1. Morning Notes
LKP Advisory
Domestic Market View
Markets to start the F&O expiry week on a
positive note
The Indian markets have rebounded in last two
sessions and the start today is likely to be a
follow up. Though, volatility too is likely to emerge
as it is the August F&O series expiry week.
Traders will also show some cautiousness ahead
of the first quarter GDP data slated to be
announced on Friday. The rupee movement too
will be eyed after it made a huge surge in last
session. Meanwhile, the Planning Commission
deputy chairman Montek Singh Ahluwalia has
said that the government should use the foreign
exchange reserves of a little under $280 billion to
deal with a possible shortage and said that the
rupee is over depreciated. Marketmen will also be
keeping an eye on the FII activities as they have
sold stocks worth about $700 million in the last
week and if the trend continues, the market may
come down further.
Though, the rate sensitive realty and auto sector
will be getting some respite with Finance Minister
P Chidambaram saying that there is no need for
excessive and unwarranted pessimism. He met
top bankers and overseas investors over the
weekend and discussed fund-raising plans apart
from allaying the fears of FIIs over capital control.
Finance minister has also said that the recent
liquidity control measures taken by the Reserve
Bank to reduce volatility in forex market and quell
speculation would be revisited with return of
stability. There will be some buzz in the power
sector too, as the Power Minister Jyotiraditya
Scindia has reportedly said that as many as 94
hydro power projects are languishing due to tardy
progress at various levels in granting them
clearances.
Aug 26, 2013
Company LTP Chg % Chg Company LTP Chg % Chg
BHEL 116 9 8.1 DLF 137 -7 -4.9
TATAPOWER 78 4 5.1 ULTRACEMCO 1576 -58 -3.6
HCLTECH 948 46 5.1 SESAGOA 152 -3 -2.2
JPASSOCIAT 35 1 4.2 ULTRACEMCO 1576 -58 -3.6
JINDALSTEL 239 8 3.6 DLF 137 -7 -4.9
Company LTP Chg % Chg Company LTP Chg % Chg
United Brew-$ 754 91 13.7 DLF 137 -7 -4.7
BHEL 116 9 8.1 Reliance Comm 117 -5 -3.7
Tech Mahindra 1367 94 7.4 Ultratech Cem 1581 -55 -3.3
Yes Bank 259 17 6.8 Idea Cellular 157 -5 -3.1
REC 189 9 5.0 Hindustan Zinc 116 -2 -1.9
Company LTP Chg % Chg Company LTP Chg % Chg
PC Jeweller 94 16 20.0 SANOFI 2364 -125 -5.0
Gujarat Fluo 225 25 12.7 ITDC 599 -32 -5.0
Ruchi Soya 32 3 10.0 Gitanjali Gems 73 -4 -4.9
Dewan Housing 124 9 7.6 Indian Info 38 -2 -4.5
Alstom T&D 135 9 7.5 HT Media 88 -3 -3.6
Company LTP Chg % Chg Company LTP Chg % Chg
DIAMONPOWER-$ 47 8 20.0 KSL Inds-$ 14 -2 -12.2
BEML 147 15 11.3 Ruchi Infra 16 -2 -11.9
Astra Micro 36 3 10.0 Hindustan Media 119 -11 -8.3
Peninsula Land 33 3 9.8 NDTV 83 -5 -5.2
EPC Industrie 107 9 9.5 Kewal Kiran 736 -39 -5.0
TopGainers
TopLosers
TopGainersTopGainers
BSESmallcap
CNXNifty
CNXNifty
BSE100
BSE100BSEMidcap
TopGainers
TopLosersTopLosersTopLosers
BSEMidcapBSESmallcap
Indices 23-Aug 22-Aug % Chg. Major Indices 23-Aug 22-Aug % Chg. Rs.Crs
S&P BSE SENSEX 18,519 18,313 1.13% CAC 40 Index 4,069 4,059 0.25% 23-Aug Buy Sell Net
S&P CNX NIFTY 5,472 5,408 1.17% DAX Index 8,417 8,398 0.23% FII' Investments 3434 3583 -149
