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Indian stock market and companies daily report (April 05, 2013, Friday)
The Indian market is expected to open flat today mirroring the negative opening trades in the SGX Nifty and mixed opening across major Asian bourses. Asian markets are trading mixed, with Japanese markets surging in particular, after the Bank of Japan announced unprecedented monetary easing to end two decades of economic stagnation.
The US markets ended the trading session on Thursday modestly higher, after turning in a lackluster performance throughout much of the session. While a positive reaction to new Japanese monetary policy generated buying interest, disappointing U.S. jobs data limited the upside for the markets. Bank of Japan announced new quantitative and qualitative easing measures, leading to modest strength on the Wall Street. However, buying interest was kept in check by the release of a report from the Labor Department showing an unexpected increase in initial jobless claims.
Meanwhile, Indian markets fell sharply on Thursday, extending the sell-off from the previous session, as investors awaited the start of the fourth-quarter earnings season. Speculation about early general elections and weak global cues also weighed on sentiment, adding to concerns about the widening current account deficit and slowing economic growth.
The trend deciding level for the day is 18,572 / 5,595 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,671 - 18,832 / 5,624 - 5,674 levels. However, if NIFTY trades below 18,572 / 5,595 levels for the first half-an-hour of trade then it may correct up to 18,411 - 18,313 / 5,645 - 5,516 levels.
Delhi high court lifts stay order on Bharti Airtel 3G pact ban
The Delhi high court has set aside an earlier stay order by it on the Department of TelecommunicationsRs. (DoT) directive banning Bharti Airtel from offering 3G roaming services in some circles. On 15 March, DoT had sent the notice to Bharti Airtel asking the countryRs.s largest mobile operator to stop 3G services in the seven circles where it does not have the required licences, within three days. Bharti Airtel was offering 3G services in the seven circles, where it does not have 3G spectrum, by signing intra-circle roaming (ICR) agreements with other telecom operators -Vodafone India and Idea Cellular. Bharti Airtel was also been asked to pay a penalty of Rs.50cr per circle. However, Bharti Airtel was successful to get a stay on the DoT order from a single bench judge in the Delhi High Court by March 18. Besides, the court had allowed Bharti Airtel to continue its 3G services in the seven circles - Haryana, Maharashtra, UP (East), Kolkata, Gujarat, Kerala and Madhya Pradesh, until the next hearing, scheduled for May 8. However, the Delhi High Court also stated that Bharti Airtel has not filed the affidavit of undertaking as directed by the Single Judge Order that put a stay on the DoT notice. DoT has also stated before the Delhi High Court that the department was in process of filing an appeal. Bharti Airtel has 6.8mn 3G customers across the country, of which 5.2mn are active; execution of the DoT order would impact about 30% of its total 3G subscribers.
Bharti Airtel also offers 3G services in 13 more circles, where it has bought spectrum for about Rs.1 2,295cr, by aggressive bidding at the 3G spectrum auction in 2010. Subscribers in these circles will not be hit by the order. This news is negative for the overall telecom sector. We continue to maintain Accumulate rating on the stock with a target price of Rs.325.
NTPC's Kahalgaon plants may be shutdown
NTPC may shutdown all its seven thermal power generation units at Kahalgaon in BiharRs.s Bhagalpur district if Eastern Coalfields does not resume the coal supply. The NTPC thermal power plant at Kahalgaon needs 45,000 metric tonne coal per day for optimal generation of power at 2340 MW. However, ECL has stopped coal supply to the NTPC thermal power plants at Kahalgaon and Farakka and threatened to do so at its Talcher plant to protest the NTPCRs.s decision to verify quality and quantity of the natural fuel being supplied before making payment. We maintain Accumulate rating on the stock with target price of Rs.163.
Axis Bank increases deposit rates for select maturities
Axis Bank has increased retail deposit rates across maturities between 1 8months to less than 5 years, by 30bp to 9.3%. The increase in deposits rates across key maturities, in our view, comes at the backdrop of sluggish deposit mobilization (which has remained so for quite some time now) and also due to the asset liability mismatch (as clarified by the Management in an interaction with the media). As per media reports, the Management has hinted that the increased deposit rate would remain effective only for a short period.
We continue to believe that the banks would prefer deposit rates to come down across maturities, before they go for further lending rate cuts. Hence, for effective monetary policy transmission from here on, deposits growth has to improve, paving way for reduction in deposit rates. At CMP, the stock trades at 1.4x FY2015 ABV. We maintain our Buy view on the stock with a target price of Rs.1,698.
Hexaware signs three-year pact with US client
Hexaware has signed a contract with one of its US-based existing clients; the new contract is for a period of three years and the estimated revenue from the deal is about US$30mn. As a part of this engagement, Hexaware will provide services that cater to multiple business users across different technology platforms. The service lines include software development and application services management through Microsoft, Java and legacy applications, enterprise solutions through PeopleSoft and SAP, business intelligence and analytics, quality assurance and testing services, remote infrastructure management services and business process outsourcing. Hexaware has been associated with the client for seven years and through this contract the company will have an estimated US$5mn incremental business over the course of the deal. The revenue from this contract will begin to accrue with immediate effect as it also secures extension for the revenue stream from existing service lines for a three year period, the company said. We maintain our Buy rating on the stock with a target price of Rs.105.
Economic and Political News
- Government gives extra time to 14 SEZ developers to execute projects
- India eases curbs on sugar sales
- Reduction in CAD to be slow initially: PM
- Caller tunes earn Rs.8,1 85cr for telcos in 3 years
- Essar Oil exits CDR for Gujarat refinery, enters new loan pact
- R PowerRs.s Sasan project starts commercial operations
- SC agrees to give early hearing to SEBI plea against Sahara
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