Market Outlook
July 4, 2012
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Market Outlook
July 4, 2012
Dealer’s Diary
The Indian markets are expected to open flat to positive tracing positive opening inmost of the Asian bourses and the SGX Nifty. Most of the Asian shares are tradinghigher in the opening trades on speculation that Chinese and European centralbankers will ease monetary policy.US markets, after initially showing a lack of direction, moved mostly higher overthe course of the abbreviated trading session on Tuesday. Strength that emergedon Wall Street was partly due to the release of a report from the Commercedepartment showing a bigger than expected increase in factory orders in the monthof May. The markets also benefited from news of strong sales by U.S. automakersin the month of June. Most of the European markets closed in the green again onTuesday, driven by hopes for a rate cut by the European Central Bank. The bank isexpected to announce its decision on interest rates on Thursday.Meanwhile, Indian markets briefly dipped into the red before rebounding to closemodestly higher, on the back of improved risk appetite and speculation concerningadditional stimulus measures from major central banks.
Markets Today
The trend deciding level for the day is 17,435 / 5,290 levels. If NIFTY trades abovethis level during the first half-an-hour of trade then we may witness a further rally up to 17,518 – 17,610 / 5,315 – 5,341 levels. However, if NIFTY trades below17,435 / 5,290 levels for the first half-an-hour of trade then it may correct up to17,343 – 17,259 / 5,264 – 5,239 levels.
Indices S2 S1 PIVOT R1 R2
SENSEX 17,259 17,343 17,435 17,518 17,610NIFTY 5,239 5,264 5,290 5,315 5,341
News Analysis
Telecom tribunal gives split verdict in 3G roaming case
MOIL raises prices by 12-15% for 2QFY2013
Lupin receives USFDA approval for Generic Ortho Tri-cyclen Lo Tablets
Ashok Leyland reports above-expectations volumes in June 2012
Refer detailed news analysis on the following page
Net Inflows (July 2, 2012)
`
cr Purch Sales Net MTD YTD
FII 6,933 3,038 3,895 3895 45,994MFs 322 543 (222) (222) (6,067)
FII Derivatives (July 3, 2012)
`
cr Purch Sales Net Open Interest
Index Futures
1,446 1,030 416 13,001
Stock Futures
1,245 1,397 (152) 23,936
Gainers / Losers
Gainers LosersCompany Price (
`
)
chg (%)
Company Price (
`
)
chg (%)
Mangalore Ref 60
8.4
PTC India 63
(2.2)
Sun TV Network 323
5.8
Castrol India 528
(1.8)
Essar Oil 59
5.8
Amtek Auto 106
(1.8)
Gujarat Fluo 421
5.5
Apollo Tyres 78
(1.8)
Idea Cellular 82
5.4
GMR Infra 25
(1.8)
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex
0.2
26.7 17,426
Nifty
0.2
8.3 5,287
MID CAP
0.5
29.7 6,239
SMALL CAP
0.8
52.7 6,668
BSE HC
0.2
11.0 6,916
BSE PSU
1.0
75.1 7,387
BANKEX
0.6
72.8 12,060
AUTO
0.2
21.0 9,426
METAL
0.8
83.5 10,934
OIL & GAS
0.6
51.8 8,147
BSE IT
(0.5)
(28.9) 5,721
Global Indices
Chg (%)
(Pts) (Close)
Dow Jones
0.6
72.4 12,944
NASDAQ
0.8
24.9 2,976
FTSE
0.8
47.1 5,688
Nikkei
0.7
63.1 9,067
Hang Seng
1.5
294.1 19,736
Straits Times
1.2
34.7 2,945
Shanghai Com
0.1
3.1 2,229
Indian ADRs
Chg (%)
(Pts) (Close)
INFY
1.4
0.6 $46.1 WIT
3.0
0.3 $9.3IBN
2.6
0.8 $33.3HDB
2.8
0.9 $34.0
Advances / Declines BSE NSE
Advances
1,680
896Declines
1,194
560Unchanged
89 59
Volumes (
`
cr)
BSE 2,063NSE 10,364
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Market Outlook
July 4, 2012
Telecom tribunal gives split verdict in 3G roaming case
Telecom tribunal TDSAT gave a split verdict in the 3G intra-circle roaming casewith its Chairman allowing operators' plea against the government’s order to stopthe service, while its member dismissed it. The two-member bench comprising itsChairman, Justice S B Sinha, and Member, P K Rastogi, differed in their findings.Justice Sinha allowed the telecom operators' plea against the government'sdirective to stop intra-circle 3G roaming saying that it was violative of naturaljustice. According to him, it was a violation of natural justice. Setting aside theDoT’s order to operators to stop ICR roaming, he asked DoT to start the procedureafresh by giving proper time to operators to respond. Rastogi, however, dismissedtelecom operators’ plea saying they cannot provide roaming. The chairman was ofthe view that the DoT had not followed the proper procedure and the operatorswere not given proper time to put their views. TDSAT has a sanctioned strength ofthree people, including the Chairman. However, due to retirement of its technicalmember, the tribunal now have two people, which led to the split verdict. Thetelecom enforcement, resource and monitoring (TERM) cell of the DoT had earliersaid that action must be taken against those operators that have entered into suchroaming deals, whereby a mobile operator without 3G spectrum is able to offerservices. The operators, on their part, have defended their action by saying that theDoT itself had clarified before the 3G auction that intra-circle roaming will bepermitted.Bharti Airtel got 3G licenses in 13 circles and paid
`
12,300cr for this. If Bharti hasto buy the spectrum at the 2010 3G auction prices in its remaining nine circles, itwill have to shell out
`
4,460cr. Idea paid
`
5,770cr for 3G licenses in 11 circles.Idea will have to spend
`
10,980cr for the remaining 11 circles. The telecom sectorcurrently remains surrounded by lot of regulatory uncertainties, which could bestructurally negative for the overall sector.
