Indian stock market and companies daily report (January 17, 2012, Tuesday)

The markets are expected to edge higher following strong opening across most of the Asian bourses. The markets clocked modest gains yesterday, reacting to sharp fall in December inflation numbers led by cheaper food items. The headline inflation (WPI) falling to two-year low of 7.5% triggered hopes that RBI will likely reverse its rate-tightening cycle in upcoming review.
Global cues showed some improvement. European stocks rallied after early losses, led by strong French bond auction which eased fears about the eurozone’s ongoing debt crisis. Despite the recent downgrade of its long-term sovereign rating, France was able to garner enough demand for its debt – it sold €8.6bn of short terms bonds, against a target of ~€8bn indicated at the start of the auction. US markets remain closed on account of a national holiday.
After prolonged pessimism, the markets seem to have breathed easy, majorly due to easing of inflationary pressure which had impacted the sentiments. The coming weeks will be watchful, as the crucial earnings season will gather steam. The investors will closely track the quarterly performance as well as the management commentary, in order to gauge future outlook. In addition, developments in the eurozone will weigh on the markets.

Markets Today
The trend deciding level for the day is 16,147 / 4,861 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,257 – 16,324 / 4,894– 4,914 levels. However, if NIFTY trades below 16,147 / 4,861 levels for the first half-an-hour of trade then it may correct up to 16,080 – 15,970 / 4,840 – 4,807 levels.

WPI inflation eases to two-year low of 7.5%; though manufacturing inflation remains stubborn
Wholesale price-based inflation for December 2011 eased to 7.5% yoy, falling significantly from the 9.1% yoy level registered in November 2011. The figure of 7.5% yoy was slightly above the Bloomberg estimate of 7.4%. Core (non-food manufacturing) inflation – which the RBI tracks closely – came in at 7.5% yoy as against 7.8% in November 2011.
Primary articles inflation came in at a low 3.1% yoy, ~545bp lower than 8.5% yoy witnessed in November 2011. Food articles inflation moderated considerably to 0.7% yoy from 8.5% yoy registered in November 2011. Non-food articles inflation, which was as high as 18.2% yoy in August 2011, declined to 1.5% yoy (3.2% yoy in November 2011). However, over November 2011, non-food articles index rose by 1.3% mom (annualized growth of 15.7%) on account of higher prices of gaur seeds, flowers, linseed, soyabean and rape and mustard amongst others. Inflation for minerals rose at a faster pace of 21.9% yoy compared to 18.0% yoy in November 2011. On an annualized three-month basis, growth stood at 9.1%.
Fuel and power inflation continued to be high at 14.9% yoy (average of 14% over the last six months), which can be partly attributed to the sharp INR depreciation. Within fuel and power, only mineral oil index showed an increase of 0.8% mom (annualized growth of 9.5%) over November 2011, while both coal and electricity index remained unchanged.
Manufactured products, which have a weightage of ~65% in the overall WPI inflation, continued to be stubborn at 7.4% yoy (average of 6.3% over the past two years). The mom growth in manufacturing index was also high at 0.6% (highest over the past seven months), leading to annualized growth of 6.9%. Manufacturing articles inflation was driven by higher prices of beverages, metals, wood and chemical products. On the other hand, inflation in textiles, machinery and rubber products moderated vis-à-vis November 2011.
The spread between primary articles and manufactured products inflation, which was as high as 13.1% at the start of CY2011, fell into the negative territory (4.3%) for the first time in nearly four years. In fact, the negative spread is the lowest since the inception of the new base year 2004-05.
Inflation figures came in more or less in-line with street’s estimates. With both IIP (6.1% for November 2011 compared to contraction of 5.5% in October 2011) and manufacturing PMI (54.2 for December 2011 compared to 51.0 for November 2011) showing improved performance sequentially and manufacturing inflation still resisting near the 7.5% levels, the RBI may stick with status quo on its policy rates stance in the January 24, 2011, monetary policy. However, that said, with liquidity crunch persisting in the system and OMO operations not reaping the desired benefits, chances of a CRR cut in the monetarily policy on January 24, 2011 cannot be ruled out, in our view.

