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Fundamentals March 15, 2013


Nik's Diary
Indian markets opened marginally in the red tracking SGX Nifty, which is currently trading lower by ~0.2%. Most of the Asian markets are trading in the positive territory with gains in the range of 0.1% to 0.8%. US stocks moved higher on Thursday buoyed by upbeat employment data. The strength on Wall Street came following the release of a report from the Labor Department which showed an unexpected drop in initial jobless claims for the week ended March 9. The report showed that initial jobless claims fell to 332,000, a decrease of 10,000 from the previous week's revised figure of 342,000 and much below the estimates of 350,000. European markets were trading higher on Thursday, ahead of a two-day meeting of European policy makers that begins in Brussels in which EU leaders are expected to endorse plans for structural assessments of national budgets and discuss a bailout for Cyprus. Meanwhile Indian markets reversed the declines in the past three trading sessions, with the key benchmark indices Sensex and Nifty posting gains of ~1%. The Indian markets rose on hopes of rate cut after WPI inflation data showed the core inflation surprisingly fell to 3.8% in February, its lowest level since March 2010.

WPI inflation at 6.8% for February 2013
Ahead of the RBI’s monetary policy review on March 19th, the whole sale price index inflation stood at 6.84% in February 2013, as against 7.56% in the corresponding period in the previous year. Inflation was declining for four months in a row till January. In January 2013, WPI inflation was at 6.62%. The cumulative inflation in the current financial year in the April-February period is 5.71% compared to the figure of 6.56% in the corresponding period of the previous year. The Inflation in manufactured products (Weight-age: 64.97%) was at 0.1% and that of fuel and power (Weight -age: 14.91%) was at 3%. The inflation in 'Food Articles' which has a weight-age of 14.3% in the WPI basket stood at 0.2%, and the index for 'Non-Food Articles' group was at 1.6%. The index for 'Minerals' group registered a reading of 0.9%. The inflation in onions was as high as 154.33%. The price rise in rice was at 18.84 and that of wheat was at 21.63. The price of vegetables rose by 12.11% and that of potatoes rose by 45.99%. While the inflation in egg, meat and fish stood at 12.85%, the price of milk rose up 4.57% and that of fruits went up by 7.02%. Source: Business Standard

GSM operators lose ~2mn subscribers in February 
The GSM operators lost 1.97 million subscribers in February, after a modest user addition during the previous month, taking its total base to 655.59 million. This is a 0.30 per cent fall from previous month, according to data compiled by GSM operators’ body Cellular Operators’ Association of India (COAI). The GSM operators added 0.4 million users in January 2013, arresting losses of previous two months. “The fall is due to shutting down of services by certain operators, while the subscriber verification initiatives have almost stabilised. Some of the subscribers were picked up others, but not all,” COAI Director-General Rajan S. Mathews said. Uninor, which closed down operations in Mumbai on February 16, lost 8.35 million subscribers during the month. The company, which had a total of 31.77 million users, closed down operations following the Supreme Court order that operators who did not win spectrum in the previous auction should close down services. Aircel lost 6,98,506 users during the month, dragging its customer base to 60.87 million. Videocon and Mahanagar Telephone Nigam Ltd were the other operators to record subscriber base erosion, with the companies losing 196,935 and 2,03,878, respectively. Bharti Airtel continued to the country’s leading operator by subscribers, with the New Delhi-based company garnering a total of 186.62 million users. It added 2.43 million subscribers, increasing its market share to 28.47 per cent, during the reporting month. Vodafone India added 2.19 million users taking its total user base to 149.89 million, while Idea Cellular added 2.86 million subscribers increasing its subscriber base to 119.26 million. Source: Business Line

Infosys bags order from BMW
In a deal that will help it gain more share in the European market, Infosys BSE 0.63 %announced that it has won a five-year deal from BMW Group for application basis infrastructure management services. Infosys will open a new delivery centre in Munich as part of its global service delivery team and cover services, such as maintenance and operations of the web infrastructure, content management, SAP Basis operations, IT for IT (the company's internal IT system) and the business intelligence systems of BMW Group. The second-largest IT services firm in the country garners around 24% of the revenues from Europe, where it is looking for more growth. Last September, it acquired Swiss consulting firm,Lodestone, for over $350 million (Rs 1,930 crore). In the third quarter of fiscal 2013, the revenues from Euro went up 16.6% sequentially and 14.4% on constant currency terms. This was a reflection of the business gain through the acquisition. "Our new delivery centre in Munich will help us achieve this objective for BMW and allow us to expand our local presence in a key growth market," said Ashok Vemuri, global head of manufacturing and engineering services at Infosys, Overall Europe contributes a little under 30% of the $76 billion in exports that the Indian IT-BPO industry is expected to clock in the year to March 2013, with most of it coming from the UK and Nordic region. Source: Economic Times

Punj Lloyd bags `314 cr offshore contract
Infrastructure major Punj Lloyd today said it has bagged a contract worth Rs 314 crore ($57.75 million) from Al-Khafji Joint Operations for an offshore project in Al-Khafji, Saudi Arabia. “The project, worth Rs 314 crore, is scheduled for commissioning in September 2014,” it said in a statement. Al-Khafji Joint Operations is a joint operation of two companies, Aramco Gulf Operations Company Ltd (AGOC) of Saudi Arabia and Kuwaiti Gulf Oil Company (KGOC), for oil and gas exploration development and production in the offshore area of the partitioned neutral zone between Saudi Arabia and Kuwait. “Middle East has a huge potential in the offshore space and this project marks our entry into this market. With our extensive expertise of offshore pipelines and platforms, self owned technologically advanced barges, we are committed to delivering this project to out client’s satisfaction,” Punj Lloyd’s Director P K Gupta said. The scope of work for the project entails detail design, engineering, procurement, testing, transportation and construction/ installation of a new 20” OD crude transmission line, 40 km submarine rigid pipeline, mechanical completion among others, the company said. “The purpose of this project is to install a new crude transmission pipeline as a replacement for the existing transmission line,” it added. With this contract, the order backlog for the Punj Lloyd group on a consolidated basis has gone up to Rs 24,004 crore, “reflecting the total value of unexecuted orders as on December 31, 2012 and orders received after that day”, the company further said. Punj Lloyd is a leading engineering, procurement and construction company, offering services in energy and infrastructure sectors along with engineering and manufacturing capabilities in defence sector. Source: Business Line

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