± Six core industries grew by 9.4% yoy in January 2010. (BS)
± Power Tariffs across the country may have to be revised upwards in excess of 7% annually if the Government goes by the recommendation of the 13th Finance Commission. (ET)
± Government has invited applications from telecom operators for bidding for 3G and Broadband wireless access spectrum to be auctioned starting April 9. (BL)
± Gujarat proposes 5% increase in tax on tobacco products. (BL)
Today, is the Big Budget day. No point in speculating now on what it will have in store for the India Inc. and the people in general and the market in particular. Let’s wait and listen. With the Finance Ministry having accepted most recommendations of the 13th Finance Commission, there is not much suspense left so far as fiscal consolidation is concerned. The fact that the fiscal stimulus has to be unwound is a no-brainer. Some announcement on GST implementation is likely. Some sops may be retained for sectors that are yet to recover fully.
Expectations of big bang reforms are minimal. One space which needs to be dealt with urgently though is the huge subsidies, especially to the oil sector.Whether the Finance Minister takes any concrete step in this direction is anybody’s guess. On the whole, the market will be volatile, which is a given on the Budget day. The start will be nervous due to mixed global markets.
The ministry's economic survey for the financial year 2009-10 urged a calibrated exit from fiscal stimulus, which cushioned India's economy from the worst of the global downturn but pushed the fiscal deficit to a 16-year high of 6.8% of GDP.
The report, presented in Parliament ahead of Friday's Union Budget, forecast economic growth at 8.25%-8.75% in 2010-11, accelerating to over 9% the year after, compared with projected growth of 7.2%-7.5% in the current year.
SBI plans to raise up to US$4.3bn through a rights equity issue in 2010-11. The bank needs about half the amount to sustain growth over the next 5 years, the chairman was quoted as saying.
SBI to raise Rs200bn via right issue; needs over Rs500bn capital in the next five years. (ET)
ONGC is looking to enhance its presence in Africa and Latin America. (ET)
Wipro wins 10-year outsourcing deal from Punjab and Sind Bank. (BS)
SBI to buy significant stake in Tata Motor Finance says SBI chairman. (ET)
Bharti Airtel eyes US$7bn offshore loans to back its offer to buy Zain’s African cellular assets. (BS)
Government puts on hold the IPO of Satluj Jal Vidyut Nigam following poor response to the FPO of NTPC and REC. (ET)
Rahul Bajaj sells stake in Bajaj Electrical to Shekhar Bajaj. (BS)
ITC plans to foray the food market of UAE and Gulf Co-operation Council. (BS)
Mindtree to raise debt upto US$100mn. (BS)
Today Listing
Hathway Cable
(BSE Code: 533162)
Today,the fact that master blaster Sachin Ton-dulkar has overshadowed Mamata Banerjee is proof enough of how disappointing Railway Budget is. Populism took precedence over pragmatism. One only hopes the Finance Minister doesn’t fall prey to the temptation. Those batting around conventional wisdom of making some quick gain on railway-related stocks had to make a hasty retreat less their capital evaporates further.
Meanwhile, the Economic Survey will be unveiled today. Here again, we have seen that the Survey always talks of a spate of reforms urgently needed to accelerate India’s growth. But, the Budget hardly incorporates any recommendations made in the Survey. The key is to keep expectations low and one will not be disheartened. As for the markets, they are set for another colorless show. The opening is likely to be sedate to say the least. There might be some more volatility today due to the F&O expiry. Global cues are inconclusive. US market ended higher on reassurances from Federal Reserve chairman Ben Bernanke that he will keep rates at record low for some time to come. Asian markets are mixed. European shares managed modest gains.
The market is in a predicament and a bit nervous ahead of Budget. The NSE Nifty has been stuck in a range of 4800-4930 of late and is unlikely to make a big move anytime soon- at least not today. A long overdue breakout in either direction could take place only post the Budget. At the same time, one has to take into account the emerging global situation before jumping the gun.
FIIs were net buyers in the cash segment on Wednesday at Rs4.85bn on a provisional basis while the local funds were net sellers of Rs1.54bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers of Rs7.47bn. On Tuesday, FIIs were net buyers of Rs7.44bn in the cash segment.
Railway Minister Mamata Banerjee could be inspired to chart her on course when she presents Railway Budget today. She is unlikely to follow her predecessor though, who brought back glory to the Railways and earned plaudit for himself.
