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Indian stock market and companies daily report (December 18, 2013, Wednesday)
Indian markets are expected to open in the green today tracking a positive opening in SGX Nifty and most of the other Asian markets which are also trading in the positive territory.
The US markets showed a lack of direction throughout much of the trading day on Tuesday. The choppy trading came as traders looked ahead to tomorrow's announcement of the Federal Reserve's monetary policy decision. The major averages bounced back and forth across the unchanged line before closing modestly lower. The European markets ended Tuesday's session in negative territory, following the gains of the previous session. Investors shrugged off data which showed that Germany's economic confidence increased to the highest level in nearly seven years. They continued to play it cautious ahead of announcement from the Federal Reserve at the FOMC meet.
Indian markets fell slightly on Tuesday, as investors awaited the outcome of Reserve Bank of India's policy meet today, with many economists expecting the central bank to hike the repo rate by 25 basis points to curb soaring inflation.
The trend deciding level for the day is 20,664 / 6,154 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 20,732 - 20,853 / 6,175 - 6,212 levels. However, if NIFTY trades below 20,664 / 6,154 levels for the first half-an-hour of trade then it may correct up to 20,543 - 20,475 / 6,118 - 6,097 levels.
RBI releases discussion paper on early recognition of financial distress
RBI in its discussion paper has outlined several measures for early recognition of financial distress, prompt steps for resolution and fair recovery for banks. These measures are broadly aimed at helping banks to recover bad debts earlier, so as to ease the financial stress on bank's books. To begin with the paper requires banks to form a joint lenders committee as and when signs of stress are visible and to timely agree on a plan for resolution which would result in better regulatory treatment of assets in question. If they fail to reach a resolution plan timely, those assets will require accelerated provisioning.
The paper also envisages an improvement in the current restructuring process, by including measures such as independent evaluation of large value restructuring with a focus on viable plans and fair sharing of losses between promoters and creditors. It also suggests increasing incremental borrowing costs for noncooperative borrowers. As far as the asset sales to ARCs is concerned, as per the paper the loss on sale can be spread over two years provided the loss is fully disclosed. It also encourages leveraged buyouts of stressed entities by specialized entities. Overall, the measures are aimed at improving current stress recognition and recovery process, by incentivizing banks to do so early. In our view, these measures if implemented in current form would entail higher operating costs for banks in the immediate term primarily to benchmark their current processes, however over a medium-to-long term these measures clearly aim at increases recovery prospects of stressed assets, which would result in benefits much higher in magnitude as compared to the initial costs.
Infosys wins contract from Chinese firm FESCO
Infosys has bagged a contract from Chinese firm FESCO to develop a human resource (HR) services platform. FESCO is the first Chinese firm to provide professional HR services to foreign enterprises, financial institutions and economic organizations in China. Called iSynergy, the software platform will automate a range of services provided by Fesco, including management of personnel information, organization structure and payroll data. The new platform will help Fesco's users access its services using a single window and self-service options. We maintain our Neutral rating on the stock.
Cipla- Receives USFDA approval for Levalbuterol HCL
Cipla has received ANDA approval for Levalbuterol Hydrochloride which is generic version of Sunovion's Xopenex Inhalation solution. Cipla is the fourth generic company to have received an US ANDA. The overall market size of the drug as of is estimated to be US $439mn. We believe this is an interesting opportunity for Cipla and expect the drug to generate full year sales of US $20-25mn and net profits of US $4-5mn respectively for the company. We maintain our buy on the stock with a price target of Rs.504.
IRB Infrastructure Developers has emerge as a preferred bidder for Rs.1,500cr road project
IRB Infrastructure said it has emerged as a preferred bidder for four Laning of Solapur to Yedeshi section of NH-211 from km 0.000 to km 100.000 (Design Length 98.717 km) in the state of Maharashtra to be executed as BOT (Toll) on DBFOT Pattern under NHDP Phase - IV. The total cost of the project is estimated to be Rs.1,500cr and has a concession period of 29 years (including 30months of construction period). The project also has viability gap funding (VGF) of Rs.189cr from NHAI. We maintain our Buy rating on the stock with a target price of Rs.104.
Economic and Political News
- RBI likely to raise repo rate by 0.25% to tame inflation
- Gold import curbs to stay despite easing trade gap
- Mizoram GSDP growth at 11% during 11 Plan
- Traders urge government to slash onion MEP to $300/tonne
- DCHL's plea against AP High court rejected by SC
- IKEA stores in India closer to reality, Walmart still a far cry
- Tesco likely to submit application for multi-brand retail
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