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Indian stock market and companies daily report (December 06, 2012, Thursday)

Contributed by Angel Broking

The Indian market is expected to open in the green reflecting positive opening trades in the SGX Nifty and major Asian indices.

The US markets ended the session mixed after seeing considerable volatility over the course of the trading day on Wednesday. The volatility on Wall Street came as traders kept a close eye on comments out of Washington, where lawmakers continue to struggle to reach an agreement to avoid the looming fiscal cliff. The majority of the European markets managed to hold onto some modest gains at the end of WednesdayRs.s trading session. EU finance ministersRs. attempt to strike a deal on a common supervisor for euro area banks hit a roadblock on Tuesday as nations remained split on the terms of the proposed "single supervisory mechanism." The ministers have agreed to meet again next week, ahead of the EU leader's summit scheduled for December 13-14. The meeting is expected to resolve the disagreements over the single supervisor, which could enable Europe to contain the banking woes of the single-currency region.

Meanwhile, Indian shares rose on Wednesday on hopes the government will win the Parliamentary vote on FDI in retail later in the day. However, IndiaRs.s service sector growth declined in November, an HSBC survey showed, limiting any major upside. The HSBCRs.s Services Purchasing Managers Index (PMI) for November fell to a 13-month low of 52.1 in November from 53.8 in the previous month.

Markets Today

The trend deciding level for the day is 19,409 / 5,903 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 19,446 - 19,501 / 5,915 - 5,930 levels. However, if NIFTY trades below 19,409 / 5,903 levels for the first half-an-hour of trade then it may correct up to 19,354 - 19,316 / 5,889 - 5,877 levels.

Government wins vote on FDI in multi-brand retail in Lok Sabha

The government defeated the oppositionRs.s motion against its decision of up to 51% foreign direct investment in multi-brand retail in the Lok Sabha. The Congress-led UPA government won the crucial debate on FDI in multi-brand retail with 253 votes against the oppositionRs.s 218 votes. Following the fervent debate which took place under Rule 184 in the Lok Sabha, outside-supporters to the UPA government - the BSP and SP expectedly walked out of the house, refraining from the vote. Thus, the majority required to win the vote came down to 251 (from 273) in the 544 member house. Subsequent to the vote in Lok Sabha, the issue is now expected to be debated in the Rajya Sabha under rule 168.

On September 14, 2012 the Cabinet Committee on Economic Affairs approved FDI in multi-brand retail with up to 51% stake, with the final decision on allowing it to rest with the respective State governments. Further, since the decision on permitting FDI in multi-brand retail up to 51% is an executive decision, the vote on FDI is non-binding. However, we believe that it is key to ending the logjam in parliament since it convened on November 22, 2012. We believe that by winning the vote the government is likely to confidently step up momentum on further reforms drive thereby enabling it to push through difficult legislations.

Result Review

Mphasis - 4QFY2012 (CMP: Rs.387 / TP: Under review)

Mphasis announced its 4QFY2012 numbers which underperformed our expectation on revenue front however came higher than expectations on the net profit front. The dollar revenues came in at US$248mn, down 1.6% qoq, due ramp down in some projects from HP channel. In INR terms revenues came in at Rs.1,306cr, down 3.6% qoq. The company again witnessed headcount reduction in Application as well as ITO business, which led to increase in the respective utilization levels. EBITDA margin of the company increased by 93bp qoq to 20.7% due to lower employee costs as the companyRs.s overall employee base got reduced by ~ 1,000 employees. PAT came in at Rs.209cr aided by slightly lower interest charges and higher other income. The company added 22 new clients during the quarter, out of which 14 were added in direct channel. The stock is currently under review.

Economic and Political News

- Maha coordination panel to decide on retail FDI: Praful Patel

- SC declines to entertain SangmaRs.s plea against President

- Services PMI falls to 13-month low in November

- Auction coal blocks only after geological report: Crisil

Corporate News

- TVS Motors expects flat growth in sales this year

- PC Jeweller plans to have 50 stores by FY14-end

- RIL divests Yemen-9 Block To Medco, Indonesia

- Sahara gets more time to repay bond investors