Cairn India's 670km long crude carrier pipeline is nearing completion and will be commissioned next month. (BL)
Maruti Suzuki admitted to recalling 100,000 A-Stars which were manufactured before August 22, 2009 to replace faulty components that could cause fuel leakages. (BS)
HDFC has ruled out any immediate hike in its lending rates given the surplus liquidity in the system and low credit demand. (ET)
The Punjab government has cleared the phase-I of Super Mega Mixed Use Integrated Industrial Park being developed by DLF Home Developers Ltd over an area of 1,250 acres, with an investment of Rs27bn in Mullanpur Local Planning Area. (BS)
Public sector banks and insurance majors step in to salvage the FPO of state-owned Rural Electrification Corporation which closed with the issue being oversubscribed 3x. (BS)
Axis Bank’s private equity arm Axis Private Equity is mulling to separate itself from the parent company in the coming weeks - a move that is part of the group’s overall restructuring plan. (ET)
UK-based GlaxoSmithKline’s plan to buy about 5% stake in Dr Reddy’s Laboratories for US$150-160mn is stuck and unlikely to happen. (ET)
Though Railway Minister Mamata Banerjee could chart her on course, she is unlikely to replicate the success of her predecessor, who brought back glory to the Railways and earned plaudit for himself. With an eye on West Bengal polls, ‘Didi’ might be inclined to play to the gallery. Too much populism and less emphasis on revenue generation could mar the sentiment further. A ‘Peace Train’ may be in the offing between Kanyakumari to Kashmir.
As for the markets, there is no peace or happiness at start. We expect a soft start owing to weak global markets. By itself, the Railway Budget is not expected to swing the mood on the bourses. That might happen when the Union Budget is out on Friday. But, even that might not be able to do so, given the concerns on local as well as global front. In short, the choppy consolidation phase may prevail for a while before the market breaks out of the current rangebound activity. The best way to overcome near-term uncertainty is to stay put and not do anything adventurous.
FIIs were net buyers in the cash segment on Tuesday at Rs5.5bn on a provisional basis while the local funds were net sellers of Rs1.8bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers of Rs2.38bn. On Monday, FIIs were net buyers of Rs396mn in the cash segment, while Mutual Funds were net buyers at Rs889mn, according to SEBI web site.
FIIs were net sellers in the cash segment on Monday at Rs1.02bn on a provisional basis while the local funds were net buyers of Rs1.17bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers of Rs9.11bn. On Friday, FIIs were net buyers of Rs2.93bn in the cash segment, while Mutual Funds were net sellers at Rs1.48bn, according to SEBI web site.
Today, though India has successfully weathered the financial storm, the market remains in a limbo. With budget a couple of days away, the lackluster trend may remain. We expect a slightly lower start given that most world markets are in the red.
The main indices have been stuck in a tight range amid concerns over fresh local as well as external headwinds. Even the broader market has been largely lackluster. FII flows have been erratic with a negative bias. Buying from local funds has been anything but tepid. The NSE Nifty could meet resistance at around 4930. It has to sustain above 4950 convincingly to signal start of a fresh advance. Conversely, a break below 4800 might take it as low as 4650. We expect Nifty to remain in a range of 4800 to 4900 in the near-term. Of course, the budget could potentially alter the current market direction.
Global markets made a tentative start to the week as concerns about the speed of monetary tightening and worries over Greece’s fiscal position policy linger.
