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Indian stock market and companies daily report (September 10, 2012, Monday)

Contributed by Angel Broking

The Indian markets are expected to open flat to positive tracking mixed opening in the Asian markets which are trading mildly higher after a bleak U.S. jobs report as it sparked hopes of more policy action from the Federal Reserve.

The US markets closed modestly higher on Friday as lackluster August jobs data fueled speculation that the Federal Reserve may start another round of monetary stimulus. The Labor DepartmentRs.s report showed that employment increased by 96,000 jobs in August (expected - 125,000) following a downwardly revised increase of 141,000 jobs in July. Despite the weaker than expected job growth, the unemployment rate dropped to 8.1% in August from 8.3% in July because the overall workforce shrank by a notable 368,000 people. Central-bank strategies will be the dominating forces driving US stocks this week, with European policy makers looking for a high-court ruling on euro-zone bailout programs, and investors watching for word from the Federal Reserve about another round of stimulus.

Meanwhile the Indian markets rallied on Friday after the ECB unveiled a bond-buying plan to help lower struggling euro zone countriesRs. borrowing costs. Markets shed some of the gains before the close of the day.

Markets Today

The trend deciding level for the day is 17,739 / 5,356 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,784 - 17,818 / 5,369 - 5,379 levels. However, if NIFTY trades below 17,739 / 5,356 levels for the first half-an-hour of trade then it may correct up to 17,705 - 17,661 / 5,346 - 5,333 levels.

Telecom user base dips for first time, drops by over 20mn

Telecom subscriber base fell to 944.8mn in July 2012 from 965.5mn in June 2012, the first ever decline in the country. The subscriber base report for the month of July released by Telecom Regulatory Authority of India (TRAI) shows that overall telecom user base of the country dropped by 20.7mn subscribers over June. The decline in total subscriber base for the first time was led by the wireless segment where users declined by 20.6mn.

The biggest loss in user base came from Reliance Communications (R Com) that lost 20.5mn users, followed by Tata Teleservices, Uninor, Videocon, Loop and MTNL. The drop in R ComRs.s subscriber base was due to removal of inactive customers from its user base as the company decided to deactivate the inactive prepaid subscribers who have not had any usage in the last 60 days. Tata Teleservices lost over 2.4mn wireless customers, Uninor lost over 1mn subscribers, Videocon 0.4mn, and Loop Mobile and MTNL each lost ~0.15mn subscribers in July. Bharti Airtel, however, led the growth in mobile subscribers in July by adding 1.5mn new customers, taking its total subscriber base to over 188mn. Vodafone added 1.2mn users, taking its total subscriber base to over 154mn. Idea Cellular, Aircel, BSNL and HFCL added 0.45mn, 0.28mn, 0.47mn and 23,000 new users, respectively in July.

The subscriber addition in Bharti Airtel was along the expected lines while addition in Idea Cellular as well as R Com disappointed. Companies in the telecom sector remain surrounded by regulatory issues which are yet to resolve. We maintain our Neutral view on the telecom sector.

TCS gets Rs.103cr West Bengal contract

TCS has signed a Rs.103cr end to end information and communication technology solutions contract with the West Bengal government. The contract will help in implementing the Mahatma Gandhi national rural employment guarantee scheme (MGNREGS) in the state. The TCS MGNREGS solution will enable backward and forward integration of the process that includes enrollment, biometric-based authentication, secure wage disbursement, worksite attendance management and on-line facilities into the system. It will also provide a comprehensive management information system to ensure effective monitoring and deployment. TCS will provide a five year support to the system after implementation. It will offer extensive experience in e-governance and a framework for the scheme. We maintain our Neutral rating on the stock owing to recent run-up in the stock price.

Bosch to temporarily suspend production at its plants

In a view to avoid unnecessary buildup of inventory at its plants and align the production as per the market demand, Bosch (BOS) has announced that it will suspend the manufacturing operations at the Bangalore (partially for five days) and Jaipur plant (fully for four days) in September. BOS has started adjusting production at its plants in Bangalore, Nashik and Jaipur to varying degrees since June 2012 due to economic downturn and declining demand in the medium and heavy commercial vehicle (MHCV) and tractors segments. The domestic automobile industry remains the primary driver of companyRs.s revenue and weak domestic demand on account of sluggish economic growth, increasing fuel prices and weak consumer sentiments has affected BOSRs.s operating performance. At the CMP of Rs.8,443, the stock is trading at 19.4x CY201 3E earnings. We maintain our Neutral rating on the stock.

Economic and Political News

- Government to place views on coal blocks by September 14

- BSP demands special session of Parliament for quota bill

- 2G case: Raja to cross examine A K Srivastava tomorrow

Corporate News

- Aurobindo Pharma gets US nod for anti-hypertension pills

- Cipla hits new high on winning patent case over Tarvea

- Directors working on details to list tower biz: Bharti Airtel

- Have begun production from coal blocks: R-Power

- Hershey to buy out Indian JV partner Godrej

- ONGC buys Hess stake in Azeri field for US$1bn