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Indian stock market and companies daily report (March 03, 2014, Monday)
Indian Markets are expected to open in flat to negative tracking negative opening in most of the Asian indices due to concerns about rising tensions in Ukraine
The US markets saw a mixed finish on Friday; after strength for much of the trading day on Friday, stocks saw considerable volatility in the latter part of the session. The strength seen for most of the session reflected a positive reaction to a slew of U.S. economic data, including a report from MNI Indicators showing that the Chicago Business Barometer ticked up to 59.8 in February from 59.6 in January. Thomson Reuters and the University of Michigan also released a report showing a modest upward revision to their reading on consumer sentiment in February. Meanwhile, traders largely shrugged off a report from the Commerce Department showing a notable downward revision to pace of fourth quarter GDP growth to 2.4% compared to the previously reported 3.2% growth, but the data was viewed as old news. The volatility seen later in the session was partly attributed to concerns about rising tensions in Ukraine and worries about the possibility of any significant developments over the weekend.
The Indian markets rose notably on Friday, driven by renewed FII buying on expectations that a stable government at the Centre after the 2014 elections will foster stability and long term growth.
The trend deciding level for the day is 21,083 / 6,263 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 21,177 - 21,234 / 6,297 - 6,317 levels. However, if NIFTY trades below 21,083 / 6,263 levels for the first half-an-hour of trade then it may correct 21,026 - 20,933 / 6,242 - 6,208 levels.
Real GDP growth for 3QFY2014 in line with expectations at 4.7%
Real GDP growth for 3QFY2014 came in line with market expectations at 4.7% as compared to 4.8% in 2QFY2014 and 4.4% in the corresponding quarter of the previous year. The headline growth is largely supported by better performance in financial services and community, social and personal services. We expect real GDP growth for FY2014 to come in at about 4.7% lower than CSORs. advance estimate of 4.9%.
Growth in agriculture and allied activities came in at 3.6% as compared with 4.6% in the previous quarter and 0.8% in 3QFY2013 as production of food-grains during the Kharif season of FY2014 is estimated to grow by 0.2% over a year ago.
The industrial sector reported de-growth of 0.7% during 3QFY2014 as compared to growth of 2.3% in 2QFY2014 and 1.7% in 3QFY2013 owing to contraction in mining and manufacturing output. The mining sector reported a steeper contraction of 1.6% despite decline of 2.0% a year ago and as compared to degrowth of 0.4% in the previous quarter. However, we believe that it is likely to gain some traction going ahead aided by a low base as well as increase in production on the back of reopening of certain mines. The manufacturing sector reported degrowth of 1.9% as compared to a 1.0% growth during 2QFY2014. The electricity sector reported moderate 5.0% growth as compared to a 7.7% during 2QFY2014. The construction sector despite a low base reported dismal 0.6% growth as compared to a 4.3% during 2QFY2014.
Growth in the services sector came in at 7.6% during the quarter as compared to 6.0% in the previous quarter and 6.9% in 3QFY2013. The Rs.trade, hotels, transport and communicationRs. segment which accounts for one-fourth of the share in GDP moderated to 4.3% as against 5.9% in 3QFY2013 largely on account of dampening consumption demand. But Rs.financing, insurance, real estate & business servicesRs. segment continued to report robust growth of 12.5% during the quarter as against 10.0% in 2QFY2014. Also, Rs.community, social and personalRs. services posted growth of 7.0% as against 4.2% in the previous quarter mainly since most of the compression in government spending in order to meet the fiscal deficit target is likely to happen during 4QFY2014.
Going into FY201 5, we expect a recovery in non-farm GDP (to above 6% level) mainly owing to a revival in global growth and improved external demand conditions coupled with anticipated upturn in the domestic investment cycle from greater policy-related momentum post elections.
Auto Monthly - February 2014
Mahindra & Mahindra
Mahindra & Mahindra reported slightly better-than-expected volumes led by continued momentum in tractor sales. The automotive segment, however, posted weak performance as the PV segment once again witnessed a steep decline in volumes. Total volumes declined 4.7% yoy to 59,758 units during the month. Tractor segment sustained its strong sales traction, reporting a better-than-expected growth of 18.4% yoy led by strong monsoons, higher minimum support prices and shortage of labor across farms. The automotive segment continued to report disappointing performance, down 11.8% yoy, led by sharp decline of 17.6% yoy in the passenger vehicle (PV) sales. The PV sales continue to be impacted due to the sluggish demand environment and increased competition. Exports and four-wheeler pick-up sales too posted a decline of 17.4% and 3.1% yoy respectively during the month. The Management expects automotive sales to pick up going ahead led by reduction in excise duty announced during the Interim Budget which has resulted in higher inquiries.
