Thursday, July 25, 2013
In a minute there is time for decisions and revisions which a minute will reverse. - T S Eliot
Volatility is a given as the rollovers take place today. The outlook is weak given the subdued global cues. Some buying could set in towards the end but runaway gains are unlikely.
The banking counters may see some value buying after eight of the 13 major bank stocks slumped at least 5 percent on Wednesday.
Indian Oil Corporation could see some action as the Cabinet is likely to consider the proposal for sale of 10% stake in the company.
The rupee ended stronger at 59.15 against the dollar.
Container Corp of India will consider a bonus share issue today.
Cement counters are likely to see some action a Swiss cement major Holcim is set to increase its stake in Ambuja Cements from 50.55% to 61.39%. Ambuja, in turn, will buy Holcim’s stake in ACC.
ITC, ACC, Maruti Suzuki, Piramal Ent, Tara Jewels Bata India, Gail India, Mahindra & Mah Fin are the major results to look out for on Thursday
Asian markets are mostly lower. Japan's Nikkei 225 and Hong Kong's Hang Seng index were half a percent lower each. South Korea's Kospi index is marginally up while China's Shanghai index is flat.
A day after closing at peaks, Dow and S&P 500 slipped slightly on Wednesday, dragged down by Caterpillar, Broadcom and AT&T. All three delivered results short of Wall Street's forecasts. Caterpillar also lowered its earnings and sales outlook for the year, which sent its stock 2.4% lower. It was the biggest loser in Dow.
A tech stock rally powered by Apple's better-than-expected earnings limited the fall in US stocks on Wednesday. Apple rose 5% which helped Nasdaq end in the green zone.
The Commerce Department said new home sales rose to a five-year high, with an annual rate of 497,000 in June, up 8.3% from May.
Data later today is expected to show Britain's economy expanded at a faster pace in the second quarter.
Results watch: Maruti Suzuki, ITC, Biocon, Gail India, ACC, Strides Arco, Kalpataru Power, Thermax, Kansai Nerolac, Balaji Amin, Bata India, Container Corp, Emco, FAG Bearings, Bervin Invest, Bharat Bijlee, BF Invest, Granules India-, Jayant Agro, MRF, Muthoot Fin, NAVIN FLUORI, Gujarat State Fin, Mahindra & Mah Fin, Piramal Ent, Pricol, Shriram City Uni, SKS Microfinance, Torrent Power, THINKSOFT, Sterling Hol Res, TCI Developers, TTK Healthcare, Zee Entert, WPIL, Wendt India, Transport Corp.
Trends in FII flows: The FIIs were net sellers of Rs4.04bn in the cash segment on Wednesday, while the domestic institutional investors (DIIs) were net sellers of Rs3.28bn, as per the provisional figures released by the NSE.
The foreign funds were net buyers of Rs2.73bn in the cash segment on Tuesday, according to the SEBI figures.
Global Data Watch: Nationwide Housing Prices n.s.a (YoY) (Jul) GBP, Nationwide Housing Prices s.a (MoM) (Jul) GBP, Unemployment Survey (Q2) EUR, M3 Money Supply (3m) (Jun) EUR, M3 Money Supply (YoY) (Jun) EUR, Private loans (YoY) (Jun) EUR, IFO - Current Assessment (Jul) EUR, IFO - Business Climate (Jul) EUR, IFO - Expectations (Jul) EUR, Consumer Confidence (Jul) EUR, Gross Domestic Product (QoQ) (Q2)Preliminar GBP, Gross Domestic Product (YoY) (Q2)Preliminar GBP, Index of Services (3M/3M) (May) GBP, 30-y Bond Auction EUR, 10-y Bond Auction EUR, Durable Goods Orders (Jun) USD, Durable Goods Orders ex Transportation USD, Initial Jobless Claims (Jul 19) USD, Continuing Jobless Claims (Jul 13) USD, EIA Natural Gas Storage change (Jul 19) USD, Kansas Fed manufacturing activity (Jul) USD, National Consumer Price Index (YoY) (Jul) JPY, National CPI Ex Food, Energy (YoY) (Jul) JPY, National CPI Ex-Fresh Food (YoY) (Jul) JPY, Tokyo Consumer Price Index (YoY) (Jul) JPY, Tokyo CPI ex Food, Energy (YoY) (Jul) JPY, Tokyo CPI ex Fresh Food (YoY) (Jul) JPY.
