Key developments during the week
• Mar WPI inflation 6.89%, slightly below RBI projection
• India Mar CPI combined inflation rate 9.47% vs 8.83% Feb
• RBI cuts Repo Rate by 50 bps to 8.00% with immediate
effect and leaves Cash Reserve Ratio unchanged at 4.75%
• RBI says Bank Rate adjusts to 9% with immediate effect
• PM says Assam's Bongaigaon thermal power plant likely by Oct 2013
• Govt OKs defence ops' FDI plans of Ashok Leyland, M&M
• Eicher Motors launches truck in light & medium duty segment
• KEC International gets orders worth 14.16 bln rupees
• Trade secy says FY12 exports up 21% at $303.7 bln; imports rise 32%
• Kingfisher Airlines gets DGFT approval for direct import of ATF
• Govt won't invoke General Anti‐Avoidance Rule if capitaltax paid
• Cement cos cut prices in Gujarat, Delhi by 5 rupees/50 kg Wed
• Lupin resumes sales of generic Fortamet tablets in US
• Aptech ties up with GAIA Management for Japanese foray
• US Supreme Court rules in favour of Sun Pharma arm in Prandin lawsuit
• SpiceJet in talks with oil mktg co's to start importing ATF
• India crude oil basket falls to 62‐day low of $116.74 per bbl Mon
• RComm, Google in pact to market android mobile devices in India
• Tata Motors group Mar global wholesales at 139,655 units, up 26%
• Aptech, Hungama Digital in pact for education solutions
• Alstom Projects consortium gets order worth around 18 mln euros
• Reliance Jan‐Mar net profit 4236 cr rupees vs 5376 cr rupees (YoY).
Domestic events week ahead
• Apr 24: Budget session of Parliament to resume after recess.
Global events week ahead
• Apr 23: Flash Manufacturing and Services PMI of Europe, German Flash Manufacturing and Services PMI.
• Apr 24: G7 Meetings.
• Apr 25: Crude Oil Inventories , FOMC Statement and Federal Funds Rate of US.
• Apr 26: German Prelim CPI m‐o‐m, Unemployment Claims of US.
• Apr 27: Advance GDP q‐o‐q of US, French Consumer Spending m‐o‐m, Monetary Policy Statement of Japan.
Weekly Sector Outlook and Stock Picks
Pharma Stocks Outlook: Seen flat with positive bias this week
Shares of pharmaceutical companies are seen trading flat with a positive bias in the week starting Monday. Since the start of this month, shares of pharmaceutical companies have out performed other indices, and the trend is expected to continue as most companies in the sector are expected to post good results.The stocks are also likely to take cues from the broad market. Jan‐Mar corporate earnings will also affect market sentiment in the coming sessions.
Capital Goods sector ‐ To remain weak on BHEL downgrade Shares of capital goods and engineering companies are likely to remain weak over the next five sessions in the absence of any positive triggers. The BHEL stock has lost nearly 6% in the last two sessions after downgraded the company's ratings. Shares of Larsen & Toubro may also fall due to the negative sentiment in the capital goods and engineering space post the downgrade on BHEL.
FMCG Sector ‐ Trend bullish this week; Jan‐Mar earnings eyed Shares of fast‐moving consumer goods companies are seen outperforming benchmark stock indices in the week ahead as investors expect these companies to announce strong Jan‐Mar earnings. Hindustan Unilever, Marico, and Dabur India are scheduled to release their quarterly earnings on May 1, May 3, and Apr 30, respectively. The sales volumes of ITC and Hindustan Unilever are expected to have grown 8‐9% from a year ago in Jan‐Mar. Recently, the companies hiked prices of their products in various categories, which could boost their margins to some extent going forward by offsetting the impact of rise in input costs. Hindustan Unilever's growth in the personal care products category will be watched as this segment contributes 50% to the company's bottomline. Competition in this segment has increased over the past six months. Marico's Jan‐Mar earnings are expected to reflect its foray into the body lotions segment, and the price hikes the company took in a key product category, edible oils. There are concerns over ITC's ability to maintain its cigarette sales volumes as it raised prices by 5‐15% across Gold Flake, and Navy Cut brands earlier this month. Last week, the BSE FMCG index gained 2.98% while benchmark indices, the National Stock Exchange's Nifty and the BSE's Sensex gained 1.6%.
