Reports » India

Indian stock market and companies daily report (March 04, 2013, Monday)

Contributed by Angel Broking

The Indian market is expected to open in the red today mirroring negative opening trades in the SGX Nifty and mixed opening in the Asian markets.

After recovering from an early move, US markets slid on Friday. They then saw modest strength for much of the remainder of the trading session. The strength on the day came as upbeat economic data overshadowed concerns about the impact of automatic government spending cuts. The major averages moved roughly sideways going into the close, hovering in positive territory. The European markets ended FridayRs.s session with mixed results. A number of weaker-than-expected economic reports weighed on investor sentiments at the end of the trading week. Manufacturing data from China and the UK were disappointing, while unemployment in the Eurozone climbed to a record high. The markets managed to recover some ground in the afternoon, following some better-than-expected economic reports in the US, including the stronger-than-expected ISM manufacturing data.

Meanwhile, Indian shares rose on Friday, rebounding from three-month lows after the finance ministry clarified it would not question the validity of tax residency certificates held by foreign investors. IndiaRs.s indexes, however, ended lower for a fifth consecutive week after the budget on Thursday disappointed investors by financing increased revenues in part by raising taxes on some companies and high-earners.


Markets Today

The trend deciding level for the day is 18,909 / 5,713 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,998 - 19,077 / 5,746 - 5,773 levels. However, if NIFTY trades below 18,909 / 5,713 levels for the first half-an-hour of trade then it may correct up to 18,830 - 18,741 / 5,687 - 5,653 levels.


Quick clarification on TRC issue to soothe investor sentiments

Markets reacted negatively post the budget on account of confusion regarding amendment to the requirements for claiming the benefit of DTAA (double taxation avoidance agreement). But the finance ministry was quick to clear the confusion regarding its statement on furnishing of TRC (tax residency certificate) being a Rs.necessary but not sufficient conditionRs. to qualify for the benefits. It elucidated that the validity of TRCs held by foreign investors will not be questioned and accepted as evidence of residence while concerns over DTAA will be addressed suitably in the Finance Bill.

We believe that the government is unlikely to fray nerves of foreign investors since capital inflows are of utmost importance to finance the widening current account deficit. In fact, the Finance Minister in his budget speech admitted that the current account deficit is more worrying than the fiscal deficit and the economy needs to find over USD75bn to finance the CAD in this as well as the coming year too.


Bulk diesel price raised; non-subsidised LPG price cut

The government has hiked the price for bulk consumers of diesel and has lowered the price of non-subsidized LPG cylinders. Diesel price for bulk consumers like Railways has been hiked by a rupee per litre, while the price of cooking gas (LPG) is cut by Rs 37.50 a cylinder that consumers buy beyond their quota of subsidized bottles. We do not see any significant impact of this move on the under-recoveries and hence maintain our estimates.


Auto sales numbers - February 2013

Ashok Leyland

Ashok Leyland (AL) reported slightly lower-than-expected volumes led by continued weakness in the medium and heavy commercial vehicle (MHCV) segment, which declined by 26% yoy (up 2.6% mom) to 7,045 units. Consequently, total volumes declined 9.5% yoy (4.9% mom) to 10,046 units. Dost, however, maintained its steady performance and recorded sales of 3,001 units.

Tata Motors

Tata Motors (TTMT) reported in-line volumes for February 2013 with total volumes registering a decline of 32.7% yoy to 61,998 units led by 33.1% and 26.2% yoy decline in domestic and export volumes respectively. The domestic performance was severely impacted on account of deteriorating sales performance in the MHCV and passenger vehicle segments which witnessed a significant decline of 45% and 69.5% yoy respectively. The light commercial vehicle sales however maintained momentum, posting a strong growth of 13% yoy.

Mahindra and Mahindra

Mahindra and Mahindra (MM) reported an in-line volume growth of 7.3% yoy (down 6.4% mom) in February 2013 as the farm equipment segment continued to post decline in sales. However, the automotive segment registered a healthy growth of 11% yoy (down 3.4% mom) driven by continued traction in the passenger vehicle segment (up 13.8% yoy) on the back of the new launches XUV5OO, Quanto and Rexton. The three-wheeler segment however registered a sluggish growth with volumes declining by 6% yoy (17.3% mom). The export volumes staged a recovery during the month and posted a strong 30.4% yoy growth (106.1% mom) to 3,425 units. In the farm-equipment segment, MM posted a decline of 3% yoy led by weakness in domestic markets, which posted a decline of 3% yoy during the month.

Maruti Suzuki

Maruti Suzuki (MSIL) reported in-line volumes for February 2013, primarily driven by growth in the Super Compact (up 21.6% yoy and 7.4% mom) and Utility Vehicle segments led by Dzire and Ertiga respectively. Total volumes for the month registered a decline of 7.9% yoy (4.1% mom) to 109,567 units largely due to the slowdown in demand for entry levels cars and vans. As a result, the Mini and Vans segments witnessed a steep decline of 15.9% yoy (11.1% mom) and 38.9% yoy (2.9% mom) respectively. The Compact segment too registered a decline of 13.9% yoy during the month. Export volumes on the other hand registered a modest growth of 2.8% yoy (3.9% mom) as demand in key export markets continues to remain weak. We believe that MSIL will miss out on its volume growth guidance of 5.5-6% for FY201 3; though by a small amount. MSIL has registered a total volume growth of 4.3% YTD in FY2013.

Hero MotoCorp

Hero MotoCorp (HMCL) registered a lower-than-expected performance in February 2013 with total sales posting a decline of 4.2% yoy (10.1% mom) to 501,271 units led by slowdown in the industry volumes. Meanwhile, the workers at the companyRs.s Gurgaon plant have resorted to indefinite hunger strike as announced earlier to pressurize the Management to reach a wage settlement. This is following an inconclusive meeting with the Management on February 22, 2013. However, as per the reports, the production at the plant has not been impacted.

TVS Motor

TVS Motor (TVSL) reported lower-than-expected volumes in February 2013 with total volumes posting a decline of 3.7% yoy (5.8% mom) to 165,696 units. The weakness was primarily on account of slowdown in two-wheeler volumes (down 4.8% yoy) led by motorcycle and scooter sales which registered a decline of 3.2% and 16.6% yoy during the month. The three-wheeler sales however, maintained momentum and posted an impressive growth of 56.6% yoy.


SKNL plans to raise Rs.600cr by selling Reid & Taylor shares

According to media news, S. Kumars Nationwide (SKNL) plans to raise ~Rs.600cr by selling shares of subsidiary, Reid & Taylor (R&T), through a QIP. The money raised will be used to pay off the companyRs.s debt. SKNL had planned to list its Reid and Taylor business in 2010, however, due to the unfavorable market conditions, the listing didnRs.t happen. As per the article, the promoters have dropped the IPO plans as of now as the market conditions have not improved substantially yet; and, in addition, the performance of SKNLRs.s stock isnRs.t good either in the market. We currently have a Neutral view on the stock.


Economic and Political News

- Government says FY2014 gross borrowing at Rs.5.79 lakh cr

- Diesel price for bulk consumers up by Rs.1/litre

- Budget poses fertiliser spending crunch in FY2014

- Digitisation Phase II: Over 55% target achieved

- SIAM wants roll-back of extra tax on SUVs


Corporate News

- HDFC Bank raises USD 500mn in overseas bond sale at 3% coupon

- ONGC plans capex of Rs.35,050cr for next fiscal

- Tata Comm transfers data center biz to subsidiary

- NTPC plans Rs.20,200cr capex for FY2014

- UltraTech shuts Awarpur plant as workers go on strike