Tata Motors' global sales continues its strong momentum in December 2011
Tata Motors reported better-than-expected global volumes for December 2011 led by strong growth across the product segments. Total global volumes registered a strong 27.3% yoy (6.4% mom) growth to 114,920 units. While, global commercial volumes (CV) grew 11.8% yoy (8.3% mom), driven largely by growth in the domestic CV sales, global passenger vehicle volumes grew by a robust 45% yoy (4.7% mom) on the back of strong domestic and continued momentum in Jaguar and Land Rover (JLR) performance. Wholesale volumes of JLR posted an impressive 45.1% yoy (6.2% mom) growth in volumes to 30,981 units, led primarily by 54.3% yoy (10% mom) growth in Land Rover volumes. Jaguar volumes, however posted a sedate 9.1% yoy growth. JLR sales continued its stellar performance backed by strong demand momentum in China and Russia. We expect JLR to sustain its volume performance driven by success of its recently introduced models. At current market price of `213, the stock is trading at 7.2x and 4.6x FY2013E earnings and EV/EBITDA, respectively. We maintain our Neutral view on the stock.

Result Review
South Indian Bank
For 3QFY2012, South Indian Bank reported a healthy set of numbers. The bank’s net profit grew by 35.7% yoy to `102cr, in-line with our estimates. Aided by an 8bp sequential rise in reported NIM to 3.1%, net interest income registered healthy growth of 5.7% qoq (up 33.5% yoy) to `273cr. Non-interest income was also strong, registering growth of 31.0% yoy (6.9% qoq) to `333cr. Gross NPA ratio as of 3QFY2012 stood at 0.94% (0.99% in 2QFY2012), while net NPA ratio stood at 0.24% (0.25% in 2QFY2012). Provisioning expenses witnessed a decline of 25.6% yoy to `22cr. Business momentum was strong during the quarter, with advances growing by 30.6% yoy (strong 7.3% qoq) and deposits growing by 25.4% yoy (2.4% qoq). At the CMP, the stock is trading at 1.1x FY2013 ABV. Currently, we have a Neutral rating on the stock.

Result Preview
HCL Technologies
HCL Technologies is slated to announce its 2QFY2012 numbers. We expect the company to post revenue of US$1,036mn, registering 3.4% qoq growth, led by volume growth of 4.6% qoq. In INR terms, revenue is expected to grow by 13.2% qoq to `5,263cr. EBITDA margin is expected to expand by 255bp qoq to 19.6%. PAT is expected to come in at `625cr. The company is one of our preferred picks in the IT sector. We maintain our Buy rating on the stock with a target price of `535.
TCS
TCS is slated to announce its 3QFY2012 results. We expect the company to post revenue of US$2,611mn, with 3.4% qoq growth, led by volume growth of 4.4% qoq. In INR terms, revenue is expected to grow by 14.0% qoq to `13,256cr. EBITDA margin is expected to expand by 164bp qoq to 30.7%. PAT is expected to come in at `2,936cr. TCS remains our preferred pick amongst tier-I IT companies. We recommend Buy rating on the stock with a target price of `1,294.

Economic and Political News
- Exports for December 2011 up 6.7% at US $25bn
- Inflation to fall to 6-7% by March end : Finance Minister
- India to launch US$1bn fund to invest in ideas to uplift poor
- GoM to meet today to review Air India’s turnaround plans

Corporate News
- Iron ore export duty hike unlikely in Budget: Steel Ministry
- Singapore govt. stake in RIL rises to 1.09%
- SBI gets approval for `8,000cr infusion
- CIL to invite fresh bids for exploration of Mozambique blocks
- Mahindra to reopen XUV500 bookings

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Indian stock market and companies daily report (January 11, 2012, Wednesday)

Indian markets are expected to open in green taking cues from positive opening in most of the Asian markets today and firm closing in most of the global markets on Tuesday. The Indian markets ended higher yesterday on the back of positive global cues and renewed hopes of a CRR cut later this month. A decision by global ratings agency Moody's to upgrade India's rating to investment grade and reports showing an impressive 56% rise in FDI inflows in November helped revive appetite for riskier assets.
Globally, most of the US and European markets closed in green yesterday as a weaker US currency helped drive up the price of oil, other dollar-denominated commodities and resource stocks. Also, an announcement by the rating agency Fitch that a downgrade of the creditworthiness of France from the top credit rating of "AAA" within a year is not expected provided a boost to the market. The markets this week will be closely watching out from IIP numbers and Infosys results which will be released on January 12, 2012.

Markets Today
The trend deciding level for the day is 16,081/4,825 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,265–16,364/4,881– 4,912 levels. However, if NIFTY trades below 16,081/4,825 levels for the first half-an-hour of trade then it may correct up to 15,982–15,799/4,793–4,737 levels.

