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Market Outlook 010612

Market Outlook 010612

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Published by Angel Broking
Market Outlook 
June 1, 2012

Dealer’s Diary
The domestic markets are expected to edge lower, tracing negative opening in most of the Asian bourses and the SGX Nifty, after China’s manufacturing and U.S. economic data missed estimates, adding to concern the world’s two largest economies are slowing. Globally, US markets moved sharply lower in early trading on Thursday as traders reacted negatively to a another batch of U.S. economic data, including reports that provided further signs of sluggish
Market Outlook 
June 1, 2012

Dealer’s Diary
The domestic markets are expected to edge lower, tracing negative opening in most of the Asian bourses and the SGX Nifty, after China’s manufacturing and U.S. economic data missed estimates, adding to concern the world’s two largest economies are slowing. Globally, US markets moved sharply lower in early trading on Thursday as traders reacted negatively to a another batch of U.S. economic data, including reports that provided further signs of sluggish

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Published by: Angel Broking on Jun 01, 2012
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12/14/2013

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Market Outlook 
 
June 1, 2012
 
 www.angelbroking.com
 
Market Outlook 
 
June 1, 2012
 
Dealer’s Diary 
The domestic markets are expected to edge lower, tracing negative opening inmost of the Asian bourses and the SGX Nifty, after China’s manufacturing and U.S.economic data missed estimates, adding to concern the world’s two largesteconomies are slowing.Globally, US markets moved sharply lower in early trading on Thursday as tradersreacted negatively to a another batch of U.S. economic data, including reports thatprovided further signs of sluggishness in the labor market. Selling pressure re-emerged in late-day trading resulting in a lower close. The European markets gaveback their early gains yesterday and largely finished in negative territory, followingthe release of the weaker than expected U.S. employment data, the downwardly revised GDP result and the sharp decline in the Chicago PMI result. Meanwhile,ECB President Mario Draghi on Thursday said that the bank cannot fix the turmoilin the currency bloc and urged Eurozone leaders to come up with a 'vision' foryears ahead.Indian markets fell sharply on Thursday, extending the previous session's losses,after government data showed that the country's 4QFY2012 GDP slumped to anine-year low of 5.3%, reflecting weak business sentiment, high fiscal and currentaccount deficits and government policy inaction.
Markets Today 
The trend deciding level for the day is 16,194 / 4,919 levels. If NIFTY trades abovethis level during the first half-an-hour of trade then we may witness a further rally up to 16,302 – 16,385 / 4,954 – 4,985 levels. However, if NIFTY trades below16,194 / 4,919 levels for the first half-an-hour of trade then it may correct up to16,111 – 16,003 / 4,889 – 4,853 levels.
Indices S2 S1 PIVOT R1 R2
SENSEX 16,003 16,111 16,194 16,302 16,385NIFTY 4,853 4,889 4,919 4,954 4,985
News Analysis
 
India’s 4QFY2012 GDP grows at weakest pace in ~9 years
 
Cabinet approves new telecom policy 
 
BHEL bags
 ` 
1,143cr order from NTPC
 
MphasiS 2QFY2012 Result Preview
Refer detailed news analysis on the following page
 
