www.angelbroking.com Market Outlook January 8, 2013 Dealer’s Diary The Indian market is expected to open flat to negative tracking the flat opening of SGX Nifty. Most of the Asian markets are trading in the red. US stocks saw moderate weakness during trading on Monday, giving away some ground after moving sharply higher last week. However, the selling pressure was relatively subdued, and the market held on to the bulk of its recent gains. The major averages ended the day in negative territory but well off their lows for the session. The European markets finished in negative territory on Monday, as investors took profits following the strong gains at the end of the previous trading week. Investors are continuing to evaluate the potential impact of the debt ceiling situation in the US and are preparing for the beginning of the US earnings season. Indian shares fell on Monday, with selling accelerating late in the session, weighed down by weakness in other Asian markets and European stocks as investors moved to the sidelines awaiting cues from central bank meetings in Europe and the UK this week and the fourth-quarter U.S. earnings season. Markets Today The trend deciding level for the day is 19,734 / 6,003 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 19,814 – 19,936 / 6,028 – 6,068 levels. However, if NIFTY trades below 19,734 / 6,003 levels for the first half-an-hour of trade then it may correct up to 19,612 – 19,532 / 5,963 – 5,938 levels. Indices S2 S1 PIVOT R1 R2 SENSEX 19,532 19,612 19,734 19,814 19,936 NIFTY 5,938 5,963 6,003 6,028 6,068 News Analysis Government imposes 20% import duty on some Chinese flat steel products Marico announces business, corporate and organization restructuring Bajaj Auto launches new 100cc vehicle, Discover 100T FI’s turn down Glaxo’s open offer price Bank of Maharashtra to consider raising capital Refer detailed news analysis on the following page Net Inflows (January 04, 2013) ` cr Purch Sales Net MTD YTD FII 3,189 1,937 1,251 4,900 4,900 MFs 473 779 (307) (357) (357) FII Derivatives (January 07, 2013) ` cr Purch Sales Net Open Interest Index Futures 649 834 (185) 7,588 Stock Futures 1,107 1,474 (367) 32,883 Gainers / Losers Gainers Losers Company Price (`) chg (%) Company Price (`) chg (%) Indiabulls Fin 330 6.1 L&T 1,589 (2.4) HPCL 329 4.8 United Brew-$ 905 (2.3) SAIL 100 4.6 Strides Arco 1,049 (2.3) Mangalore Ref 68 4.2 REC 260 (2.1) ADANI POWER 65 3.8 Jaiprakash Asso 99 (2.1) Domestic Indices Chg (%) (Pts) (Close) BSE Sensex (0.5) (92.7) 19,691 Nifty (0.5) (27.7) 5,988 MID CAP 0.2 17.4 7,332 SMALL CAP 0.5 41.7 7,657 BSE HC 0.4 33.3 8,239 BSE PSU 0.0 0.4 7,598 BANKEX (0.6) (91.7) 14,603 AUTO 0.4 43.3 11,634 METAL 0.9 106.5 11,396 OIL & GAS 0.2 19.2 8,875 BSE IT 0.2 11.8 5,810 Global Indices Chg (%) (Pts) (Close) Dow Jones (0.4) (50.9) 13,384 NASDAQ (0.1) (2.8) 3,099 FTSE (0.4) (25.3) 6,065 Nikkei (0.8) (89.1) 10,599 Hang Seng (0.0) (1.3) 23,330 Straits Times (0.1) (0.4) 3,223 Shanghai Com 0.4 8.4 2,285 Indian ADR Chg (%) (Pts) (Close) INFY 1.4 0.6 $43.3 WIT 0.6 0.0 $9.0 IBN (0.3) (0.1) $44.9 HDB (0.9) (0.4) $40.8 Advances / Declines BSE NSE Advances 1,617 841 Declines 1,318 683 Unchanged 131 67 Volumes (` cr) BSE 2,649 NSE 12,365
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Market Outlook January 8, 2013
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Market Outlook January 8, 2013
Dealer’s Diary The Indian market is expected to open flat to negative tracking the flat opening of SGX Nifty. Most of the Asian markets are trading in the red.