In other news in the media
Cairn India is planning a capex of Rs160bn for finding and producing more oil over the next three years through the end of FY 2016. (BL)
Fortis Healthcare plans to raise up to US$43.5mn through various instruments, including issue of Foreign Currency Convertible Bonds in Singapore. (BL)
The Telecom Disputes Settlement and Appellate Tribunal stayed the Rs6.5bn penalty on Bharti Airtel for allegedly violating the subscriber local dialing norms between 2002 and 2005. (BS)
Jindal Power, a subsidiary of Jindal Steel and Power, has tied up Rs54bn in loans for two units of its upcoming 2,400- Mw generation plant in Chhattisgarh. (BS)
SpiceJet will fill by the first week of August the posts of chief executive officer and chief commercial officer (CCO), left vacant by the resignations of Neil Mills and Harish Moideen Kutty. (ET)
GVK Oil and Gas, will go slow on investing further into the development of seven deep-water blocks it has on the West Coast due to inordinate delay in getting government clearances. (ET)
Tata Consultancy Services has completed the acquisition of French enterprise solutions provider Alti, a move that will help the company to expand its reach in Europe. (ET)
NTPC will invest Rs89bn to develop its own mines and cut the share of imported coal in its total consumption to 10% in three years from 21% despite a near 40% rise in generation capacity.(ET)
Oriental Bank of Commerce hikes some deposit rates for term deposits of less than Rs10mn under various maturities from 91 days to less than a year. (BL)
Bharti Airtel’s high capacity terrestrial optical fibre link between India and Bangladesh has become operational. (BL)
The Central Board of Excise and Custom said car models, which are known as sedans, will attract 27% excise duty, as applicable to large cars and not 30%, as announced in the Budget. (BL)
The Heavy Industries Ministry has written to the Finance Ministry seeking an additional 5% import duty on power equipment. At present, there is 21% duty on such equipment. (BL)
Net inflow of Rs 220.60 crore on 23 July 2013
Foreign institutional investors (FIIs) bought shares worth net Rs 220.60 crore on Tuesday, 23 July 2013, compared with net outflow of Rs 380.70 crore on Monday, 22 July 2013.
The net inflow of Rs 220.60 crore on Tuesday, 23 July 2013, was a result of gross purchases of Rs 2525.70 crore and gross sales of Rs 2305.10 crore. The entire net inflow of Rs 220.60 crore pertained to secondary equity market transactions. The S&P BSE Sensex had jumped 143.01 points or 0.71% to settle at 20,302.13 on that day, its highest closing level since 4 January 2011.
FIIs have sold shares worth net Rs 5765.70 crore in July 2013 so far (till 23 July 2013). FIIs sold shares worth Rs 11026.90 crore in June 2013.
FIIs have purchased shares worth a net Rs 66412.70 crore in 2013 so far (till 23 July 2013). FIIs bought shares worth a net Rs 128359.80 crore in calendar 2012.
There are a total of 1,756 foreign funds registered with the Securities & Exchange Board of India.
The market may start the day's trade lower tracking weakness in Asian stocks. Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could fall 33 points at the opening bell. The market may remain volatile today, 25 July 2013, as traders roll over positions in the futures & options (F&) segment from the July 2013 series to August 2013 series. The near month July 2013 derivatives contracts expire today, 25 July 2013.
ACC, GAIL (India), ITC, Maruti Suzuki (India) and Sterlite Industries unveil quarterly results today, 25 July 2013.
