Reports » India
Indian stock market and companies daily report (September 11, 2013, Wednesday)
Indian markets are expected to open flat tracking flat to marginally negative opening trades in the SGX Nifty and most of the Asian indices.
US stocks continued to perform well throughout the trading session on Tuesday. The strength on Wall Street came amid cautious optimism that the crisis regarding the Syrian government's alleged use of chemical weapons could be resolved without US military action. The optimism came on the heels of reports that Syria has accepted a Russian proposal to give up its chemical weapons. Meanwhile, in an interview President Barack Obama indicated that the proposal would be a potential breakthrough, although he remained skeptical that Syria will follow through. Additionally, another batch of upbeat Chinese economic data also generated some buying interest on Wall Street after helping to drive the rally on Monday. The data from the National Bureau of Statistics revealed that industrial production in China increased 10.4% yoy in August. The Chinese retail sales also grew by 13.4% annually, faster than the 13.3% increase expected by the economists.
Meanwhile, strong buying by the FII's on the back of easing concerns about a potential US led military action on Syria and provisional data showing a double digit rise in India's merchandise exports for August lifted the benchmark indices to more than six week highs.
The trend deciding level for the day is 19,818 / 5,847 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 20,192 - 20,386 / 5,955 - 6,013 levels. However, if NIFTY trades below 19,818 / 5,847 levels for the first half-an-hour of trade then it may correct up to 19,624 - 19,250 / 5,788 - 5,680 levels.
Trade deficit narrows to USD10.9bn
Provisional data released by the commerce ministry shows that India's trade deficit for August 2013 narrowed to USD10.9bn on the back of decline in gold imports and double-digit growth in exports. Though the trade deficit improved as compared to USD12.3bn in July 2013 and USD15.3bn in August 201 2, it came in slightly above consensus estimates of USD9bn. The cumulative trade deficit for April - August of 2013-14 is estimated at USD73.4bn, lower than the deficit of USD74.7bn during April - July of 2012-13.
During August 2013, exports continued to report double-digit growth for the second straight month at 13% on the back of 6.5% contraction during August 2012. On a cumulative basis during April - August 2013, exports witnessed growth of 3.9%.
The outlook for export growth has improved supported by the economic recovery in advanced economies like U.S, Japan and Eurozone to some extent along with steep INR depreciation and low base (contraction of almost 2% in FY2013).
During August 2013, imports reported 0.7% contraction as compared to decline of 6.2% in July 2013 and 6.7% in August 2012. The contraction can be attributed to the 10.4% decline in non-oil imports. Gold imports are pegged to have come in at just USD0.65bn as compared USD2.2bn in July 2013 mainly because of the uncertainty related to the new gold import policy imposed by the RBI on July 22, 2013 linking gold imports to exports. It is believed that with the subsequent clarification issued by the RBI, gold imports for the month of September 2013 would be boosted. Nonetheless gold imports are expected to moderate to USD40-45bn during FY2014, lower than import of USD53bn for FY2013.
Oil imports have witnessed almost 18% growth during August 2013 as against contraction of 8.0% in the previous month. While ex-oil, ex-gold imports are expected to decline, we believe that oil imports are at the receiving end of a double whammy owing to rise in international crude oil prices as well as INR depreciation on a yoy basis. In this regard, we would be watchful for the steps expected to be announced by the oil ministry in the coming week (possibly September 16, 2013 as per media reports) to cut the oil import bill.
JLR maintains its strong growth momentum in retail sales in August 2013
Jaguar and Land Rover (JLR) sustained its strong volume momentum in retail sales in August 201 3 registering a growth of 27.6% driven by the robust performance of the newly launched models and the Range Rover Evoque. The volume growth ex. Evoque too remained strong (up 24.8% yoy) and was driven primarily by the recently launched Jaguar models. Geographically, the volume momentum continued across the world (except Europe which declined by 1.4% yoy) with China, North America, UK and the Asia Pacific region witnessing a robust growth of 43.2%, 39.6%, 36.3% and 35.2% yoy respectively. Meanwhile, on a mom basis, total sales declined by 11.9% primarily due to a 76.9% yoy decline in UK volumes ahead of the name plate changes that happens in September and 25.3% decline in Europe volumes.
