Reports » India
Indian stock market and companies daily report (September 02, 2013, Monday)
Indian markets are expected to open flat to positive tracking a flat opening in SGX Nifty whereas most of the other Asian markets are trading in the positive territory.
US markets showed some volatility over the course of the trading day on Friday but maintained a negative bias throughout the session. The weakness on Wall Street came as traders expressed uncertainty about the situation in Syria and the possibility of a U.S. attack over the three-day weekend. Moreover, traders digested mixed reports from Commerce Department that the personal income edged up by 0.1% in July (expected increase of 0.2%) following a 0.3% increase in June and MNI Indicators about Chicago business barometer edging up to 53.0 in August from 52.3 in July.
Indian markets witnessed a volatile session before ending the day in green owing to downtrend in oil and gold prices for a second day and gains elsewhere across Asia underpinning sentiment. Buying picked up late in the afternoon after Prime Minister Manmohan Singh said the sharp fall in the value of the Indian rupee has been especially because of large current account deficit and some other domestic factors.
The trend deciding level for the day is 18,524/ 5,442 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,775 - 18,930 / 5,523 - 5,575 levels. However, if NIFTY trades below 18,524/ 5,442 levels for the first half-an-hour of trade then it may correct up to 18,369 - 18,117 / 5,390 - 5,309 levels.
Real GDP growth at 4.4% in 1QFY2014, lowest in 4 years
Real GDP growth for 1QFY2014 came in at 4.4% largely in line with market expectations, as compared to 4.8% in the previous quarter and 5.4% in 1QFY2013. On the demand-side, GDP at market prices continued to decelerate to 2.4% as growth in private consumption slowed and investment as well as exports contracted during 1QFY2014. We believe that the liquidity tightening measures taken by the RBI to contain exchange rate volatility have further dampened consumption and investment sentiments and raised downside risks to growth. We continue to believe that the near-term outlook for growth is likely to remain challenging. We expect real GDP growth for FY2014 to range between 4.5-5.0%.
Trends in economic growth
Growth in agriculture and allied activities came in at 2.7% as against 1.4% in the previous quarter and 2.9% in 1QFY2013. It was boosted by production of coarse cereal, pulses and oilseeds during the rabi season while production of rice and wheat declined during the period.
The industrial sector reported almost flat performance as compared to growth of 2.7% in 4QFY2013 and 1.8% in 1QFY2013. This can be attributed to the contraction in mining and manufacturing sector during the quarter. Regulatory issues plaguing the mining sector continued to result in a decline in production for the third straight quarter. Manufacturing sector witnessed a 1.2% de-growth despite a low base (1.0% contraction) during 1QFY201 3.
Growth in the services sector which contributes 60% share to GDP remained at 6.6%, similar to growth in the previous quarter. The major disappointment comes from the deceleration of growth in trade, hotels, transport and communication category. It contributes to more than one-fourth of the overall GDP and has slumped to 3.9% from the 6.1% in 1QFY2014. It clearly reflects the weakness in consumption sentiment. Growth in community, social and personal services picked up to 9.4%, the highest in 1 5 quarters on account of higher government spending. This can be corroborated with the double-digit growth in government final consumption expenditure during the period. We believe that growth in this component is unlikely to be sustained since the government is expected to curtail spending.
Near-term outlook remains challenging
We continue to believe that the outlook for growth is likely to remain challenging. Our external sector vulnerability reflected in the INR depreciation has led to economic stability gaining precedence over growth. The silver lining is that agricultural growth is expected to gain momentum owing to a good monsoon. So far, the area under sowing for kharif crop has increased by 8.0% as compared to the corresponding period of the previous year. We believe that this is likely to boost rural consumption. However, the overall consumption and investment sentiments have dampened owing to tighter monetary conditions. Post the general election in 2014 greater policy certainty is likely to boost investment sentiment. Until then, a meaningful recovery in the capex cycle can be largely ruled out.
Auto sales update - August 2013
Mahindra and Mahindra
Mahindra & Mahindra's (MM) automotive segment registered lower-than-expected sales during August 2013 on account of the continued weakness in the passenger vehicle (PV) segment. The PV sales witnessed a steep decline of 27.5% yoy (1.9% mom) due to the subdued demand environment and rising competition amidst increase in excise duty which has impacted the company's products the most. The four-wheeler pick-up and the three-wheeler sales too witnessed a decline of 3.8% and 14.2% yoy respectively. Automotive exports also declined by 9% yoy during the month. MM had announced production cuts at its automotive plants in August to keep inventory under check.
