New York: 22:17 || London: 03:17 || Mumbai: 06:47 || Singapore: 09:17

Reports India

Indian stock market and companies daily report (July 11, 2014, Friday)

July 11, 2014, Friday, 05:18 GMT | 00:18 EST | 08:48 IST | 11:18 SGT
Contributed by Angel Broking

Indian markets are expected to open on a flat note with positive bias tracking marginally positive opening on SGX Nifty while most of the Asian markets are trading mixed.

The US markets regained some ground over the course of the session after showing a substantial move to the downside at the start of trading on Thursday. The initial sell-off on Wall Street was partly due to renewed concerns about the prospect of the Federal Reserve raising interest rate sooner than anticipated also weighed on the markets following the release of upbeat jobs data. Meanwhile European stocks ended the lower as Portugal's banking woes threatened to dent the European financial system.

Back home, Indian shares ended an extremely volatile session modestly lower on Thursday after Finance Minister Arun Jaitley presented a growth-oriented Budget, with proposals to boost growth and narrow the country's fiscal deficit

Markets Today

The trend deciding level for the day is 25,470 / 7,593 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 25,823 - 26,274 / 7,706 - 7,845 levels. However, if NIFTY trades below 25,470 / 7,593 levels for the first half-an-hour of trade then it may correct 25,020 - 24,667 / 7,454 - 7,341 levels.

Budget FY2015 - a good start

Budget FY2015 highlighted the new government's rational approach towards policies for taxation, government spending and growth. Infrastructure, housing and finance sectors were amongst the biggest winners, with key measures announced to improve fund availability for low-cost housing (through National Housing Bank [NHB]), real estate projects (through Real Estate Investment Trusts [REITs]) and infrastructure development (through banks and infrastructure investment trusts). Amongst other key positives, foreign direct investment (FDI) limit in defense equipment and insurance sectors has been increased to 49%.

Fiscal prudence was maintained, sticking to a 4.1% fiscal deficit target. While the tax revenue assumptions may still be a bit on the optimistic side, but a key area where the budget math differed from the vote on account was in its assumption of higher non-tax receipts. This indicates the new government's resolve to accelerate the disinvestment agenda amongst other things. It has set the disinvestment target at Rs.58,425cr for FY2015.

In line with the government's election manifesto, smart cities, industrial corridors, higher education, low cost housing and various roads, ports, airports and other infra projects are expectedly going to be the thrust areas. The budget also indicated areas on which policy measures can be expected in the coming year such as coal availability, gas pipelines, urea, ship-building, etc. All in all, there is a lot in the budget that creates optimism of continued policy impetus yet to come across a range of sectors.

With the immense low-hanging fruits and huge decisive mandate, in our view, policy impetus is likely to continue in the weeks and months to come. Overall, we maintain our strongly positive view on the market with a continued preference for domestic cyclicals such as banking, infrastructure, capital goods, auto, cement as well as quality midcap stocks across a range of sectors.

Result Preview

Infosys (CMP: Rs.3,293/ TP: Rs.4,245/Upside: 28.9%)

Infosys is slated to announce its 1QFY2015 results today. We expect the company to post 2.8% sequential growth in USD revenues to US$2,151mn. In rupee terms, revenues are expected to come in at Rs.12,843cr, down 0.3% qoq. EBITDA margin is expected to show decline of ~298bp qoq to 25.3% on account of increase in employee spend. Consequently, PAT is expected to be at Rs.2,593.9cr, a dip of 13.3% qoq.

Key points to watch out for are: 1) Any revision in the USD revenue growth guidance for FY2015 which has been set at 7-9%, 2) client budget outlook, 3) impact of senior management exits and 4) growth versus margin tradeoffs. We maintain our buy rating on the stock with a target price of Rs.4,245.

Economic and Political News

- Major steel PSUs to invest over Rs.1 5,000cr in FY15

- CPI inflation at 8% by fiscal-end possible: RBI Governor

- Govt to review DTC bill in its present form :Jaitley

Corporate News

- Britannia monetises its land parcel in Chennai for Rs.172cr

- Indian Hotels sells Sydney hotel for Rs.180cr

- Suzlon bondholders approve FCCB restructuring proposal