01 September 2012

India Equity Strategy Keeping the Faith. But for How Long?: JPMorgan


 Over the last three months, Indian Equities have done well. MSCI
India (US$) is up 12% in absolute terms and has outperformed MSCI
EM by 500 bps.
 But fundamentals have deteriorated. Consensus estimates for FY13E
GDP growth have been cut from 6.5% to 5.5%. The monsoon has picked
up into August. But the damage done early in the season could be
meaningful for consumption. Brent has rallied from a low of US$ 90 in
June to US$115 / barrel putting pressure on the twin deficits and
inflation. Other financial markets are reflecting this stress – the INR has
weakened from 54 to 56 vs. the US Dollar and Yields on the benchmark
10 year Government Bond have increased from 8.08% to 8.24%.

Anand Rathi- TOP dividend yield picks


  Dividend
Company Name Yield (%)
Guj Gas Company 7.37
Indiabulls Fin. 6.9
Shree Gan.Jew. 6.52
SRF 6.53
IOB 6.36
Ingersoll-Rand 5.19
Vijaya Bank 4.97
Tata Inv.Corpn. 4.81
SJVN 4.78
Finolex Inds. 4.74
United Bank (I) 4.64
Ashok Leyland 4.58
UCO Bank 7.75
S Kumars Nation 4.3
G N F C 4.42
T N Newsprint 4.39
St Bk of Bikaner 4.19
Aptech 4.19
Torrent Power 4.14
Deepak Fert. 4.06
Karnataka Bank 4.05
VST Inds. 3.78
Rural Elec.Corp. 3.7
S B T 3.64
J & K Bank 3.57


India Strategy Identifying Over-Owned/ Under-Owned Stocks 􀂄BofA Merrill Lynch,


India Strategy
Identifying Over-Owned/
Under-Owned Stocks
􀂄 FII portfolio: O/W on cement and U/W on energy rise; U/W
on pharma and O/W on financials fall
􀂄 FIIs had a tepid interest in the Indian markets during the quarter with a
negative bias. They sold cyclicals like financials, industrials and energy while
buying defensives like consumers and pharma apart from cements.
􀂄 The buying in cement and pharma brought down the U/W for pharma and
increased the O/W in cement. Change in the MSCI index resulted in no
change in FII O/W on consumers despite heavy buying during the quarter.
􀂄 Financials continue to be the biggest O/W sector for the FIIs with 2 stocks in
the top-5 O/W stocks list of the FIIs. However, due to the recent selling done
by the FIIs and index changes O/W on the sector is now at the lowest.
􀂄 Key stocks bought: TCS, HDFC, HDFC Bank, Cairn India, & ITC.
Key stocks sold: Axis Bank, Infosys, RIL, L&T and Yes Bank.
Domestic MF portfolio: O/W on Industrials and U/W on
Financials rise; O/W on Pharma and U/W on Metals fall
􀂄 Domestic MF portfolio is in stark contrast with that of FIIs, with Industrials
being major O/W sector, sector where FIIs are marginally U/W. Consumer is
another sector where domestic MFs are heavily O/W in contrast to FIIs who
are not. They are also U/W Financials where FIIs are O/W. However, on the
similar lines of FIIs, domestic MFs are also U/W commodities.
􀂄 In contrast to FIIs, domestic MFs bought financials & industrials and sold
consumers & pharma. However, on the similar lines to FIIs they sold energy.
LIC net buyer
LIC was a net buyer during the quarter. LIC bought Utilities (NTPC), Software
(Infosys & TCS), Energy (RIL & Cairn India) and Auto (Bajaj Auto & Hero
Motocorp). LIC sold Consumer (HUL & ITC).
25% public holding norm to be implemented by next year
As per SEBI norms all private sector listed companies need to have 25% public
holdings by June 2013 (for PSUs it is August 2013). In the BSE 500 there are 66
companies which need to lower their promoter holding to 75%. Therefore at the
current price these companies together need to raise ~22bn US$ to sell the extra
promoter holding. Large portion of this is from the PSUs (~19bn US$). Among the
PSU which need to lower the Govt. stake include Coal India, MMTC, NTPC, &
NMDC. Private companies include Wipro, DLF, R-Power, Adani Ent.

MphasiS --HP continues to haunt, outlook hazy: Sunidhi

MphasiS’ US$ revenues have been declining for the last four quarters – primarily due to weak HP contribution. Management indicated discretionary budgets for clients remain under pressure, with longer decision cycles. We believe weak sentiment due to a declining headcount (4 quarters in Applications and ITO business) and a weak outlook on HP’s enterprise services business is likely to persist for some time. HP channel revenues declined 10.1% QoQ to US$138.6 mn, while direct channel revenues grew at 1.6% to US$113.4 mn.