Two-wheeler major Hero MotoCorp after trading hours on Wednesday, 24 July 2013, reported 10.86% decline in net profit to Rs 548.58 crore on 1.25% decline in total income to Rs 6271.78 crore in Q1 June 2013 over Q1 June 2012. The company said the net profit declined due to higher tax rate on account of the expiry of 5 years (April 2008-March 2013) of 100% exemption in Haridwar, where the largest-producing manufacturing plant of the company is located. With the expiry of the tax benefit, the tax liability of the company went up to 26.9% in Q1 June 2013, from 16.3% from Q1 June 2012. The decline in net profit is also reflective of the newly-levied higher surcharge in the Finance Bill 2013, Hero MotoCorp said in statement.
Commenting the first quarter results, Mr. Pawan Munjal, MD and CEO, Hero MotoCorp said: "The fact that our profit before tax has surpassed the previous as well as the corresponding quarter, despite a marginal de-growth in our volumes during the quarter and the overall economic downturn, is a strong statement of our intent and vision. Our operating profit has also improved compared to the previous and the corresponding quarter. We are determined to sustain the trajectory of positive momentum in the coming quarters as well. Q1 of this fiscal was an action-packed quarter for us when we rolled out a slew of innovative initiatives including the 'industry-first' five-year warranty on our entire range of products and our own dedicated retail financing arm. We continued to grow ahead of the industry in both scooters and 125cc motorcycles this quarter, thereby building further on our market share gain in these segments. We had a record month in May, with our highest ever dispatches in a month. Retails also kept pace with record 1.1 million-plus retail sales in April-May -- the highest-ever retails in a non-festival period. Heavy and early rains in June have slowed down the momentum a bit, but we are optimistic about growth in the second half of the fiscal. Our product launches that are planned around the festive season should contribute towards accelerating growth. On the new market front, after entering Central America and Africa, we are now geared-up for Latin American markets of Peru and Ecuador which should be in the month of August".
Oil exploration firm Cairn India's consolidated net profit fell 18% to Rs 3127 crore on 8% decline in revenue to Rs 4063 crore in Q1 June 2013 over Q1 June 2012. The company announced Q1 result after market hours on Wednesday, 24 July 2013.
Cairn India reports revenue net of profit-sharing with the government in all blocks and Rajasthan block royalty expense. During the quarter, the profit petroleum pay-out to the government rose from 20% to 30% in the DA1 in the Rajasthan block. The gross cumulative Rajasthan development capital expenditure as on 30 June 2013 was $3.9 billion, of which $107 million was spent in Q1 June 2013 including $19 million in DA 2.
Cairn India said it achieved highest ever gross operated production of 212,442 barrels of oil equivalent per day (boepd) in Q1 June 2013. The company achieved record average daily production of 173,517 boepd for Rajasthan block during the quarter.
Commenting on the first quarter results, Mr. Elango P, Whole time Director, Cairn India said: "I am very pleased to report that we are once again delivering robust operational and financial results with the company achieving its highest ever gross operated daily production. We continue to generate substantial cash flow from one of the lowest cost producing assets in the world and are well placed to deliver success from our $3 billion capital expenditure programme. We remain focussed on driving production growth from our core Rajasthan asset and delivering positive results from our extensive exploration and appraisal program. We remain particularly excited by the deep gas prospects and welcome the recent Government decision on gas pricing that will encourage higher investments in exploration and the development of gas discoveries. We expect the government to come out with a policy on Integrated Development Plan that will help in reducing the time from discovery to production".
Swiss cement major Holcim on Wednesday, 24 July 2013, announced a major restructuring of its India operations. The board of directors of Ambuja Cements on Wednesday, 24 July 2013, approved a proposal, wherein Ambuja will first acquire from Holderind Investments, Mauritius (Holcim), a 24% stake in Holcim India for a cash consideration of Rs 3500 crore, followed by a merger of Holcim India into Ambuja. The intra-group transaction will result in Ambuja holding 50.01% stake in ACC. The merger swap ratio proposed by two independent accounting firms and approved by Ambuja's board, is one Ambuja share for 7.4 Holcim India shares, translating into an implied swap ratio of 6.6 Ambuja shares for every ACC share, Ambuja said in a statement. Based on the approved merger ratio, Ambuja will issue 58.4 crore new equity shares of the company to Holcim, as consideration for the merger. Post the merger, the expanded capital base of Ambuja (post cancellation of the shares held by Holcim India in Ambuja and the issuance of new shares as aforesaid) will increase by 28%. Holcim will then own 61.39% of Ambuja and Ambuja in turn own 50.01% of ACC.
