Uttarayan for RBI - Cuts Repo Rate by 0.25% :: HDFC Securities

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Along with the Sun changing its direction to the North, the Reserve Bank of India (RBI) too in a rare morning surprise, changed its stance and cut the repo rate by 0.25%.

The Nifty, which was slated to open with a deep gash of 40 points, will now open in the green.

The rate cut is not enough. It is shallow. But it indicates a reversal of the regulators Thinking, which is great!

Interest rate sensitive stocks such as banks, housing companies, NBFCs should do well.

Global Slowdown Concerns 

The Nifty fell 22 points or 0.26% Wednesday to close at 8278. The Sensex too was down 9 points or 0.29% at 27,347. 

The markets were down because of  Dr Copper, which indicates a slowdown in the Global economy , something that the World Bank also reminded when it cut its figures for the global growth. The metals sold off on Wednesday.

European Court Adviser Nod to OMT

An adviser to Europe?s top court on Wednesday said the European Central Bank can legally buy large quantities of Eurozone government debt to stabilise the currency area?s economy, delivering a key endorsement for the bank as it prepares another round of stimulus measures.

The European Court of Justice?s  interim OMT decision leaves the door open to quantitative easing for the ECB, but there is still a possibility of further legal challenges. 

This was the decision we had worried about yesterday. Had the verdict gone the other way, it would have led to a catastrophic fall in the indices.

The European indices, however, still fell because of the global slowdown fears. 

December WPI at 0.11% 

Wholesale price index for the month of December rose a mild 0.11 %, marginally higher compared to 0% of November, however it was lower than the street expectation of 0.3%. This was primarily on account of large fall in fuel and power and continued weakness in manufacturing products. The major groups namely primary articles, fuel and manufactured product prices moved up to 2.17%, -7.82% and 1.57% from -0.98%, -4.91% and 2.04% of previous month respectively.  On the flip side, October inflation revised down to 1.66% from the provisional figure of 1.77%. The recent trend of both retail as well as wholesale inflation offers comfort to the central bank to act on the policy rate move that may come even before the scheduled policy review meeting on 3rd Feb 2015. 

Yes Bank Q3 profit jumps 30%, asset quality deteriorates

Yes Banks Q3FY15 profit jumped to 30% Y-o-Y at Rs 540 crore, driven by strong net interest income and other income. However, rise in provisions has capped the profits to some extent. Net interest income surged 36.6 % Y-o-Y to Rs 909 crore during December quarter where as other income increased by 38%. The numbers were marginally higher than street's expectations of profit of Rs 516 crore and NII of Rs 887 crore.

Asset quality deteriorated marginally during the quarter with gross non-performing assets (NPA) increased to 0.42% in Q3FY15 from 0.39 %  of Q3FY14 and 0.36 % of Q2FY15. Net NPA also showed an uptick at 0.1 % as against 0.09 % of previous month.   In absolute terms, net NPA rose by 52% Y-o-Y and 19% Q-o-Q to Rs 64.5 crore in the quarter gone by. While, Net interest margin rose to 3.2 % in Q3FY15 from 2.9 % in same quarter last year; sequentially the same was flat.

Bajaj Auto & TCS to report Q3 earnings

Bajaj Auto is expected to see 1% de-growth in its volumes for Q3FY15 followed by a sharp decline in the domestic segment, however realizations would improve 10% Y-o-Y   due to the price hike taken by the company in export markets and on its Pulsar range of motorcycles. Net Profit is likely to come at Rs 856 crore, down by 5.3% Y-o-Y.

While, revenue of TCS is estimated to grow by 3% Q-o-Q at Rs 24500 in Q3FY15, where as Net profit would come at Rs 5615 crore, up by 6.2% Q-o-Q, on the back of higher other income. 

Finance Ministry proposes fresh 10% stake sale in IOC

The department of divestment in the finance ministry has moved a proposal to divest 10% in petro-product marketing major Indian Oil Corp (IOC) that could infuse about Rs 7,800 crore at the current stock price. At present, the government holds 68.6% in IOC. The proposed 10% divestment could fetch about Rs 8,154 crore for the government. If the department gets the Cabinet nod for divestment in IOC, then along with ONGC and Coal India, this could take the total inflows through sell offs to about Rs 48,000 crore in the current fiscal. 

Petrol, diesel prices likely to be cut by Rs 2 each

On the back of international oil prices hitting a 6-year low, oil companies are likely to cut the prices of petrol and diesel by Rs 2 each from Thursday, the first cut of the year. On Tuesday, the prices of international crude oil fell below USD 45 per barrel following the latest sign from OPEC that the group doesn't plan to cut production.

Earlier, state-owned oil companies had cut the prices by Rs 2 each on December 15. However, no price cut was done on December 31 as it was expected.

SpiceJet to file investment plan with SEBI

Cash-strapped SpiceJet may finally have found an investor to bail it out. Senior Government officials said on Wednesday that the airline is submitting an investment plan to market regulator SEBI. As on December 5, the airline, controlled by billionaire Kalanithi Maran?s Sun Group, owed ?1,600 crore to various creditors. SpiceJet?s former promoter, Ajay Singh, is believed to have tied up with JP Morgan to pump in up to $200 million.

While the contours of the investment plan were not immediately available, sources said that SEBI?s nod is required as the foreign investment holding is likely to exceed 25 per cent, triggering an open offer. However, SpiceJet?s foreign investor does not want to go in for an open offer and plans to seek a one-time exemption from SEBI.

