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Indian stock market and companies daily report (March 18, 2013, Monday)

Contributed by Angel Broking

Indian markets are expected to open in the red on negative opening in most of the major Asian markets because of bailout announced by Cyprus president, in which private citizensRs. bank deposits would be tapped. Cyprus announced plans for a one-off levy on bank deposits in exchange for equity in the banks as part of a deal that would have international creditors provide 10bn euros (US$12.9bn) to shore up the island nationRs.s finances. Under the bailout, Cyprus would also sell government assets, raise corporate tax rates and impose a tax on interest earned in Cypriot banks.

US stocks moved lower over the course of the day on Friday as profit taking continued and a report from Reuters and the University of Michigan showed a substantial deterioration in consumer sentiment in the month of March to 71.8 from 77.6 in February. Meanwhile, the Federal Reserve released a separate report showing that industrial production increased by more than expected in the month of February to 0.7% (Estimate - 0.5%).

Meanwhile Indian markets fell on Friday, dragged down by rate-sensitive realty, banking and auto stocks, as investors adopted a cautious approach ahead of the RBIRs.s monetary policy meeting due tomorrow. S&PRs.s comments that the outlook on IndiaRs.s sovereign rating is constrained by slowing growth and the CobrapostRs.s alleged expose of money laundering activities by three top private sector banks also dampened investor sentiment.


Markets Today

The trend deciding level for the day is 19,495/ 5,893 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 19,606 - 19,785 / 5,925 - 5,978 levels. However, if NIFTY trades below 19,495/ 5,893 levels for the first half-an-hour of trade then it may correct up to 19,316 - 19,205 / 5,841 - 5,808 levels.


Petrol price cut by Rs.2/litre; diesel unchanged

Media reports suggest that the oil marketing companies have reduced petrol prices by Rs.Rs.2/litre due to fall in crude prices. However diesel prices have been kept unchanged. Since petrol is deregulated, we do not see any impact of this move on the under-recoveries and hence maintain our estimates.


DoT asks Bharti to stop 3G services in seven circles and slaps a Rs.350cr fine

The department of telecommunications (DoT) on Friday asked Bharti Airtel to stop 3G services within three days in the seven circles in which the company does not have the required licenses. Bharti Airtel had filed a petition against the decision in the Delhi High Court. The hearing is scheduled today. Bharti Airtel was offering these services in seven circles, where it does not have 3G spectrum, by signing intra-circle agreements with Vodafone and Idea Cellular. Bharti Airtel has also been asked to pay a penalty of Rs.50cr per circle. The seven circles are Haryana, Maharashtra, UP (East), Kolkata, Gujarat, Kerala and Madhya Pradesh. Bharti Airtel has 6.8mn 3G customers across the country (5.2mn are active) and ~30% of these subscribers might be impacted by this order. The telecom company offers 3G services in 13 more circles, where it has bought spectrum in the 3G auction. Subscribers in these circles will not be hit by the order. Idea Cellular already has a stay from the Delhi High Court against the stopping of 3G services through the intra-circle agreements. The three telcos together have 12mn 3G subscribers. Of these, according to estimates, ~30% are in circles where the operator concerned does not have 3G spectrum. Idea Cellular has ~2.8mn 3G customers and Vodafone has ~2.5mn. The 3G business was still small; the move might not impact the companiesRs. overall businesses. As no operator could get a pan-India license during 3G auction, the top three operators - Bharti Airtel, Vodafone India and Idea Cellular - had signed pacts sharing 3G spectrum and offering services across each otherRs.s circles. Bharti Airtel, Vodafone and Idea won 3G airwaves in 13, 9 and 11 circles, respectively, in the 2010 auctions.