We maintain our Neutral view on thetelecom sector.
MOIL raises prices by 12-15% for 2QFY2013
MOIL has raised prices of manganese ore by 12-15% for 2QFY2013, dependingon various grades. MOIL had frequently lowered prices after January 2011 onaccount of oversupply of manganese ore in international markets. However,international manganese ore prices have increased in the past three months.Moreover, given the recent INR depreciation against the USD, the increase inmanganese ore price by MOIL does not surprise us. Further, given the 10% rise inthe stock price over the past three months,
we maintain our Neutralrecommendation on the stock.
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Market Outlook
July 4, 2012
Lupin receives USFDA approval for Generic Ortho Tri-cyclen LoTablets
Lupin’s subsidiary, Lupin Pharmaceuticals Inc. has received approval for itsNorgestimate and Ethinyl Estradiol Tablets, 0.18 mg/0.025 mg, 0.215 mg/0.025mg, and 0.25 mg/0.025 mg from the U.S. FDA (FDA). Lupin’s Norgestimate andEthinyl Estradiol Tablets are the AB-rated generic equivalent of
Ortho Tri-cyclenLo
® Tablets, 0.18 mg/0.025 mg, 0.215 mg/0.025 mg and 0.25 mg/0.025 mg,of Janssen Pharmaceuticals, Inc. Norgestimate and Ethinyl Estradiol Tablets areindicated for the prevention of pregnancy in women who elect to use oralcontraceptives as a method of contraception.
Ortho Tri-cyclen Lo
® Tablets hadannual U.S. sales of ~US$421mn for the 12 months ending March 2012(IMS Health sales data).
We maintain our Buy recommendation on the stock with atarget price of
`
647.
Ashok Leyland reports above-expectations volumes in June 2012
Ashok Leyland (AL) registered strong growth of 27.9% yoy (18.5% mom) in June2012, ahead of our expectations, primarily driven by incremental volumes fromthe recently launched small commercial vehicle
Dost
(2,725 units, up 18.2%mom). While commercial vehicle sales (ex.
Dost
) declined by 6.1% yoy, they surged by 18.5% sequentially led by gradual pick-up in demand in the southernregion. AL has witnessed strong growth traction in 1QFY2013, where volumeshave grown by 38.5% yoy, mainly led by the success of
Dost
. We expect salesmomentum in
Dost
to continue going ahead and expect it to post total sales of30,000 units (7,383 units in FY2012) in FY2013, enabling AL to register 29.2%yoy growth for the fiscal. At
`
25, the company is trading at attractive valuations of8.3x FY2014E earnings.
We maintain our Buy rating on the stock with a targetprice of
`
33.
Economic and Political News
Diesel prices should also go on a float, says Basu
Inflation expected to soften from mid-October: Basu
Deficient rains not worrisome for paddy: Minister for Agriculture
Corporate News
PMO asks Coal Ministry to help CBI in mines allocation probe
TDSAT gives notice to DoT on Aircel's plea for more spectrum
Home ministry okays paramilitary forces for SAIL mine
LIC hikes stake in Cairn India to over 5%
SAIL, Kobe to seal pact for
`
1,500cr plant next week
Bharti Airtel launches cloud computing services
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
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