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Fundamentals - December 24, 2012


Nik’s Diary

The Nifty was expected to open in green due to positive start to most Asian Indices. However, there is a huge pessimism in the markets due to the ongoing worries about the Fiscal Cliff. The pessimism took an exponential hike when the talks were broken down between the Democrats (Obama) and the House Speaker John Boehner. The White House and Congressional leaders have until January 1 of the New Year to work out a budget deal. Hence prepare yourself for an exciting first week of the New Year. The matter of fact is that Washington’s news has overshadowed the batch of upbeat economic data, including a report showing a bigger than expected increase in durable goods orders which increased by 0.7% in November following a 1.1% increase in October. The Commerce Department also released a separate report showing a much bigger than expected increase in personal income in November. Traders are likely to keep a close eye on developments in Washington as the fiscal cliff deadline approaches. The budget negotiations are likely to once again overshadow a batch of economic data, including reports on new home sales, consumer confidence, and Chicago-area business activity.

CBI charges Vodafone, Bharti in telecom case: The CBI on Friday filed a chargesheet against Bharti Airtel, Vodafone and former Secretary of the Department of Telecom Shyamal Ghosh for alleged irregularities in allocating additional 2G spectrum in 2002. No promoter of any telecom company has been named in the charge sheet. The CBI has alleged that the decision to allocate additional spectrum to mobile companies in 2002 was a conspiracy to benefit the telecom companies. It has pegged the loss to the Government at `846cr. This development adds to the other regulatory overhangs going on in the Indian telecom sector.
Oil ministry to allow Cairn India to further explore: Rajasthan oilfields Media reports suggests that the oil ministry has decided to allow Cairn India to further explore its Rajasthan oilfields and this would help the company raise its output by more than 70%.  Buy Cairn Target price of 375.
Apollo Tyres issues warrants to promoters: Apollo Tyres (APTY) has issued 5mn warrants to promoter group entity, Sacred Heart Investment at a price of `86.2/warrant. The issue of warrants to promoters is on the expected lines as the company had already received board’s approval and shareholders nod to issue convertible warrants up to 27.5mn to the promoter’s. At `87, the stock is trading at 5.9x FY2014E earnings. Long Term Target Price ’96.

 Economic and Political News:
„ FDI inflows jump 65% to US$1.94bn in October 2012
„ S&P expects India's economic growth at 6.5% in 2013
„ Environment clearance issue for coal blocks to be examined
„ FIIs pour US$3.4bn in Dec, inflows cross US$23bn in 2012
„ Government may put 3% holding in public sector ETF
„ India Inc's equity mop-up crosses `30,000cr in 2012 

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