Nik's Diary
The Indian market opened on a weak
note tracking negative cues from SGX Nifty which is trading lower. A majority
of the Asian indices too are trading in the red following data points from
Europe that signal that the region’s recession is deepening, and on concerns
that China will do more to control economic growth. The US market ended lower
as traders continued to cash in on the recent strength in the markets, which
lifted the major indices to multi-year highs. The concerns about the outlook
for monetary stimulus from the Federal Reserve also weighed on stocks along
with the disappointing reports on weekly jobless claims and Philadelphia
manufacturing activity. According to the Labor Department report, initial
jobless claims climbed to 362,000 in the week ended February 16th vs
expectations of 359,000. Separately, the Philadelphia Federal Reserve report
stated that the regional manufacturing activity fell to a negative 12.5 in
February from a negative 5.8 in January. However, the National Association of
Realtors released a report showing that existing home sales saw a modest
rebound (up 0.4%) in January 2013. Back home in India, markets suffered their
biggest losses in seven months on Thursday amid a global sell-off, after
minutes from the latest Federal Reserve policy meeting stoked concerns
the central bank may scale back its bond-buying program sooner rather than
later. Going ahead, market participants would keep an eye on the proceedings in
the Budget session.
Markets impacted by
unfavorable global cues
Equity indices
plunged to near two-month lows on Thursday as global markets nose-dived on
concerns related to the continuance of quantitative easing in the US, which,
along with the European Union, is battling disappointing economic
data. Benchmark indices posted their biggest single-day fall in nearly
seven months even though foreign institutional investors bought shares worth
over $220 million, taking the year-to-date tally to over $8.1 billion. The
Sensex slid 1.62% or 317.39 points to close at 19,325.36, while the broader
Nifty declined 1.53% or 90.80 points to settle at 5,852.25 points. The broader
markets also witnessed a sharp correction, with the BSE Mid-Cap and Small-Cap
indices losing nearly 1.7% each. Even before Thursday’s fall, the markets
had been weak despite FII flows being double the levels seen in the
corresponding period of 2012 (see graph). The Sensex has barely budged this
year compared to the sharp move of 18% seen in 2012. Asian indices like
Japan’s Nikkei, Hong Kong’s Hang Seng, China’s Shanghai Composite and South
Korea’s Kospi lost 1-3% on similar concerns of liquidity tightening in the US
and China. Most European indices such as the UK’s FTSE 100, France’s CAC 40 and
Germany’s DAX were down nearly 2% at the time of going to press. The
markets turned jittery as minutes from the US Federal Open Market Committee
meeting revealed that “many” members were concerned about the costs and risks
of further asset purchases. Further, US housing starts for the month of January
fell sharply below expectations. In Europe, services and manufacturing
contracted in February at a much faster rate than expected. Analysts
stated that it was a bad day for global equities and investors needed a reason
to correct. “I am a little less worried about the US Fed minutes. The US
markets came off five-year highs and there is nothing bad about a healthy
correction. The same is true for the Indian markets. We have had a great run
from September to January and we do not foresee any change in fundamentals. We
do not hear any alarm bells are not ringing as of now,” said Andrew Holland,
CEO, Ambit Investment Advisory. According to a research head and market
strategist of a US-based financial services group, Thursday’s fall in Indian
equities had no domestic context. “It was an overnight risk off and bad
economic data. In such a scenario, it is going to be hard for central banks in
the US and EU to pull out liquidity support. The dollar would strengthen and
worsen the situation in global equities. It is not an easy decision to pull out
monetary easing,” he said on condition of anonymity. Market watchers said
the sharp correction ahead of the Union Budget would leave some room for
upside. Historically, markets have corrected after the budget and the chances
of positive surprises are more, they explained. Shares of metals, banking, and
real estate companies were among the worst hit, while all main sectors finished
in negative territory. Market breadth was weak, too, with nearly 2,000 stocks
losing ground as against only 904 gainers. Source: FinancialExpress
GSM subscribers’
addition in January 2013 stood at 0.4mn
Idea added the highest number of
subscribers in January at 2.5 million. The company also has the best visitor
location register (VLR) ratio in the industry. Airtel followed by
adding 2.3 million subscribers while Vodafone added a marginal 0.2 million.
These three operators were the only incumbents to see substantial growth in
their subscriber base. "We believe with stricter TRAI norms in place
and reduction of free/discounted minutes by operators, the growth in subscriber
base would be largely active,'' said ICICIdirect. The addition
of subscribers by incumbents post adherence to stricter KYC norms by TRAI
is a positive sign as majority of the subscribers added are expected to be
active. Also, with incumbents reducing free/discounted minutes, an
ARPM expansion for the industry is in sight, it said. The Telecom Commission has
recommended that operators with BWA spectrum in 2300 MHz be permitted to
offer voice along with data services for a payment of license fees of
Rs 16.50 billion. This move would be beneficial for Reliance Infocomm,
which has pan-India BWA spectrum. However, this move could attract litigation
from otsher operators as at the time of BWA spectrum auctions, the spectrum was
only allowed to be used for data. Now with voice being allowed, the spectrum
would be considerably cheaper than 3G spectrum. ''Any competition
from Reliance in the voice market would be a risk to our call of ARPM expansion
for the industry and an expected industry wide tariff hike to combat the spectrum
related outgo for all operators. We maintain our target price of Rs
385, Rs 120 and Rs 69 on Bharti, Idea and RCom and rate
them as strong BUY, HOLD and HOLD, respectively,''' it added. Source: Myiris
ABB - RU3QFY2013
For 4QCY2012, ABB India’s (ABB)
top-line and bottom-line performance was below our expectations. Top-line
declined by 5.3% yoy to `2,082cr, mainly on account of an 18% yoy decline
in revenues from the power system segment to `599cr. ABB's operating margins
continue to remain under pressure, coming in at 3.2%, due to lower margins in
power systems and the process automation segment. Cost over-runs due to project
delays and delay in payment of receipts have resulted in margin erosion.
Consequently, ABB's bottom-line sharply declined yoy to `17cr (against
`64cr in 4QCY2011). Source:
Angel Brokimg
Gujarat Gas -
RU3QFY2013
Gujarat Gas reported its 4QCY2012
results. The company’s top line increased 17.9% yoy to `756cr mainly on account
of higher realization partially offset by lower volumes. Natural gas volume
sold declined by 14.4% yoy to 270mmscm during the quarter. The decline was
mainly in the industrial PNG segment. The company’s cost of goods sold
increased by only 5.7% yoy to `603cr. Hence, EBITDA grew by 385.7% yoy to
`108cr aided by lower other expenses and muted staff costs. Other income
declined by 47.0% yoy to `10cr. Consequently company’s net profit grew by
187.5% yoy to `69cr. The company stated that it has received the sanction of
the PNGRB to lay city gas distribution pipelines in Surat, Bharuch and
Ankleshwar. Source: Angel Brokimg
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