Dead Presidents! - India Equity Research: Jan 19, 2014

Sunday, January 19, 2014

Indian markets see first weekly rise of 2014 after WPI eased to a five-month low at 6.16% in December 2013 thereby raising rate cut hopes. The Sensex shut shop 1.47% higher while the Nifty rose 1.46% for the week ended January 17, 2014
Major Headlines for the week:
December CPI inflation cools down to 9.87%
Indian Pharma sector grows 8.2% YoY
December WPI at 5-month low, eases to 6.16%
Reliance Industries net profit marginally up in Q3
TCS Q3 Profits beat street; Revenue in line
Indian indices:
Welcome to the ‘Weekly Market Wrap’ for January 17, 2014 where markets rose last week after a government data showed that inflation based on the wholesale price index (WPI) eased to five-month low at 6.16% in December 2013. Easing inflation provides legroom for the central bank to cut interest rates in its next policy meet in order to bolster growth. Firm global stocks also boosted sentiments.
Weaker-than-estimated US employment data released last Friday, January 10, 2014, cheered financial markets, as global investors feel the US Federal Reserve may not accelerate the pace of reduction in its monthly bond purchases.
The S&P BSE Mid-Cap index slipped 1.43% and the S&P BSE Small-Cap index fell 1.42% thus underperforming the benchmark Sensex.
The S&P BSE Sensex, rose 305.13 points to 21,063.62 and 50-unit CNX Nifty gained 90.20 points to 6,261.65
Major events for the week:
1. India's headline inflation eased to a five-month low in December on lower vegetable prices, providing some relief to the ruling coalition before a national election and increasing the odds that interest rates will stay on hold this month. December 2013 WPI Inflation came in at 6.16% much lower than markets’ estimate as compared to 7.52% seen in the November month. October 2013 inflation revised upwards to 7.24% versus 7.0% (provisional)
2. December CPI inflation cooled down to 9.87% vs 11.16% (MoM) - lower than market estimates. November CPI inflation revised downwards to 11.16% vs 11.24% (as per provisional estimate)
Weekly market trend from January 13, 2014 – January 17, 2014:
Jan 13- Indian shares rose nearly 2% to post their biggest daily gains this year on expectations the central bank will keep interest rates on hold and the U.S. Federal Reserve will stick to its ultra-loose monetary policy for longer. The BSE Sensex rose 1.81% and NSE Nifty was up by 1.64%. The Indian markets rallied on Monday recording their highest single-day gain since November 25, 2013 led by gains in IT majors after Infosys reported better-than-expected earnings and raised its dollar revenue guidance for the current fiscal. The Sensex closed at 21134.21, up by 375.72 points, while the Nifty rose 101.30 points to close at 6272.75
Jan 14- Indian shares fell on Tuesday led by declines in software exporters such as TCS on profit-taking after the recent run-up on better-than-expected quarterly results by peer Infosys. The BSE Sensex fell 0.48% and NSE Nifty was down by 0.49%. Benchmarks reversed its upward movement to slip into the red as profit booking in software companies along with anemic global cues weighed on the investor sentiment. The Sensex closed at 21032.88, down by 101.33 points, while the Nifty fell 30.90 points to close at 6241.85
Jan 15- Indian shares mark their highest close in five weeks as rate-sensitive stocks such as ICICI Bank rose after data showing sharply easing inflation reinforced expectations the central bank will keep interest rates on hold. The BSE Sensex rose 1.22% and NSE Nifty was up by 1.27%. After a minor correction in noon trades markets staged a recovery and the Nifty regained the 6,300 mark with bank shares leading the gains. The Sensex closed at 21289.49, up by 256.61 points, while the Nifty rose 79.05 points to close at 6320.90
Jan 16- Indian shares fell on Thursday after earlier marking their highest levels in five weeks as mobile carriers such as Idea Cellular slumped on possible high bidding prices at a spectrum auction next month after eight companies applied to bid. The BSE Sensex fell 0.11% and NSE Nifty was down by 0.03%. Indices kept swinging between gains and losses with negative bias on profit taking in telecom shares after brokerage downgrades. The Sensex closed at 21265.18, down by 24.31 points, while the Nifty fell 2.00 points to close at 6318.90
Jan 17- Indian shares fell on Friday after TCS slumped as its quarterly profit adjusted for other income lagged expectations, sparking some profit-taking in recently outpeforming software services exporters. The BSE Sensex fell 0.95% and NSE Nifty was down by 0.91%. The Indian markets ended lower after the sharp correction in Tata Consultancy Services dampened sentiment in IT sector. The Sensex closed at 21063.62, down by 201.56 points, while the Nifty fell 57.25 points to close at 6261.65
Global indices:
Majority of the global markets closed on a positive note except Nikkei which declined by 1.12% and Shanghai Comp fell by 0.41%. Top Gainers: Dax100 rose by 2.85%, CAC 40 surged 1.81% and FTSE 100 gained 1.33%.
Sectoral and stock screening:
Among the 13 sectoral indices eight sectors closed in the green zone while others ended in red in the week gone by. Top Gainers - S&P BSE CG surged by 2.90%, followed by S&P BSE Oil & Gas which rose 2.64%, S&P BSE PSU up 1.72% and S&P BSE Bankex gained 1.15%. Top Losers - S&P BSE CD down 2.28%, S&P BSE Realty fell 1.61% and S&P BSE HC slipped 0.79%
Looking at the 'A' group stocks, the top three gainers of the week were - IOC up by 12.84%, Infosys rose 8.03% and Godrej Industries up by 7.81%. The top three losers of the week were - MCX fell by 19.50%, Ranbaxy Labs slipped by 14.28% and Exide Inds dipped by 12.22%.
FII/MF activity:
The foreign institutional investors (FIIs) have been the net buyers of the Indian stocks to the tune of Rs1503.00 crore and the domestic investors sold Indian shares worth a net of Rs576.00 crore as on January 16, 2014.
Market Outlook for the coming week!
In the coming week, investors will focus on key Q3 December 2013 earnings announcements. The trend in investment by foreign institutional investors (FIIs), movement in global stock markets and the movement of rupee against the dollar will be keenly watched.
Results for the coming week:
Asian Paints, UltraTech Cement, Ashok Leyland, Colgate-Palmolive (India), Kotak Mahindra Bank, Tata Coffee, Thermax, Torrent Pharma, HDFC, L&T, Dabur India, Biocon, Mahindra & Mahindra Financial Services, Raymond, Zee Entertainment Enterprises, Cairn India, Dish TV India, Indian Bank, L&T Finance Holdings, Mastek, Novartis India, Bharti Infratel, Essar Ports, Coromadel International, Engineers India, Glenmark Pharmaceuticals, Karnataka Bank, Mahindra Lifespace Developers and SKS Microfinance will announce their October-December 2013 earnings.

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Sunday, January 19, 2014