India Equity Strategy We Continue to Shout: Growth is the Bigger Problem:: Jefferies,

Key Takeaway
Around the middle of 2011, we were concerned that GDP growth print might
fall below 6% by this quarter. Without falling in the trap of being anchored by
the most recent GDP growth to forecast ahead, we now worry that on existing
trends in capacity creation, growth print could fall to even below 5%, if not 4%,
in one of the quarters in the coming year. And an ever lower growth will still
not solve inflation. The central bank, and the industry, must recognize after
the latest GDP numbers that interest rate cuts are needed even if inflation is
to stay high, as India’s inflation is increasingly borne out of low growth (that
is a result of low supply creation) and even lower revival hopes (through the
impact on balance payment).

Cement Sector Update - June 2012 :ICICI Securities,

May 2012 dispatches up ~14% YoY…
Cement majors have reported their dispatches for May 2012. Aggregate
dispatches of the nine companies taken into account have increased by
~14% YoY and ~6% MoM. This was supported by a pick-up in
construction activities during the month after lifting of the ban on sand
mining in the northern region, which impacted the April dispatches.
Ambuja and UltraTech dispatches grew ~10% YoY while ACC dispatches
grew ~3% YoY. Jaypee and Shree Cement continued their
outperformance with ~30-33% YoY growth. JK Cement, JK Lakshmi and
Mangalam Cement also reported high growth of ~18%, 16% and ~58%,
respectively.
In April 2012, dispatches grew ~7% YoY. However they declined ~14%
MoM due to the sand mining ban by the high court in northern
(particularly in Rajasthan), southern and western regions during the month
coupled with shortage of labour (due to starting of the harvest season)
and inventory build-up in March.

Cement Sector Update - June 2012

Health Check - May, 2012 :ICICI Securities,

Q 4   n umb e r s  mi x e d ,   a p p r o v a  l  mome n t um  p i c k s
u p…
The Q4FY12 numbers reported by I-Direct universe companies were a
mixed bag with most of the companies reported robust exports, thanks
to ~10-15% rupee depreciation against all major currencies and good
traction from the US and RoW markets. On the domestic front also, there
were very few players that reported muted growth. On the EBITDA front,
however, there was some pressure on account of high operating
expenses and year end provisions.

Click link: Health Check - May, 2012

Supreme Infrastructure -Management meet reinforces confidence; Buy: Anand Rathi

We recently met the senior management of Supreme Infrastructure to
get an insight on latest developments in various business verticals and
overall industry scenario. We raise our profit estimates by 6% for FY13
& FY14 and target price by 5% to `350 and maintain a Buy.

V Guard Industries Ltd. :: Nirmal Bank

V Guard posted a strong quarter in terms of Net Sales/EBITDA/PAT growing 24.3%/69.9%/34.7% respectively. The EBITDA margin improved by 320bps YoY to 11.9% and 300bps QoQ on account of strong EBIT margin in all the business segment supported by decline in raw-material cost and selling & distribution expenses. The PAT registered a growth of 34.7% YoY to Rs. 19.17 crores and 54% QoQ. The PAT margin was improved by 50bps YoY to 6.9% and 200bps QoQ. We remain positive on the stock owing to strong domestic business, steady penetration in non-south market and gradually expansion of product portfolio, V Guard is set to outperform in the consumer durable space.

ICICI Bank: Buy :Business Line

Fresh investments with a two-three year horizon can be considered in the stock of ICICI Bank that trades at an attractive valuation.

At the current price of Rs 829, excluding the value of subsidiaries (estimated at Rs 240 per share) the stock trades at 1.28 times its estimated 2013 book value. This is at a discount to all new private banks. The price-to-book multiple at the consolidated level is 1.44 times.

ICICI Bank is likely to be impacted less than other banks due to the new Basel III norms which propose stricter capital requirement. ICICI Bank has a tier-1 capital ratio of 12.7 per cent as compared to an average 10 per cent for other banks. Therefore, while other banks may face downward pressure on profitability, ICICI Bank can still improve return ratios.

The bank managed to improve its return on assets from slightly less than one per cent in 2008-09 to 1.5 per cent in 2011-12. There is further scope for return on assets to improve as fee income growth revives and the branch network is more effectively utilised.

Improved proportion of low-cost deposits, reduced wholesale deposits and rising spreads on the international business aided the bank's net interest margins (NIM). NIM expansion coupled with balance-sheet returning to growth, aided profitability. Not only have the core operating metrics of the bank improved (even after Bank of Rajasthan merger), non-performing assets (NPA) during this period were also kept under check. The gross NPA ratio declined from 4.4 per cent in March 2009 to 3.6 per cent in March 2012.

