EQUITY UPDATE – 8 AUGUST 2012

INDIA

Rating agency CRISIL reduced it’s forecast for India’s GDP growth in FY12-13 to 5.5 percent from 6.5 percent. Rainfall deficiency and the worsening of the Euro zone crisis are the major factors which could affect GDP, it cited. The agency noted that it expects the Indian economy to attract lower foreign capital inflows compared to its earlier estimates. The rupee was also expected to settle around 53 to the US dollar vs 50 earlier.  The report also revised up its average WPI inflation forecast for 2012-13 to 8.0 percent from 7.0 percent. (Moneycontrol)

According to Dun and Bradstreet Indian CFO survey, macro-economic conditions in India are likely to remain ‘unfavourable’ or remain unchanged in the July-September quarter. Around 73 per cent candidates surveyed were pessimistic or neutral about the macro-economic outlook during 3Q12. (Financial Express)

The Micro and Small Medium Enterprise (MSME) Additional Secretary opposed IKEA’s plan to set up operations in India if it did not source 30 percent of its supplies from domestic industries. With IKEA lobbying for 100 percent FDI, it also was keen on avoiding compulsory sourcing from domestic markets on various investment and cost concerns. (Economic Times)

According to RBS private banking, Nifty index is expected to hit 5,700 level by December 2012. The forecast is based on investor-friendly policy reforms, a 0.50 per cent rate cut by RBI post-September, improvement in fiscal and revenue deficit and a third round of QE from United States. The report also highlighted that a stronger growth in developed world, an enhanced QE programme and a firmer domestic growth could take nifty beyond 6,200 mark. However in an opposite scenario, if US growth falters and disappoint on the QE front, and policy paralysis could take nifty to 4,900 levels. (Economic Times/PTI)

FII’s made gross purchases of INR 2,455.56cr and sales of totalling INR 1,639.61cr. DII’s made gross purchases of INR 1,234.50cr and sales totalling INR 1,179.26cr. (Business Standard)

Reliance Industries/British Petroleum plc – Co.’s received a conditional approval for over USD 1 b of investments in the KG-D6 basin to raise output at these fields. It was also asked by the management Committee to drill additional wells to confirm oil discovery at three wells in the Krishna Godavari basin. (Economic Times)

Coal India – Mining co. agreed to pay a penalty on its failure to provide adequate supply of coal to Indian power projects which resulted in a shortfall ranging from 1.5 percent to 40 percent. It would also negotiate with the Central Electricity Authority on combining prices of imported and domestic coal to market it to customers.  In other news, co. plans to import 20m tons of coal in the current fiscal to bridge the supply shortage. (Economic Times/Fox Business)

Jet Airways – Co. to hive-off its loyalty programme ‘JetPrivilege’ into a wholly-owned subsidiary. (Economic Times/PTI)

Lanco Infratech – Crisil downgraded the rating on co.’s bank facilities to ‘BB’ from ‘BBB’. The rating agency cited relative less time left to meet the debt payment of INR 700cr between October 2012 to January 2013. (Business Standard)

Kingfishers Airlines –  According to a source, co.’s pilots and engineers has decided not to report to work from tomorrow (8th August), due to non payment of salaries. (Financial Express)

INDIAN EARNINGS

Punj Lloyds – Co. reported 1Q12-13 net loss of INR 13.37cr vs. previous net loss of INR 12.25cr. Net sales of at INR 2,706.82cr vs. previous INR 2,248.31cr. (Business Standard/PTI)

Sobha Developers – Co. reported 1Q12-13 net profit at INR 45cr vs. previous INR 26cr. Total operating income at INR 433.2cr vs. previous INR 277.7cr. (Business Standard/PTI)

NHPC – Co. reported 1Q12-13 net profit at INR 669.81cr vs. previous INR 791.05cr. Total income at INR 1,729.53cr vs. previous INR 1,666.89cr. (The Hindu Business Line)