This is the third time in the last two years that the government has asked Bharti Airtel to stop providing 3G services. The telecom department first asked mobile phone companies to hang up on 3G roaming pacts in December 2011, resulting in operators moving the TDSAT. But in July last year, a two member bench of the telecom disputes tribunal delivered a split verdict on mobile phone companiesRs. petition challenging the governmentRs.s order banning such agreements. Following the split verdict, DoT referred the matter to the law ministry, which said the government could initiate action, including terminating mobile permits of companies that have entered into bilateral roaming agreements in areas where they did not have 3G permits. The law ministry also said DoT was well within its rights to claim the amounts earned by companies by providing 3G services for which they did not have any authorization, permission or license from DoT. Armed with the law ministryRs.s endorsement, the department had issued a second set of notices in August 2012. Mobile phone companies, including Bharti Airtel, had moved the Delhi High Court, and the latter had asked telcos to reply to the departmentRs.s notice and also directed the government to form a committee to look into the issue. The telecom department committee, in its report, said 3G roaming pacts were illegal and violated license rules and asked the government to direct telcos to terminate these pacts immediately, even as it proposed a Rs.50cr penalty per service area to be imposed for such violations. DoT, in its latest notice, has said the pacts Bharti had entered into with other operators did not qualify as roaming, but were equivalent to spectrum sharing or leasing, which is currently not permitted. We maintain our Neutral rating on the overall telecom sector.


Infosys wins second contract from India Post

Infosys has bagged India Post's Rural Systems Integration (RSI) contract. In 2011, Infosys was selected as the lowest bidder for the contract which is estimated to be around Rs.100cr which was a financial services system integration contract from India Post, which is presently undergoing a modernization program. As the RSI partner, Infosys will develop a service delivery platform using its solutions such as mConnect, TruSync and Finacle. This will allow more than 130,000 rural post offices to offer online services. Additionally, it will also connect and manage more than 130,000 handheld devices used by rural postal workers for distribution of social benefits under the National Rural Employment Guarantee Act and process electronic money orders. Owing to recent run up in the stock price, we maintain our Neutral rating on the stock.


Wipro bags three year contract from Emirates NBD

Wipro Infotech, the India and Middle East IT Business unit of Wipro Ltd, has won a three year strategic managed services contract from banking group Emirates NBD to deliver end-to-end service transition and transformational services. This includes maintaining the banking groupRs.s IT systems through a managed service framework, and comprehensive help desk and field support services. It will make the processes more streamlined, thereby allowing the bank to offer better services to its end customers. Wipro will support both physically and remotely all Emirates NBDRs.s offices in the Middle East and many of its international offices through a remote support model. Wipro will also maintain and manage more than 8,000 assets of the organization. Owing to recent run up in the stock price, we maintain our Neutral rating on the stock.


JSW Steel's February production numbers

JSW Steel's February crude steel production grew 11.0% yoy to 0.7mn tonne. The rolled flat production increased by 14.0% yoy to 0.5mn tonne while the rolled long production decreased 14.0% yoy to 0.1mn tonne. The capacity utilization for the Vijaynagar plant continues to remain lower due to iron ore shortage in Karnataka. We maintain our Neutral rating on the stock.


JSW steel puts on hold Vijaynagar plant expansion

JSW Steel has put on hold the expansion plans of its Vijaynagar plant, which has 10 million tonnes (MT) capacity, due to continued iron ore shortages. The company had plans to expand its Vijaynagar capacity by 2MT, taking the total capacity to 12MT per annum. We had not factored-in the benefits of this plant into our model and hence we maintain our estimates and Neutral rating on JSW steel.


Economic and Political News

- Bank borrowing zooms to Rs.1,35,000cr

- Foodgrain output likely to dip 3.5% to 250MT in FY2013

- Finance Ministry plans 100% I-T e-refunds

- No rollback on bulk pricing: Oil Ministry


Corporate News

- AAI to release deregistered KFA planes after government nod

- Ashok Leyland sells stake worth Rs.216cr in IndusInd Bank

- Hindalco, Vedanta in race to buy Rio TintoRs.s Iron Ore Company

- RIL to give up 4,266 sq km of KG-D6 block

- Sebi cleared Bharti Infra IPO after adequate disclosures: Government

- State BankRs.s advance tax for March quarter down 12%