S&P BSE MID CAP 5,359 5,310 0.91% Dow Jones Industrial Ave 15,011 14,964 0.31% DII's Investments 1497 741 756
S&P BSE SMALL CAP 5,248 5,209 0.74% FTSE 100 Index 6,492 6,447 0.70% FII's contribution to the total turnover 50%
Nasdaq Composite Index 3,658 3,639 0.52% DII's contribution to the total turnover 16%
S&P BSE CAPITAL GOOD 7,236 7,091 2.04% Major Asian Indices 23-Aug 22-Aug % Chg. Rs.Crs
S&P BSE BANKEX 10,791 10,589 1.91% Hang Seng 21,864 21,895 -0.15% 23-Aug Index Fut Index Opt Stock Fut Stock Opt
S&P BSE OIL & GAS 8,191 8,063 1.59% Nikkei 225 13,661 13,365 2.21% Net -662 631 801 -46
S&P BSE CONSUMER DU 5,744 5,657 1.55% Seoul Composite 1,870 1,849 1.14% OI 17073 64221 28269 3437
S&P BSE AUTO 10,248 10,096 1.51% SSE Composite Index (Sh 2,057 2,067 -0.47% Chg.OI -0.7% 2.7% 1.9% 5.8%
S&P BSE IT 7,545 7,442 1.37% Taiwan Weighted 7,873 7,814 0.75% FIIs' contribution to the total Derivatives turnover 33%
S&P BSE PSU 5,227 5,169 1.13%
S&P BSE POWER 1,398 1,383 1.08% Commodities (MCX) 23-Aug 22-Aug % Chg. 23-Aug 22-Aug % Chg.
S&P BSE METAL 7,817 7,739 1.00% Aluminium (30AUG2013) 119 120 -0.13% USDINR 28Aug13 63.99 64.75 -1.17%
S&P BSE FMCG 6,294 6,246 0.77% Copper (30AUG2013) 475 475 -0.11% EURINR 28Aug13 85.50 86.28 -0.90%
S&P BSE TECk 4,248 4,218 0.71% Crude (19SEP2013) 6,837 6,881 -0.64% JPYINR 28Aug13 (100 Yen) 64.63 65.61 -1.49%
S&P BSE HEALTHCARE 8,661 8,619 0.48% Gold (5OCT2013) 31,756 31,905 -0.47% FTSE100 (20-Sep-2013) 6450 6435 0.23%
S&P BSE REALTY 1,224 1,240 -1.33% Silver (5SEP2013) 53,473 53,469 0.01% S&P500 (20-Sep-2013) 1651 1643 0.52%
FII's & DII's in equity
BSE Sectoral Indices
Futures (NSE)
FII's in Derivatives
2. LKP Advisory
Global Market Overview
Asian markets conclude Friday’s trade on a mixed note
The Asian markets concluded Friday’s trade on a mixed note with Japanese stocks led higher cheering
gains on Wall Street and a weakened yen, while Chinese stocks retreated amid concerns about liquidity
conditions. Seoul shares ended higher to snap a five-day losing streak. Hong Kong shares surrendered
early gains and edged lower, dragged by afternoon weakness in Chinese markets as investors stayed
cautious ahead of a slew of earnings reports from heavyweight Chinese financials next week.
US markets extend gains as home sales numbers drop in July
The US markets extended their gains on Friday supported by a positive reaction to weak new home sales
data. Though the week remained mixed for the major bourses but they managed to recover a major
portion in last sessions. The Commerce Department reported a bigger than expected drop in new home
sales in July as well as a substantial downward revision to the data for June. New home sales tumbled
13.4 percent to an annual rate of 394,000 in July from the revised June rate of 455,000. The data eased
some concerns about the Federal Reserve scaling back its asset purchases at its September meeting.
Traders also took cues from big news from Microsoft, with the software giant surging up by 7.3 percent to
a one-month closing high after the company announced that Chief Executive Officer Steve Ballmer has
decided to retire within the next 12 months. The company’s Board of Directors appointed a special
committee to direct the process of choosing Ballmer's successor.