± RIL has raised its offer for Lyondell Basell (LB) to US$14.5bn, US$1bn higher than its previous offer made in November. (BS)
± Power Grid Corp of India plans to raise Rs35bn by selling shares to fund an expansion of its grid to end blackouts. (BS)
± Religare Enterprises is close to buying a majority stake in US based venture capital and private equity investment firm Northgate for US$200m (ET)
± Tata Steel expects the arrival of equipment and machinery worth Rs5bn for the 6mtpa project at Kalinganagar by the end of FY10. (BS)
± The devastating fire at IOC’s Jaipur fuel depot has delayed commissioning of Cairn India’s pipeline for transporting crude from its Rajasthan oil fields. (BS)
± The Government is likely to approach state-owned banks and institutions, including the biggest local investor, Life Insurance Corporation (LIC), to bail out REC’s equity issue, if investors choose to stay away. (ET)
± Apollo Tyres plans to make Chennai its hub for both manufacturing and research and development (R&D) and is setting up a Rs20bn manufacturing facility. (BS)
± ITC plans to launch noodles under the ‘Sunfeast’ brand name. (BS)
± L&T will finalise plans to unlock value in its financial services arm in the next 12 months. (ET)
± US-based investor fund QVT has proposed an alternative debt restructuring plan to Wockhardt. (BS)
Power Finance Corporation (PFC) - BUY
CMP Rs235, Target Price Rs299, Upside 27.3%
Power Finance Corporation (PFC) with prominent market share (20%+) in power financing business is expected to be the key beneficiary of the hefty capex plan as articulated in the XIth Five Year Plan. The company has witnessed robust 32% CAGR in sanctions over FY05-FY09. With an improving investment appetite, we expect PFC to capitalise on the growth opportunity. Predominant exposure towards generation segment, increasing proportion of disbursement towards private sector and near zero levels of NPA would drive a sturdy 21% CAGR in balance sheet and 22% CAGR in loan book over FY09-11E. Recommend BUY.
± SBI may not raise deposit rates before May-June. (BL)
± REC FPO subscribed just 0.29 times receiving bids for 34.90mn shares out of the total issue size of 171.73mn shares on opening day. (BS)
± HDFC Bank increases the rates on fixed deposits by up to 150bps across maturities. (BL)
± Reliance MediaWorks has made an open offer to purchase a controlling stake in Fame India. (Mint)
± Bharti Airtel chairman says his company does not need any regulatory approvals in India to acquire African assets of Zain Telecom; hopes the deal would be concluded by the end of April. (TOI)
± Bharti Airtel lines up funds aggregating US$9bn from foreign and local banks for its proposed acquisition of Zain Telecom, as it settles to finance the entire deal through debt in the first phase. (ET)
± S&P and Crisil placed Bharti Airtel’s long-term bank facilities and debt programme on ‘rating watch with negative implications. (ET)
± Ambuja Cements plans to spend around Rs35bn to expand its capacity to 24mn tons from the current 19mn tons by year-end. (ET)
± Shree Renuka Sugars announces the acquisition of 51% stake in Equipav S.A. Acucar e Alcool, one of the largest sugar and ethanol companies in Brazil, for Rs15bn. (BL)
± Patel Engineering plans to dilute as much as 40% of equity in its power subsidiary, Patel Energy Resources. (BS)
± The Foreign Investment Promotion Board asks United Breweries Holdings to clarify some issues on an application to bring in foreign investment. (BS)
A good start to an action-packed week will at least save you the Monday blues. Asian markets are all smiling with the Nikkei 225 up nearly 3%. The Railway Budget, Economic Survey and Union Budget and F&O expiry will see the bulls and bears have a slug-fest especially later this week.
Besides the Q3 GDP figures later this week, the report of the 13th Finance Commission will also be closely watched. A new FDI policy is expected to be unveiled on March 31, according to a report which adds that the government has begun the process of restricting fresh foreign investment in the tobacco sector.
A lot of economic reports are due from the US this week, including numbers on housing and revision in third quarter GDP. The Federal Reserve Chairman Ben Bernanke will testify on the state of the economy and monetary policy on Wednesday.
Buy on dips :Videocon Inds at 220-240 hold for Target Rs255: The stock continues to be in an uptrend after breaking out a downward-sloping trend line since January 2010. The momentum indicator RSI is exhibiting positive movement suggesting further upside in the near term. We believe a move past Rs244 will see the stock testing January 2010 peak. Keeping in mind the above mentioned technical parameters, we recommend traders to buy the stock in the range of Rs220-240 with SL of Rs217 for target of Rs255 and Rs260 plus in coming days.
We expect significant positive measures for the rural economy, in line with the government’s agenda of inclusive growth, infrastructure development and educational reform. Announcement on disinvestment and GST roadmap will be tracked closely. The budget is unlikely to cause any negative impact for equities. However, it may fall short of the triggers to boost the markets. The expected excise hike could act as a near-term depressant for certain sectors
Fiscal prudence is expected to be the primary agenda of Budget 2010-11. This is certainly not the year for industry-specific freebies or any galloping gross budgetary support. Instead, the Finance Minister will aim at bringing down fiscal deficit, largely through stimulus withdrawals, disinvestments and 3G auctions, among others. Inflation control measures (mainly food inflation) will also be a focus area.