In addition, Ambuja's board also provided its approval for Ambuja to make commercially reasonable efforts to invest up to Rs 3000 crore to acquire an economic ownership in ACC of up to 10% without triggering a mandatory open offer.
Ambuja said that this restructuring exercise is expected to be EPS accretive from year one post completion of the transaction. There is synergy potential of about Rs 900 crore through supply chain and fixed cost optimization expected to be realised in a phased manner over two years post completion of the transaction.
Currently, Holcim owns a little over 50% stake in both Ambuja and ACC.
Meanwhile, Ambuja Cements' net profit fell 30.9% to Rs 324 crore on 8.6% decline in net sales to Rs 2346 crore in Q2 June 2013 over Q2 June 2012. The company announced Q2 result after market hours on Wednesday, 24 July 2013.
Ambuja Cements also that the board of directors of the company at its meeting held on 24 July 2013 approved setting up of a 2.17 million tonnes per annum (MTPA) greenfield clinkerization project at Marwar Mundwa, District Nagaur, Rajasthan and three clinker grinding units of 1.5 MTPA capacity each at Marwar Mundwa, Rajasthan, Dadri (phase II), Uttar Pradesh and Osara, Madhya Pradesh at an approximate cost of Rs 3500 crore.
Rural Electrification Corporation (REC) and Damodar Valley Corporation (DVC) have signed a loan agreement for funding of DVC's first 2X660 MW supercritical thermal power unit at Raghunathpur in West Bengal's Purulia district. The agreement was signed on at Kolkata recently in the presence of Mr. Rajeev Sharma, CMD, REC, Mr. R.N Sen, Chairman, DVC and other senior officials from both the organizations. The loan amount of Rs 6362 crores is to be funded solely by REC. These units will be a part of Raghunathpur Phase II expansion programme of DVC. REC provides financial assistance and promotes rural electrification projects throughout the country. It funds state electricity boards, state government departments and rural electric cooperatives for rural electrification projects.
Key benchmark indices edged lower in choppy trade on Wednesday, 24 July 2013, as the Reserve Bank of India's (RBI) latest measures to squeeze liquidity from the banking system to stem rupee's decline rattled investor sentiment. The S&P BSE Sensex lost 211.45 points or 1.04% to settle at 20,090.68 on that day, its lowest closing level since 17 July 2013.
Foreign institutional investors (FIIs) sold shares worth a net Rs 404.50 crore on Wednesday, 24 July 2013, as per provisional data from the stock exchanges.
Asian stocks fell on Thursday as investors weighed US economic data to gauge the fate of Federal Reserve stimulus. Key benchmark indices in Indonesia, Hong Kong, Singapore, Japan, and Taiwan were down by 0.07% to 0.85%. China's Shanghai Composite rose 0.36%. South Korea's Kospi was flat.
US stocks closed largely lower on Wednesday after improving home sales in the US renewed expectations that the Federal Reserve remains on course to winding down stimulus measures this year.
A report yesterday showed that new home sales rose more than forecast in June to a five-year high, and a manufacturing gauge rose. Fed Chairman Ben S. Bernanke has said asset purchases that have stoked bond and equity gains may be trimmed this year should economic risks subside. US new-home sales climbed 8.3% to an annualized pace of 497,000, the highest level since May 2008, according to Commerce Department data. The Markit Economics preliminary index of US manufacturing increased to 53.2 in July from a final reading of 51.9 a month earlier, the London-based group said.