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Indian stock market and companies daily report (January 09, 2013, Wednesday)

Contributed by Angel Broking

The Indian market is expected to open flat tracing flat to marginally positive opening trades in the SGX Nifty and major Asian bourses.

US markets ended the trading session on Tuesday mostly lower, as traders expressed uncertainty about the upcoming earnings season. Investors remained cautious ahead of the unofficial start of the U.S. earnings season today, when aluminum company Alcoa reports its results for the fourth quarter. Meanwhile, the European markets ended the trading session with mixed results. The markets were positive in early trade, despite the increase in the Eurozone unemployment rate and the weaker than expected rise in retail sales. However, the markets reversed direction in the afternoon, tracing weak performance of the U.S. markets.

The domestic markets erased early losses to end modestly higher on Tuesday, despite weak global cues and FitchRs.s renewed warning on IndiaRs.s rating outlook. Fitch Ratings has reiterated its negative outlook on IndiaRs.s sovereign credit rating, citing worries about slowing growth, stubborn inflationary pressures and the ballooning fiscal deficit.

Markets Today

The trend deciding level for the day is 19,712 / 5,991 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 19,792 - 19,841 / 6,018 - 6,034 levels. However, if NIFTY trades below 19,712 / 5,991 levels for the first half-an-hour of trade then it may correct up to 19,663 - 19,583 / 5,975 - 5,948 levels.

Axis Bank increases deposit rates

Axis Bank has increased the interest rates on deposits of size Rs.1cr to less than Rs.5cr for maturity between 18 months to less than 5 years by 25bp to 9.25%, w.e.f January 8, 2013. Recently Dena Bank, Federal Bank and Bank of India had also revised its term deposit rates by 25-35bp for maturity bucket of 1-3years. As we understand, increase in deposit rates, is partly due to asset liability mismatch and due to moderating deposit growth. Even going ahead, deposit growth can be expected to remain moderate as real interest rates continue to remain negative (considering CPI inflation remaining at levels of 10%). RBI had also cautioned about the growing differential between deposit growth and credit growth. At CMP, the stock is trading at 1.9x FY2014E ABV. We recommend Buy rating with a target price of Rs.1587.

SAIL reported modest production growth during April-December 2012

Steel Authority of India (SAIL) reported 1% yoy growth in crude steel production to 10.1mn tonnes during April-December 2012. However the saleable steel production grew by 2% yoy to 9.3mn tonnes during the same period. The modest improvement in production came on the back of improved productivity of blast furnace and power plants. The numbers were in line with our expectation; we maintain our Neutral view on the stock.

Bhushan Steel plans to raise Rs.475cr via rights issue

Bhushan Steel has proposed to raise Rs.475cr through a rights issue of 1.41cr equity shares. The company has proposed a ratio of 1 share for every 15 shares held as on record date which is January 16, 201 3. The proposed price for the rights issue is Rs.335 per share. The rights issue is unlikely to have a meaningful impact on Bhushan SteelRs.s financials. Hence, we maintain our Neutral rating on the stock.

Economic and Political News

- CCI to review procedures followed in grant of clearances

- Govt not worried about downgrade, will contain deficit: FinMin

- Rangarajan for quick action to prune diesel subsidy

Corporate News

- MOIL plans to up production, invest Rs 1,200 cr in phases

- Wockhardt gets USFDA nod to market anti-epilepsy tablets

- Mahindra Reva names new electric car Rs.Mahindra e20Rs.