FDI equity inflows up 56% in November 2011 after two slack months
Indicating a positive investor sentiment amidst the ongoing macroeconomic concerns, FDI equity inflows into India increased by 56% to US$2.53bn in November 2011. According to officials, cumulative flows for the April-November period stood at US$22.83bn vs. US$19.43bn for FY2011.
FDI equity inflows for the past two months were sluggish, with September and October reporting a 16.5% yoy and 50% yoy decline in inflows, respectively. During FY2011, equity in India witnessed a sharp 25% dip in FDI, from US$25.6bn in FY2010 to US$19.43bn.
Telecom, IT, construction, power, housing and real estate are the major sectors attracting FDI, and Mauritius, Singapore, U.S., U.K., Netherlands, Japan, Germany and UAE are the major sources of FDI in India. We believe the pick-up in FDI inflows will have a positive impact on INR in the foreign exchange market.

KPIT’s infotainment platform achieves GENIVI compliance
KPIT Cummins (KPIT) has announced that its In-Vehicle Infotainment (IVI) platform is now compliant with GENIVI Compliance Specification Release 1.0. The GENIVI compliance program provides a set of specifications for GENIVI member companies to measure their products and services. Those that meet the specifications may be registered as GENIVI compliant and facilitate OEMs and Tier-1 suppliers to short list compliant offerings and simplify their vendor selection process. Automotive OEMs are aggressively pursuing the adoption of consumer electronics (CE) features in infotainment. KPIT's infotainment platform speeds up this process by leveraging the critical mass of open source community, which enables broader coverage and faster support of new CE technologies. This platform features automotive grade robustness, leverages scale to reduce total cost of ownership and is supported by a mature service delivery organization to speed up development of product variants across feature sets and geographies. The platform contains core services and frameworks to enable faster, contextaware human machine interface and application development. It is optimized for the latest ARM-based application processors from multiple silicon vendors as well as for the Intel Atom processor. We maintain our Accumulate recommendation on the stock with a target price of Rs.163.

Economic and Political News
- Government clears 20 FDI proposals worth Rs.1,935cr
- Indirect tax kitty up 16.1% in Apr-Dec
- Moody’s upgraded India’s short-term country ceiling on foreign currency
bank deposits, in addition to the three upgrades on December 20 last year
- Petroleum Ministry asked to follow IMO fuel emission norms

Corporate News
- MTNL to float Rs.200 cr tender for network expansion
- PSL Ltd wins Rs 280-cr order from Pratibha Ind
- TVS to introduce three products in 2012
- Wockhardt launches generic nasal spray for Rhinitis

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Indian stock market and companies daily report (January 09, 2011, Monday)

Indian markets are expected to open in red taking cues from gap down opening in most of the Asian markets and negative closing in most of the global markets on Friday. The Indian markets ended flat to modestly high on Friday, reversing early declines, as European stocks rose and expectations of an interest rate cut this month heightened.
Globally, most of the US and European markets closed lower on Friday traders shrugged off another upbeat U.S. employment report amid continued concerns about the ongoing European debt crisis, stocks turned in a lackluster performance during trading. Selling pressure in global markets was also generated by news that Fitch Ratings downgraded Hungary to junk status. Adding to the concerns, ECB said overnight deposits by European commercial banks reached a new record high of EUR455.3bn. The markets this week be closely watching out from IIP numbers and Infosys results which will be released on January 12, 2012. Infosys result is expected to set tone for the upcoming result season.

Markets Today
The trend deciding level for the day is 15,861 / 4,750 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 15,888 – 15,926 / 4,757– 4,766 levels. However, if NIFTY trades below 15,861 / 4,750 levels for the first half-an-hour of trade then it may correct up to 15,823 – 15,796 / 4,740 – 4,733 levels.

NTPC gets back three de-allocated coal blocks
The Coal Ministry has given back three coal blocks to NTPC Ltd. The ministry had taken back these blocks last year as the company had failed to develop them within the stipulated period. All the blocks have been given back on the condition that they would be developed within two years, failing which they would be again taken back by the Coal Ministry. At the CMP, the stock is trading at P/BV of 1.6x its FY2013 estimates. We maintain our Buy recommendation on the stock with a target price of `200.

Idea challenges fresh liquidated damages imposed for two circles
Idea Cellular has approached telecom tribunal TDSAT against the government’s move to impose additional liquidated damages on it for not meeting roll-out obligations in two circles – Haryana and Maharashtra. The contention of the telco is that when the main penalty for these two circles has already been set aside by the tribunal, there is no point in imposing the additional penalty. The main penalty had been set aside on December 5. The counsel appearing for Idea also said that DoT has imposed penalty on it without serving a show cause notice, thereby denying it an opportunity to present its case in a proper manner. TDSAT has directed the DoT to file reply on Idea's plea by Wednesday. It has also asked DoT not to take any action against the operator. We maintain our Neutral recommendation on the stock.