Net Inflows (May 29, 2012)
`
cr Purch Sales Net MTD YTD
FII 1,593 1,405 187 (974) 42,488MFs 241 363 -122 360 (5,741)
FII Derivatives (May 31, 2012)
`
cr Purch Sales Net Open Interest
Index Futures
3,773 5,025 (1,252) 6,755
Stock Futures
5,646 5,500 146 19,890
Gainers / Losers
Gainers LosersCompany Price (
`
)
chg (%)
Company Price (
`
)
chg (%)
Bank of India 340
6.6
Suzlon Energy 18
(8.6)
Dena Bank 92
5.7
United Spirits 564
(7.9)
Uco Bank 69
5.6
 Amtek Auto-$ 99
(4.7)
 Asian Paints 4,035
5.6
Tata Motors 233
(4.2)
Central Bank 76
5.1
ICICI Bank 784
(4.0)
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex
(0.6)
(93.6) 16,219
Nifty 
(0.5)
(26.5) 4,924
MID CAP
0.4
21.0 5,908
SMALL CAP
(0.6)
(36.2) 6,271
BSE HC
(0.1)
(4.9) 6,645
BSE PSU
0.3
19.9 6,760
BANKEX
(0.9)
(95.3) 10,885
 AUTO
(2.0)
(177.1) 8,873
METAL
(0.2)
(21.5) 10,106
OIL & GAS
0.1
3.4 7,588
BSE IT
0.4
19.5 5,666
Global Indices
Chg (%)
(Pts) (Close)
Dow Jones
(0.2)
(26.4) 12,393
NASDAQ
(0.4)
(10.0) 2,827
FTSE
0.5
23.6 5,321
Nikkei
(1.1)
(90.5) 8,543
Hang Seng
(0.3)
(60.7) 18,630
Straits Times
(0.4)
(11.4) 2,773
Shanghai Com
(0.5)
(12.4) 2,372
Indian ADRs
Chg (%)
(Pts) (Close)
INFY
(1.0)
(0.4) $42.1 WIT
(0.5)
(0.0) $8.6IBN
(0.4)
(0.1) $28.2HDB
(3.3)
(0.9) $28.0
Advances / Declines BSE NSE
 Advances
1165
622Declines
1,449
819Unchanged
104
57
Volumes (
`
cr)
BSE 1,783NSE 16,178
 
 
 www.angelbroking.com
Market Outlook 
June 1, 2012
India’s 4QFY2012 GDP grows at the weakest pace in ~9 years
Economic slowdown clearly evident:
The Indian economy grew at its weakest pacein nearly nine years in 4QFY2012, suggesting the impact of high inflation andinterest rates as well as added supply constraints and execution slowdown due tothe government’s policy impasse. India's gross domestic product (GDP) grew by 5.3% yoy in 4QFY2012 in comparison to 9.2% yoy expansion witnessed in4QFY2011, due to continued poor performance of the manufacturing andagriculture sectors. The reading was much lower than Bloomberg’s survey ofeconomists at 6.1% and added to the prevailing negative sentiments in themarkets. GDP growth for FY2012 also moderated to 6.5% from 8.4% growthregistered in FY2011.
Farm output growth declines; manufacturing declines:
During 4QFY2012, themanufacturing sector’s output declined by 0.3% yoy from 7.3% registered in4QFY2011. Growth in farm output also dipped to meager 1.7% yoy from 7.5%yoy recorded in 4QFY2011. Mining and quarrying production improved by 4.3%yoy during the quarter, as against subdued growth of 0.6% yoy in 4QFY2011.Growth in the construction sector also slowed to 4.8% yoy from 8.9% yoy in4QFY2011.
Services sector growth also moderates this time:
Growth momentum moderated inthe trade, hotels, transport and communications segments (grew by 7.0% yoy asagainst 11.6% witnessed in 4QFY2011) and community, social and personnelservices (grew by 7.1% yoy from 9.5% registered in 4QFY2011). Growth inbusiness services including insurance and real estate remained strong, however,with an increase of 10.0% yoy in 4QFY2012 (10.0% in 4QFY2011 as well).Overall, services sector growth moderated to 7.8% yoy during 4QFY2012 from10.5% registered in 4QFY2011.
Capex cycle shows signs of turnaround; private consumption remains moderate:
 Capex cycle for India Inc., which had slowed down considerably over the past fewquarters, showed signs of improvement. Gross fixed capital formation (GFCF),which had dipped by 0.3% yoy in 3QFY2012, increased by 3.6% yoy during thequarter. Also, as a result of high inflation, private consumption expenditure growthremained moderate (6.1% yoy in 4QFY2012 as against 6.4% in 3QFY2012).
 5.3% reading increases the probability of further monetary easing:
The
 