Bombay Dyeing – Co. reported 1Q12-13 net loss at INR 27.50cr vs. previous net loss of INR 39.79cr. Net sales at INT 465.73cr vs. previous INR 394.84cr. (Financial Express)

EUROPE

According to Eurogroup’s President Jean-Claude Junker, the exit of Greece from the eurozone would still be manageable inspite of the risks it posed to the citizens of the country. He ruled out an exit as early as autumn. (Reuters)

A Fitch rating’s investor survey showed that, European fixed-income investors expected eurozone to resist pressures and stay intact. Around 21 per cent respondents expected Greece and possibly one or two more countries to exit the EU. However, according to the rating agency, full break-up and demise of the euro was highly unlikely, because of the huge costs and the strong political commitment anchored to the EU. (Economic Times/Reuters)

Switzerland’s foreign reserves swelled to Swiss Franc (SFr) 406 b (USD 419.7 b) in July as its central bank purchased huge amounts of euros to prevent the franc from strengthening against it. The Swiss National Bank had targeted a rate of 1.20 to the euro as the ceiling exchange rate. Euro holdings of the bank rose to 60 percent of its total reserves in the 2Q12 period vs 51 percent in the 1Q12 period. With inflation still lower in the country, the central bank is expected to channel the euro funds into other currencies. (Financial Times)

Xstrata Plc – Miner reported 1HY12 operating profits at USD 2.5 b, a 42 percent decline on a y/y basis, but came above expectations of a decline of more than 50 percent. EPS excl items came in at 73 cents, down 25 percent on a y/y basis. The co. stated that it would cut down on various fixed costs as slowdown in the economy affected demand, which affected commodity prices. The co. saved around USD 105 m through various cost cutting measures. The co. would also postpone its planned USD 1 b capex plans on opposition from investors to curtail spending. Capex would now be reduced to USD 7.2 b. (Financial Times)

Munich Re – German reinsurer saw its profits exceed expectations on lower outlays arising from claims. Profits for 2Q12 came in at EUR 808 m vs EUR 736 m a year ago. Gross premiums rose 5.5 percent to EUR 12.6 b, a reason which contributed to higher profits. The co. saw its 1HY12 earnings come in at EUR 1.60 b and hence raised expectations of exceeding its targeted profit of EUR 2.5 b stated earlier. EPS for the quarter came in at EUR 4.54 a share vs EUR 4.14 previously. (Financial Times)

Standard Chartered plc – Shares of the bank declined 25 percent in trade on charges of conducting illegal transactions worth USD 250 b with Iranian entities. The bank’s shares to GBP 1195 pence a share in trade and would have time until 15 August to respond to charges against it. Adverse consequences would mean that the firm could lose its license to operate in the United States. (Financial Times)

NORTH AMERICA

According to Fed’s Eric Rosengren,  has suggested that Fed should launch an aggressive open-ended bond buying program , which would continue until economic growth picks up and unemployment starts falling again. (WSJ)

Citigroup – Co. could have to take a writedown of USD 6 b during this quarter on the valuation of its retail brokerage unit formed with Morgan Stanley. Citi valued the joint venture business at USD 22 b while Morgan Stanley pegged it at USD 9 b. The two firms disagreed on the valuation of the brokerage business and a third party appraiser would be appointed to evaluate the outcome. (Reuters)

Facebook Inc – Social networking provider will provide online wagering games to users in U.K with games such as bingo and slot machine online games. Regulations would not permit the co. to start its operations in the U.S, where it generates most of its revenues from. (Financial Times)

GLOBAL

According to research firm Gartner, global expenditure on IT outsourcing projects is expected to rise 2.1 percent to USD 251 b in FY2012 vs USD 246 b a year ago. The advent of cloud computing, expected to grow 48 percent to USD 5 b vs USD 3,4 b prev, would make a significant contribution to outsourcing outlays. (Economic Times)

 

 

 

 

 



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