Jaguar sales continued its impressive trend posting a growth of 91.7% yoy driven by the growth in the XF and XJ models (on the back of the introduction of the Sportbrake, AWD and smaller engine variants). Geographically, Jaguar posted a robust growth in all the major markets with China (up 278% yoy), North America (up 70.2% yoy) and Europe (up 74.6% yoy) being the top three performers during the month.
Land Rover sales too recorded a strong growth of 18.1% yoy led by the continued momentum in Range Rover Evoque, Freelander and Discover models which registered a growth of 34.4%, 22.7% and 14.3% yoy respectively. Additionally the dispatches of the new Range Rover and Range Rover Sport too aided the growth during the month. Geographically the growth was strong across all the markets (except Europe) with Asia Pacific region, UK and North America being the top three growth drivers recording a growth of 37.2%, 36.1% and 31.5% yoy respectively. Sales in Europe however, declined by 11.1% yoy during the month.
Meanwhile, JLR has announced that it would invest GBP1.5bn over a period of three years to introduce aluminum vehicle architecture for new models. The first car from this architecture is expected to rollout in 2015 and will be a mid-sized premium sedan car. The investments announced are a part of the capital expenditure plans of the JLR. The company has also announced creation of 1,700 new jobs at its Solihull facility to support the roll out of the new vehicles. Additionally, in the domestic markets Tata Motors has planned to launch 25 to 30 new products including upgrades and variants in 2HFY2014 in anticipation of revival in the demand.
Going ahead, we expect headwinds in the standalone business to continue in FY2014 due to weak macro-economic environment which is expected to continue impacting domestic volumes. However, we expect JLR to sustain its strong performance driven by continued momentum in the global luxury vehicle market and aided further by the strong product launch pipeline and the success of the model launched in 4QFY2013. We expect JLR volumes to grow at ~13% CAGR during FY2013-15E and PAT to grow at ~15% CAGR during the same period. While we retain our positive view on Tata Motors; post the sharp ~25% up move in the stock price over the last one month, we recommend a Neutral rating on the stock.
HCL Tech bags deal from Anglo American for End-User Computing and Data Center Services worldwide
HCL Technologies (HCL Tech) has bagged a contract from - Anglo American, one of the world's largest mining companies, where HCL Tech will deliver IT services for Anglo American businesses across the globe. As a part of this contract, HCL Tech will transform Anglo American's end user computing and data center landscape to improve operational efficiency, business agility and the user experience. The scope of service covers end to end infrastructure services, including data centre and hosting services, email services, service desk, local area network and security management, end user computing and on-site IT services, utilizing hybrid on-premise and cloud delivery models. HCL Tech will leverage its Enterprise of the Future framework to continuously upgrade and evolve Anglo American's IT services and infrastructure for users across multiple locations. Owing to recent run up in the stock price, we maintain our Neutral rating on the stock.
Income Tax Department slaps Rs.1,631cr tax notice on NMDC
Media reports suggests that the Income Tax Department has slapped Rs.1,631cr tax notice on NMDC for assessment years 2006-07, 2007-08, 2008-09 and 200910, alleging that the company had under invoiced some export accounts. During 2011-12 also the Income Tax authorities reopened the assessment for financial years 2007-08 and 2008-09 alleging under invoicing of exports and raising tax demand notices for Rs.1,255cr and Rs.102cr for those years. NMDC has contested these allegations and has filed appeals before appellate authorities and hence until further clarity emerges on this matter we maintain our estimates and Buy view on NMDC with a target price of Rs.142.
Ashoka Buildcon has emerged as the lowest bidder for order worth ~Rs.610cr
Ashoka Buildcon Ltd has emerged as the Lowest Bidder for the re-structured accelerated power development and reforms programme (R-APDRP) part-8 in Chennai North & South Regions of Tamil Nadu Generation and Distribution Co. Ltd. (TANGEDCO) on turnkey basis. The estimated cost of the project is Rs.610cr. We continue to maintain our Buy rating on the stock with target price of Rs.60.
Economic and Political News
- Task force on promoting local currency trade to meet today
- Gross tax mop-up down Rs.41,000cr over 2012-1 3 budget estimate
- Double digit export growth likely to continue in August: Commerce Secretary
- Government to fast track 40,000MW hydro power projects: Scindia
- WB okays scheme to open up back-end retail to private players
- Tata Motors enters Indonesian market, launches 3 new vehicles
Stock Market Forum
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