ReserveBank of India (RBI) in its latest monetary policy cited slowdown in growth andheadroom provided by moderating core inflation as the primary motivators behindthe larger-than-expected reduction in policy rates. In our view, the recent weak setof economic data (IIP declined by 3.5%, moderation in GDP growth to 5.3% andweakening global macro scenario) improves the probability of further rate cuts inthe next monetary policy due in June.
 
 
 www.angelbroking.com
Market Outlook 
June 1, 2012
Exhibit 1:
 
Component-wise GDP growth
Industry (
`
cr) 4QFY12 3QFY11
% chg
FY2012 FY2011
% chg
 Agriculture, Forestry & Fishing 193,955 190,778
1.7
728,668 709,104
 2.8
Mining & Quarrying 30,798 29,520
 4.3
108,468 109,422
(0.9)
Manufacturing 208,999 209,523
(0.3)
793,468 774,162
 2.5
Electricity, Gas & Water Supply 24,839 23,684
 4.9
98,105 90,946
7.9
Construction 108,385 103,378
 4.8
404,617 384,199
5.3
Trade, Hotels, Transport & Commn. 391,527 365,994
7.0
1,462,774 1,330,455
9.9
Fin., Ins, Real Estate & Business Services 243,294 221,114
10.0
931,715 849,995
9.6
Community, Social & Personal Services 193,275 180,493
7.1
674,703 637,675
5.8
GDP at factor cost 1,395,072 1,324,484
5.3
5,202,518 4,885,958
6.5
 Source: CSO, Angel Research
Exhibit 2:
 
GDP component-wise yoy growth trends
Industry (%) 4QFY12 3QFY12 2QFY12 1QFY12 4QFY11 3QFY11
2QFY11
1QFY11
 Agriculture, Forestry & Fishing 1.7 2.8 3.1 3.7 7.5 11.0 4.9 3.1Mining & Quarrying 4.3 (2.8) (5.4) (0.2) 0.6 6.1 7.3 6.9Manufacturing (0.3) 0.6 2.9 7.3 7.3 7.8 6.1 9.1Electricity, Gas & Water Supply 4.9 9.0 9.8 7.9 5.1 3.8 0.3 2.9Construction 4.8 6.6 6.3 3.5 8.9 8.7 6.0 8.4Trade, Hotels, Transport & Commn. 7.0 10.0 9.5 13.8 11.6 9.7 10.6 12.6Fin., Ins, Real Estate & Business Services 10.0 9.1 9.9 9.4 10.0 11.2 10.4 10.0Community, Social & Personal Services 7.1 6.4 6.1 3.2 9.5 (0.8) 4.5 4.4
GDP at factor cost 5.3 6.1 6.7 8.0 9.2 8.2 7.6 8.5
 Source: CSO, Angel Research
Cabinet approves new telecom policy
The Cabinet, yesterday, approved National Telecom Policy (NTP) 2012 thatproposes to abolish roaming charges on mobile phones and allow users to retainthe same number across the country. NTP 2012 aims to provide free roaming totelecom users and allow them to retain their mobile number even outside theircircles without having to pay any extra charge. However, consumers will have towait for some time before roaming charges are abolished and one-number-one-nation concept implements, as DoT will first workout modalities of the new schemebefore it is brought into force. NTP 2012 envisages increasing penetration oftelecom services in rural areas from the current level of ~39% to 70% by 2017and 100% by 2020. The new policy, which will separate licenses and airwaves andwill allow sharing of airwaves among carriers, also seeks to facilitate consolidationin the telecom industry. Pricing of airwaves is, however, not part of the telecompolicy and will be set through an open auction process.
BHEL bags
`
1,143cr order from NTPC
BHEL has bagged a
 ` 
1,143cr contract from NTPC for setting up a 500-MW powergenerating unit at its Vindhyachal Super Thermal Power Station in MadhyaPradesh. The order includes supply and installation of the main plant package(boilers, turbines and generators). The scope of work in the contract envisagesdesign, engineering, manufacture, supply and erection & commissioning of steam

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