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Indian stock market and companies daily report (March 19, 2013, Tuesday)

Contributed by Angel Broking

The Indian markets are expected to open in the green today, tracking positive opening in most of the Asian markets as stocks moved higher to take back some losses made yesterday, when investors reacted to news that a bailout for Cyprus would include a tax on bank deposits. A bailout of Cyprus announced over the weekend included a controversial proposal to levy tax of up to 10% on all the countryRs.s bank accounts, sparking widespread public anger and fears of a run on some banks in the region.

US stocks moved lower over the course of the day yesterday as markets responded to news of a bailout agreement for Cyprus that raised concerns about a run on the Mediterranean island's banks. CyprusRs. parliament has postponed a vote on the proposed bailout, which has generated significant opposition, as it is seen to unnecessarily tax deposit holders. Meanwhile, the National Association of Home Builders released a report showing an unexpected drop in US homebuilder confidence in the month of March with Wells Fargo Housing Market Index coming in at 44 as against 46 in February.

Meanwhile Indian markets fell yesterday, in tandem with the global sell-off in equities and commodities as an unusual bailout proposal for Cyprus fuelled concerns that EuropeRs.s debt crisis may deepen. However, shares ended off their dayRs.s lows, as hopes of a rate cut by the RBI at its mid-quarter policy review to be announced today helped to limit the downside.


Markets Today

The trend deciding level for the day is 19,290/ 5,833 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 19,348 - 19,403 / 5,852 - 5,869 levels. However, if NIFTY trades below 19,290/ 5,833 levels for the first half-an-hour of trade then it may correct up to 19,235 - 19,177 / 5,816 - 5,797 levels.


Markets nervous ahead of Cyprus vote on bailout package

Global markets seem jittery on the back of parliamentary vote in Cyprus over the bailout conditions. The European Union has agreed on a Euro10bn bailout for Cyprus (lower than the expected Euro17bn), provided the country can recoup about Euro5.8bn from bank depositors. The bank depositors (national as well as foreigners) are expected to contribute a one-time charge of 9.9% on deposits exceeding Euro100,000 and 6.75% on deposits up to Euro100,000. The government is likely to adjust the levy such that impact on savers at the lower end of the spectrum is reduced to some extent. Other conditions of the rescue package include asset sale and an increase in the corporate tax rate to 12.5% from 10%. The parliamentary vote has been postponed until Tuesday and meanwhile the bank holiday has been extended until the vote.

Cyprus had requested for a bailout package in June 2012, owing to the banksRs. mounting losses after being heavily exposed to Greek debt. At its peak, the banking system in Cyprus was eight times the size of the economy. The size of the economy itself is relatively small since it accounts for 0.2% of the total Eurozone output, with real GDP of Euro15bn in 2011. It is the fifth bailout for a Eurozone economy (following Greece, Portugal, Ireland and Spain) and the first that prescribes such conditions for depositors mainly owing to the nature of the banking system and we believe that it is highly unlikely to set a precedent for future bailouts. The IMF has also backed the package since it is seen as a Rs.sustainable, fully financedRs. solution that Rs.appropriately allocates the burden sharingRs..


Bharti Airtel can continue offering 3G services till 8 May: Delhi HC

The Delhi high court yesterday ordered a stay on the order of the department of telecommunications (DoT) asking Bharti Airtel to stop 3G services in the seven circles - where it did not have the necessary licenses - within three days, as it continued to hear the case. The first hearing is set for May 8. With the stay, Bharti Airtel will not have to pay the Rs.350cr penalty imposed on it by the DoT, till the court gives the final order. The court has also allowed Bharti Airtel to continue to offer its services, but has ordered it to keep all its revenue from 3G in a separate bank account. The company will also have to sign an affidavit saying the government could cash its bank guarantee if the stateRs.s stance on the issue is found correct.

Bharti Airtel was offering these services in seven circles, where it does not have 3G spectrum, by signing intra-circle agreements with Vodafone India and Idea Cellular. The DoT notice had also asked Bharti to pay a penalty of Rs.50cr per circle. Following the DoT notice, Bharti Airtel had moved to the Delhi High Court on the same. The seven circles are Haryana, Maharashtra, UP (East), Kolkata, Gujarat, Kerala and Madhya Pradesh. We maintain our Neutral rating on the overall telecom sector.


Economic and Political News

- 18 road projects in FY12 yet to get financial closure: Government

- India may cut oil import from Iran by 27%

- India, Africa revise 2015 trade target upwards to US$1 00bn

- AP action plan for agriculture with an outlay of Rs.25,962cr

- Government to borrow Rs.3.5 lakh cr in first half of 2013-14


Corporate News

- Gammon India to amalgamate power subsidiary

- IL&FS Engineering bags Rs.52cr buildings project

- Bajaj targets 27-30% share in two-wheeler segment

- CIL reviewing decision regarding continuance in ICVL: Government

- Glenmark Generics recalls anti-asthma drug from US market

- Visa Steel forms JV with SunCoke Energy

- NTPC, CIL standoff continues on fuel pacts