The Dow Jones Industrial Average ended up by 46.77 points or 0.31 percent at 15,010.51, the Nasdaq
gained 19.09 points or 0.52 percent to 3,657.79 and the S&P 500 closed higher 6.54 points or 0.39
percent to 1,663.50.
Domestic Market Overview
Benchmarks extend last session’s jubilation on Friday
Extending last session’s euphoria, Indian equity benchmarks snapped Friday’s session with a gain of over
a percentage point, recapturing their crucial 5,450 (Nifty) and 18,500 (Sensex) bastions, buoyed by
supportive global cues coupled with appreciation in Indian rupee against dollar. After an initial volatility,
domestic bourses gained strength as investors opted to invest in battered down but fundamentally strong
stocks. Some support also came in from Fitch statement that the rupee depreciation would not trigger a
change in its ratings and will maintain a ‘Stable Outlook’ on India’s sovereign rating at ‘BBB-’, mainly on
the back of the country’s sizable forex reserves, fiscal deficit management and structural reforms.
Meanwhile, sentiments remained calm to some extent after Finance Minister P Chidambaram, who in a
bid to allay investors’ fears about the rupee falling 5.5 per cent in five days, said that though the currency
is undervalued and has overshot appropriate levels, there is no need for excessive and unwarranted
pessimism.
Supportive cues from US markets too provided support to local markets in early deals. Rally in most of the
Asian markets also boosted the traders’ moral with Japanese Nikkei surging sharply over two percent with
the yen declining against the US dollar. Recovery in European counterparts after a steep fall too helped
the sentiments of local investors.
Appreciation in Indian rupee against dollar remained the major reason for jubilation in domestic markets.
The rupee was quoting at 64.11 per dollar at the time of equity markets closing as compared with previous
close of Rs 64.63. Metal stocks continued to remain on the buyers’ radar on a report showing that China’s
manufacturing unexpectedly expanded in August. Some support also came in from buying in index
heavyweight Reliance Industries (RIL) which rose over one and a half percent after the company
announced a new gas condensate discovery off the east coast of India in the Cauvery basin. Moreover,
software stocks continued to edge higher on recent steep slide of the rupee against the dollar.
4. LKP Advisory
Corporate News
Lupin’s - US subsidiary, Lupin Pharmaceuticals, Inc. (LPI) has received final approval for its Rifampin Capsules USP, 150 mg and 300 mg
strengths from the United States Food and Drugs Administration (USFDA).
Tata Motors, the country’s largest automotive player and the world’s fourth largest truck and bus manufacturer, has launched a new
variant of its sports utility vehicle (SUV) Safari Storme in the country, with price starting at Rs 10.86 lakh in ex-showroom, New Delhi. The
new Safari Storme Explorer Edition is a true outdoor companion, with customised outdoor essentials and a host of in-vehicle technology
features building on the 'REAL SUVs' masculinity, premiumness and utility.
Bhushan Steel, reportedly is likely to hike steel prices by 5% from September 2013. The Steel price hike would be in the range of Rs 1500
to 2000 per tonne. The fall of profit may be the one reason of this price hike. The company has reported 62.98% fall in its net profit at Rs
76.26 crore for the first quarter ended June 30, 2013 as compared to Rs 205.97 crore for the same quarter in the previous year.
Seamec has entered into a Contract for the Charter hire of Vessel ‘ALLIANCE’ with Sea Horse General Contracting Establishment, UAE,
Dubai for working in Offshore Egyptian Mediterranean waters. The said vessel is under bareboat charter with Seamec. The tenure of the
contract would be around 120 days with option for extension. The Contract is likely to commence around end August 2013. The total
contract value for the firm period would be around $7.3 million approximately.
Maharashtra Electricity Regulatory Commission (MERC) has allowed Rlnfra to recover past arrears, along with 14.5% per annum (p.a)
carrying cost, at Rs. 925 crore per year, aggregating to Rs. 5,550 crore over the next 6 years.