Another key positive for the bank is that the fee income (in spite of some moderation) is large enough to cover most of the operating expenses.

Technical QUERY CORNER -Opto Circuits, MCX, Rashtriya Chemicals, HDFC, Glenmark, Page Industries ::Business Line

I am a long-term investor, holding shares of Opto Circuits at Rs 250 and Multi Commodity Exchange of India (MCX) at Rs 1,280. Kindly advise the prospects and future growth of these shares.

V.Rajaiah

Opto Circuits India (Rs 154.4): The stock peaked out around your buy price at Rs 252 in September 2010. Since then, it has been on a long-term downtrend. In February 2012, the stock encountered resistance around Rs 220 and continued its long-term downtrend.

Medium-term trend is down for the stock since this February. As long as the stock trades above the key long-term support band between Rs 140 and Rs 150, long-term investors can hold the stock with stop at Rs 140. A fall below this band will reinforce the bearish momentum and pull the stock down to Rs 120 and then to Rs 100 in the forthcoming months.

An upward reversal from the aforesaid support range will lift the stock higher to Rs 175 levels and then to Rs 190. Only a strong rally above the Rs 210 and Rs 220 zone will alter the stock's downtrend and take it higher to Rs 260 in the long-term.

June 10: Pivotals: Reliance Industries,Tata Steel, SBI, Infosys, ::Business Line

 Reliance Industries (Rs 729.4)

Reliance Industries recovered from the intra-week low of Rs 673 to close Rs 45 higher. The bullish engulfing candle and morning star pattern in the weekly chart portends a possible turnaround from these levels.

But we need to see the action in the next couple of weeks to confirm this.

Decline below Rs 670 in this period will drag the stock lower to Rs 557, Rs 532 and Rs 512 in the coming weeks.

Short-term resistances will be at Rs 746, Rs 770 and Rs 792. The 21-day moving average at Rs 760 and 50 DMA at Rs 784 will also pose hurdles to rallies in the near-term.

Fresh long positions are suggested only on strong move above Rs 760. We stay with the view that the medium-term view remains down as long as the stock trades below Rs 790.

Waiting for daybreak :Business Line

It is always the darkest before dawn. Only if you subscribe to this view, do the results from Indian companies for the recent March quarter offer room for optimism. For, the numbers present a singularly gloomy picture of what is afoot in India Inc.

For 3,000 listed companies that unveiled their results, net profits fell by 13 per cent in the March quarter compared with a year ago. Raw material costs and interest payouts, the two key pressure points on corporate profit, showed no moderation. A depreciating rupee robbed companies of cost savings from falling commodity prices.

Operating profit margins, despite showing a slight sequential improvement, were a full two percentage points below last year's levels. But the most worrisome feature of this scorecard was undoubtedly the dwindling sales growth. Sales growth for these companies came in at just 13 per cent in the latest quarter, from 20 per cent plus levels in the preceding three.

52-Week Flop: DHANLAXMI BANK ::Business Line

Index Outlook: As going gets tough; the bulls get going :Business Line

Bulls who were in retreat, turned around and put up a valiant fight last week. Recovery in global sentiments, revival of hopes of domestic interest rate cut and announcements of infrastructure spending by the Prime Minister helped lift the mood as well as stock prices. The Sensex closed 750 points higher while the Nifty surged 226 points.

Global policy makers put up a concerted effort through monetary action and some pep talk to pull equity markets back from the brink. China cut interest rate, European Central Bank held rates steady and Ben Bernanke announced that the Federal Reserve was ready to act, if needed. This coupled with hints that ‘Operation Twist' wherein the Federal Reserve could invest proceeds from its assets into Treasury market was being contemplated, gave a booster dose to sagging equity prices.

Fund Talk: Sector funds are not for passive investors :Business Line

Monitor your portfolio and periodically weed out underperformers and rebalance.

I have investments in the following funds through the SIP route: Morgan Stanley Ace, Religare Contra, Axis Long Term Equity, Franklin India Blue Chip and J.P Morgan India Equity. In each of these funds, I have invested Rs 1,000.

Please let me know if the above investments are worth continuing. Should I exit a few and move to some other options?

I also have some investments in SBI magnum Tax gain, Kotak Tax Saver (both SIPs stopped after three years); Reliance Pharma, Reliance Banking Fund and Morgan Stanley Multi Asset.