Auto sector ‐ May extend gains this week; Tata Motors top pick
Automobile stocks are likely to extend their gains this week with banks announcing a cut in the interest rates, including those on auto loans. The upside could, however, be capped by some profit booking in the stocks during the week. The broad market has been moving in a range of 200 points, but auto stocks have outdone the market and should perform in positive territory this week also. Tata Motors Ltd, which rose over by 9% in the last five trading sessions, is likely to trade up this week as well. The company's differential voting rights shares have also seen a sharp 15% increase in their value last week on expectations of better dividend payout by the company as the company's global sales showed strong growth. Mahindra & Mahindra Ltd also got a lift on Friday from the government approving the company's proposal for foreign direct investment into its joint venture for defence systems. Maruti Suzuki Ltd could see some movement in the latter half
of the week, as the company would announce its Jan‐Mar results on Apr 28.
Steel Sector ‐ Seen mixed; Jindal Steel earnings eyed Shares of major steel companies are seen mixed this week, with shares of Jindal Steel and Power Ltd remaining in focus as the company will announce its Jan‐Mar earnings on Friday. Shares of steel companies such as JSW Steel and Kalyani Steels gained over the past five sessions after Supreme Court allowed mining to resume in Karnataka, albeit in limited manner,
on Apr 13. Shares of Kalyani Steel and JSW Steel have gained nearly 18% and 1.5% respectively since then. Shares of JSW Steel, however, on Friday ended 1.6% down at 750.75 rupees on report that Central Empowered Committee, enquiring into illegal mining in Karnataka, has recommended a Central Bureau of Investigation probe into bribes allegedly paid by JSW group company South West Mining, and the Adani Group for mining leases in the state, to former chief minister B.S. Yeddyurappa‐run Prerana Trust.
Cement Sector ‐ In range this week; UltraTech in focus
Shares of most cement companies are seen trading in a narrow range this week with a negative bias, as Jan‐Mar earnings of two sector heavyweights ‐ ACC Ltd and Ambuja Cements Ltd disappointed the Street last week. Investors will now wait for UltraTech Cement's Jan‐Mar earnings that will be detailed on Monday to take a further view on the sector. On Thursday, both ACC and Ambuja Cements posted lower‐than‐expected net profit for Jan‐Mar, reflecting depressed realisation on sales despite higher volumes and strong pricing. Jan‐Mar earnings of the two Holcim group companies‐‐ACC and Ambuja Cements‐‐were also hit following a change in method for accounting depreciation on fixed assets of captive power plants. ACC Ltd posted a 56% year‐on‐year decline in net profit to 1.55 bln rupees, despite a 20% rise in net sales at 29.55 bln rupees. Ambuja Cements' net profit for Jan‐Mar declined 23% on year to 3.12 bln rupees even as its net sales rose 20.8% to 27.48 bln rupees.
IT Sector ‐ To take cues from TCS' Jan‐Mar earnings this week Shares of major information technology companies are seen taking cues from Jan‐Mar earnings of Tata Consultancy Services that will be announced Monday. The Street will also eye earnings of soaps‐to‐software major Wipro Ltd on Wednesday. Sentiment for the sector has remained mixed in the past two weeks after Infosys' Jan‐Mar performance upset investors, but HCL Technologies' earnings were nearly in line with Street expectations. HCL Technologies' net profit for Jan‐ Mar was 6.02 bln rupees. Infosys' outlook of a tepid 8‐10% revenue growth in 2012‐13 (Apr‐Mar) has set a tone of caution
amongst investors, and they will watch out for comments from managements of TCS and Wipro to take a view on the sector as a whole.
Oil Sector ‐ RIL in range this week; state‐owned retailers up
Reliance Industries Ltd's shares are likely to trade in a narrow range this week after the company reported a net profit of 42.36 bln rupees for Jan‐Mar, down 21% on year. Other income of 22.95 bln rupees supported the company's bottomline while all three core operations performed poorly during the quarter. The other income came mostly from investing over 700 bln rupees cash reserves the company has. Despite the poor performance downside in the stock will be capped because of the company's ongoing share buy back at up to 870 rupees per share. Cairn India disappointed the Street with its net profit declining 11% on year in Jan‐Mar to 21.86 bln rupees, mainly because of a rise in cess on crude oil and foreign exchange losses. Shares of the oil marketing companies are seen up this week as crude prices continue to soften. Shares of oil marketing companies, Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd, ended last
week with gains. The government is likely to announce within the next few weeks the final subsidy figure for the oil marketing companies towards revenue loss incurred on sale of subsidised fuel in 2011‐12 (Apr‐Mar). Also the government is expected to take a call on raising petrol and diesel prices soon as under‐recoveries on these fuels have increased significantly
Telecom Sector ‐ Down this week; Idea's Jan‐Mar earning eyed Shares of most telecom companies are seen trading with a weak bias this week as investors have taken short positions in the April month futures contract, indicating a bearish outlook for most stocks. Shares of Idea Cellular will be in focus this week, as the company will announce its Jan‐Mar earnings on Thursday.