Maruti Suzuki reported flat volume performance at 109,104 units, in-line with our expectations, largely on account of 1.8% yoy growth in domestic volumes. Exports on the other hand continued its poor performance with volumes posting a decline of 19.5% yoy during the month. Domestic volume performance was driven primarily by the incremental volumes of newly launched Celerio, which resulted in a 19.4% yoy growth in the Compact segment. The super compact segment (Dzire) sustained its momentum despite increasing competition from HondaRs. Amaze. The Vans segment too recorded a strong growth of 22.1% yoy during the month. The Mini segment however, witnessed a decline of 9.6% yoy. The utility vehicle (down 12.2% yoy) segment continues to post sluggish volumes led by slowdown in demand for diesel cars and also on account of higher competition from Ford and Renault.
Tata Motors continued posting decline in sales as domestic CV volumes contracted sharply following weak consumer demand, slowdown in industrial activity and increasing competition. Total volumes declined 35.6% yoy (1.3% mom) to 39,951 units with the domestic CV segment registering a steep decline of 49.4% yoy. Sequentially though, domestic CV sales declined marginally by 6.6% as performance of the medium and heavy commercial vehicle (MHCV) segment improved with sales surging by 11.5% mom. The light commercial vehicle (LCV) sales though remain extremely weak and registered a decline of 59.5% yoy (15% mom) following slowdown in demand. The PV segment however, posted a growth of 6.7% yoy (3.2% mom) primarily due to the base effect. Exports performance too improved and posted a growth of 16% yoy (21.2% mom) during the month.
TVS Motor reported better-than-expected volume growth of 7.2% yoy to 177,662 units driven by strong volume growth in scooters and three-wheelers. Momentum in exports too continued with robust growth of 31.4% yoy led by the strong growth in two-wheelers and three-wheelers. Domestic sales grew by 3.5% yoy, largely led by 37.2% yoy growth in scooters, on the back of the success of Jupiter. Motorcycle sales too recorded a modest growth of 2.9% yoy during the month. Three-wheeler sales witnessed a robust growth of 53.5% yoy (9.4% mom) primarily driven by strong exports performance. The company has lined up several new launches for FY2015, including the new Scooty, upgraded variant of Star City, refresh of Apache and re-launch of the Victor.
L&T Construction wins orders worth Rs.5,220cr
L&T Construction has secured orders worth Rs.5,220cr across various business segments in January and February 2014. Water & Renewable Energy business segment has bagged new orders worth Rs.2,019cr, which include major orders such as Saurashtra Narmada Avtaran Irrigation Yojna, Augmentation of Indi branch canal in Bijapur district and Common Effluent treatment plant for Narol textile cluster near Ahmedabad. The building and factories business segment bagged orders worth Rs.1,461cr while power transmission and distribution segment bagged orders worth Rs.1,001cr. The remaining orders worth Rs.739cr were bagged by L&TRs. heavy civil infrastructure business segment. We recommend Accumulate on the stock with a target price of Rs.1,237.
BHEL wins order worth Rs.7,900cr
BHEL has bagged a contract worth Rs.7,900cr from NTPC for 1,980 MW North Karanpura super thermal power project in Jharkhand. The plant will have three units, each having a generation capacity of 660 MW. According to the company, the work involves design, engineering, manufacture, supply, construction, erection, testing and commissioning for the EPC package. The key equipment for the contract will be manufactured at BhelRs. Trichy, Haridwar, Bhopal, Ranipet, Hyderabad, Jhansi and Bangalore plants. Meanwhile, Government plans to sell 5% stake in BHEL to LIC which is expected to fetch ~Rs.2,046cr. We maintain Neutral rating on the stock.
JPA plans to sell 2 hydro-power plants
According to media reports, Jaiprakash Associates (JPA) is in talks with Abu Dhabi government-owned utility Taqa to sell its 2 hydro-power plants for Rs.11,500-12,500cr. Taqa is expected to acquire JPVLRs. two units at Baspa II (300 MW) and Karcham Wangtoo (1,000 MW) for Rs.6,000cr as well as take over the Rs.6,000cr debt of the facilities. JPA has a consolidated debt of ~Rs.55,000cr. The management plans to cut down its debt by Rs.15,000cr and selling its hydro-power units is part of the plan. Since the stake sale will enable the company to reduce its debt, it will be positive for the company. However, we await further clarity from management. We maintain Neutral rating on the stock.
Economic and Political News
- April-Jan fiscal deficit at US$86bn, crosses full year target
- Government hikes DA by 10% for 80 lakh employees & pensioners
- Projects worth Rs.16,057cr approved
- Retail inflati on eased to 7.24 % for industrial workers
- Coal India officers serve three-day strike notice
- CCEA clears Rs.6,000cr Eastern Peripheral Expressway
- Government to sell 5% stake in Bhel to LIC; may get Rs.2,046cr
- Jubilant Life resolves FDA-raised issues for Montreal facility
- Telcos opt for multiple IT services vendors
- NTPC to set up Rs.17,000cr power project in Madhya Pradesh
- IRB stops collecting toll at Kolhapur project
- MobME plans IPO, garners Rs.16 cr from angel investors
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