May 23, 2011

T20 17th May 2011

Global Markets

1. S&P 500 experienced consolidation during the week just above its support level of 1324. SP Chart

2. US Dollar: Gains on the back of falling oil prices and European crisis. US Dollar Chart

3. Crude prices fall on worries about interest rate hikes in china, higher the expected oil inventories in the US and the European debt crisis. Crude Oil Chart

4. Gold prices under pressure due to strengthening of US dollar. Gold Chart

Economy

5. India’s headline inflation eased to 8.66% in the month of April, but the petrol hike and a further interest rate increase by the RBI might play spoilt sport.

6. Food inflation falls to 7.7% its lowest levels in 18 months mainly driven by the fall in prices of pulses and vegetables.

7. India’s IIP data rose to 7.3% for the month of March from a year earlier. The rise in the IIP numbers highlight a strong manufacturing sector but this may be temporary as a further rise in interest rates by the RBI will lead to a slowdown in growth.

8. Government hikes fuel prices by Rs. 5 per litre in order to take the load off oil marketing companies and bolster public finances. A ministerial panel is meeting later this week to decide on increase in prices of diesel, kerosene and cooking gas prices.

9. A new index series to measure industrial production has been approved by the central government to replace the current series of the index of industrial production (IIP). The new index will come into effect from June 10th taking the base year as FY05. The new IIP series will be more accurate and will help policy makers and industrial participants in taking decisions.

Indian Markets

10. Nifty in consolidation mode as assembly election results bring hope of a stable central government. Nifty Chart

11. FIIs sold shares worth a net Rs. 2921.9 cr in the month of May, 2011 to date; Domestic funds sold shares worth a net Rs 3721.1 for the same period.

Sector

12. Indian paint makers see demand waning in the coming months as reduction in demand from homes, offices and cars is seen hurting the industry. The industry is seen growing at a CAGR of 15% to 16%.

13. Global pharma majors are opting for the JV route to enter Indian markets as the see high valuation as deterrents for M&A deals. Through the JV option, the overseas firm gets easy access to the Indian market as the local partner has established distributors and vendors in place and is comfortable with regulations and politics. Some of the JV’s are Germany's Bayer Healthcare announced a joint venture with Zydus Cadila and in April, Sun Pharmaceutical Industries and US-based Merck & Co Inc entered into a joint venture to develop, produce and market generic drugs in emerging markets.

14. Airlines finally have something to rejoice about as crude prices come down and holiday traffic to tourist destinations are expected to grow at about 40% this year as compared to last year. Demand is not expected to be effected even though airlines plan to hike rates.

15. On 12th May, 2011 the government approved Rs. 20,001 crore in additional cash subsidies to state run oil companies to compensate them for the losses suffered in FY11. With this the government has paid a total of Rs. 40,912 crore to oil companies in FY11. The cash subsidies is more than half of the Rs. 78,000 crore loss that was suffered by 3 state run oil firms suffered due to selling auto and cooking fuel below import cost.

16. SKS micro finance moves to Supreme Court against the Andhra Pradesh governments microfinance act which tries to regulate the micro finance sector in the state. SKS claims that the state government has no power to regulate the sector as it falls under the central list and is not a state subject on which the Andhra Pradesh government could pass any act.

Stocks

17. JSW steel Q4 net profit rose by 30% as compared to the same period last year on the back of strong demand and retail sales. JSW steel Chart

18. Glenmark Pharma entered into a licensing agreement with global pharma major Sanofi which could see the company receive as much as $ 613 million in licensing fees. Glenmark Pharma Chart

19. Dr Reddy’s Q4 net profit rose by 101% driven by strong revenues from two key markets US and Russia. Dr Reddy’s Chart

Quotes

20. “A business that makes nothing but money is a poor business.”-- Henry Ford.

Global cues 17th May 2011

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May 11, 2011

T20 11th May - 2011

Global Markets

1. S&P 500 saw slight gains on encouraging job reports but lost out earlier due to a series of disappointing economic data. SP Chart

2. US Dollar: Gains as fears surrounding European debt crisis bears down on trader sentiment. US Dollar Chart

3. Crude prices on the rise again after a huge drop last week, following demand concerns. Crude Oil Chart

4. Gold prices suffer the largest weekly drop since Feb, 2009 on the back of profit booking. Gold Chart

Economy

5. Foreign Direct Investment (FDI) in India if down by 11% in March, 2011 to $ 1.07 billion from $ 1.2 Billion in the backdrop of financial crisis in Europe.

6. Indian government is nervous as they predict that a further rise in oil prices will clip 1% off its GDP growth predictions which stands between 8.5% to 9.25%.

7. The federation of Indian export organisations has wants the duty entitlement passbook scheme to stay as it as its withdrawal may lead to a fall in the exports of the country below $ 200 Billion.

8. Net interest margins (NIM) showed good growth of 3.81% in FY11 with a positive impact on profitability for most public sector banks.

9. Reserve Bank of India (RBI) has lowered has lowered economic growth projections to 8% for the current fiscal as it states that controlling inflation is its priority and that this will help create sustained growth over a long period.

Indian Markets

10. Nifty fall driven by rise in interest rate by 50 bps, which was higher than expected. Nifty Chart

11. FIIs purchased shares worth a net Rs. 1081.3 cr in the month of May, 2011 to date; Domestic funds sold shares worth a net Rs 4912.2 for the same period.