Economic and Political News
- 9% growth in 12th Plan a challenge, says Montek Singh
- Proposal for Japanese FDI in DMIC project gets MEA nod
- Fiscal deficit may be more than projected, says Pranab Mukherjee

Corporate News
- Ashok Leyland Stile and Partner unveiled
- After Kingfisher, AI Express, DGCA raps other carriers
- JSPL commissions new unit, capacity rises to 917 MW
- GMR Infra issues debentures worth `250cr to GMR Airports
- Mundra UMPP's first 800MW unit starts production


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Indian stock market and companies daily report (January 06, 2012, Friday)

Indian markets are expected to open range-bound following mixed cues from the global markets. Asian stocks are currently trading down on concerns of European debt crisis which has outweighed forecasted gains in US employment.
Indian shares erased early gains on Thursday, as weak Asian and European cues amid fresh concerns about the state of Europe's banks and lingering worries over potential euro-zone sovereign downgrades overshadowed rising expectations that the domestic central bank will cut interest rates at the upcoming policy review meet on January 24.
The US markets traded lower early in the day but ended in the green following release of some upbeat U.S. employment data. The early weakness on Wall Street was due in large part to a negative reaction to the results of a French bond auction, with the sale of 7.96 billion Euros worth of long-term French bonds drawing a higher yield than a month ago. Investors worldwide would keenly watch out for the US nonfarm payroll data and monthly unemployment rate data due for release today.

Markets Today
The trend deciding level for the day is 15,882/4,753 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 15,955 – 16,053/4,776 – 4,803 levels. However, if NIFTY trades below 15,882/4,753 levels for the first half-an-hour of trade then it may correct up to 15,784 – 15,711/4,727 – 4,704 levels.

Cement Dispatches – December 2011
ACC’s cement dispatches for December 2011 stood at 2.09mn tonnes, up bystrong 8.9% yoy. For CY2011, the company’s dispatches reported 11.4% growth  to 23.58mn tonnes, though on a lower capacity base of the previous year. The company added ~3mtpa of capacity in CY2011, post which its overall capacity stands at ~30mtpa. Decent growth in dispatches reported by ACC and UltraTech in December 2011 hints at higher dispatches to the southern region, as both the companies have a decent exposure to the southern region. We continue to remain Neutral on ACC.

Maruti Suzuki to raise product prices next week
Maruti Suzuki (MSIL) has announced that it is planning to increase its product prices from next week to mitigate the impact of INR depreciation on input costs. While the company has not divulged any details on the quantum of the price increase, media reports indicate that the price hike will be in the range of 2-3%. The recent price hike comes on the back of price increase of Rs.10,000 carried out in November 2011 on all its diesel models.
MSIL, which has a substantial exposure to Yen (direct as well as indirect imports and royalty payment constitute ~27% of net sales), is likely to be severely impacted by the continued appreciation of Yen vs. INR (~12% qoq in 3QFY2012 and ~30% YTDFY2012). While the company has hedged its direct imports for 2HFY2012 for JPY/USD part of the leg at a rate of JPY79/USD, USD/INR part is still unhedged, which will have a negative impact on the company’s profitability in 2HFY2012. Meanwhile, MSIL has unveiled a new vehicle XA Alpha, a concept for compact SUV at the 11th Auto Expo being held at New Delhi. With the launch of the new concept vehicle and unveiling of MPV Ertiga on January 6, MSIL plans to expand its presence in the utility vehicle segment (UV), which is currently dominated by Mahindra and Mahindra.
At the current price of Rs.933, MSIL stock trading at 12.4x FY2013E earnings. We believe the recent correction in the stock price (~20% post 2QFY2012 results) factors in the impact of demand slowdown and labor problems on FY2012E volume growth and concerns regarding the adverse currency movement on  margins. Thus, we continue to maintain our Accumulate rating on the stock with a target price of Rs.1,051.

Economic and Political News (edited)
- Weekly food inflation plunges to negative 3.36%
- Inflation may fall below 7% by March 2012: PM advisory panel
- Interest rates have peaked as inflation slows: RBI
- No threat to cancel license of any airline: DGCA
- Government to reach out to consumer bodies for FDI in retail

Corporate News
- RIL gas output dips below 39mmcmd in the week ended December 25, 2011
- M&M to invest Rs.800cr in Korean arm, SsangYong Motors, to develop products
- M&M to launch SUV Rexton in India in the next six months
- ONGC finds gas reserves off Daman

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