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Friday, August 30, 2013

Step back into safety

You will either step forward into growth or you will step back into safety." - Abraham Maslow

August is behind us and thank God it ended with a bang after whimpering around most days of the month. We are into the September series and ‘Septaper’ will be on every investor’s mind. The situation in Syria remains under watch by investors. Prime Minister David Cameron said that Britain would not participate militarily in any strike against Syria as the UK Parliament voted against the same.

We have the GDP numbers which will be announced after market hours today which will give some more reason perhaps for pessimism to rise even further given the prolonged slowdown.

The outlook is a flat start. The rupee which recovered smartly on Thursday will continue to keep investors on tenterhooks. Speculation on the GDP numbers could cause the indices to taper towards close. Global cues are nothing much to write about.

Around noon, the Prime Minister Manmohan Singh will make a statement in Parliament on the state of economy and touch on the rupee's sharp swing against the dollar.

Jindal Steel & Power will remain in focus as it will consider buyback of shares. Aanjaneya Lifecare will consider fund raising.

Reliance Industries and its partner BP Plc won approval to invest $3.18 bn in R-Series gas field in KG-D6 block, says media reports. Report said that RIL-BP plan to bring satellite fields in KG-D6 block to production.

Petroleum Minister M Veerappa Moily met Finance Minister P Chidambaram to discuss possible solutions including Rs 3-4 per litre hike in diesel prices and cut in duties.

Rural Electrification Corp is planning to raise Rs50bn through issue of taxfree bonds. The issue opens on August 30 and closes on September 23, says report.

In coal block scam, the apex court directed CBI to conclude the probe against all companies, which were allocated coal blocks, by December this year and ordered it to file the status report by October 22.

Verizon Communications Inc and Vodafone Group Plc restarted talks over possible buyout of the British firm's stake in their US wireless joint venture.

The Lok Sabha has debated and passed two land-mark laws; the food bill and an updated version of the 19th-century legislation governing land acquisition. The ‘Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation & Resettlement Bill, 2012’ seeks to give a fair deal to farmers losing their land, especially multi-crop land, to industrial needs. But industry complained the law would push cost and timeframe for setting up new enterprises.

The Dow added 0.11% while the Standard & Poor's 500 Index was marginally. The Nasdaq notched up 0.75%. Asian stocks are mixed. Japan's Nikkei is down half a percent while Hong Kong's Hang Seng index is marginally up. South Korea's Kospi index and China's Shanghai index have gained ~0.5%. Brent crude prices fell 1% to $113.97 a barrel.

In US, the nation's second-quarter gross domestic product grew at a 2.5% annualized pace, according to a revised estimate from the Bureau of Economic Analysis. Jobless claims fell last week to 331,000.

Indonesia's central bank on Thursday raised its benchmark interest rates by 50 basis points to 7%, a move intended to support the declining rupiah and reduce the country's CAD.

While, Brazil's central bank on Wednesday raised its key lending rate by a half percentage point, to curb worrisome inflation despite parallel concerns over the pace of economic growth. In a widely expected move, the central bank's monetary policy committee voted unanimously to raise the ‘Selic’ interest rate to 9% from the previous 8.5%, the fourth increase since April.

A radical but a seemingly effective idea to curb gold imports by RBI might see the light of day shortly. India is considering a plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off the plunging currency.

Results watch: BRAND HOUSE,Color Chips, Dunlop India, EL Forge, Lee & Nee Soft, PREMIER ENER, S Kumar Nation, Shakti Press, UCIL Leasing.

Trends in FII flows: The FIIs were net sellers of Rs2.48bn in the cash segment on Thursday, while the domestic institutional investors (DIIs) were net sellers of Rs758mn, as per the provisional figures released by the NSE.

The foreign funds were net sellers of Rs11.99bn in the cash segment on Wednesday, according to the SEBI figures.

