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Wednesday, August 03, 2011

Market may extend losses on weak Asian stocks; Bharti Airtel in focus


The market may extend losses on weak Asian stocks. Trading of S&P CNX Nifty on the Singapore stock exchange indicates a fall of 82.50 points at the opening bell.

FIIs sold shares worth a net Rs 201.68 crore on Tuesday, 2 August 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) bought shares worth Rs 139.88 crore on that day. Weak global stocks dragged Indian shares to 5-1/2-week closing lows on Tuesday, 2 August 2011. The BSE Sensex was down 204.44 points or 1.12% to 18,109.89, its lowest closing level since 23 June 2011.



DLF's consolidated net profit fell 12.81% to Rs 358.36 crore on 15.85% rise in total income to Rs 2503.23 crore in Q1 June 2011 over Q1 June 2010. The company announced Q1 result after market hours on Tuesday.

Housing Development Finance Corporation (HDFC), India's top mortgage lender, said it had raised its retail prime lending rate on housing loans by 50 basis points with effect from 1 August 2011. "This is in line with interest rates in the economy, which have hardened due to increase in policy rates by 75 basis points since June 2011," the company said in a statement.

India's largest listed telecom oeprator by sales Bharti Airtel's consolidated net profit as per International Financial Reporting Standards (IFRS) is seen rising 8.21% to Rs 1515.81 crore on 3.83% growth in sales to Rs 16888.87 crore in Q1 June 2011 over Q4 March 2011 according to average estimate of 12 brokerages. Revenue growth will be driven by volume growth in both India and Africa operations. Bottom line growth will be driven by expansion in operating profit margin at both India and Africa operations, analysts reckon. Bharti unveils Q1 results today, 3 August 2011.

Corporation Bank announced after market hours on Tuesday that the bank has revised its benchmark prime lending rate (COBAR) from 14.50% per annum (p.a.) to 15.00% p.a. and the base rate for lending from 10.25% p.a. to 10.65% p.a. with effect from 1 August 2011.

Investors' focus continues on Q1 corporate earnings. Investors are focusing on the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when Indian firms are witnessing cost pressures amid rising interest rates and staff costs.

Bharti Airtel and United Spirits unveil Q1 results today, 3 August 2011. Adani Power, Mundra Port And Special Economic Zone and Indian Hotels announce Q1 results on Thursday, 4 August 2011. Cipla and IL&FS Transportation Networks are set to announce Q1 results on Friday, 5 August 2011.

M&M announces Q1 results on 8 August 2011. ABB, Tata Communications, Mahindra Satyam, GMR Infrastructure and VIP Industries announce quarterly results on 9 August 2011. Tata Power and Rural Electrification Corporation unveil Q1 results on 10 August 2011. Tata Motors, Castrol India and Shipping Corporation of India unveil quarterly results on 11 August 2011. Tata Steel, Hindalco, Coal India, National Aluminium Company and HPCL unveil Q1 results on 12 August 2011. Aditya Birla Nuvo unveils Q1 results on 13 August 2011.

The economy will grow at 8.2% in the year to March 2012, but it faces a challenge in achieving the fiscal targets set in the annual budget, a top economic advisory panel said in a report released on Monday. Headline inflation would remain close to 9% till October, before beginning to ease, and would be at 6.5% in March, the prime minister's Economic Advisory Council said.

Exports grew by an impressive 46% to $29 billion in June 2011, despite uncertainty in the US and European markets. Merchandise exports had aggregated to $20 billion in June 2010. During the April-June quarter, overseas shipments grew by 46% to $79 billion, according to Commerce Ministry data released on Monday, 1 August 2011. Though imports grew by 42% to $37 billion in June, the trade deficit of $7.6 billion was almost half the level of $15 billion seen in May, lessening concerns over the country's balance of payments situation.

Growth in manufacturing sector fell for the third month in a row in July as a long series of interest rate hikes and faltering global demand weighed on new orders and output growth, a survey showed on Monday, 1 August 2011. The HSBC Markit Business Activity Index, based on a survey of around 500 companies, fell to a 20-month low of 53.6 in July from 55.3 in June, though it remained above the 50 mark that separates growth from contraction for the 28th consecutive month.

The Reserve Bank of India (RBI) raised its key lending rates by 50 basis points at a policy review on 26 July 2011, to tame high inflation. The RBI has raised its end March 2012 inflation target to 7% as against the previous estimate of 6%, saying inflation has been higher than its expectations. It kept its economic growth forecast of 8% for this fiscal year. The RBI revised downwards non-food bank credit growth projection to 18% for the year ending March 2012 (FY 2012) from 19% earlier.

Although the impact of past monetary policy actions is still getting transmitted, considering the overall growth and inflation scenario, there is a need to persevere with the anti-inflationary stance, the RBI said. Going forward, the monetary policy stance will depend on the evolving inflation trajectory, which, in turn, will be determined by trends in domestic growth and global commodity prices, the RBI said. A change in stance will be motivated by signs of a sustainable downturn in inflation, it added.

The uncertain global macro-economic environment poses a challenge for the domestic economy from the perspective of financing the current account deficit, RBI said. In this context, the composition of capital flows remains a concern. In recent months, some shift in composition of capital flows towards foreign direct investment (FDI) has been observed. This trend needs to be reinforced through policy actions to improve the quality of financing of the current account deficit, RBI said.

Asian stocks fell for a second successive day on Wednesday as renewed fears about the health of the global economy rattled financial markets. The key benchmark indices in China, South Korea, Indonesia, Singapore, Hong Kong, Japan, and Taiwan fell by between 0.03% to 2.72%.

US stocks slumped on Tuesday as the wrangling over the U.S. debt ceiling faded and investors turned their attention to the stalling economy. Senate approval on a 74 to 26 vote of the $2.1 trillion deficit-reduction plan, already passed on Monday by the Republican-controlled House of Representatives, drove away the immediate specter of a catastrophic U.S. debt default. President Barack Obama immediately signed the bill into law, lifting the government's $14.3 trillion debt ceiling hours before a Tuesday midnight deadline

Shortly after the Senate vote, Fitch Ratings said the agreement to raise the U.S. borrowing capacity means the risk of a sovereign default is "extremely low" and commensurate with a AAA rating. But it warned Washington must reduce its debt or face a downgrade. A government report showed U.S. consumer spending fell unexpectedly in June for the first decline in nearly two years as incomes barely rose. The government's key monthly jobs report for July is due on Friday and will be closely watched by investors.