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Reports India

Indian stock market and companies daily report (March 20, 2014, Thursday)

March 20, 2014, Thursday, 06:28 GMT | 02:28 EST | 10:58 IST | 13:28 SGT
Contributed by Angel Broking

The Indian Markets are expected to open flat with a negative bias, tracking SGX Nifty which is trading marginally lower by ~0.4%. Most of the Asian markets are trading lower.

US markets fell on Wednesday reacting negatively to the Federal Reserve's monetary policy announcement. Although the quantum of scale back of asset purchase by Central Bank was as per expectations at US$10 billion, the markets were negatively surprised by a revision to its outlook for the federal funds rate, with the median forecast now calling for rates at 1% by the end of 2015. The projections provided after the December meeting had a median forecast of 0.75 percent at the end of 2015. The projection for 2016 was also upwardly revised to 2.25% from 1.75%. European markets ended flat on Wednesday ahead of the Federal Reserve's announcement.

Meanwhile, Indian markets ended flat on Wednesday at the end of a volatile trading session. While FMCG, Banks and Capital Goods stocks gained, IT stocks declined on concerns about revenue growth.

Markets Today

The trend deciding level for the day is 21,837 / 6,524 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 21,892 - 21,951 / 6,542 - 6,559 levels. However, if NIFTY trades below 21,837 / 6,524 levels for the first half-an-hour of trade then it may correct 21,778 - 21,723 / 6,506 - 6,489 levels.

US Federal Reserve cuts stimulus by another USD10bn

The US Federal Reserve has decided to cut its bond purchases by another USD 10bn by reducing USD5bn in purchase of mortgage backed securities and USD5bn in treasury securities. The quantum of monthly asset purchases would amount to USD55bn (USD30bn in treasury securities and USD25bn in mortgage-backed securities) as compared to the pace of USD85bn announced in September 2012. The policy rate has been maintained at a near-zero level of 0.25%. The Fed indicated that in determining how long to maintain the current 0-0.25% target range for the federal funds rate, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2% inflation. The FOMC continued to maintain that inflation persistently below its 2% objective could pose risks to economic performance and indicated at monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term. Although scaling down of the stimulus is in line with expectations, equity markets reacted negatively on Fed Chairman Janet Yellen's remark in the post policy conference that the Fed could raise interest rates six months after it ends its bond purchase program. The median forecast for the Fed funds rate has been revised upwards to 1% by the end of 2015, up from 0.75% back in December, and 2.25% by the end of 201 6, up from 1.75%.

NHAI's move to reschedule premium payment to benefit 32 projects

NHAI's move to reschedule premium payment for highway projects is likely to benefit 32 highway projects. Out of the 32 projects, 22 are awarded for 4-laning and 10 are awarded for 6-laning. It includes projects awarded to IRB Infra, L&T IDPL, IVRCL Infrastructure, GVK, Reliance Infra, Ashoka Buildcon and Sadbhav Engineering.

The new norms allow stressed projects to avail revenue-shortfall loan clause in the model concession agreement. The shortfall between the toll revenue collected by the developer and the expenses incurred, which includes operational and maintenance costs, debt servicing and premium payments, will be extended as a loan to companies seeking rescheduling. The developer will have to pay interest equal to bank rate plus 2% on premium amount deferred. The project developer will have to clear the premium deferred over the years before its concession period gets over. The recommendations also propose penalty for projects delayed due to project developer's fault. We recommend Buy on L&T and Sadbhav Engineering with a target price of Rs.1,435 and Rs.105 respectively.

Coal India asked to stop mining at some mines

Media report suggests that Coal India has been asked to stop mining at some of its mines (including 6 large mines) as it does not have necessary approvals to raise production from these mines. Over the past few years, lack of timely environmental clearances have hit Coal India's production targets. However, there is lack of clarity on the quantum of production likely to be hit. Hence, we await further clarity on this matter. Until then, we maintain our estimates and Accumulate rating on the stock with a target price of Rs.290.

Economic and Political News

- India should stop exporting sugar: HSBC

- Credit profiles of Indian companies improving: S&P

- RBI allows five private sector banks to import gold

Corporate News

- BP, Niko to formally join RIL arbitration against Govt

- Shri ram City plans to raise up to Rs 200 cr via NCDs

- Sun TV inks pact with YouTube, iTunes to sell content

- IDBI Bank raises $300mn via overseas bond sale at 5.06% coupon