WEEKLY NIFTY OUTLOOK
Resistance – Nifty facing Resistance level @5350 level above this level it may go up to @5400 &@ 5450 level.
Support ‐ Support comes for market @5250 level for Nifty; below this level Nifty next support @5200 and @5150 will be the major support for Market.
Technical – Last week Nifty opened at 5190 & it made a high of 5342.Last week we have seen rangebound market with stocks specific movements. Nifty made a low of 5183 & closed at 5290.Last week Nifty gain 159 points from its low & on weekly basis it closed at 83 point’s higher. Sensex made a weekly high of 17530 & a low of 17010 almost it gain 520 points in the week from its low.So overall last week we have seen some rangbound market. For the coming week the market range we expect 5150‐5450.
Market Commentary ‐
The market may remain volatile as traders roll over positions from the near‐month April 2012 series to May 2012 series.The April 2012 derivatives contracts expire on Thursday, 26 April 2012.
Investors will closely watch India Inc's Q4 March 2012 and year ending March 2012 (FY 2012) earnings. Focus is on the guidance provided by the management for the year ending March 2013 (FY 2013) to gauge the earnings outlook.
Meanwhile, the Federal Reserve may hint at Quantitative easing (QE3) at its April 25 gathering. Central bank policy makers upgraded the outlook for the US economy at their March 13 meeting, while they reiterated their pledge to keep interestrates near zero until at least late 2014.
Important Results ‐ Apil, TCS, Ultracemco, Petronet, Polaris, Sesagoa, Lichsgfin, Wipro, Yesbank, Raymond, Ster, MRF, Bataindia, IDEA, Biocon, Axisbank, Jindalstel, HCC, Hexaware, ICICIBank, Maruti.
• Mar WPI inflation 6.89%, slightly below RBI projection
• India Mar CPI combined inflation rate 9.47% vs 8.83% Feb
• RBI cuts Repo Rate by 50 bps to 8.00% with immediate
effect and leaves Cash Reserve Ratio unchanged at 4.75%
• RBI says Bank Rate adjusts to 9% with immediate effect
• PM says Assam's Bongaigaon thermal power plant likely by Oct 2013
• Govt OKs defence ops' FDI plans of Ashok Leyland, M&M
• Eicher Motors launches truck in light & medium duty segment
• KEC International gets orders worth 14.16 bln rupees
• Trade secy says FY12 exports up 21% at $303.7 bln; imports rise 32%
• Kingfisher Airlines gets DGFT approval for direct import of ATF
• Govt won't invoke General Anti‐Avoidance Rule if capitaltax paid
• Cement cos cut prices in Gujarat, Delhi by 5 rupees/50 kg Wed
• Lupin resumes sales of generic Fortamet tablets in US
• Aptech ties up with GAIA Management for Japanese foray
• US Supreme Court rules in favour of Sun Pharma arm in Prandin lawsuit
• SpiceJet in talks with oil mktg co's to start importing ATF
• India crude oil basket falls to 62‐day low of $116.74 per bbl Mon
• RComm, Google in pact to market android mobile devices in India
• Tata Motors group Mar global wholesales at 139,655 units, up 26%
• Aptech, Hungama Digital in pact for education solutions
• Alstom Projects consortium gets order worth around 18 mln euros
• Reliance Jan‐Mar net profit 4236 cr rupees vs 5376 cr rupees (YoY).
Domestic events week ahead
• Apr 24: Budget session of Parliament to resume after recess.
Global events week ahead
• Apr 23: Flash Manufacturing and Services PMI of Europe, German Flash Manufacturing and Services PMI.
• Apr 24: G7 Meetings.
• Apr 25: Crude Oil Inventories , FOMC Statement and Federal Funds Rate of US.
• Apr 26: German Prelim CPI m‐o‐m, Unemployment Claims of US.
• Apr 27: Advance GDP q‐o‐q of US, French Consumer Spending m‐o‐m, Monetary Policy Statement of Japan.