Corporate snippets

Reliance Industries and its partners in the KG-D6 block — BP Plc and Niko Resources — have received Government approval to invest US$4bn in the R-Series gas-field in the block. (BL)

SREI Group is looking for acquisition opportunities in distressed power and road sectors. (BL)

The NSEL Investors Forum has urged the broking community to halt trading for one day on the Multi Commodity Exchange. (BL)

With the depreciation of the rupee and a rise in crude oil prices beginning to pinch them, airlines in India have begun raising fares. Jet Airways has started levying a surcharge of US$50 on the economy class fare on its Gulf flights. SpiceJet, is planning to increase the surcharge on its domestic flights. (BS)

SpiceJet is in talks with Airbus to acquire A320neo narrow body aircraft. (BS)

ING Vysya Bank said it had increased interest rates on deposits by 25-50 basis points, effective August 28. (BS)

The commodity market regulator has now stumbled on information that a firm controlled by the group has been trading on FT-promoted MCX in violation of government guidelines. (ET)

Idea Cellular has applied for unified licences to provide voice and data services in seven circles and said it will comply with the telecom department’s guidelines on roaming agreements. (ET)

State Bank of India raised interest rates by up to 1.5% on bulk deposits of over Rs10mn. The interest rate for bulk deposits for tenors of 7 to 60 days will be 9%. (ET)

A 3-day block closure in Tata Motors’ Jamshedpur plant has begun. The closure, which will be observed from August 29 to 31, was aimed to prevent unnecessary build-up of inventory as well as at dealers’ end. (ET)

The REC is coming out with the tax-free bond issuance. Through this route, REC plans to raise Rs10bn, with an oversubscription option of Rs25bn. (BS)

A significant part of SAIL’s capacity expansion project, worth around Rs190bn, may miss the revised deadline of 2013-14. (BL)

Economic Snippets

The petroleum ministry has finalised a shale oil and gas exploration policy, which will be tabled before the Cabinet soon after the oil minister approves it. (ET)

The government is considering a radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports. (ET)

The Commerce Ministry has asked the Finance Ministry to include export credit in priority sector lending of all banks to boost overseas sales. (ET)

Credit ratings agency Moody’s has said the food security bill will weaken government finances and deteriorate country’s macroeconomic situation. (ET)

Global Data Watch: Private Sector Credit (MoM) (Jul) AUD, Private Sector Credit (YoY) (Jul) AUD, Construction Orders (YoY) (Jul) JPY, Housing Starts (YoY) (Jul) JPY, Retail Sales (MoM) (Jul) EUR, Retail Sales (YoY) (Jul) EUR, Nationwide Housing Prices s.a (MoM) (Aug) GBP, Nationwide Housing Prices n.s.a (YoY) (Aug) GBP, KOF Leading Indicator (Aug) CHF, Unemployment (Jul) EUR, Current Account Balance (Jul) EUR, Consumer Credit (Jul) GBP, M4 Money Supply (MoM) (Jul) GBP, M4 Money Supply (YoY) (Jul) GBP, Mortgage Approvals (Jul) GBP, Net Lending to Individuals (MoM) (Jul) GBP, Consumer Confidence (Aug) EUR, Business Climate (Aug) EUR, Economic Sentiment Indicator (Aug) EUR, Industrial Confidence (Aug) EUR, Services Sentiment (Aug) EUR, Consumer Price Index (YoY)Preliminar EUR, Unemployment Rate (Jul) EUR, Retail Sales (YoY) (Jun) EUR, Consumer Price Index (MoM) (Jul)Preliminar EUR, Consumer Price Index (EU Norm) (MoM) (Jul)Preliminar EUR, Consumer Price Index (EU Norm) (YoY) (Jul)Preliminar EUR, Consumer Price Index (YoY) (Jul)Preliminar EUR, Producer Price Index (MoM) (Jul) EUR, Producer Price Index (YoY) (Jul) EUR, Federal Fiscal Deficit, INR (Jul) INR, Gross Domestic Product Quarterly (YoY) (Q1) INR, Gross Domestic Product (MoM) (Jun) CAD, Gross Domestic Product Annualized (QoQ) (Q2) CAD, Personal Income (MoM) (Jul) USD, Core Personal Consumption Expenditure - Price Index (MoM) (Jul) USD, Core Personal Consumption Expenditure - Price Index (YoY) (Jul) USD, Personal Consumption Expenditures - Price Index (MoM) (Jul) USD, Personal Consumption Expenditures - Price Index (YoY) (Jul) USD, Personal Spending (Jul) USD, Chicago Purchasing Managers' Index (Aug) USD, Reuters/Michigan Consumer Sentiment Index (Aug) USD