Sector

12. Indian banking sector is rejoicing as it witnesses a 22% rise in credit and a 17.5% rise in deposits which is a good indication of the up swing that is taking place in the Indian economy.

13. Oil Companies are positive after news of an up coming hike in petrol, diesel and cooking gas prices, but PSU oil refineries are further pushing for key initiatives which go beyond price hikes and duty cuts in order to stabilise the Indian fuels market.

14. Pharma exports have grown by 15% in FY11 to touch $10.3 Billion, major importers being US, Uk, Germany, South Africa and Russia. One of the key drives of this growth is the general improvement in macroeconomic factors in developed countries.

15. Private Airlines picked up 15,000 to 16,000 of Air India’s customers last week due to the strike that was called by pilots. This incident has left Air India with a huge loses and a severely damaged reputation which could lead to increase in passenger number for private players in the long run.

16. Car sales in India rose the slowest in two years in the month of April. The rise was just 13.2% from a year earlier as high interest rates, fuel prices and vehicle costs crimped demand.

Stocks

17. SKS Finance falls after its share price target was cut by more than half by JP Morgan. SKS Finance Chart

18. Shriram transport finance slides after Temasek holdings dropped plans to buy TPG’s Stake in the company. Shriram Chart

19. Hindustan petroleum rose on news of possible petrol price hike in coming days. Hindustan petroleum Chart

Quotes

20. “Money has never made man happy, nor will it; there is nothing in its nature to produce happiness. The more of it one has the more one wants.” -Benjamin Franklin

Global cues 11th May 2011

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May 04, 2011

T20 3rd May - 2011

Global Markets

1. S&P 500 gains on the back of good earnings report which eased fears regarding slowdown of economic growth. SP Chart

2. US Dollar: weakens further as US manufacturing declines in April, 2011. US Dollar Chart

3. Crude prices touching new highs after witnessing an escalation of Libyan crisis. Crude Oil Chart

4. Gold prices driven mainly by concerns on rising inflation. Gold Chart

Economy

5. The index of six core infrastructure industries has registered a growth of 7.4% of annual growth in March as compared to 6.8% for the same period last year. This growth is due to higher crude petroleum and steel production.

6. Exports grew by 37.6% in FY11 to end at $ 245.9 Billion easily surpassing the government’s yearly target of $ 200 billion. Asia, Latin America and Africa were the main contributors to this growth. Exports growth is expected to cross $ 300 Bn in FY12.

7. In a bid to check inflation the Reserve Bank of India (RBI) raised short term lending (REPO) rates by 50 bsp to 7.25% and reverse repo rates by 50 bsp to 6.25%. They also lowered India’s growth projection to 8 percent for the current fiscal.

8. The Reserve Bank of India (RBI) has indicated that India’s current account deficit could widen this fiscal because of spike in global oil prices. Oil constitutes one third of India’s total imports.

9. Inflation could come down to 7.78% this month on the back on a good monsoon and an increase in area under Rabi crops. March inflation stood at 8.98% and inflation for the country has been above 8% since Feb, 2011.

10. India's manufacturing growth picked up in April, 2011 it rose for the 25th consecutive month in April and at their strongest pace since November, 2010. The PMI rose to 58.0 from 57.9 in March. On the other hand China’s PMI fell to 52.9 in April from 53.4 in March.

Indian Markets

11. Nifty experiencing negative movements in response to interest rate hike by RBI. Nifty Chart

12. FIIs purchased shares worth a net Rs. 6,560.2 cr during April, 2011; Domestic funds bought shares worth a net Rs 62,496.6 cr for the same period.

Sector

13. Auto parts sector are concerned about shrinking profit margins despite witnessing a growth of 28% in FY11. The industry is grappling with rise in commodity prices and a withdrawal of Duty Entitlement Passbook (DEPB) which may affect exports of auto parts as it will make Indian auto parts uncompetitive in global markets.

14. State run oil refineries are in dire straits as they are losing Rs. 465 crore daily on account of selling diesel, kerosene and cooking gas a state fixed cheaper rates. At the moment state oil cos are losing a little more than Rs 8 per litre of petrol.

15. An opportunity has risen as Smaller; specialised software services firms are likely to see better pricing in FY12 as demand for the services they offer rises. Companies such as Hexaware, KPIT Cummins Infosystems, Persistent Systems and Polaris Software Lab are expected to see some improvement in pricing in the current fiscal.

16. Reliance group is in talks to buy the stake held by Bharti Enterprises in an Indian insurer joint venture with AXA Group. This highlights RIL’s keenness to enter the insurance business. Bharti AXA is a joint venture between Bharti Enterprises and AXA, Europe's second biggest insurer.

Stocks

17. Indian overseas Bank announced a Q4 net profit of Rs 434 crore a 241.7% growth as compared to 127 crore profit in Q4, FY10. Indian Overseas Bank Chart

18. Godrej consumer products Q4 profit up 54% at Rs 142 cr. Godrej Chart

19. Marico Q4 net profit up 40% at Rs 71.6 cr. Marico Chart

Quotes

20. “The art is not in making money, but in keeping it." - Proverb

Global Cues 3rd May - 2011

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