Indian stock market and companies daily report (January 06, 2014, Monday)
January 6, 2014, Monday, 06:34 GMT | 01:34 EST | 11:04 IST | 13:34 SGT
Indian Markets are expected to open in the red today tracking negative start to SGX Nifty and major Asian markets, reacting to last weeks Chinese services report which pointed to a slower growth in the world's second-largest economy.
US markets fluctuated over the course of the trading day on Friday, before closing mixed. The choppy trading seen for much of the session came as traders seemed somewhat reluctant to make any significant news amid a quiet day on the U.S. economic front. Traders still kept an eye on comments from several Federal Reserve officials, including a speech by Fed Chairman Ben Bernanke, wherein he offered a vigorous defense of the unprecedented measures taken under his watch to spur the U.S. economy after the worst recession in decades. Major European markets rebounded from the weakness of the previous trading session on Friday. Investors largely shrugged off the weak Chinese service sector data at the end of the week.
Meanwhile, Indian markets pared early losses to end largely unchanged, as weak global cues and a lack of positive triggers weighed on markets. Prime Minister Manmohan Singh, who addressed a press conference on Friday, highlighted the achievements of his government and ruled himself out of prime minister's race after the next general elections.
The trend deciding level for the day is 20,823 / 6,201 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 20,914 - 20,976 / 6,231 - 6,252 levels. However, if NIFTY trades below 20,823 / 6,201 levels for the first half-an-hour of trade then it may correct 20,760 - 20,669 / 6,181 - 6,151 levels.
ONGC discovers gas reserves in KG field
Media reports suggest that ONGC has discovered gas in the KG DWN 98/2 field which it had bought from Cairn India in 2005. The estimated reserves are stated to be 3-4TCF of gas. The company has submitted a declaration of commerciality (DoC) to the Directorate General of Hydrocarbons (DGH). However we await further clarity on the timelines of production, capex plans etc. and until further updates we maintain our Accumulate view on the stock with a target price of Rs.318.
Infosys appoints BG Srinivas, UB Pravin Rao as presidents
Infosys Ltd has appointed Mr. B. G. Srinivas and Mr. U. B. Pravin Rao as Presidents of the Company, reporting to Mr. S. D. Shibulal, Chief Executive Officer & Managing Director. These appointments are effective immediately. The business portfolios will be realigned under the two Presidents as set forth below. In addition, Mr. B. G. Srinivas will focus on global markets and Mr. U. B. Pravin Rao will focus on global delivery and service innovation. Financial services, Insurance, Manufacturing, Engineering Services, Energy & Communications, Infosys Public Services, Infosys Lodestone, Strategic Global Sourcing, Marketing and Alliances will report to Mr. B. G. Srinivas. Retail, Consumer Packaged Goods and Logistics, Life Sciences, Resources & Utilities, Services, Growth Markets, Cloud & Mobility, Quality & Productivity and Infosys Leadership Institute will report to Mr. U. B. Pravin Rao. In view of these changes, the Executive Council, as a forum, will cease to exist with effect from April 1, 2014.
This is a clear indication that they are being groomed for the CEO's post. This suggests that apart from more centralisation of power with these two leaders, the company is not looking at talent from outside the organisation for the senior management attrition that Infosys has been witnessing of late. But this can be seen as confidence in their abilities and is a healthy sign. Though CEO Shibulal's term ends only in 2015, the search for the next chief executive is a long-drawn-out process. We currently maintain our neutral rating on the stock.
BJAUT registers lower-than-expected sales in December 2013
Bajaj Auto (BJAUT) reported disappointing performance in December 2013 with total sales posting a significant decline of 13.4% yoy (4.1% mom) to 297,776 units led by continued weakness in the domestic sales. Domestic volumes declined 32.5% yoy (16.9% mom) largely due to the sluggish performance of the Discover family due to higher competition in the entry and executive motorcycle segments and also partly due to the annual maintenance shutdown. While motorcycle sales of the company declined 12.6% yoy (6.5% mom); three-wheeler sales registered a fall of 18.6% yoy during the month. Export volumes though continued its strong traction witnessing a robust growth of 19.6% yoy (12.7% mom) to 150,753 units. The company expects to maintain a monthly run rate of 150,000 units on the exports front going ahead. On the domestic front, the company expects to gain traction post January 2014 with higher production of the new Discover and is planning to launch one more variant of the Discover in February 2014. At the CMP, the stock is trading at 13.4x FY2015E earnings. We maintain our Buy rating on the stock with a target price of Rs.2,272.
RCom repays $500mn ECB loan
RCom announced that the company has fully repaid a syndicated external commercial borrowing loan of US$500mn or ~Rs.3,100cr. In July last year RCom had completed full repayment of two syndicated ECB loan of US$500mn each, amounting to US$1bn (~Rs.6,200cr). Besides, it had paid bilateral ECB loan of more than US$31 0mn (~Rs.1,900cr). It availed the two loans in 2007 from a group of international banks, and has repayments have been from RCom's rupee resources. With the repayments of the ECB loans, RCom has become fully liquidated the borrowings from 23 foreign banks and financial institutions. RCom reported a net debt of ~Rs.41,170cr as on September 30, 2013 and the company attributed the spike in debt to rupee depreciation vis-a-vis the US dollar. We maintain our Neutral rating on the stock.
MOIL raises manganese ore prices
MOIL has raised manganese ore prices for various grades by 3-5% effective January, which is in line with our expectations. The prices have been raised on the back of seasonal pick up in demand as well as due to INR depreciation against the USD. We do not expect significant changes in our estimates due to this price increase. Hence, until the company reports its 3QFY2014 results, we maintain our estimates and Neutral rating on the stock.
Economic and Political News
- Uncertainty over poll outcome may cast a shadow on economy: Assocham
- India provides hospitable environment for FDI: PM
- FDI in pharma sector jumps 86.5% during April-Oct period
- CERC hearing on draft power tariff rules for 2014-19 on January 2015
- Reliance Industries to increase KG-D6 gas output
- FIIs allowed to raise stake in Karur Vysya Bank to 40%
- RINL hopes to sell 1mn tonne more steel on retail focus
- Shah panel report targets 55 mines of top firms in Odisha
- Adani Power fully commissions 1,320MW Kawai project in Rajasthan
- Centre holds back Rs.96cr subsidy to GSFCL