US stocks saw moderate weakness during trading on Monday, giving away some ground after moving sharply higher last week. However, the selling pressure was relatively subdued, and the market held on to the bulk of its recent gains. The major averages ended the day in negative territory but well off their lows for the session. The European markets finished in negative territory on Monday, as investors took profits following the strong gains at the end of the previous trading week. Investors are continuing to evaluate the potential impact of the debt ceiling situation in the US and are preparing for the beginning of the US earnings season.
Indian shares fell on Monday, with selling accelerating late in the session, weighed down by weakness in other Asian markets and European stocks as investors moved to the sidelines awaiting cues from central bank meetings in Europe and the UK this week and the fourth-quarter U.S. earnings season.
Markets Today The trend deciding level for the day is 19,734 / 6,003 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 19,814 – 19,936 / 6,028 – 6,068 levels. However, if NIFTY trades below 19,734 / 6,003 levels for the first half-an-hour of trade then it may correct up to 19,612 – 19,532 / 5,963 – 5,938 levels.
News Analysis Government imposes 20% import duty on some Chinese flat steel products Marico announces business, corporate and organization restructuring Bajaj Auto launches new 100cc vehicle, Discover 100T FI’s turn down Glaxo’s open offer price Bank of Maharashtra to consider raising capital
Refer detailed news analysis on the following page
Company Price (`) chg (%) Company Price (`) chg (%)
Indiabulls Fin 330 6.1 L&T 1,589 (2.4)
HPCL 329 4.8 United Brew-$ 905 (2.3)
SAIL 100 4.6 Strides Arco 1,049 (2.3)
Mangalore Ref 68 4.2 REC 260 (2.1)
ADANI POWER 65 3.8 Jaiprakash Asso 99 (2.1)
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex (0.5) (92.7) 19,691
Nifty (0.5) (27.7) 5,988
MID CAP 0.2 17.4 7,332
SMALL CAP 0.5 41.7 7,657
BSE HC 0.4 33.3 8,239
BSE PSU 0.0 0.4 7,598
BANKEX (0.6) (91.7) 14,603
AUTO 0.4 43.3 11,634
METAL 0.9 106.5 11,396
OIL & GAS 0.2 19.2 8,875
BSE IT 0.2 11.8 5,810
Global Indices Chg (%) (Pts) (Close)
Dow Jones (0.4) (50.9) 13,384
NASDAQ (0.1) (2.8) 3,099
FTSE (0.4) (25.3) 6,065
Nikkei (0.8) (89.1) 10,599
Hang Seng (0.0) (1.3) 23,330 Straits Times (0.1) (0.4) 3,223 Shanghai Com 0.4 8.4 2,285
Indian ADR Chg (%) (Pts) (Close)
INFY 1.4 0.6 $43.3
WIT 0.6 0.0 $9.0
IBN (0.3) (0.1) $44.9
HDB (0.9) (0.4) $40.8
Advances / Declines BSE NSE
Advances 1,617 841
Declines 1,318 683
Unchanged 131 67
Volumes (` cr)
BSE 2,649
NSE 12,365
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Market Outlook January 8, 2013
Government imposes 20% import duty on some Chinese flat steel products
Bloomberg has reported that the government has imposed 20% import duty on some of the flat steel products from China in order to protect domestic steel mills from threat of imports. During January- September 2012, total steel imports by India have increased by 46.3% yoy to 5.9mn tonne. The duty imposed is expected to be effective for a period of 200 days. Steel stocks rose by 2-5% post this announcement. Iron and steel imports together constitute about 2.5% - 3.0% of India’s total imports and we note that the recent rise in steel imports by India have been originating mainly from FTA countries (South Korea, Japan etc) which attract very low import duty. We do not expect a meaningful rise in domestic steel prices due to the import duty. Further, we also believe that the move is unlikely to have any material impact on curbing overall imports in the economy. Thus, we maintain our estimates and ratings on the stocks.