Keep profit booking at higher levels, hold delivery, do not over trade stay light, siting on cash will WIN. Budget my surprise all either way. Avoid this pre budget positions.
Happy Budgeting.. oh!! Happy trading..
SAIL in talks with some companies for acquiring coking coal blocks in Australia, New Zealand, Mozambique and Indonesia to achieve its production targets. (BL)
RIL may ask for more time to sweeten LyondellBasell bid. (FE)
Tata Motors appoints Ralf Speth as CEO of Jaguar Land Rover with the overall responsibility for its operations. (ET)
Swiss loan puts Wockhardt in a spot of bother. (ET)
Three international investors have decided to sell their holdings in Vedanta on concerns over its human rights record. (ET)
Navratna companies such as IOC, NTPC, ONGC and SAIL are likely to get ‘Maharatna’ status within the next 60-90 days. (ET)
Government allows ONGC and GAIL India to take 8.4% and 4.2% stake respectively, in a pipeline that China is building in Myanmar to transport gas from offshore blocks A-1 and A-3. (BL)
BPCL arm strikes gas in Mozambique. (FE)
Dr Reddys’ Laboratories to move 25% more Betapharm production to India. (BS)
M&M’s farm equipment sector is looking for local partners to outsource the assembly of its newly-launched low-cost 15HP tractor, Yuvraj. (FE)
Dishman Pharma has entered into a strategic alliance with a California-based biotech company Codexis. (ET)
We expect a weak start in India amid concerns on monetary tightening worldwide. One needs to be careful amid constant flow of news and heightened market volatility across asset classes. Inflation is threatening to touch double digits though the RBI maintains it won’t hike rates before April. But then the RBI too could surprise if inflation shoots up sharply.
Late last week, Fed chief Ben Bernanke had indicated a move was coming, but no many anticipated any action between meetings. The dollar is up while gold prices have slipped further. Crude oil too is also up. The Fed move came after Wall Street trading, where US stocks gained in a volatile session. European shares advanced but Asian markets are mixed. China market remains shut.
FIIs were net sellers in the cash segment on Thursday at Rs3.51bn on a provisional basis while the local funds were net sellers of Rs1.22bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers of Rs479.9mn. On Wednesday, FIIs were net buyers of Rs12.24bn in the cash segment, while Mutual Funds were net buyers at Rs2.62bn, according to SEBI web site.
± BHEL to hire 8,000 people in the next two years to meet growing domestic demand. (ET)
± Abbott labs has announced an open offer to acquire 20% of Solvey Pharma India at Rs3,054 per share. (ET)
± Union Bank of India will price its public issue in a range of Rs60-66 per share. (ET)
± JK Lakshmi Cement to raise Rs6bn via ECBs and rupee term loans in the next quarter to finance its Greenfield projects. (ET)
± Mahindra Satyam is looking to hire around 5,000 people, including freshers and experienced professionals, by the end of next month. (BS)
± Havells India plans to produce ceramic metal halide (CMH) lamps which are designed for indoor and outdoor lighting applications. (BS)
± Novartis is looking to buy out the remaining stake in US-based eye care group Alcon by the end of this year. (BS)
± Areva T&D India has been awarded a Rs1.2bn contract for electrical Balance of Plant (eBOP) by L&T Power for state utility, Madhya Pradesh Power Generating Company Ltd. (BS)
± L&T General Insurance is ready to launch its operations in the next three-five months. (BS)
± SpiceJet will start flights on international routes by this year if it receives all the requisite approvals. (BL)
± Chettainad Cement is planning to raise its capacity to 25mtpa by 2020 from 8.5mtpa currently. (ET)
± Government to ban FDI in Tobacco sector. (ET)
± Prime minister’s economic advisory council has pitched for a single Cenvat rate, which would be higher than the current 8%. (ET)
± India has retained its top slot in gold consumption. (ET)
± Tax heavens pose a threat to security because of their complex and secret laws, says the finance ministry. (ET)
± Government is considering selling part of its stake in PSU banks to LIC and GIC. (FE)
± Banks want the deadline for the implementation of base rate to be extended by three months. (FE)
± The government is confident that food prices will start easing from April when the rabi harvest hits the market. (BS)
FIIs were net buyers in the cash segment on Wednesday at Rs5.2bn on a provisional basis while the local funds were net buyers of Rs1.97bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers of Rs7.77bn. On Tuesday, FIIs were net buyers of Rs2.57bn in the cash segment, while Mutual Funds were net sellers at Rs590mn, according to SEBI web site.