JSW Steel in talks to buy iron ore terminal in Tamil Nadu from Sical Logistics

JSW Steel is in talks to buy an iron ore terminal in Tamil Nadu from Sical Logistics, a move aimed at backward integration of its operations and saving on cost of importing the key raw material. Sical Logistics runs an iron ore terminal with a capacity to handle 6 million tonnes (mt) of iron ore annually at government-owned Ennore Port. 

Bharti Airtel may have to pay Rs 436 crore for merging Qualcomm 4G arm

Telecom major Bharti Airtel may have to pay Rs 436 crore for merging Airtel Broadband Services with itself as per legal opinion received by the Department of Telecom. Airtel Broadband Services (ABSPL), formerly Wireless Business Services Private Limited - a telecom company founded US chip maker Qualcomm - was acquired by Airtel in 2013. 

Airtel Broadband Services (ABSPL) holds broadband wireless access (BWA) spectrum in Delhi, Mumbai, Kerala and Haryana that can be used for 4G services and Airtel has proposed merger of this subsidiary with itself.

December Retail Sales & Weak World Bank Outlook Weigh on the Dow  

Wall Street had another gloomy start on Wednesday with key Indices falling like a stone in the morning. Weighing on the markets were a lower than expected December Sales and lowering of the Global growth forecast by the World Bank. The indices closed in the red for the 4th session in a row.

The indices, which fell like nine pins in the morning rallied in the afternoon from the intraday highs along with rebounding crude, but that wasn?t sufficient to put the humpty dumpty back on the wall. The indices closed with major losses, of  0.50% to 1%.

The Dow Jones Industrial Average opened with triple digit losses in the morning and extended the losses to 343 in the afternoon before recovery set in. The blue-chip Index closed with a loss of 187 points or 1.06%.

The S&P 500 also behaved similarly closing with a loss of 12 points or 0.59% at 2011. The Nasdaq Composite ended the day 22 points or 0.48% lower at 4639.

The CBOE Volatility index, or VIX, which measures implied volatility on the S&P 500 jumped 6.5% to above 21.

December headline Retail Sales dropped 0.9%, its largest monthly decline since January 2014. The decrease reflected the steep decline in gas prices, and came in far deeper than expectations for a 0.1% drop. Sales declined in several key categories, including motor vehicles and parts, general merchandise, clothing and sporting goods. 
Core sales, excluding volatile items such as gas and automobiles, dropped 0.3%. Forecasts called for an increase of 0.5%.

Also weighing on the markets was the lowering of the global growth forecast by World Bank.  The Bank slashed its two-year forecast for the global economy, expecting 3% growth over 2015 and 3.3% in 2016. Previous forecasts had put growth at 3.4% for 2015 and 3.5% for 2016.
The markets were also worried about Copper. The commodity is also knows as Dr Copper because its demand is an indicator of the health of the economy. Copper prices began falling afresh  Tuesday and  have cratered nearly 6% to levels not seen since mid-2009. Copper is down because of a slower Chinese economy and was hit further by the downgrading of global growth by World Bank.

The Beige Book Report , which gets its name from the colour of the Cover Page it is printed on,  that came in during the day was positive. The anecdotal evidence provided by the 12 districts allayed some investor fears of a negative impact far greater on the broader economy. 
Crude-oil futures rebounded Wednesday, snapping a three-day losing streak and gaining the most in one day, from a percentage standpoint, since June 2012. Oil for February delivery, the front-month contract rose $2.59, or 5.6%, to settle at $48.48 a barrel on the New York Mercantile Exchange.

Yields on 30-year Treasury bonds were up slightly from record lows on Wednesday, trading at 2.43% after a bond auction early afternoon. Bonds had slid earlier as commodity prices plummeted and the weaker retail numbers sparked fears the U.S. and the broader global economy could fall into a deflationary environment. Ten-year yields were at 1.8%.
JP Morgan shares were down more than 3% after profit was hit by a $990 million legal charge in the fourth quarter. The bank has been racked up legal costs of nearly $1 billion as the government investigated alleged wrongdoing in the wake of the 2008 financial crisis.

Wells Fargo shares fell 1.2% after fourth-quarter earnings of $1.02 a share met analysts' expectations. 

IBM had its price target and earnings estimates reduced by Bank of America analysts Wednesday morning. The firm maintained its "neutral" rating on the stock and said it adjusted its numbers to reflect the company's continuing business transition towards higher growth. Shares dropped 0.66%.

Tesla shares plummeted nearly 6% after CEO Elon Musk said sales in China were "unexpectedly weak" over the fourth quarter. General Motors tumbled 2.7% after the automaker announced a 20% bump in capital expenditures this year. The company also reiterated its 2016 financial targets, but warned that recall costs will continue to be high.
Speaking at an event on Wednesday morning Philadelphia Fed President Charles Plosser said the U.S. economy has improved considerably and Federal Reserve officials should raise interest rates sooner rather than later in order to get ahead of future inflation. Plosser isn't a voting member of the Fed policy committee this year.

The European Court of Justice issued an interim decision that allows the European Central Bank to go ahead with a bond-buying program known as Outright Monetary Transactions (OMT), although with certain conditions.

Still, the Stock Europe 600 index couldn?t stay in the black, dropping 1.5%.The ECJ?s interim OMT decision leaves the door open to quantitative easing for the ECB, but there is still a possibility of further legal challenges.