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.