IIFL NCD 2012


Key Highlights of the issue:
Issue Size: Rs.250 Crores with an option to retain over-subscription upto Rs.250 Crores.
Issue period – 5th Sept 2012 – 18th Sept 2012
Face Value – Rs.1000 per NCD.
Rating – ‘AA -/Stable’ by CRISIL & ICRA
Allotment on First Come First Serve Basis.
Tenor – 6 Years
Coupon – 12.75%
Interest Payment Option – Monthly(Effective yield – 13.52%), Annual & Cumulative.


31 Aug: EF Market Times Market wrap


Market Wrap-Up
Post four consecutive sessions of losses—markets on the day of August series
F&O expiry impelled in the final hour of trade clocking gains of about half a
percentage point after instigating and trading in the negative terrain for
most part of the day amid cautious global markets ahead of the Jackson Hole
meeting and the first quarter GDP number for FY13. Reports
from Germany, Japan and South Korea deepened concerns that the global
economy is slowing which added to the woes of the global indices. Domestic
markets that flouted in the final hour of trade parked the benchmark Nifty
and the Sensex above their crucial levels of 5300 and 17500 respectively at
5315.05 and 17541.64 correspondingly.
Domestic Update
 Parliament was adjourned till noon amid din as BJP persisted with its
demand for Prime Minister Manmohan Singh's resignation provoking
Congress members to raise slogans. The deadlock in both Lok Sabha and
Rajya Sabha over the CAG report on coal block allocation issue entered its
seventh day as the Houses met after a day's break on account of Onam.
 Amid din over CAG report on coal block allocation issue, the Lok Sabha
passed a bill that would allow the government to set up AIIMS-like
institutes across the country by a notification.
 As India seeks to control high inflation, RBI Governor D Subbarao has said a
little sacrifice in growth is "inevitable" amid efforts to bring down prices to
acceptable levels.
Sector Update
 Government made it clear that no further extension will be given to the
mandatory cable digitization in the four metros of Delhi, Mumbai, Kolkata
and Chennai. According to the law enacted by Parliament, over 12 million
homes with television in metros have to move to digital signals by October
31 this year.
 The Food Ministry is looking to sell additional three million tonne wheat in
the open market to bulk consumers such as flour millers, a move aimed at
containing price rise and offloading surplus stocks.
 India is expected to see renewable energy capacity addition of 30,000 MW,
with significant contribution from wind power, over the next five years. At
the end of 12th Five Year Plan (2012-17), the country is expected to have
total renewable energy generation capacity of 55,000 MW. India has
renewable generation capacity of about 25,000 MW.
 The Micro, Small and Medium Enterprises (MSME) Ministry said it has not
received any proposal to dilute guidelines related to foreign direct
investment in the single-brand retail sector.
 Union Ministry of Environment and Forest has directed two mines
operating close to Bhagwan Mahaveer Wildlife Sanctuary in Goa to stop
their operations.
 The government has allowed cement companies to do away with
disclosures such as capacity and production figures. This is due to the
recent revision in Schedule VI of the Companies Act--which has a clause on
exempted disclosures on installed capacity and production statistics of
manufacturing companies to align reporting norms with global standards.
Corporate Update
 With the advent of festival season India's largest lender – the State Bank of
India has embarked upon a special campaign to ramp up its home loan
book. It is going to reduce the processing fee for home loans to Rs.1000 per
loan irrespective of the size. The offer would be made available from
September 01 onwards.
 Elgi Equipments has acquired 100% stake in Rotair S.p.a. The acquisition
is through its subsidiary Elgi Compressors Italy.
 Indian fertilisers and petrochem firm Deepak Fertilisers has abandoned
plan to build a USD 350 million plant at Port Bonython, South Australian
Mining minister Tom Koutsantonis said.
 Orchid Chemicals sold its penicillin and penem business to US-based
Hospira Inc for USD 200 million.
 Global player British Telecom began sale of a part of its over 23% stake in
IT major Tech Mahindra in the open market.

ASIA EQUITY STRATEGY WILL GROWTH BE HIGHER IN 2013? bnp paribas


SUMMARY
Will growth be higher in 2013?
This is the key question for investors in deciding positioning for the
remainder of the year. Our view remains positive and we continue to
favour cyclicals and financials ahead of defensives.
CATALYST
Central banks united for first time since 2009
Central banks are aligned in a global effort to boost growth for the first
time since 2009. Weak current economic performance adds weight to our
view that 2013 growth will be higher than 2012.
IMPLICATIONS
Upgrade Technology & Taiwan, downgrade India
We upgrade the technology sector and Taiwan to OVERWEIGHT. We
downgrade India on policy concerns and add Samsung Electronics,
Komatsu, Mediatek and Jiangxi Copper to our top cyclical picks.