Weekly Sector Outlook and Stock Picks
Pharma Stocks Outlook: Seen flat with positive bias this week
Shares of pharmaceutical companies are seen trading flat with a positive bias in the week starting Monday. Since the start of this month, shares of pharmaceutical companies have out performed other indices, and the trend is expected to continue as most companies in the sector are expected to post good results.The stocks are also likely to take cues from the broad market. Jan‐Mar corporate earnings will also affect market sentiment in the coming sessions.
Capital Goods sector ‐ To remain weak on BHEL downgrade Shares of capital goods and engineering companies are likely to remain weak over the next five sessions in the absence of any positive triggers. The BHEL stock has lost nearly 6% in the last two sessions after downgraded the company's ratings. Shares of Larsen & Toubro may also fall due to the negative sentiment in the capital goods and engineering space post the downgrade on BHEL.
FMCG Sector ‐ Trend bullish this week; Jan‐Mar earnings eyed Shares of fast‐moving consumer goods companies are seen outperforming benchmark stock indices in the week ahead as investors expect these companies to announce strong Jan‐Mar earnings. Hindustan Unilever, Marico, and Dabur India are scheduled to release their quarterly earnings on May 1, May 3, and Apr 30, respectively. The sales volumes of ITC and Hindustan Unilever are expected to have grown 8‐9% from a year ago in Jan‐Mar. Recently, the companies hiked prices of their products in various categories, which could boost their margins to some extent going forward by offsetting the impact of rise in input costs. Hindustan Unilever's growth in the personal care products category will be watched as this segment contributes 50% to the company's bottomline. Competition in this segment has increased over the past six months. Marico's Jan‐Mar earnings are expected to reflect its foray into the body lotions segment, and the price hikes the company took in a key product category, edible oils. There are concerns over ITC's ability to maintain its cigarette sales volumes as it raised prices by 5‐15% across Gold Flake, and Navy Cut brands earlier this month. Last week, the BSE FMCG index gained 2.98% while benchmark indices, the National Stock Exchange's Nifty and the BSE's Sensex gained 1.6%.
Auto sector ‐ May extend gains this week; Tata Motors top pick
Automobile stocks are likely to extend their gains this week with banks announcing a cut in the interest rates, including those on auto loans. The upside could, however, be capped by some profit booking in the stocks during the week. The broad market has been moving in a range of 200 points, but auto stocks have outdone the market and should perform in positive territory this week also. Tata Motors Ltd, which rose over by 9% in the last five trading sessions, is likely to trade up this week as well. The company's differential voting rights shares have also seen a sharp 15% increase in their value last week on expectations of better dividend payout by the company as the company's global sales showed strong growth. Mahindra & Mahindra Ltd also got a lift on Friday from the government approving the company's proposal for foreign direct investment into its joint venture for defence systems. Maruti Suzuki Ltd could see some movement in the latter half
of the week, as the company would announce its Jan‐Mar results on Apr 28.
Steel Sector ‐ Seen mixed; Jindal Steel earnings eyed Shares of major steel companies are seen mixed this week, with shares of Jindal Steel and Power Ltd remaining in focus as the company will announce its Jan‐Mar earnings on Friday. Shares of steel companies such as JSW Steel and Kalyani Steels gained over the past five sessions after Supreme Court allowed mining to resume in Karnataka, albeit in limited manner,
on Apr 13. Shares of Kalyani Steel and JSW Steel have gained nearly 18% and 1.5% respectively since then. Shares of JSW Steel, however, on Friday ended 1.6% down at 750.75 rupees on report that Central Empowered Committee, enquiring into illegal mining in Karnataka, has recommended a Central Bureau of Investigation probe into bribes allegedly paid by JSW group company South West Mining, and the Adani Group for mining leases in the state, to former chief minister B.S. Yeddyurappa‐run Prerana Trust.
Cement Sector ‐ In range this week; UltraTech in focus
Shares of most cement companies are seen trading in a narrow range this week with a negative bias, as Jan‐Mar earnings of two sector heavyweights ‐ ACC Ltd and Ambuja Cements Ltd disappointed the Street last week. Investors will now wait for UltraTech Cement's Jan‐Mar earnings that will be detailed on Monday to take a further view on the sector. On Thursday, both ACC and Ambuja Cements posted lower‐than‐expected net profit for Jan‐Mar, reflecting depressed realisation on sales despite higher volumes and strong pricing. Jan‐Mar earnings of the two Holcim group companies‐‐ACC and Ambuja Cements‐‐were also hit following a change in method for accounting depreciation on fixed assets of captive power plants. ACC Ltd posted a 56% year‐on‐year decline in net profit to 1.55 bln rupees, despite a 20% rise in net sales at 29.55 bln rupees. Ambuja Cements' net profit for Jan‐Mar declined 23% on year to 3.12 bln rupees even as its net sales rose 20.8% to 27.48 bln rupees.
