresh buying as the reports claimed that the Government may allow the export of another 1 million tonnes of sugar under the open general license.

Ø    Coal India gained 2% as the management reported that the company will seek more time from the government to sign fuel supply agreements (FSA) with power generation companies due to a disagreement among the coal producer's board members on assured supply commitment clauses.

Outlook

Ø    U.S. stocks on Friday snared their biggest first-quarter gain in more than a decade, after a better-than-anticipated rise in consumer confidence and spending boosted views of the economy

Ø     In early trade Asian markets are up two third of a percent and the SGX Nifty is trading a above 5300 levels. Going ahead Indian market is likely to open on a soft note with positive.

Regards,

CSEC Research

GAAR took center stage : CSEC Research

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GAAR took center stage

During the week the General Anti-Avoidance Rule (GAAR) took the center stage, as market feared that the adoption of new tax norms, effective from 1^st April 2012, could affect the FII Investment through theMauritius route and through participatory route. Though selling was intense in the initial part of the week, the clarification which came in the later part of the week, from the Finance Minister of India stating no tax liability on P-note holders, helped Sensex to offset its initial losses and closing the week with a minor gain of 0.24% at 17,404

Going ahead, the market may remain volatile in a truncated week. The stock market remains closed on Thursday, 5 April 2012, on account of Mahavir Jayanti and again on Friday, 6 April 2012, on account of Good Friday. Automobile and cement shares will be in focus as companies from these two sectors start unveiling monthly sales volume data for March 2012.

Regards,

CSEC Research

Nifty testing 200 DMA Ø CSEC Research

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Nifty testing 200 DMA

Ø    Key benchmark indices edged lower, as weak global stocks weighed on sentiment.

Ø    Interest rate sensitive i.e. banking stocks declined on fears banks' bad loans could increase in a slowing economy. Among banking stocks, Bank of India, Kotak Mahindra Bank, IndusInd Bank, Punjab National Bank, Bank of Baroda, IDBI Bank and Axis Bank dropped by 0.94% to 4%.

Ø    Cairn India tumbled 4.16% after the company's chief executive officer told the media that a proposed 80% increase in cess on crude petroleum oil produced in India could discourage the firm's expansion plan.

Ø      Gold financing companies gained on bargain hunting after steep recent slide triggered. Manappuram Finance gained 2.5% while Muthoot Finance rose 2.97%.

Outlook

Ø    U.S. stocks fell for a second session as investor’s dumped energy and other stocks closely tied to global growth. Durable-goods orders stood below street estimates which also aided the fall.

Ø     In early trade Asian markets are down nearly a percent. The SGX Nifty is trading below 5200 mark. Going ahead Indian market is likely to open on a soft note with a negative bias.

 

 

Regards,

CSEC Research

F&O Expiry ahead :CSEC Research

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F&O Expiry ahead

Budget impact was witnessed in the initial part of the week as the S&P CNX Nifty declined more than a percent and touched an week low of 5215 mark, During the midweek Indian market managed  to bounce back  on account of short covering. Meanwhile "coalgate" issue and rupee spoiled momentum as Indian bourses closed in the red for fifth consecutive week. The volumes were on the lower side when compared to previous week. The FII's continued to buy for Rs 11,506 millions while the DII sold shares worth Rs.6563.50millions. Amongst the sectoral indices CNX infra index shed nearly 2 percent and topped the index losers list.

On the macro front, The Reserve Bank of India tightened rules for lending against gold by finance companies, saying the rapid growth in such loans in the past few years had increased risks to the banking system and retail investors. The banking regulator has directed that companies having half their assets in gold should have a minimum equity capital, or tier-I capital, of 12% by April 2014. Further, these companies can't lend more than 60% of the value of gold jewelry. Mirroring these developments shares of Muthoot and Manappuram finance melted more than 10% percent for the week.

Global markets witnessed profit booking after successive multiple week rally. Euro zone Manufacturing PMI contracted for the eight running month in March, declining to 47.7, following 49.0 points in February, Markit Analysts expected an increase to 49.5 points. The U.S markets posted losses for the week despite decent macro economic data. the US government reported that first-time claims for unemployment benefits in the week ended March 17 dropped to 348,000, a four-year low and a better number than analysts had expected. 