India Strategy Earnings vs. Share Prices: Opportunities & Disconnects ::Morgan Stanley Research,


To be defensive or not to be Since the start of the year, Financials and Consumer Staples have been fighting for the position of top-performing sector in India – a trend that was last seen in 2010, although by the end of that year both sectors lost performance and finished among the bottom 4 sectors. So how will the rest 2012 shape up? The state of earnings revisions may give us some hint of coming performance.
What we have done
It is a commonly held belief that share prices lead earnings revisions. We plot relative share prices vs. relative earnings revisions for the MSCI sectors and its constituents to identify any obvious disconnects between share price and earnings expectations.
Technology appears to present opportunity
For the third consecutive quarter, the performance strength in consumer staples has been backed by earnings upgrades, likewise with Financials, albeit with some volatility. The outperformance of Energy, Healthcare and Utilities has led upward earnings revisions, while the downward revisions for the CD, Industrials, Materials and Telecoms sectors have been mirrored in the performance. Technology is seeing improving estimates, but share prices have yet to respond.
We can argue that earnings will catch up with share prices, but the opposite cannot be ruled out. Either way, these represent potential opportunities for investors. This analysis obviously ignores the starting point of valuations, which can sometimes explain the disconnect between share prices and earnings.

India Equity Strategy: Show me the earnings:: Deutsche bank,


Show me the earnings is the motto for 'reluctantly bullish' investors
We believe that the dynamic interplay of weak macro fundamentals on the one
hand coupled with central bank injections of liquidity at regular intervals has
compelled investors to become 'reluctantly bullish". As our Asia equity
strategist Ajay Kapur says "Show me the earnings" is the motto for markets in
the current environment. We believe that earnings and quality balance sheets
will become the key factors for markets, more than ever before. In the peculiar
environment we are in currently, investors may need to shed long-held dogmas
on valuations. We expect companies and sectors—particularly with a shrinking
investible universe—seen displaying sustainable earnings momentum will see
valuations continue to expand, in many cases, beyond recent historical highs.
The premium for earnings predictability will only get richer, in our view.

FII & DII trading activity across NSE and BSE 31-08-2012

 BuySellNet
ValueValueValue
FII3084.383295.46
-211.08
DII1114.321286.86
-172.54

 
 


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Comfort Commotrade IPO opens Sept 5th


Issue Terms
 
Issue price / Floor Price (Rs)
10
Application per share (Rs)
10.00
Minimum investment amount (Rs)
100,000.00
Minimum bid (no of shares)
10000 shares and in multiples of 10000 thereafter
Maximum Shares for Retail
20000
Issue Date and Size
 
Issue opens
05-Sep-12
Issue closes
10-Sep-12
Listing on
BSE SME
Issue size (Rs cr)
6


Shares on Offer
Lakhs
Total shares offered
60.00
Of above, offered to public
54.90
Post-issue shares
100.20


Lead Managers & Registrar
Lead Manager(1)
VC Corporate Advisors Pvt Ltd
E-mail
mail@vccorporate.com


Registrar
Sharepro Services India P Ltd
E-mail
sme.ipo@shareproservices.com
Company Contact Details
Company's address
A-301 Hetal Arch, S V Road Malad (West), Mumbai
Pincode
400 064
Tel No.
91 22 28449765
Fax No.
91 22 28892527
Website
http://www.comfortcommotrade.com



Thejo Engineering IPO opens on Sept 4th



Issue Terms
 
Issue price / Floor Price (Rs)
402-430
Application per share (Rs)
402.00
Minimum investment amount (Rs)
120,600.00
Minimum bid (no of shares)
300 shares and in multiples of 300 thereafter
Maximum Shares for Retail
300
Issue Date and Size
 
Issue opens
04-Sep-12
Issue closes
06-Sep-12
Listing on
NSE SME
Issue size (Rs cr)
19
Mkt cap at issue price (Rs cr)
N.A.
Shares on Offer
Lakhs
Total shares offered
N.A.
Of above, offered to public
N.A.
Post-issue shares
N.A.
Post-issue promoters' holding(%)
N.A.
Company Financials (Rs cr)
2012-03-31
No of months
12
Turnover
118.04
Net profit / (loss)
9.01
Borrowings
N.A.
Lead Managers & Registrar
Lead Manager(1)
IDBI Capital Market Services Limited
E-mail
thejo.ipo@idbicapital.com


Registrar
Cameo Corporate Services Limited
E-mail
thejo@cameoindia.com
Company Contact Details
Company's address
Aysha Building, 2nd floor,41, Whites Road, Chennai, Tamil Nadu
Pincode
600 014
Tel No.
91 44 4392 1900
Fax No.
91 44 28522547
Website
http://www.thejo-engg.com

Indian economy might have bottomed out: TCA Anant, Chief statistician in ET

India's chief statistician TCA Anant sees a sliver lining in the clouds gathering over the country's economy. Anant says the economy's better performance than the last quarter gives rise to a hope that "we might have bottomed out". In an interview with ET's Shruti Choudhury, Anant talks about the positive signals, the consumption pattern and the importance of reliable sources of data. Excerpts: