Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
4Activity
0 of .
Results for:
No results containing your search query
P. 1
Market Outlook 040512

Market Outlook 040512

Ratings: (0)|Views: 344 |Likes:
Published by Angel Broking

More info:

Published by: Angel Broking on May 04, 2012
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

05/07/2012

pdf

text

original

 
 
Market Outlook 
 
May 4, 2012
 
 www.angelbroking.com
Dealer’s Diary 
The Indian markets are expected to open flat to negative tracking negative cuesfrom global markets. Asian stocks fell for a second day as U.S. service industriesexpanded less than forecast.The US markets closed lower yesterday amongst a mixed set of data releases. Thestocks came under pressure following the release of a report from the Institute forSupply Management showing an unexpected slowdown in the pace of growth inthe service sector in the month of April. The ISM said its non-manufacturing indexdropped to 53.5 in April from 56.0 in March. The markets largely shrugged off therelease of a Labor Department report showing a bigger than expected drop ininitial jobless claims in the week ended April 28th, with traders looking ahead tothe release of the monthly jobs report on Friday.Indian shares fell for a second consecutive session on Thursday, with heavyweightauto, metal and banking shares pacing the declines. The rupee hit a fresh four-month low of 53.45 against the dollar, as overseas investors awaited more clarity on how the government will resolve tax policy issues like GAAR.
Markets Today
The trend deciding level for the day is 17,181 / 5,195 levels. If NIFTY trades abovethis level during the first half-an-hour of trade then we may witness a further rally up to 17,242 – 17,332 / 5,210 – 5,232 levels. However, if NIFTY trades below17,181 / 5,195 levels for the first half-an-hour of trade then it may correct up to17,091 – 17,030 / 5,174 – 5,159 levels.
Indices S2 S1 PIVOT R1 R2
SENSEX 17,030 17,091 17,181 17,242 17,332NIFTY 5,159 5,174 5,195 5,210 5,232
News Analysis
 
RBI releases Basel–3 Guidelines
 
Reliance Industries fined
 ` 
6,600cr for lower KG-D6 output
 
IRB’s stock plunges 11% as Chairman is being investigated in murder case
 
4QFY2012 Result Reviews – Marico, Aventis, KEC, ATXL, Finolex Cables
 
4QFY2012 Result Previews – Bank of Baroda, Corporation Bank, ITNL
Refer detailed news analysis on the following page
 
Net Inflows (April 30, 2012)
`
cr Purch Sales Net MTD YTD
FII 2,114 1,573 541 (1,865) 43,461MFs 725 876 (152) (676) (6,249)
FII Derivatives (May 03, 2012)
`
cr Purch Sales Net Open Interest
Index Futures
1,152 1,389 (237) 8,599
Stock Futures
1,022 1,238 (216) 20,412
Gainers / Losers
Gainers LosersCompany Price (
`
)
chg (%)
Company Price (
`
)
chg (%)
Pipavav Defence 87
8.5
IRB Infra 150
(10.9)
United Phosphorus 127
5.9
Hero MotoCorp 2,072
(7.7)
Shree Renuka Sug 32
 4.4
Educomp Sol. 187
(5.4)
Godrej Cons. 567
3.4
Sintex Ind. 67
(5.3)
Glenmark Pharma 337
 2.2
 Aditya Birla Nuvo 884
(5.0)
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex
(0.9)
(150.7) 17,151
Nifty 
(1.0)
(50.8) 5,188
MID CAP
(1.0)
(64.2) 6,235
SMALL CAP
(1.0)
(68.0) 6,710
BSE HC
(0.2)
(11.2) 6,787
BSE PSU
(1.5)
(104.4) 7,104
BANKEX
(1.7)
(206.6) 11,654
 AUTO
(2.4)
(253.9) 10,209
METAL
(1.8)
(192.4) 10,834
OIL & GAS
(0.7)
(51.1) 7,868
BSE IT
0.7
40.9 5,787
Global Indices
Chg (%)
(Pts) (Close)
Dow Jones
(0.5)
(62.0) 13,207
NASDAQ
(1.2)
(35.6) 3,024
FTSE
0.2
8.4 5,767
Nikkei
0.3
29.3 9,380
Hang Seng
(0.3)
(59.6) 21,250
Straits Times
0.0
0.9 3,007
Shanghai Com
0.1
1.6 2,440
Indian ADRs
Chg (%)
(Pts) (Close)
INFY
(1.9)
(0.9) $46.7 WIT
(1.0)
(0.1) $9.5IBN
(4.9)
(1.6) $31.8HDB
(1.4)
(0.5) $33.0
Advances / Declines BSE NSE
 Advances
1,055
429Declines
1,719
1,046Unchanged
107
68
Volumes (
`
cr)
BSE 1,921NSE 10,004
 