Going ahead Market may remain volatile ahead of F&O expiry. On the macro front, the government is slated to announce its market borrowing calendar for first half of FY 2013

Regards,

CSEC Research

The run up to the budget was mixed with markets looking forward to reforms:: CSEC Research

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The run up to the budget was mixed with markets looking forward to reforms. However, markets were left stranded with little coming by way of reforms. Expectations of a hike in indirect taxes were met while a whole gamut of services was brought under the tax net in one swoop. Personal taxes slabs were raised leaving more income in the hands of the common man, albeit marginal. The governments teetered on Direct taxes code by failing to announce a timeline for its implementation. The government reduced targets on disinvestment proceeds to Rs 300bn crore which appear more realistic than the Rs 400bn crore for the previous year; however, even this appears unassailable unless a deal is worked out with the Anil Agarwal group that has offered Rs 170 bn for the Government’s stake in Hindustan Zinc and Bharat Aluminium.

Outlook

The much talked about rate cut is unlikely to come in the upcoming RBI’s policy meet. The RBI is likely to follow inflation rather lead it, given uncertainty in global commodity prices, forex and the loop effects of the hike in excise duty and service taxes. Lack of reforms is yet another dampener, however, various measures in thermal power projects is likely to augur for independent power producers.

With the Sensex at 13 times FY 13 earnings, markets from a valuation standpoint remain reasonable. Crude oil prices, inflationary pressure from hikes in excise duty and forex volatility are amongst the headwinds that the markets face.  Given reasonable valuations and possibility of rate reductions in the later part of the year, we recommend investors to focus on companies with strong balance sheets. Consumer oriented growth stocks can be looked at from an earnings growth point of view.

Regards,

CSEC Research

Budget Impact Ø : CSEC Research

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Budget Impact

Ø     Indian bourses closed the Friday session in the red, the S&P CNX nifty shed more than 150 points from the days high to close at 5317.

Ø    Volumes were on the higher side, the FII remained as net buyers for Rs 8835.00million.

Ø     Amongst the sectoral indices the BSE oil index declined more than 2 percent and topped the losers list. Meanwhile, the BSE FMCG and the BSE Auto indices bucked the trend and closed in the green.

Ø    Shares of Oil exploration companies dropped after the government raised cess on crude petroleum oil production to Rs 4,500 per metric tonne from Rs 2,500 per tonne in Union Budget 2012-13.

Ø       Standard Chartered PLC hit an upper circuit limit of 20% after the Finance Minster Pranab Mukherjee allowed two-way fungibility of Indian Depositary Receipts

Outlook

Ø       U.S. stocks mostly declined Friday, limiting weekly gains and halting the Dow’s longest up ride in more than a year, after an index of consumer confidence unexpectedly fell in March.

Ø    In early trade it’s a mixed bag for Asian markets and the SGX Nifty is trading below 5350 mark. Going ahead Indian market is likely to open on flat note.

Regards

CSEC Research

Growth pegged at 7.6% for FY13 :: CSEC Research

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Growth pegged at 7.6% for FY13

Indian bourses opened on a positive note ahead of key macro events. The S&P CNX nifty tested 5500 mark on the higher side. However, nifty failed to close above this mark as market fell lower after the budget announcement. The volumes were on the higher side. FII's remained as Net buyers for Rs 6,640.00 millions while the DII continue to sell their positions for Rs 4,870.00 million. Amongst the sectoral indices banked declined sharply on account of RBI stance on rate cut. Though the pause on rate cut was in line with streets expectation Interest rate sensitives declined on the back of hawkish tone by the RBI Governor.

On the macro front, the wholesale price index, India's main gauge of inflation, edged up a faster-than-expected 6.95% from a year earlier in February after a spike in vegetable prices fanned food inflation.  But non-food manufactured inflation, which the central bank uses to gauge demand-driven price pressures, slowed to a 14-month low of 5.8% from 6.7% in January. Indian IIP registered a brisk growth of 6.8 per cent for January 2012, a rate much higher than the expected 2.1 per cent by experts, as well as the 1.8 per cent expansion in December 2011. Data showed that manufacturing grew at a feisty 8.5 per cent and electricity at 3.2 per cent over the corresponding period in the previous year.

Budget for the year 2012 -2013 was presented on Friday. Indian markets considered budget as a non event. The Finance minister in his budget speech has stated that in the following years the fin min has planned to cap subsidy at 1.75% of India’s GDP. He also intimated accelerate reforms and state asset sales and boost infrastructure spending. The economy would expand by 6.9% in the current fiscal year ending in March, with growth accelerating to 7.6% in the financial year running from 2012 to 2013.

Going ahead, Indian market is likely to mirror the happenings in the global market.

