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Weekly Newsletter - Sep 14 2012

Indian markets had a splendid week, with the BSE Sensex and the NSE Nifty scaling seven-month peaks besides crossing important milestones. The much-awaited move on fuel price revision did come about, with the Government finally hiking diesel prices. LPG subsidy has been capped while excise duty on petrol has been slashed. The Government was also due to take a call on a whole host of reform measures to avert BRICS’ first debt downgrade to ‘junk’. All eyes are on the RBI, which reviews its policy on Monday. With inflation in August spiking, the RBI may not yet cut policy rates. Stocks could fly even higher if the RBI too springs a pleasant surprise. Globally too, things have improved considerably, with Europe, China and now the US unleashing fresh stimulus to boost growth. One bad news for India is the fresh uptick in commodity prices, especially that of crude oil and gold. We also need to see what follow-up policy action the Centre unveils in order to restore investor confidence.

Weekly Stock Picks - Sep 14 2012

Buy DLF Buy Bata India Buy Titan Buy LIC Housing Finance Buy Bank India

Weekly: Sensex, Nifty surges ~4.4% each

Indian markets had a splendid week, with the BSE Sensex and the NSE Nifty scaling seven-month peaks besides crossing important milestones. The much-awaited move on fuel price revision did come about with the Government finally hiking diesel prices. LPG subsidy has been capped while excise duty on petrol has been slashed. The Government was also due to take a call on a whole host of reform measures to avert BRICS’ first debt downgrade to ‘junk’. All eyes are on the RBI, which reviews its policy on Monday. With inflation in August spiking, the RBI may not yet cut policy rates. Stocks could fly even higher if the RBI too springs a pleasant surprise.

Sensex surges 400 points almost after a year;

The Indian markets witnessed a 2% rally for the eighth straight day. The Sensex closed 443 points higher while the Nifty gained 142 points in trade today. Major Headlines: Govt hikes diesel prices by Rs5 per litre Inflation for Aug at 7.55% vs 6.87% in July 2012 Cabinet to consider FDI in aviation, broadcast sector Govt terminates mining licence of 4-blocks

Govt approves 51% FDI in multi-brand retail

The Cabinet today (September 14, 2012) decided to operationalise 51 per cent FDI in multi-brand retail but left it to the state governments to allow setting up of such stores. The Cabinet has also cleared FDI in aviation and broadcast sectors. In another major decision, the government also cleared FDI in aviation by foreign carriers. FDI in aviation will help troubled companies like Kingfisher, Spicejet and Go Air The move signals the end of policy paralysis in the UPA government. The government has, however, left the option to invite multi-brand retail on the states. The Government approved the disinvestment of 5 Public Sector Units ( PSUs), including Oil India (10%), Nalco (12.5%) and Hindustan Copper (9.59%) The government had last year cleared 51% FDI in multi-brand retailers for cities with populations of more than a million. But it later rolled back the decision after protests by allies of UPA and opposition.

