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Wednesday, July 17, 2013
Telecom stocks in spotlight after Govt clears 100% FDI
Telecom stocks may advance after the Congress-led United Progressive Alliance (UPA) has, with a few caveats, allowed 100% foreign direct investment (FDI) in telecom. FDI in the telecom services sector was increased from 74% to 100%, but all investments above 49% will continue to be routed through the Foreign Investment Promotion Board (FIPB).
HDFC Bank will be watched ahead of its Q1 June 2013 results today, 17 July 2013.
Development Credit Bank's net profit surged 126.5% to Rs 42.83 crore on 26.9% jump in operating income to Rs 305.84 crore in Q1 June 2013 over Q1 June 2012.
JSW Steel after trading hours on Tuesday, 16 July 2013, said that as a policy the company does not respond to speculative stories and market rumours after media reports said that JSW Steel is in talks to purchase a significant stake in Sandur Manganese and Iron Ores to improve its access to iron ore and cut logistics costs. Earlier, Sandur Manganese during trading hours on Tuesday, 16 July 2013, had denied stake sale reports. Neither Sandur Manganese nor its promoters have appointed any investment bankers to scout for a buyer, Sandur Manganese had said.
Equity shares of Pantaloons Fashion & Retail will list on the stock exchanges today, 17 July 2013. The stock will trade in the list of 'T' group securities on BSE. Future Retail, formerly known as Pantaloon Retail, and Future Ventures India demerged their fashion businesses into Future Lifestyle Fashions, which will have a portfolio of over two dozen fashion and lifestyle brands.
Torrent Pharmaceuticals after trading hours on Tuesday, 16 July 2013, said it has fixed 24 July 2013 record date for 1:1 bonus share issue.
UltraTech Cement turns ex-dividend today, 17 July 2013, for dividend of Rs 9 per share for the year ended 31 March 2013 (FY 2013).
Berger Paints India turns ex-dividend today, 17 July 2013, for dividend of Rs 1.80 per share for the year ended 31 March 2013 (FY 2013).
Shriram City Union Finance turns ex-dividend today, 17 July 2013, for final dividend of Rs 6 per share for the year ended 31 March 2013 (FY 2013).
Tata Communications turns ex-dividend today, 17 July 2013, for dividend of Rs 3 per share for the year ended 31 March 2013 (FY 2013).
WABCO India turns ex-dividend today, 17 July 2013, for dividend of Rs 5 per share for the year ended 31 March 2013 (FY 2013).
Monday, July 15, 2013
India Strategy
Key takeaways
Liquidity and currency dominate the equity market. Adverse developments on the global liquidity front and an excruciating fall (10%) in the rupee in a short span of two months have made the Indian equity market jittery. Lack of buying support from domestic sources is compounding the same. Fears of large-scale selling by FIIs because of the weakening rupee is also casting a long shadow. However, at 13.6x 12-month forward PE, the Indian market’s valuation is below its long-period average of 15x and would not be an impediment for a rally, as and when it fructifies.
India outperforms peers over last month. Despite the falling rupee, the Indian equity market has outstripped major equity markets in the last one month. Brazil, Russia and China have fallen more than 10% vs. a 0.5% decline in the Sensex.
1QFY14 earnings to be muted. For the quarter under consideration (1QFY14), we expect ARG’s coverage (160 companies) to post a revenue growth of 3.9% yoy, while net profit growth would be 2.4% yoy. Excluding financials, revenue growth (1QFY14) of companies we cover is likely to be 2.1% yoy, with net profit declining 2.4% yoy.
Impact of past two rupee devaluations on economy, a good precedent. In the 2-3 years following the sharp rupee devaluations of 1966 and 1991, India experienced a sharp contraction in trade deficits, and economic growth sharply rebounded in the 1-3 years following. Inflation however, rose sharply in the subsequent two years.
Market outlook. In the immediate term, volatility is expected to take centre stage. This is largely due to the fact that earning downgrades are yet to run their course and earning predictability is yet to creep in. However, we believe that the 5500-5600 levels on the Nifty would emerge as a strong support and maintain our contention that the next phase of the rally would emerge from an uptick in earnings, post 2QFY14. Thus, 2HFY14 should be much better than the first half. In these challenging circumstances, drawing inspiration from the adage ‘This too shall pass”, and the confidence that earning upgrades would emerge post 2HFY14, we retain our Sensex target for end-CY13 of 22,500—23,000.
Sector recommendations. We are of the opinion that the stage is getting set to slowly shed the defensive approach and start the quest for value propositions and not abhor risk. We have a bias towards Pharma, IT and Consumer. Scepticism persists towards Metals, Construction, and Capital goods. Auto could be a mixed bag and necessitate discerning selectivity.
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