Indian stock market and companies daily report (January 10, 2014, Friday)
January 10, 2014, Friday, 06:23 GMT | 01:23 EST | 11:53 IST | 14:23 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 ThursdayRs.s trading session roughly flat as traders seemed reluctant to make any significant moves ahead of FridayRs.s report on the employment situation in the month of December. Economists expect an increase of about 200,000 jobs in December, while the unemployment rate is expected to remain at 7.0%. Ahead of the monthly report, the Labor Department released a report showing that initial jobless claims fell by more than expected in the week ended January 4th. The report said jobless claims dropped to 330,000 from the previous weekRs.s revised figure of 345,000, while economists had expected jobless claims to fall to 335,000. Meanwhile, the European markets finished with mixed results again on Thursday, mirroring yesterdayRs.s move, with weakness in the major markets, but gains in the periphery. The European Central Bank and the Bank of England both left their respective interest rates unchanged Thursday.
Back home, Indian shares fell slightly on Thursday, recording their sixth decline in seven sessions so far this year, as investors are exercising caution ahead of the quarterly earnings season and inflation data. India is due to post wholesale and consumer price data on Tuesday, which will help determine whether the Reserve Bank of India will resume raising interest rates.
The trend deciding level for the day is 20,715 / 6,168 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 20,777 - 20,840 / 6,188 - 6,208 levels. However, if NIFTY trades below 20,71 5 / 6,168 levels for the first half-an-hour of trade then it may correct 20,651 - 20,589 / 6, 148 - 6,128 levels.
Government clears way for stake sale in private companies
The Cabinet has deferred its earlier decision to create an asset management company by dismantling SUUTI, and thereby has paved way for the sale of government holdings in ITC, Axis Bank and L&T. SUUTI holds around 11% in ITC, 21% in Axis Bank and 8% in L&T, which at yesterdayRs.s closing price was worth around Rs.28,300cr, Rs.11,500cr and Rs.7,300cr respectively. The move will help the government to meet its disinvestment target for the year. The possibility of stake sale in these stocks at unattractive prices would remain an overhang on these stocks. We remain Neutral on ITC, while we have a Buy rating on Axis Bank and L&T, with a target price of Rs.1,709 and Rs.1,237, respectively.
Ranbaxy Labs Update
Ranbaxy Laboratories Ltd (Ranbaxy) signed a licensing agreement to sell drug researcher Epirus Switzerland GmbHRs.s copy of arthritis and rheumatic disorder drug infliximab in India and other emerging markets. EpirusRs. version, BOW015, is a biosimilar of the original biotechnology drug developed by US-based Janssen Biotech Inc. and sold under the brand name Remicade in global markets. Currently, no biosimilar of infliximab is approved in India, though the original drug is approved by the local regulator. A biosimilar is a copy of a biotechnology drug but the biological molecules are not very identical, as is the case in chemistry-based drugs.
Under the terms of the agreement, Epirus, a fully owned subsidiary of US drugmaker Epirus Biopharmaceuticals Inc., will develop and supply the product, and Ranbaxy, after getting regulatory approval, will market it in India and other emerging markets. The rheumatoid arthritis drug market in India is expected to be US $672mn in 2013. This a win -win collaboration for both companies, as Epirus gets the distribution benefits and Ranbaxy the expertise to market and sell the biotech product, product category where Ranbaxy has not shown any expertise.
Also, in another development, Ranbaxy Pharmaceuticals Canada Inc. (RPCI), a wholly owned subsidiary of Ranbaxy Laboratories Limited (RLL), announced that RPCI received approval on December 24, 2013 to manufacture and market RAN-Donepezil Hydrochloride 5 mg and 10 mg tablets from Health Canada. Total market size of Aricept* (Donepezil Hydrochloride) in Canada is$153.9mn ($ CAD) (IMS-CDH: November 2013) and growing at 38% (extended units). Donepezil Hydrochloride is indicated in the treatment of dementia in AlzheimerRs.s patients. The product can contribute $20mn ($ CAD) to its revenues, on a conservative basis. We maintain our neutral stance on the stock.
Infosys (CMP: Rs.3,451/ TP: -/Upside: -)
Infosys is slated to announce its 3QFY2014 results today. We expect the company to post 2.3% qoq growth in USD revenue at US$2,11 3mn, mostly volume led. In rupee terms, revenues are expected to come in at Rs.13,101cr, up 1.0% qoq. EBITDA margin is expected to show marginal uptick of ~25bp qoq to 26.4%, on account of increase expected in utilization level. PAT is expected to be at Rs.2,650cr.
Key points to watch out for are: 1) USD revenue growth guidance for FY2014 which we expect it to be increased to 11-13% from 9-10% given during 2QFY2014 results, 2) client budget outlook, and 3) indications on discretionary spending in CY2014. We maintain our Neutral rating on the stock.
Economic and Political News
- Create infra to boost manufacturing: Montek
- Govt. considering partial rollback of price hike in bulk diesel: Oil secretary
- Annual auto sales witness first decline in 11 years
- Cabinet approves framework to regulate TV rating agencies
- IRDA allows insurers to invest in ETF
- Coal India appeals against CCIRs.s Rs.1,773cr penalty order
- ED, RBI might probe USLRs.s fund diversion
- Ranbaxy enters into licensing pact with EPIRUS Switzerland
- BSNL & MTNL to get Rs.11,000 in return for their 4G spectrum