IT Sector ‐ To take cues from TCS' Jan‐Mar earnings this week Shares of major information technology companies are seen taking cues from Jan‐Mar earnings of Tata Consultancy Services that will be announced Monday. The Street will also eye earnings of soaps‐to‐software major Wipro Ltd on Wednesday. Sentiment for the sector has remained mixed in the past two weeks after Infosys' Jan‐Mar performance upset investors, but HCL Technologies' earnings were nearly in line with Street expectations. HCL Technologies' net profit for Jan‐ Mar was 6.02 bln rupees. Infosys' outlook of a tepid 8‐10% revenue growth in 2012‐13 (Apr‐Mar) has set a tone of caution
amongst investors, and they will watch out for comments from managements of TCS and Wipro to take a view on the sector as a whole.
Oil Sector ‐ RIL in range this week; state‐owned retailers up
Reliance Industries Ltd's shares are likely to trade in a narrow range this week after the company reported a net profit of 42.36 bln rupees for Jan‐Mar, down 21% on year. Other income of 22.95 bln rupees supported the company's bottomline while all three core operations performed poorly during the quarter. The other income came mostly from investing over 700 bln rupees cash reserves the company has. Despite the poor performance downside in the stock will be capped because of the company's ongoing share buy back at up to 870 rupees per share. Cairn India disappointed the Street with its net profit declining 11% on year in Jan‐Mar to 21.86 bln rupees, mainly because of a rise in cess on crude oil and foreign exchange losses. Shares of the oil marketing companies are seen up this week as crude prices continue to soften. Shares of oil marketing companies, Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd, ended last
week with gains. The government is likely to announce within the next few weeks the final subsidy figure for the oil marketing companies towards revenue loss incurred on sale of subsidised fuel in 2011‐12 (Apr‐Mar). Also the government is expected to take a call on raising petrol and diesel prices soon as under‐recoveries on these fuels have increased significantly
Telecom Sector ‐ Down this week; Idea's Jan‐Mar earning eyed Shares of most telecom companies are seen trading with a weak bias this week as investors have taken short positions in the April month futures contract, indicating a bearish outlook for most stocks. Shares of Idea Cellular will be in focus this week, as the company will announce its Jan‐Mar earnings on Thursday.
WEEKLY NIFTY OUTLOOK
Resistance – Nifty facing Resistance level @5350 level above this level it may go up to @5400 &@ 5450 level.
Support ‐ Support comes for market @5250 level for Nifty; below this level Nifty next support @5200 and @5150 will be the major support for Market.
Technical – Last week Nifty opened at 5190 & it made a high of 5342.Last week we have seen rangebound market with stocks specific movements. Nifty made a low of 5183 & closed at 5290.Last week Nifty gain 159 points from its low & on weekly basis it closed at 83 point’s higher. Sensex made a weekly high of 17530 & a low of 17010 almost it gain 520 points in the week from its low.So overall last week we have seen some rangbound market. For the coming week the market range we expect 5150‐5450.
Market Commentary ‐
The market may remain volatile as traders roll over positions from the near‐month April 2012 series to May 2012 series.The April 2012 derivatives contracts expire on Thursday, 26 April 2012.
Investors will closely watch India Inc's Q4 March 2012 and year ending March 2012 (FY 2012) earnings. Focus is on the guidance provided by the management for the year ending March 2013 (FY 2013) to gauge the earnings outlook.
Meanwhile, the Federal Reserve may hint at Quantitative easing (QE3) at its April 25 gathering. Central bank policy makers upgraded the outlook for the US economy at their March 13 meeting, while they reiterated their pledge to keep interestrates near zero until at least late 2014.
Important Results ‐ Apil, TCS, Ultracemco, Petronet, Polaris, Sesagoa, Lichsgfin, Wipro, Yesbank, Raymond, Ster, MRF, Bataindia, IDEA, Biocon, Axisbank, Jindalstel, HCC, Hexaware, ICICIBank, Maruti.
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