Marico announces business, corporate and organization restructuring
The Board of Directors of Marico has approved the restructuring of businesses, corporate entities and organization involving a) the demerger of Kaya Skin Care Solutions into a separate company by name Marico Kaya Enterprises Ltd (MAKE) and b) formation of a unified FMCG business with operations in India and abroad headed by a single CEO. The restructuring plan would be effective from April 1, 2013.
As per the proposed Kaya demerger plan, MAKE will become the holding company of Kaya Ltd (India) and Kaya entities in the Middle East and South East. Currently the promoters of Marico have a 60% stake in Marico and post demerger the shareholding structure of MAKE will be identical to Marico’s current shareholding structure. Shareholders of Marico will be allotted one share of MAKE for every 50 shares held in Marico. The equity shares of MAKE will be listed in both BSE and NSE after all the statutory approvals are obtained.
Marico currently has three business verticals namely a) Indian Consumer products business b) International FMCG business and c) Kaya Skin Care Solutions (Kaya) with operations in India and abroad. Post the restructuring, Kaya Skin Care solutions would operate as a separate listed entity (MAKE). The Indian and International FMCG businesses which were till date headed by two different CEOs will be unified and will be headed by a single CEO.
Kaya has been a loss making venture for Marico. During FY2012, it made a loss of `29cr at the PBIT level on net sales of `279cr (a loss of `33cr in FY2011). Demerger of the loss making venture would result in better return ratios for Marico. At the CMP, Marico is trading at 28x FY2014E earnings. We maintain a Neutral on Marico.
Bajaj Auto launches new 100cc vehicle, Discover 100T
Bajaj Auto (BJAUT) has launched a new 100cc motorcycle, Discover 100T at a price of `50,500 ex. showroom Delhi. The new motorcycle will be powered by the company’s DTS-i technology and is likely to deliver 10.2PS of power and offer a fuel efficiency of 87kmpl. The Discover 100T is based on the all new Discover platform through which Discover 125ST has already been launched. The new
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Market Outlook January 8, 2013
motorcycle has been positioned by the company at the upper end of the less than 110cc segment. We expect the launch of Discover 100T along with the existing, Discover 100 to strengthen BJAUT’s positioning in the less than 110cc segment. Currently, BJAUT has ~20% market share in the segment which is dominated by Hero MotoCorp (~70% market share) through its flagship models Splendor and Passion. BJAUT is targeting a market share of ~30% in the less than 110cc segment over the next two years. We believe that the new launch will enable BJAUT to further ramp up its domestic volumes going ahead. The company is already benefitting from the new launches of Discover 125ST (July 2012) and Pulsar 200NS (June 2012) which accounts for ~15% of the company’s motorcycle volumes. At the CMP of `2,194 the stock is trading at 17.3x FY2014E earnings which is slightly higher than its historical average. Hence, we maintain our Neutral rating on the stock.
FI’s turn down Glaxo’s open offer price
As per media reports financial institutions, led by Life Insurance Corporation, have declined to participate in the open offer announced by GlaxoSmithKline (GSK) for its Indian subsidiary GlaxoSmithKline Consumer Healthcare (GSK consumer) in November 2012. The institutions, which jointly hold 32% stake believe the open offer price of `3,900/share is unattractive. The tendering period for open offer is expected to begin from January 17th 2013. At the CMP GSK consumer is trading at P/E of 32.5x FY2014E estimates. We maintain a Neutral view on GSK consumer.
Bank of Maharashtra to consider raising capital
The board of Bank of Maharashtra is scheduled to meet on January 10, 2013 to consider the proposal to raise capital by issuing equity shares upto 20cr by means of FPO and/or rights issue and/or QIP in FY2014. As of 2QFY2013, CAR for Bank of Maharashtra remained one among the lowest at 10.7%, with tier-I at 7.1%. At CMP, the issue would aid the company to raise a sum of upto `1,280cr, thereby aiding its tier-I capital adequacy by nearly 200bps. Recently the bank had also successfully issued tier-II bonds worth `1,000cr. After the recent run up in stock price, the stock now trades at 0.8x FY2014E ABV and hence, we recommend neutral view on the stock.