Regards,

CSEC Research

Budget Highlights : CSEC Research

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Budget Highlights

 

v      GDP estimated to have grown at 6.90% in 2011-12 in real terms.

v      GDP growth  expected to be 7.6% in FY13

v      Average inflation expected to be moderate and stabilize.

v      Fiscal deficit at 5.9% as against BE of 4.6% of GDP in FY12

v      Fiscal deficit projected at 5.1% of GDP in FY13. Target of 3.6% of GDP by   FY14.

v      Net market borrowing through dated securities in FY13 would be Rs.4.79 lakh crore.

v     Divestment target cut to Rs 30000 crore. Achievement in FY12 Rs 14000 crore

v     Personal Income tax slab raised to Rs 2,00,000 from Rs1,80,000

 

Regards,

CSEC Research

Mid-quarter review a non-event :: CSEC Research

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Mid-quarter review a non-event

Highlights

·          Status quo on key policy rates

·          Repo – 8.5%, reverse repo – 7.5% and margin standing facility rate – 9.5%

·          Reserve ratios maintained

·          Cash reserve ratio at 4.75% (75 bps cut with effect from 10^th March)

·          Statutory liquidity ratio maintained at 24%

·          Pause on a rate cuts comes on the back of risks on inflation and an uptick in IIP

·          The upcoming budget would be amongst the event drivers on policy action

House view:

Global commodity prices, weak rupee and suppressed fuel prices are potential sources of risk to inflation. Ahike in fuel prices appears imminent even as the chorus for a rate cut is getting louder. Growth has been largely driven consumption with investment demand lagging system wide growth.  Credit growth is expected to remain subdued, unless a rate cut kicks in. Over the next couple of months, deposits rates are likely to stay put.

 

Regards,

CSEC Research

Inflation bounces from 25-month low: Swing in fruits & vegetables :, CSEC Research

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Inflation bounces from 25-month low: Swing in fruits & vegetables

For the month of February, WPI inflation inched up higher to 6.95% from 6.55% in January. The index reading was reported at 158.4 (provisional) as against 148.1 for February 2011 and 157.7 (provisional) for January 2012. December inflation numbers were revised upwards to 7.74% from 7.47%. Build up in inflation for the financial year to date was reported at 5.95% as against 8.66% reported in the previous year.

Going forward, high prices of crude oil may sustain elevated levels of inflation in the fuel component

Regards,

CSEC Research

U.S Markets close at multiyear high Ø CSEC Research

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U.S Markets close at multiyear high

Ø    The BSE Sensex opened on a positive note and gained more than 200 points to close above 17800 mark. Positive news across the globe guided Indian markets to close in green.

Ø    Amongst the sectoral indices CNX Metal Index rallied more than 2 percent. Shares of Sail, Sterlite posted 5 percent returns and topped Nifty gainers list.

Ø    Shares of Wipro declined more than a percent Azim Premji Thrust, the promoters of Wipro, said it will sell up to 3.5 crore shares of Wipro via an offer for sale mechanism prescribed by SEBI.

Ø    Coal India rallied 2 percent as its board of directors has approved payment of interim dividend of Rs 9.50 per share for the year ending March 2012. Meanwhile, media reports claimed that one of the Hedge fund investor would sue Coal India's board and has threatened to pursue legal action against individual directors for failing to protect minority investors' interests.

Outlook

Ø     U.S. indices rose more than 2 percent on the back of strong economic data. The Nasdaq Composite finished above 3,000 for the first time in 11 years. The Dow Jones Industrial Average rose 217.97 points, to close at 13,177.68, its highest level since Dec. 31, 2007. The Dow last closed above 13,000 on Feb. 28, its first finish above that level since the middle of 2008.

Ø    In today trade Asian markets are up more than a percent and the SGX Nifty is trading near 5550 mark. Going ahead Indian market is likely to open on a positive note. Inflation numbers for the month of February are to be announced today.

Regards,

CSEC Research

Consumer goods growth robust : CSEC Research

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Consumer goods growth robust

For the month of January, growth in industrial output (IIP-index of industrial production) bounced back to 6.8%YoY, as against 2.5%YoY for December 2011.  Industrial growth was the highest in the recent seven months; much of it is attributed to a 42.1%YoY growth in consumer goods growth that was up 20.2%YoY. High volatility continued in capital goods; consumer goods growth was also explosive leading to a positive surprise in the markets that were expecting a growth of 2-2.2% YoY.

The index reading was reported at 187.9 (provisional) as against 175.9 for January 2011 and 180 for December 2011.  The cumulative growth for the period April-January 2011-12 stands at 4.0% over the corresponding period of the previous year. The three-month average IIP growth bounced back to 5.1%.

Regards,

CSEC Research

January IIP grew 6.8% Ø :: CSEC Research

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January IIP grew 6.8%

Ø       The S&P CNX Nifty opened near 5400 mark and declined more than a percent from the day high to close at 5359. The volumes were on the higher side, the FII bought shares worth Rs 12,986 mn.

Ø       IIP for the month of January 2012 registered a growth of 6.8 percent. The IIP numbers were above street estimates. Manufacturing and Electricity grew at 8.5 percent and 3.2 percent while mining witnessed degrowth of 2.7 percent.