 
Market Outlook 
May 4, 2012
 www.angelbroking.com
RBI releases Basel–3 Guidelines
What the guidelines entail
: Reserve Bank of India (RBI) released the final guidelinesregarding the Basel-3 norms yesterday. Amongst other details, the key point is thatthe banks will have to achieve a minimum Core Equity Tier-I capital adequacy (CET1) of 5% by FY2014, which in a staggered manner will then have to beincreased to 8% by FY2018.
RBI Guidelines for transitional arrangements for Basel-3 norms
Minimum capital ratios FY13FY14 FY15FY16FY17 FY18
Minimum Common Equity Tier 1 4.55 5.55.55.5 5.5Capital conservation buffer (CCB) -- 0.61.31.9 2.5Minimum CET1+ CCB 4.55 6.26.87.4 8Minimum Tier 1 capital 66.5 777 7Minimum Total Capital 99 999 9Minimum Total Capital +CCB 99 9.610.210.9 11.5 Phase-in of all deductions from CET1 (in %) 2040 6080100 100
 
 Source: Company, Angel Research
Immediate impact:
For 27 banks under our coverage (comprising 85% of thesector), as on FY2012 none of them are estimated to be below the immediatethreshold of 5% of CET1 to be achieved by FY2014. However, in our view by FY2014, almost all banks will look to maintain a minimum CET1 of at least 8% tobe comfortably above the minimum requirements.Based on this, a handful of banks including primarily a few small PSU banks likeCentral Bank, Vijaya Bank and UCO Bank would be the only ones that would bebelow the 8% threshold. This is because, for most other banks post the governmentinfusion already announced, they are likely to be above 8% CET1 from FY2013itself. Few others such as Corporation Bank, IOB, IDBI and United Bank would alsobe marginally below 8%. SBI is likely to be the only large-cap that may end upbelow 8% (unless their risk-weighted asset growth lags total asset growth). In caseof the smaller banks, since they are trading well below 1x P/ABV, capital raisingwould result in dilution in EPS of 4% to 18% and in book value to the extent of 2%to 5% of our current estimates. In case of SBI, dilution would be book-accretive butEPS-dilutive.
 
 
Market Outlook 
May 4, 2012
 www.angelbroking.com
Exhibit 1:
 
Shortfall (below 8% core tier-I capital) for banks under our coverage as of FY2014E
BankCore Tier-1cap FY11CapitalInfusionRetained EarningsFY2013-14CET1FY14CET1 %FY14Shortfallfor 8%Shortfall(Rs cr)DilutionrequiredEPSimpactABVPSimpact
FEDBK 5,084-2,0457,129 13.3---0.0%0.0%J&KBK 3,444-2,0005,444 12.2---0.0%0.0%SIB 1,650-9932,644 11.1---0.0%0.0%DENABK 3,3561512,0845,591 10.5---0.0%0.0%HDFCBK 24,055-15,55739,612 10.4---0.0%0.0%INDBK 7,842-4,59312,436 10.4---0.0%0.0%ICICIBK 47,547-13,40960,956 9.9---0.0%0.0%CANBK 17,549-8,95926,508 9.8---0.0%0.0% ALLBK 7,5971,4624,92413,984 9.7---0.0%0.0%OBC 10,170-3,59313,763 9.3---0.0%0.0%BOB 19,0631,61312,74933,425 9.3---0.0%0.0%SYNBK 6,6408663,57111,078 9.0---0.0%0.0% ANDHBK 6,436-3,1599,595 8.9---0.0%0.0% AXSB 18,084-11,87529,960 8.6---0.0%0.0%PNB 18,9582,87512,81134,645 8.4---0.0%0.0%BOM 2,5099951,5665,069 8.4---0.0%0.0%BOI 15,2822,0838,21025,574 8.2---0.0%0.0%YESBK 3,683-3,0446,727 8.0---0.0%0.0%UNBK 11,0271,0055,18917,221 8.0---0.0%0.0%CRPBK 7,086-3,68110,768 7.80.22850.7-3.4%-1.7%UTDBK 3,5463051,6165,467 7.80.21592.3-4.7%-2.7%IDBI 12,0585,2935,77623,127 7.80.27177.1-3.7%-1.8%IOB 7,7751,9782,96012,713 7.60.47548.4-6.7%-3.8%UCOBK 4,8097592,7518,319 7.20.888011.2-10.5%-2.6%SBI 78,8127,90033,375120,087 7.01.016,4927.7-4.8%5.7% VIJAYA 3,2581471,1854,589 6.91.169411.9-12.3%-4.7%CENTBK 7,6311,0002,28210,913 6.41.62,67127.2-17.9%-2.5%
 
 Source: Company, Angel Research
Medium-term impact:
The immediate impact is restricted to few smaller banks (ofwhich, in case of the three most exposed banks vis. Central Bank, Vijaya Bank andUCO bank we have a Neutral / Reduce rating). However, in the medium-term inour view the Basel 3 guidelines imply significant capital shortage for the IndianBanking system. By the end of FY2018, as the minimum CET1 requirement itselfmoves to 8%, we believe most of the banks would look to maintain closer to 9-10% CET1 capital adequacy. At the same time, if we factor in 17% asset growth for the sector between FY2014-18E and assume that average ROEs for the sector improve by 100-200bps, thenbased on retained earnings alone, CET1 is estimated to decline to 7.9% from thecurrent 9.1% estimated for FY2012. Even if on average, the sector is to maintain9% CET1 this implies a capital shortage of about
 ` 
1.4lakh cr and at 10% CET1, ashortage of Rs2.6lakh cr. This amounts to 14% and 27% of the sector’s networth,respectively, or an additional equity requirement of 2.5%-4.5% every year for thenext 6 years.

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->