Reliance Industries, which holds pan-India 4G telecom spectrum for data services, reportedly has applied for a licence to offer mobile
telephony. This move comes right after DoT issued long-awaited migration guidelines, which pave way for Internet service providers (ISP)
that have BWA spectrum, to offer mobile telephony service by paying an extra fee of Rs 1,658.57 crore.
JSW Steel, the flagship of the JSW Group, is reportedly planning to sell its US Mill complex to pare debt and boost earnings as a revival in
the world’s biggest economy spurs demand. The company is likely to start looking for buyers once the plant has turned around. This
divestment would help the company to lower its liabilities. The company had paid $900 million for a 90% stake in the unit in 2007 to tap
demand from the oil and gas industry.
Bharat Heavy Electricals (BHEL) has emerged the lowest bidder for 1000 MW Neyveli lignite Corporation (NLC) unit tender. The 1000
MW Neyveli lignite project cost is seen at Rs 5907 crore. Further, the company is also planning to bid for NTPC’s 1600 MW Darlipali,
Orissa project.
Assam Company India has been appointed as the sole operator of Amguri Oil Block in Assam by Ministry of Petroleum& Natural
Gas,(MOPNG). The Company is accordingly taking necessary steps to commence production at the earliest. Once production is in full
flow, the bottom line of the Company is expected to improve substantially.
Bharti Airtel’s gross debt is expected increase by a massive Rs 5,900 crore just because of the Indian currency's depreciation versus
dollar. Its liability increases by Rs 1,000 crore for every one rupee change in US dollar exchange rate. A potential 10 % rupee depreciation,
that is 59.4 to 65.3 v/s USD will result in dollar denominated liabilities increasing by Rs 5,900 crore for the company. Telecom operator had
paid a massive $ 10.7 billion in 2010 to buy out the African operations of Zain.
Foreign institutional investors (FIIs) have bought additional stake in Tech Mahindra through open market purchase. First State Investment
Management (UK) on its own behalf and First State Investments International have bought 240,631 shares representing 0.1% stake in the
company via open market on August 21.
Hexaware Technologies, IT and Process outsourcing service provider, reportedly will approve, the proposal of Baring private Equity
Partners Asia for acquiring controlling stake in the company for $400 million, in its board meeting today, i.e., August 23,2013. With this, the
company finally will come to an end one-and-half year of negotiations it had with several financial and strategic players, including Japan's
NEC and home grown L&T Infotech.
5. LKP Advisory
Mangalore Chemicals and Fertilizers’ (MCF) promoter company Kingfisher Finvest India has raised its stake in the company to 2.01%
from 1.96%. Kingfisher Finvest India has purchased 14,600 shares on the BSE for Rs 8.96 lakh and another 47,000 shares for Rs 28.90
lakh on the NSE through the open market route.
Bharti Airtel, the world's fourth largest telecom operator by subscribers, is reportedly in final talks to sell off its Sri Lankan operations to
Abu Dhabi's Etisalat. The company has taken this decision as its subscribers have not grown in the past four quarters in the region, despite
investing over $300 million since 2007, the unit continues to make losses.
With an aim to further restructure its businesses, L&T is planning to form a subsidiary, L&T Technology Services to focus on engineering
services. As per the plan, L&T by April 1, 2014, will transfer the major part of the engineering services within itself to the new entity.
Core Education & Technologies is looking for fresh funding of around Rs 200 crore from lenders as part of debt restructuring to get itself
out of a difficult situation. The company is facing immense financial stress during April-June quarter due to decrease in the sales revenue
and increase in overdue trade receivables.
Hindalco Industries, Aditya Birla Group firm is looking for more time from the government in order to set up aluminum and aluminum
products special economic zone (SEZ) in Odisha as it is facing problems in land acquisition. In a meeting on August 30, 19-member Board
of Approval (BoA) chaired by Commerce Secretary S R Rao will considered the company’s request.
Macquarie Bank has sold 563,016 shares of Gitanjali Gems in an open market transaction. The foreign fund house has sold the shares at
Rs 81.02 a piece on National Stock Exchange (NSE) on August 22, 2013.
Reliance Industries (RIL) - telecommunications unit - Reliance Jio Infocomm has reportedly applied to the government for a new
telecommunications permit, which will enable the 4G airwave holder to offer voice services.
Parsvnath Group, India’s leading real estate and infrastructure developer with a diversified portfolio, has paid an amount of Rs 500.86
crore to Rail Land Development Authority (RLDA), Ministry of Railways for the development of 15.27 hectares (38 acres) of railway land
area situated at Sarai Rohilla-Kishanganj in Delhi. A development agreement has been executed between RLDA and Parsvnath Rail Land
Project, a special purpose company (SPV) incorporated for implementing this Project on 31st May, 2013.
Pharma major Dr Reddys Laboratories has recalled few lots of Ranitidine Hydrochloride tablets of 150 mg strength in the US earlier this
month due to microbial contamination of non-sterile products. It is a class II recall by the company. The drug was supplied to three different
parties with three different brand names. The product was manufactured at the company’s facility in Shreveport, USA.
NHPC, the country’s largest hydro power producer is planning to buyback shares worth Rs 1,600 crore instead of going through Offer for
Sale. The share buyback proposal is aimed at improving the value of company's share in the market. In this regard, the company is
seeking approval from its Board, after which the Power Ministry will approach the Cabinet for the final nod.
Reliance Industries (RIL) and its consortium partner BP has made a new gas condensate discovery off the east coast of India in the
Cauvery basin. The discovery, in the deepwater block CY-DWN-2001/2 (CYD5), is situated 62 kilometers from the coast in the Cauvery
Basin and is the second gas discovery in the block. RIL is the operator with 70% equity and BP has a 30% share. Well CYIII-D5-S1 was
drilled in a water depth of 1,743 meters, to a total depth of 5,731 meters, with the primary objective of exploring Mesozoic-aged reservoirs.
The Government of India (Gol) and Directorate General of Hydrocarbons have been notified of the discovery, named D-56.
Economy
Need to do more on the reforms front to kick start investments: FICCI
Expressing need to boost investment into the country, the Federation of Indian Chambers of Commerce and Industry (FICCI) said that the
government should focus on bringing more reforms to kick start investments and set the economic growth rolling on the fast track. Indian
economy’s growth is likely to remain flat in the first quarter of the current fiscal on account of sluggish economic conditions.
6. LKP Advisory
Pointing out that, Finance Minister P Chidambaram's statement on growth being the key focus area as encouraging, FICCI president Naina
Lal Kidwai said that presently there is need to return the investment cycle into the country and to continue the momentum on the reform
front. By adding further, she added that India should focus on introducing goods and services tax (GST) and speed up the implementation
of infrastructure projects cleared by Cabinet Committee on Investment (CCI) and restart investments.
Gold jewellery exports nosedive 70% in July
As a cause of worry, India's gold jewellery exports plunged by 70% year-on-year to $441.41 million in July on account of shortage of
precious metal and limited inventory in domestic market. In July last year, the exports stood at $1.5 billion, according to the data provided
by the Gems and Jewellery Export Promotion Council (GJEPC).
Further, gold medallions and coins exports have also witnessed a sharp decline of 63.3% to $112.83 million in July 2013 compared to a
year-ago period. However, silver jewellery exports saw a robust jump of 184% to $109 million during the period under review. With this, the
country's total gems and jewellery exports fell about 17 per cent to $2.49 billion.
Indian economy’s growth likely to remain flat in Q1 FY14: Finance Minister
Admitting that Indian economy’s growth is under pressure, Finance Minister P Chidambaram said that economic growth is likely to remain
flat in the first quarter of the current fiscal on account of global slowdown as well as some domestic factors. However, Chidambaram added
that the economy’s growth is likely to pick up in the remaining three quarters of FY14 on back of various initiatives taken by the government
like increase in sown area by about 9.1 percent, acceleration in plan expenditure and implementation of various infrastructure projects
cleared by the cabinet committee on investment (CCI) in last few months . The country's economic growth has slowed down to decade low
of 5 percent in the last fiscal year.
In order to improve the country’s deteriorating macro-indicators, Chidambaram said that during the last 12 months the government has
taken a number of measures to contain inflation and revive investment and growth. Referring to the rupee depreciation, Finance Minister
said that the domestic currency is undervalued and has overshot appropriate levels, but there is no need to take panic and stability will
return to currency markets as government continues to promote investment and growth. Rupee value fell by 5.5 percent in the last five
days and depreciated to a record low of over 65 per dollar.
Inflation could accelerate due to rupee's sharp depreciation: RBI
In what could be potential trouble brewing up for the already sagging Indian economy, Reserve Bank of India (RBI) in its ‘Annual Report
2012-13’, underscored that although headline inflation had moderated in the first quarter of 2013-14 to an average of 4.7%, it could
accelerate due to the rupee's sharp depreciation.
In its report, RBI said, “the pass-through of the depreciation of the rupee exchange rate by about 11% in the four months of 2013-14 is
incomplete, and will put upward pressure as it continues to feed through to domestic prices.”
Further, it added that, this Rupee depreciation is likely to offset the positive impact of above-average monsoons on inflation. As of August
13, the monsoon was 10% above normal with 85% of the Met divisions recording more than normal to average rainfall, helping improve the
Kharif sowing by 11%. Additionally, central bank anticipated rupee's weakness to increase subsidy payouts for fuel and fertilizer in
2013/14.
Rupee depreciation no trigger for changing India's stable outlook: Fitch
Amid domestic currency deprecating to a record low of over 64 to a dollar, global rating agency Fitch said that the rupee depreciation
would not trigger a change in its ratings and will maintain a 'Stable Outlook' on India's sovereign rating at 'BBB-', mainly on the back of the
country's sizable forex reserves, fiscal deficit management and structural reforms. However, Indian economy is likely to continue facing
pressure on account of fall in rupee value, and the sharp weakening of the currency reflects large or growing current account deficit whose
funding has been complicated by a reversal of global portfolio capital, it added.
Fitch said that policy management would be the key factor in determining whether economic and financial stability is maintained in India
following the intensified pressure on currencies and asset prices. By adding further, Fitch said that rapid private-sector credit growth,
7. LKP Advisory
widening fiscal deficits or sustained higher inflation could lead to a broader and more sustained loss of confidence among investors. Fitch’s
note further said that India's foreign-exchange reserves have come under pressure, but are still sizable and the country's forex reserves,
which have currently fallen to $279 billion, still provide around 5.5 months of import cover. Noting that demand growth in excess of current
supply-side capabilities could lead to a further widening in external imbalances, Fitch said that additional supply-side reforms could boost
sustainable growth rates and attract greater foreign investment inflows, but likely to take more time to implement in view of approaching
elections in first half of 2014.
TRAI recommends raising FDI limit in news channels and FM radio services to 49%
The Telecom Regulatory Authority of India (TRAI), in line with the recommendation of committee led by economic affairs secretary Arvind
Mayaram, has recommended that the foreign direct investment (FDI) limit in news channels and FM radio services be raised from 26% to
49%, subject to clearance by the Foreign Investment Promotion Board (FIPB). It also recommended that the FIPB approval process be
streamlined and made time-bound.
In its recommendations on FDI limits and approval routes thereof in various segments of the broadcasting sector in India, the regulator
segmented its approval in three categories viz; broadcast carriage services, television content services and FM radio services. Further it
said that in Broadcast Carriage Services, DTH, HITS, IPTV, Mobile TV, Teleports Cable Networks ( Multi System Operators (MSOs)
operating at National or State or District level and undertaking upgradation of networks towards digitalisation and addressability), where the
existing limit is 74% (up to 49%-Automatic route and Beyond 49%-FIPB route) and Cable Networks (Other MSOs not undertaking
upgradation of networks towards digitisation with addressability and Local Cable Operators (LCOs)), where the present approval is 49%
through Automatic route, the limit should be increased to 100%, with up to 49% through Automatic route and beyond 49% through FIPB
route.
http://www.lkpsec.com/news/corporate-news.aspx Source: Reuters, Ace Equity & LKP Research
The information in this documents has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true and is for general guidance
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finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past.
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