Disinvestment in Oil India, NTPC soon: DK Mittal Round 2 of spectrum auction on March 11 Govt kick starts process of CIL restructuring
Corporate News
Tata Motors introduces 4-yr warranty on heavy truck range REpower signs contracts for wind farm in UK Opto to supply medical devices to Chicago transit system
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Date Company
January 09, 2013 IndusInd Bank
January 10, 2013 Sintex, Cera Sanitaryware Ltd
January 11, 2013 Infosys
January 12, 2013
January 13, 2013 Petronet LNG
January 14, 2013 TCS, Electrosteel Castings
January 15, 2013 Axis Bank, South Ind.Bank
January 16, 2013 Bajaj Auto
January 17, 2013 Hero Motocorp, HCL Tech, Exide Industries, Federal Bank, Infotech Enterprises
January 18, 2013 HDFC Bank, M&M, Mindtree
January 19, 2013 Force Motors
January 20, 2013
January 21, 2013 HDFC, Asian Paints, Alembic Pharma
Source: Bloomberg, Angel Research
Result Calendar
Global economic events release calendar
Date Time Country Event Description Unit Period Bloomberg Data
Last Reported Estimated
January 8, 2013 3:30PM Euro Zone Euro-Zone Consumer Confidence Value Dec F (26.60) --
January 10, 2013 5:29PM India Imports YoY% % Change Dec 6.40 --
5:29PM India Exports YoY% % Change Dec (4.20) --
5:29PM China Exports YoY% % Change Dec 2.90 5.50
5:30PM UK BOE Announces rates % Ratio Jan 10 0.50 0.50
6:15PM Euro Zone ECB announces interest rates % Jan 10 0.75 0.75
January 11, 2013 7:00AM China Consumer Price Index (YoY) % Change Dec 2.00 2.30
3:00PM UK Industrial Production (YoY) % Change Nov (3.00) (2.00)
11:00AM India Industrial Production YoY % Change Nov 8.20 --
January 14, 2013 12:00PM India Monthly Wholesale Prices YoY% % Change Dec 7.24 --
January 15, 2013 3:00PM UK CPI (YoY) % Change Dec 2.70 --
7:00PM US Producer Price Index (mom) % Change Dec (0.80) --
January 16, 2013 3:30PM Euro Zone Euro-Zone CPI (YoY) % Dec 2.20 --
7:00PM US Consumer price index (mom) % Change Dec (0.30) --
7:45PM US Industrial Production % Dec 1.05 --
January 17, 2013 7:00PM US Housing Starts Thousands Dec 861.00 --
7:00PM US Building permits Thousands Dec 900.00 --
January 18, 2013 7:30AM China Industrial Production (YoY) % Change Dec 10.10 --
7:30AM China Real GDP (YoY) % Change 4Q 7.40 --
January 22, 2013 8:30PM US Existing home sales Millions Dec 5.04 --
January 23, 2013 3:00PM UK Jobless claims change % Change Dec (3.00) --
January 24, 2013 2:00PM Germany PMI Manufacturing Value Jan A 46.00 --
January 25, 2013 3:00PM UK GDP (YoY) % Change 4Q A -- --
8:30PM US New home sales Thousands Dec 377.00 --
January 29, 2013 8:30PM US Consumer Confidence S.A./ 1985=100 Jan 65.10 --
11:00AM India RBI Repo rate % Jan 29 8.00 --
11:00AM India RBI Cash Reserve ratio % Jan 29 4.25 --
11:00AM India RBI Reverse Repo rate % Jan 29 7.00 --
January 30, 2013 7:00PM US GDP Qoq (Annualised) % Change 4Q A 3.10 --
January 31, 2013 12:45AM US FOMC rate decision % Jan 30 0.25 --