Today,we expect a subdued opening owing to mixed global cues. Asian markets are down mostly, barring Japan. Chinese markets will resume trading next week. US stocks closed higher and European stocks rose for a third straight session. We expect a choppy session with a slightly positive bias. The run-up if any to the budget can be used to get out of event-related counters.
The spurts of green in recent times give some confidence that the world has weathered the financial storm well so far. We still have to get out of the woods and on to a highway. For every 2-3 good news is encountered with a set of bad news, which sometimes triggers unnecessary panic. China is overheated while Europe is facing certain debt issues. The US is growing but the quality of recovery is questionable. Unemployment is still pretty high in the matured economies.
For India, the big issue is inflation and its broader economic fallout. Interest rates are set to head north, slowly but surely; need not be steadily though. The Government has limited elbow room on account of a bloated fiscal deficit. With the economy doing well, a partial rollback of fiscal stimulus is definitely on the cards.
The NSE will introduce 11 additional stocks in the F&O segment.
Videocon Industries Ltd,
Godrej Industries Ltd,
Adani Enterprises,
Apollo Tyres,
Areva T&D India,
BGR Energy Systems,
Fortis Healthcare,
Jain Irrigation Systems,
Mcleod Russel India,
Mundra Port & SEZ and
Onmobile Global.
± Dutch firm Lyondell Basell Industries’ agreement with its creditors, that will help its emergence from Chapter11, could hit Reliance Industries plans. (FE)
± Government has demanded another US$2.7mn from Reliance Industries towards royalty and profit petroleum payments on gas produced from the Krishna-Godavari (KG) D6 for the six-month period from April-September 2009, arguing that the company did not take into account the marketing margin it levies while calculating the dues. (ET)
± Bharti Airtel said the acquisition of Zain Group's African assets would result in a total payout of US$9bn, which includes any loans payable by the operating companies to Zain Group. (BL)
± TCS said it will review salary increment plans by this month-end, as signs of revival of demand in the sector get stronger by the day. (ET)
± Entering the business of combat vehicles manufacturing for the defence sector, Tata Motors plans to bid to supply light bullet-proof vehicles to the Indian Army, with a possible order size of Rs3.5bn. (BS)
± Tata Motors said it has cut production by about 5-10% in its commercial vehicle business since January due to shortage of key components like trucks/bus radial tyres. (BL)
± Tata Motors plans to increase prices of its commercial vehicles by 1-2% from April when the new emission norms become effective. (ET)
± Tata Motors is looking to offload stake in its finance arm, Tata Motors Finance. (ET)
± Italian defence and aerospace manufacturer Finmeccanica unit AgustaWestland and Tata Sons signed a JV to assemble AW119 helicopters in Hyderabad. (BS)
± BHEL will sign a MoU with Japan's Toshiba Corp for a transmission and distribution joint venture to offer turnkey services in the country’s power transmission sector and set up focus on the distribution segment as well. (BL)
The difficulties seem to take a back seat as the market is slated to open in the green. US stocks took off well after a President’s Day break following better-than-expected quarterly results from Merck and Barclays. Commodity prices and shares got a boost from a weaker dollar.
A kind of suspense continues on the outcome of the budget which is keeping investors on tenterhooks. With LIC expecting to invest further ~Rs100bn in the equity markets by March-end, many hope to quickly ride past the 5000 mark around budget time.
The Dow Jones rose 170 points, its biggest daily gain since Nov. 9 ‘09. The S&P 500 was up 1.8% while the Nasdaq added 1.4%. Asian markets are all up ~2%.
With most of the major Asian markets back with a bang we expect a solid start. However, one must not forget possibilities of a partial and calibrated rollback of the fiscal stimulus. Another daunting task for the government is to cap inflation which is on the verge of crossing double digit.
Fantastic performance
of our last recommendation
± WPI basket continues to rise as it increases 8.56%
± Primary goods index continues to surge on back of higher prices of food articles
± Food products prices cause higher manufactured goods index
± Fuel index rises 6.9% yoy as crude oil price increase
