EQUITY UPDATE – 10 AUGUST 2012

ASIA

China’s Industrial output for July rose slower than expected by 9.2 percent to near three year lows, adding to concerns that the country is slowing in its recovery process. Inflation in the county declined for the fourth consecutive month in July to 1.8 percent vs 2.2 percent a year ago. On a m/m basis, inflation rose 0.1 percent vs -0.6 percent previously. (Bloomberg)

The Bank of Japan kept benchmark interest rates unchanged at 0.10 percent, in line with expectations. The bank stopped short of lowering its monetary policies and kept its asset purchasing fund at JPY 45 t (USD 573 b) and the lending fund at JPY 25 t. Stimulus measures would only come into force if the yen appreciated significantly against the US dollar. (Bloomberg)

South Korean central bank The Bank of Korea (BoK) kept its benchmark seven day repo rates unchanged at 3.00 percent which was unanimously taken by the members. The central bank would give more focus to propping up domestic demand. (Reuters)

Sale of passenger vehicles in China for July rose slower than forecast on a m/m basis on slowing demand and buyers postponing purchases on expectations of stimulus measures from the government. Deliveries of vehicles incl. multipurpose and utility vehicles rose 11 percent to 1.12 m units vs expectations of 1.16 m units. Sale of mini-commercial vehicles saw the biggest decline which could impact logistic operations in the country. Sale of vehicles incl. trucks and buses rose to 1.38 m units, a 8 percent m/m rise. Customers who held back on purchase are due to expectations of various subsidies and other incentives to be offered by the government. (Bloomberg)

INDIA

The Reserve Bank of India has transferred surplus profit of INR 16,010cr in 1Q12-13 (vs. previous INR 15,009cr) to the government of India. (The Hindu Business Line)

Fitch has downgraded India’s 2H12 outlook on the retail sector to negative. The rating agency cited sustained deterioration in discretionary spending ability and its unlikely recovery in the short term. Fitch revised FY13 and FY14 real GDP forecast to 6.5 per cent and 7 per cent from the earlier 7.5 per cent and 8 per cent respectively. (The Hindu Business Line)

Reliance Industries – Co. has slashed its natural gas reserves in its KG-D6 gas field by 70 per cent to 3.10tr cubic feet due to unforeseen geological surprises. (Business Standard/PTI)

Infosys – IT firm secured a USD 700 cr deal with India’s Department of Post for provision of core banking and insurance services across various post offices in India. It will also assist in installing ATM’s in these post offices. (Economic Times)

JSW Steel – Co. and other steel co. that depend on iron ore from Karnataka could face closure due to severe shortage of iron ore, if mining did not resume in the state. The state’s steel industry, whose 21m ton output accounts for 25 per cent of the national production, is operating with just a 45-day supply of iron ore. According to JSW Steel’s management it would be difficult to operate its plants if mining operations didn’t resume. JSW Steel has purchased about 14m ton of iron ore sold at the e-auctions. (Business Standard)

Sail – Co. to outsource the development of its two virgin iron ore mines in Chatisgarh and Jharkand. The mines will have a capacity of 14m tons per annum and 15m tons per annum respectively. (Business Standard/PTI)

INDIAN EARNING

HPCL – Co. reported 1Q12-13 net loss at INR 9,248 cr.vs previous INR 3,080 cr. Net Sales of the co. rose to INR 44,076.5 cr. vs INR 40,795 cr on a YoY basis. (Moneycontrol)

Tech Mahindra – Co. reported 1Q12-13 consolidated Profit After Tax (PAT) at INR 338 cr vs estimated INR 310.73 cr. Sales for the firm increased by 8.7 percent  on a QoQ basis and 19 percent on a YoY basis to INR 1,543cr vs estimated INR 1,539 cr. EBITDA margins increased by 38.66 percent on a q/q basis to INR 330 cr vs estimated INR 295 cr. (Moneycontrol)

Jindal Stainless – Co. reported 1Q12-13 net loss at INR 231.41cr vs. previous 1Q11-12 net profit at INR 85.79cr. Net sales at INR 2,206.69cr vs. previous INR 1,976.93cr. (MoneyControl)

GE Shipping – Co. reported 1Q12-13 net profit at INR 181cr vs. previous INR 162.59cr. Income from operations at INR 802.42cr vs. previous INR 680.53cr. (MoneyControl)

Eicher Motors – Co. reported 2Q12 net profit at INR 75.96cr vs. previous INR 76.31cr. Income from operations at INR 1573.05cr vs. previous INR 1,268.75cr. (MoneyControl)

EUROPE

According to the ECB governing council member Christian Noyer, ECB was ready to intervene in secondary bond markets very soon, to bring down the excessive borrowing costs of Spain and Italy. (Reuters)

U.K Trade Deficit for 2Q12 ended June increased to GBP 28.3 b vs GBP 25 b in the previous quarter on lower exports. The ongoing euro crisis saw lower demand for Britain’s goods which declined 4.9 percent on a q/q basis while imports also lowered by 0.5 percent. The trade deficit for June came in higher than expected at GBP 10.119 b vs a deficit of GBP 8.364 b previously vs estimates of a deficit of GBP 8.73 b. Exports to Germany declined by GBP 525 m, while Netherlands trade declined the most to GBP 819 m. Exports for June declined 8.4 percent over May and imports fell 1.2 percent for the same period. (Bloomberg)

NORTH AMERICA

According to estimates, the trade deficit in the U.S for June narrowed to USD 47.5 b vs USD 48.7 b in May on lower oil prices reducing the country’s imports. The lower oil prices are attributed to low demand emanating from the global crisis. (Bloomberg)

U.S Non farm productivity rose 1.6 percent on an annualized basis for the 2Q12 period vs exp advance of 1.3 percent vs prv rise of 0.7 percent. Co.’s and businesses expanded their operations but still saw hourly work rate output rise by just 0.4 percent. (Bloomberg)

U.S Initial Jobless claims for unemployment benefits declined by 6000 applications to a seasonally adjusted number of 361,000 for week ended 3 August. Expectations came at 370,000 and prv period’s claims were revised to 367,000 applicants. The four-week moving average for fresh claims rose by 2250 applicants to 368,250. Nonfarm payrolls rose by 163,000 in July, but the unemployment rate rose to touch 8.3 percent. (Reuters)

Moody’s downgrades of US municipal bonds issuers hit a 10 year quarterly high in 2Q12. The rating agency cited stressed budgets and weaker liquidity. (Reuters)

Google Inc – Co. is to pay Apple Inc a total of USD 22.5 m in settlement charges for bypassing the privacy settings of customers who used Apple’s safari web browser. (Reuters)

Research in Motion – A US judge has overturned the USD 147.2m for patent infringement in favors of co. (Boston.com/AP)

COMMODITIES

OPEC forecasted FY 2012 oil demand at 88.72m barrels per day vs. previous estimate of 88.68 barrels per day in July. FY 12 demand forecasted at 89.52mbpd vs. previous estimate of 89.50mbpd in July. (MoneyControl)



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