Diesel Hike Impact on Autos

Diesel Hike Impact on Autos

Bharti Airtel gains after tower unit files for IPO

Bharti Airtel rose 0.53% at Rs 255 at 15:19 IST on BSE after the company said its mobile tower unit, Bharti Infratel, filed a draft prospectus with Securities and Exchange Board of India today, 14 September 2012, for an initial public offering. The announcement was made during trading hours today, 14 September 2012. Meanwhile, the BSE Sensex was up 462.68 points, or 2.57%, to 18,483.84. On BSE, 4.71 lakh shares were traded in the counter as against an average daily volume of 6.35 lakh shares in the past one quarter. The stock hit a high of Rs 259.60 and a low of Rs 253.70 so far during the day. The stock had hit a 52-week high of Rs 412.25 on 16 November 2011. The stock had hit a 52-week low of Rs 238.50 on 30 August 2012. The stock had underperformed the market over the past one month till 13 September 2012, falling 2.42% compared with the Sensex's 2.20% rise. The scrip had also underperformed the market in past one quarter, sliding 17.55% as against Sensex's 6.76% rise. India's largest listed telecom operator by sales has an equity capital of Rs 1898.76 crore. Face value per share is Rs 5. Bharti Airtel announced that its subsidiary, Bharti Infratel, has filed its draft red herring prospectus with the Securities and Exchange Board of India (Sebi) today, 14 September 2012, in relation to its initial public offer (IPO) of equity shares. The IPO constitutes a fresh issue of equity shares by Bharti Infratel and an offer for sale portion by Compassvale Investments, GS Strategic Investments, Anadale and Nomura Asia Investment (IB), Bharti Airtel said. In a separate statement to the stock exchange, Bharti Airtel, which owns about 86% of Bharti Infratel, said it had decided not to participate in the IPO. Bharti Infratel will reportedly raise Rs 5000 crore through the IPO. Bharti Infratel owns over 33,000 towers, across 18 states, and 11 telecom circles. Bharti Infratel also has a 42% stake in Indus towers, which was created as a joint venture between Bharti Infratel, Vodafone and Idea to hive off the towers business in 16 telecom circles. Bharti Airtel's consolidated net profit, as per international financial reporting standards, fell 37.3% to Rs 762.20 crore on 14% increase in net sales to Rs 19350.10 crore in Q1 June 2012 over Q1 June 2011. Bharti Airtel is a leading integrated telecommunications company with operations in 20 countries across Asia and Africa. Headquartered in New Delhi, India, the company ranks amongst the top 5 mobile service providers globally in terms of subscribers. In India, the company's product offerings include 2G, 3G and 4G services, fixed line, high speed broadband through DSL, IPTV, DTH, enterprise services including national & international long distance services to carriers. In the rest of the geographies, it offers 2G, 3G mobile services. Bharti Airtel had close to 261 million customers across its operations at the end of June 2012.

Sensex at near 14 month closing high

The market gained for the second straight week as diesel price hike by the Indian government to help improve country's deteriorating fiscal position, US Federal Reserve's QE3 program and Germany's Federal Constitutional Court rejecting calls to block the euro rescue fund increased investors' appetite for riskier assets. Recent strong buying of Indian stocks by foreign finds also supported domestic bourses. The market gained in all five trading sessions in the week just gone by. The barometer index, BSE Sensex, scaled nearly 14 month closing high above 18,000. The 50-unit S&P CNX Nifty hit nearly 7 month closing high. The BSE Sensex jumped 714.62 points or 4.02% to 18,464.27, its highest closing level since 26 July 2011. The 50-unit S&P CNX Nifty surged 218.95 points or 4.08% to settle at 5,577.65, its highest closing level since 21 February 2012.

RBI's policy review to set the tone

The Reserve Bank of India's (RBI) mid-quarter review of the monetary policy on Monday, 17 September 2012 will set the tone for the markets in a truncated week ahead. Domestic bourses witnessed recent strong rally as countries around the world took monetary and fiscal initiatives to stimulate growth. The market remains shut on Wednesday, 19 September 2012 on account of Ganesh Chaturthi. The RBI is expected to maintain status quo on short term lending rates in its policy review on 17 September 2012, as per the poll carried out by Capital Market. RBI last cut rates by 0.5 percentage point to 8% from 8.5% in April, its first move to reverse a 20-month rate-tightening cycle. It then held rates steady in June and at its last rate-setting meeting on July 31, saying that a cut would exacerbate inflationary pressures. Inflation in August accelerated to 7.55% much above the central bank's comfort level.

Friday blockbuster on the Street as Govt kicks off long-stalled reforms

Key benchmark indices logged smart gains for eight straight session of trade after the government signaled pushing long pending reforms on the fast track after hiking steeply diesel prices by Rs 5 per liter on Thursday. The BSE Sensex settled at its highest closing since 26 July 2011 and the NSE Nifty settled at its highest closing since 21 February 2012. Markets across the globe surged after the US central bank on Thursday initiated another aggressive stimulus program to stimulate growth in the world's largest economy. The Sensex was up 443.11 points or 2.46%, up 179.52 points from the day's low and off 34.27 points from the day's high. The market breadth was positive.