Tata Motors (TTMT) continued its poor sales performance as the domestic commercial (CV) and passenger vehicle (PV) volumes maintained the downward trajectory following weak consumer demand and slowdown in industrial activity. Total volumes posted a sharp decline of 30.9% yoy (3.6% mom) to 49,61 1 units with CV and PV segments registering a sharp decline of 26.6% and 48.2% yoy respectively. Within the CV space, domestic medium and heavy and light commercial vehicle segments witnessed a decline of 43.8% and 1 8.2% yoy respectively. While in the PV segment, utility vehicle and passenger cars witnessed a decline of 38.9% and 50.6% yoy respectively. Exports however, posted a growth of 11.9% yoy (14.4% mom) during the month.
TVS Motor (TVSL) reported in-line performance with total sales posting a 1.2% mom (flat yoy) growth to 1 55,532 units. The performance was led by the strong growth in the motorcycle and three wheeler segments. which recorded a growth of 5.9% mom (14.2% yoy) and 0.8% mom (80.8% yoy) respectively. The scooter and the moped segments however, continued its subdued performance led by the weak demand and increasing competition. While scooter sales declined by 1.1% mom (4.5% yoy); moped sales witnessed a 2.3% mom (13.9% yoy) decline during the month. The exports performance on the other hand remained strong registering a growth of 4.9% mom (52.9% yoy) driven by the strong performance of the twowheeler and the three-wheeler sales.
Taro Pharma in ties with NovaBiotics for co-development of an anti-fungal drug
Taro pharma has entered into an agreement with NovaBiotics to license and co-develop Novexatin, a topical anti-fungal drug to cure toe-nail infections. Novexatin is a topical treatment for fungal nail infections (onychomycosis). The active pharmaceutical agent of this medicinal candidate is NovaBioticsRs. novel, patented antifungal peptide, NP213, which was developed specifically as a safe, fast-acting nail penetrating fungicidal molecule from the company's proprietary antimicrobial peptide platform.Novexatin is an investigational drug that is expected to enter a multi-centre phase IIb study for mild-to-moderate onychomycosis in the US.
NovaBiotics and Taro will jointly manage the study and other development activities for Novexatin, with Taro as lead partner in the programme.NovaBiotics and Taro will jointly manage the study and other development activities for the drug with Taro being the lead partner of the program. The drug is currently in Phase 2 (a) and will soon enter phase 2 (b).This is a very lucrative deal for both the companies as the drug will be able to cure infections in just 28 days whereas other drugs needed atleast 3 to 4 months and a course of one year to cure the fungal infection completely. According to GlobalData, the onychomycosis market in 2012 had generic antifungal sales of USD$548.44 million and is expected to grow by 19.5% annually over the next decade and reach total revenue sales (US) of over USD$3.26 billion by 2022.We remain Neutral on the stock.
HMCL's Haridwar plant faced temporary labor problem
Hero MotoCorp's (HMCL) Haridwar plant which faced temporary tool-down agitation by the workers on Thursday night is expected to return to normalcy from Monday as the workers have withdrawn the tool-down protest. The workers at the plant had gone on a tool-down strike agitating against the wrongful suspension of the two colleagues and were demanding their reinstatement. However, as per the media reports, HMCL management has resolved the difference with the striking workers in an amicable manner and the workers will resume the duties from Monday onwards. The details of the agreement with the workers though is not publicly available. While the production at the plant was affected since Thursday night; we believe that the impact on the company will not be significant. More importantly, the management acted swiftly to resolve the issue which is expected to help HMCL ahead of the festival season. At the CMP price of Rs.2,030, the stock is trading at 13.9x FY2015 earnings. We recommend a Neutral rating on the stock.
Economic and Political News
- Govt plans to set up bullion bank to mobilise idle gold
- Fiscal deficit touches 63% of Budget Estimate in just four months
- NABARD allocates Rs 900 crore to Karnataka under RIDF
- DonRs.t donate to trusts where directors hold post: RBI to UCBs
- Govt. mulls raising import duty on non-essential goods
- PFC to invite bids for 2 UMPPs worth Rs 40k cr
- NCC to sell BOT assets to reduce debt
- Production comes to a halt at Hero's Haridwar unit
Stock Market Forum
- Nifty breached after test 6300 in early trading
5 December 2013
- U.s.market update
5 December 2013
- The Oil prices ended up the day on a bright note
5 December 2013
- Global mount money calls and updates
5 December 2013
- Intraday Free Stock Calls for NSE Intraday trading
5 December 2013
- brent crude oil updates ,energy calls and trend
4 December 2013
- Stornoway ( SWY.TO ) Announces $28.4M Renard Pre-Development
3 December 2013
- Petrichor (PTP.V) Closes First Tranche Convertible Debenture Financing for Gross Proc
3 December 2013
- Red Eagle Mining (RD.V) Completes Preliminary Economic Assessment for the San Ramon G
3 December 2013
- India's FDI investment reduce in Q2 of FY14
3 December 2013