Indian stock market and companies daily report (January 09, 2014, Thursday)
January 9, 2014, Thursday, 16:34 GMT | 11:34 EST | 21:04 IST | 23:34 SGT
Indian Markets are expected to open flat today tracking marginally negative opening in the SGX Nifty and flat opening in most of the Asian markets.
US Stocks ended Wednesday's trading session on a mixed note despite the release of a report from payroll processor ADP showing better than expected increase in private sector employment in the month of December. ADP said the private sector added 238,000 jobs in December following an upwardly revised increase of 229,000 jobs in November. While the data points to strength in the labor market, traders seemed reluctant to make any significant moves ahead of the release of the Labor Department's monthly jobs report on Friday. Meanwhile, the European markets ended Wednesday's session with mixed results with major markets such as Germany, France and the U.K. finishing lower and peripheral markets like Spain, Portugal and Switzerland finishing higher. Investors are awaiting cues from the European Central Bank's policy meeting on Thursday and release of U.S. jobs report for December on Friday.
Back home, Indian shares rose on Wednesday to mark their first daily gain this year, snapping a five-session losing run, as export-driven IT and pharmaceutical shares gained on expectations of higher earnings on back of weaker rupee and recovery in overseas markets.
The trend deciding level for the day is 20,735 / 6,176 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 20,781 - 20,833 / 6,191 - 6,207 levels. However, if NIFTY trades below 20,735 / 6,176 levels for the first half-an-hour of trade then it may correct 20,683 - 20,636 / 6,159 - 6,144 levels.
RBI increases LTV for gold NBFCs
RBI has revised upwards loan-to-value (LTV) norm for NBFCs engaged in gold loans from 60% to 75%, with immediate effect. The development is positive for gold loan companies like Muthoot Finance and Manappuram Finance, as earlier norm of 60% LTV had resulted in moderation of loan books for these companies. It also appears that regulator is now comfortable with the loan books of these NBFCs and want them to play an active role in monetisation of idle gold in the country. We do not have rating/coverage on any of these gold loan NBFCs, which in our view are likely to trade higher today.
Government's FDI policy for Pharmaceuticals
Government decided to retain the policy of allowing 100% foreign investment in the existing pharma firms, brushing aside concerns about non- availability of affordable drugs in view of MNCs takeovers. The Department of Industrial Policy and Promotion (DIPP) said however that as far as the contentious issue of noncompete clause is concerned, the Foreign Investment Promotion Board (FIPB) will take a view on it on case-by-case basis. The government has reviewed the position in this regard and decided that the existing policy would continue with the condition that 'non-compete' clause would not be allowed except in special circumstances with the approval of the FIPB. Faced with a rush of multinationals (MNCs) acquiring Indian pharmaceutical firms, the DIPP had earlier proposed stringent norms to tighten the Foreign Direct Investment (FDI) policy for the sector. India permits 100 % FDI in pharmaceutical through automatic approval route in the greenfield, or new projects. The non allowance of the 'non compete' clause, might have an impact on some of the companies which were getting higher valuations on possibility of an M&A, while the sector should not witness any change in the valuations accorded, as most of the companies are being valued for their core businesses and don't enjoy any premium for the M&A activity. However, this might bring down the premium paid by the acquiring companies. Thus, we maintain our recommendations in the sector.
Supreme Court asks government to consider cancelling coal block allocated after 2005
Media reports suggest that Supreme Court has asked the central government to consider cancelling the coal blocks allotted after 2005. Also the Supreme Court has stated that huge investments in plant and machinery cannot be used to justify coal blocks allocated to the companies. However, there is no clarity on whether the central government is likely to consider cancellation of coal blocks. Hence, until further clarity emerges, we maintain our estimates and ratings on the stocks.
JSW Steel reported crude steel production numbers for December 2013 and 3QFY2014
JSW Steel reported crude steel production numbers for December 2013 and 3QFY2014 from all the three plants namely Vijayanagar, Salem and Dolvi. The crude steel production for the month of December stood at 1.05mn tonnes and the rolled flat and rolled long production stood at 0.87mn tonnes and 0.15mn tonnes respectively, whereas the crude steel production for 3QFY2014 stood at 3.19mn tonnes and the rolled flat and rolled long production stood at 2.57mn tonnes and 0.44mn tonnes respectively. Both the production numbers are however, not comparable to the numbers of corresponding period last year since these numbers comprises of the production from the erstwhile JSW Ispat's Dolvi plant which is now merged with JSW Steel. We maintain our Sell rating on JSW Steel with a target price of ?848.
Economic and Political News
- PM pegs FY14 economic growth at 5%
- CCEA may consider import duty hike on refined oil to 1 0%
- RBI fast-tracks bank licensing process
- CIL to pay special dividend if stake sale fails: Mayaram
- Relai nce Power,Lanco and other solar plant owers seek higher tarrifs
- LIC to review Investment plan in PSB's bonds
- Coal ministry slaps notice, seeks explanation from NTPC for mine delays