Ø       Bank Nifty gained more than a percent on the back of CRR cut from the RBI. State bank rallied 3 percent and topped the index gainers list.

Ø       Shares of Natco pharma was in action as the management informed that it had received a compulsory licence from the Indian patents office to manufacture and sell a generic version of Bayer's cancer treatment drug Nexavar.

Outlook

Ø       U.S. stocks rose for a third session on Friday, with the S&P 500 and Nasdaq tallying a fourth week of gains, after another strong monthly jobs report

Ø      In today trade Asian markets are up nearly a percent and the SGX Nifty is trading near 5450 mark. Going ahead Indian market is likely to open on a positive note.

 

Regards,

CSEC Research

Flat trade Ø CSEC Research

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Flat trade

Ø       The BSE Sensex opened in the red and declined more than a percent in the morning session. However, Sensex recouped its losses on the back of positive European cues.

Ø       IT index bucked the trend and closed in green. The rise was on account of weak rupee. The rupee was hovering near seven-week low on Wednesday.

Ø       Shares of state-run oil marketing companies (PSU OMCs) fell on fears the much anticipated fuel price hike would get delayed.

Ø      Textile stocks were mixed as reports claimed that a ministerial panel will review on Friday, the recently imposed cotton-export ban after the farm minister objected to the move saying it would harm farmers.

Outlook

Ø       U.S. stocks extended gains into a second session as a deadline for private bondholders to exchange Greece-issued debt passed. The Dow Jones Industrial Average closed up 70.61 points, or 0.6%, to 12,907.94. It’s still modestly lower for the week.

Ø    In today trade Asian markets are trading flat and the SGX Nifty is trading above 5300 mark. Going ahead Indian market is likely to witness gap up opening on the positive side.

Regards,

CSEC Research

Volatile week ahead ::CSEC Research

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Volatile week ahead

Indian bourses declined for the second week in a row on account of tepid Q3 GDP numbers as it stood at 6.1 percent way below street estimates. The S&P CNX Nifty remained range bound between 5270 and 5460 and managed to close above 5350.Interest rate sensitives declined with realty shedding another 2 percent for the week. The volumes were on the lower side when compared to previous week. The FII’s remained as net buyers for multiple weeks as they bought shares worth Rs 20,885 million while DII sold shares worth Rs 17,979 million.

Auto sales numbers for the month of February were robust. Maruti, TataMotors, Hero motocorp reported healthy sales numbers. Mahindra and Mahindra sales improved in the SUV segment while its farm equipment segments posted de growth of 19 percent. Shares of Mahindra and Mahindra declined more than 5 percent.

Going ahead, Indian market is likely to remain volatile ahead of elections results in five states due on Tuesday, 6 March 2012. The stock market remains closed on Thursday, 8 March 2012, on account of Holi. Price fluctuation in Crude oil prices may also have an impact on market momentum

Regards,

CSEC Research

Software and IT Services sector Update, CSEC Research,

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Dear All,

Highlights:

·         IT large cap delivered decent numbers in a seasonally weak quarter

·         Mid cap companies were a mixed bag

·         Pricing continues to remain stable

·         Delay in decision making on discretionary projects, but no cancellation yet

·         Margins expansion largely aided by rupee depreciation against dollar

·         Amongst verticals Life science segment was under limelight

·         Increase in demand for Business Intelligence, Mobility and QATS services

·         Client addition continues to be strong

Range bound trade Ø CSEC Research

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Range bound trade

                  

Ø    The S&P CNX Nifty shed a percent to close in the red at 5339. Amongst the sectoral indices Realty declined more than 3 percent.

Ø     Shares of Mahindra and Mahindra decelerated sharply on account of its February sales number. The company’s tractor sales were below street estimates.

Ø     Shares of DLF tumbled 6 percent on the back of media reports claimed that there are no takers for its Mumbai land parcel.

Ø     Suzlon energy raised more than 8 percent in the last hour of trade as the company’s wholly owned subsidiary REpower  systems SE has signed an agreement with a consortium of banks for a syndicated loan of 750 million euros.

Ø     ONGC stake sale via auction method garnered over Rs. 12,600 crore. The final bid quantity stood at 42.04 crore against an offer of 42.77 crore

Outlook

Ø    The Dow Jones Industrial Average closed at 12,980.30, the rally was led by financial following a rally in European bank shares after Spain and France sold 12.5 billion euros ($16.7 billion) of bonds.

Ø    In today trade Asian markets and the SGX Nifty are trading in green and indicate that the Indian markets are likely to open on a positive note.

Regards,

CSEC Research