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Reports India

Indian stock market and companies daily report (December 20, 2013, Friday)

December 20, 2013, Friday, 05:02 GMT | 00:02 EST | 09:32 IST | 12:02 SGT
Contributed by Angel Broking

Indian markets are expected to open in the red today tacking negative cues from SGX nifty however Fed's decision to scale back its stimulus program would weigh on the market.

The US markets after ending the previous session sharply higher, stocks turned in a lackluster performance during trading on Thursday before closing roughly flat. The choppy trading came as traders continued to digest the Federal Reserve's decision to scale back its stimulus program. The major averages eventually ended the day mixed, with the Dow posting a modest gain. The European markets finished solidly in positive territory on Thursday, after the Federal Reserve tapered its massive bond-buying program by $10 billion to $75 billion per month. The Fed cited recent improvement in the U.S. jobs market when it announced the decision late Wednesday.

Back home, The Indian markets fell notably on Thursday, bucking a worldwide rally, on apprehensions the Federal Reserve's decision yesterday to slow the pace of its bond purchases may trigger massive capital outflows in the coming months. India is better prepared to deal with any consequences arising out stimulus tapering, Finance Minister P Chidambaram said today in an attempt to assuage investors worried about fresh capital outflows.

Markets Today

The trend deciding level for the day is 20,791 / 6,194 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 20,935 - 21,162 / 6,237 - 6,307 levels. However, if NIFTY trades below 20,791 / 6,194 levels for the first half-an-hour of trade then it may correct up to 20,564 - 20,419 / 6,124 - 6,081 levels.

CCEA approves higher gas price for RIL if bank guarantee is given

Media reports suggest that the Cabinet Committee on Economic Affairs (CCEA) has decided to allow Reliance Industries (RIL) to almost double the price of natural gas from April 2014 provided the firm gave a bank guarantee to cover its liability if gas-hoarding charges are proved. The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price and it will be encashed if it is proved that the company hoarded gas or deliberately suppressed production at the main gas fields Dhirubhai-1 and 3 (D1 &D3) fields in the eastern offshore KG-D6 block since 2010-11. This development is on expected lines however, we await further clarity on the matter of the quantum of the Bank guarantee and hence until further updates we maintain our Accumulate rating on RIL with a target price of Rs.931.

TTMT to observe ten day shutdown at Jamshedpur plant

According to media reports, Tata Motors (TTMT) is likely to observe a ten day block closure at its Jamshedpur plant starting from December 23, 2013. The Jamshedpur plant of the company manufactures medium and heavy commercial vehicles (MHCV) and has a capacity of around 150,000 units per year. The production shutdown has been undertaken considering the weak demand environment and to avoid unnecessary buildup of inventory and align the production as per the market demand. We are not surprised by the company's decision given that the MHCV demand remains extremely weak and we believe that this exercise of aligning production in-line with the market demand will help the company curtail costs and prevent inventory build-up. Nevertheless, we remain positive on Tata Motors primarily due to the sustained momentum witnessed at Jaguar and Land Rover driven by the success of the new launches. We maintain our Accumulate rating on the stock with an SOTP based target price of Rs.410.

Suzuki Motor mulling to increase stake in MSIL

According to media reports, Suzuki Motor Corporation (SMC) is mulling to increase the stake in its Indian subsidiary, Maruti Suzuki India Limited (MSIL). As per the reports, SMC, may either look at share buy-back or opt for preferential issue of shares to increase its holding in MSIL. SMC has recently increased its stake in MSIL to 56.2% in March 2013 from 54.2% in December 2012. In the event SMC decides to increase its stake in MSIL, the maximum that it can hold in the company would be 75%, which is the maximum permissible promoter holding limit in a listed company. While MSIL has declined to comment on the media speculation, stock markets have responded positively to the development (MSIL shares up ~3% post the reports). We believe that SMC's rationale behind such a move could be the increasing importance of MSIL in its global operations in recent years. MSIL is SMC's largest overseas subsidiary accounting for ~50% of volumes and ~25% of sales. In our view, such a move by SMC would be positive for MSIL indicating the confidence that the parent company has over the potential of India's passenger vehicle industry. We would wait for further clarity on this front. At the CMP of Rs.1,781, MSIL trades at 15.9x FY2015E earnings which is broadly in-line with its historical average. Thus we maintain our Neutral rating on the stock.

Economic and Political News

- Implementing GST to benefit food processing industry: Pawar

- Cabinet to take up KG-D6 bank guarantee issue, CBM rights for CIL today

- UN lowers India growth forecast to 4.8% for 2013

- CIDCO to issue RFQ for Navi Mumbai airport in January

Corporate News

- SKS Microfinance completes Rs.215cr securitization

- ONGC, Rajahmundry begins direct marketing of gas

- IDFC not eligible for bank licence as foreign holding exceeds 50%

- Power Grid lists fresh equity; share price falls in early trade