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Wednesday, February 19, 2014

EPS: Economy, Politics and Sentiment!

With public sentiment, nothing can fail. Without it, nothing can succeed - Abraham Lincoln

Economy, Politics and Sentiment will be the three pivots, which will determine market direction in the current year. And that is the theme for IIFL’s flagship institutional conference ‘Enterprising India V’ which begins today.

Investors are of course curious on what lies ahead especially with respect to elections. The mood remains cautiously optimistic on hopes of a stable government post the elections. At least that’s the sentiment for now.

The outlook today is a positive start however some profit booking cannot be ruled out in the second half of the day. The global markets are mixed. Asian markets were trading with a slight negative bias. The Nikkei index in Japan was down 0.7% while the Hang Seng Index in Hong Kong was trading marginally lower by 0.17% and the Shanghai stocks also edged lower by 0.3%.

On the other hand, the S&P 500 and Nasdaq index in the US rose on Tuesday, following Wall Street's biggest weekly gain of the year. However, the Dow Jones fell 23.99 points or 0.15%, to end at 16,130.40, while S&P 500 gained 2.13 points or 0.12%, to finish at 1,840.76.

The Lok Sabha passed the Telangana bill despite loud protests. The blackout of live telecast of the proceedings during the debate on the Telangana Bill caused more uproar though it is being termed as a technical glitch. The Bill now has to be passed in the Rajya Sabha in the next three days before the 15th Lok Sabha winds up.

IIFL’s Enterprising India-V will see all major sectors well represented with maximum representation from the Banking and Finance sector (19 companies), followed by IT, FMCG, Pharma, Cement, Utilities, Media, Auto, Capital Goods & Engineering and Oil & Gas. The list of companies from the sectors represented are of varied sizes; 27 companies have market cap of more than US$5 bn, 35 companies have market cap of US$ 1-5bn and 25 companies have market cap of less than US$1b.

Mr. Prabodh Agarwal, Head of Research, Institutional Equities, IIFL, said, "IIFL's fifth Enterprising India Conference is bigger than any of our previous conferences in terms of number of participants. This year we have nearly 90 participating companies across all major sectors and market cap buckets."

The conference will be graced by a host of imminent dignitaries including Dr. KC Chakrabarty, Deputy Governor, RBI, Dr. Jim Walker, Founder & MD, Asianomics Macro Ltd, Chris Roberts, Renowned market technical analyst, Rajan Anandan, Managing Director, Google India, T.N. Ninan, Editor, Business Standard, Rahul Dravid, former cricketer and many others.

India’s gold demand rose 13% in 2013, despite imports restrictions. Consumers around the world bought gold in record amounts in 2013, according to the latest World Gold Council Gold Demand Trends report. In 2013, the gold market saw 21% growth in demand from consumers which contrasted with outflows of 881t from ETFs. Meanwhile, demand for jewellery, the other component of consumer demand, increased by 29% from 519t to 669t in China, and by 11% from 552t to 613t in India.

Moody's Investors Service says that the Indian central government's interim FY2014/15 budget -- released on 17 February -- is consistent with the policy assumptions that underpin the government's Baa3 rating, which has a stable outlook. The estimated budget deficit for the current fiscal year ending 31 March 2014 is 4.6% of GDP, modestly lower than the original 4.8% target.

The recent Indian telecom spectrum auction will hasten industry consolidation, strengthen tariffs and reduce regulatory risks, says Fitch Ratings. Industry operators will come down to six/seven from 12 as the bottom-six telcos look to exit - lacking sufficient spectrum and financial muscle to remain viable.

Bharti Airtel and Loop Mobile announced a strategic agreement for their operations in Mumbai (India) service area.Under the agreement, Loop Mobile’s 3 million subscribers in Mumbai will join Airtel’s over 4 million subscribers, creating an unmatched mobile network in Mumbai. The stock was down 1% at Rs302.

Oil & Natural Gas Corporation Ltd has announced that ONGC Videsh and Oil India has signed Production Sharing Contract for Two Shallow water Exploration Blocks in Bangladesh.

Bank shares gained 2.41 per cent adding to Monday's 1.2 per cent rise after finance minister announced a fiscal deficit target of 4.1 per cent of the GDP, and a gross market borrowing of Rs 597,000 crore, below market expectations.

Since January 23, as many as 192 stocks from the BSE-500 small-cap and mid-cap indices have gained up to 44 per cent, compared with the 3.5 per cent decline each in the S&P BSE small-cap and mid-cap indices, says a report.

Results watch: Thomas Cook, Esab India

Trends in FII flows: The FIIs were net buyers of Rs2.92bn in the cash segment on Tuesday, while the domestic institutional investors (DIIs) were net sellers of Rs1.54bn, as per the provisional figures released by the NSE. The foreign funds were net buyers of Rs14.96bn in the cash segment on Monday, according to SEBI data.

In other news in the media:

GMR Infrastructure announced the completion of the divestment of a majority 74% in GMR Ulundurpet Expressways Private Limited to India Infrastructure Fund for Rs2.2bn (BS)

ONGC Videsh Ltd and its partner Oil India Ltd have signed contracts to explore for oil and gas in two areas in Bangladeshi waters. (BS)

Ashok Leyland's joint venture with construction equipment manufacturer John Deere launched Backhoe Loader targeting the first time users. (BS)

Canara Bank plans to sell Rs10bn worth of non-performing assets by the end of this financial year. (BL)

Alstom India has been awarded a contract by NTPC to provide environmental control equipment for the NTPC’s 500 MW Vindyachal super thermal power plant in Madhya Pradesh. (BL)

Havells India Ltd has set its eyes on export market as Chinese fans have started getting more expensive, thereby giving an opportunity for Indian makers to pump their products in the international markets. (BL)

Data analytics firm Flytxt has partnered Idea Cellular to deploy multi-channel mobile advertising platform ‘QREDA’. (BL)

CBI has registered cases related to supply of low quality imported coal to NTPC and NSPCL (NTPC-SAIL Power Company Ltd). (BS)

ING Vysya Bank looks to open 40-50 branches each every year between 2014 and 2016 as its aims to improve mobilisation of current and savings accounts and speed up growth. (ET)

Power Grid Corp plans to invest more than Rs610bn in the next three financial years, with a significant chunk of funds to be raised by way of bonds and debentures. (ET)

Coal India unit Western Coalfields expects to raise output by 10% to 44mn tons in the next fiscal year due to the use of more sophisticated machinery in its mines. (ET)

The drug regulator has proposed mandatory patient monitoring cells in pharmaceutical companies due to reduction in time gap between drugs launches in developed markets and India. (BS)

The GSM subscriber base in the country rose 1.24% in January to 703.4mn with the addition of 8.58mn users, industry body COAI said. (BS)

Government's total debt increased by 2.6% to over Rs46tn in the third quarter ended December, compared to the previous three months of the current financial year. (BS)