Key developments during the week
• Jindal Steel raises 35 bln rupees for Odisha plant
• India Apr‐Jun indirect tax mop‐up over 1 trln rupees, up14.6%
• ITC to tap niche agarbatti market, co's business growing 35% on yr
• MTNL plans capital spend of 8 bln rupees in FY13
• Mukesh Ambani's Reliance Brands to bring in UK's Superdry
• Titan spins off third‐party watch‐retailing arm
• Cabinet defers decision on forward contract amendment bill
• IMD says India week to Jul 11 rainfall 63.8 mm, 1% above normal
• Govt source says Cairn plans to up Rajasthan output to 300,000 bpd
• PFC arm seeks bids to form equal JV for thermal project consultancy
• Greaves Cotton to supply three‐wheeler diesel engines to Atul Auto
• Cabinet panel OKs 6.48‐bln‐rupee Uttar Pradesh road two‐laning plan
• Cabinet defers decision on SAIL divestment
• Infosys Apr‐Jun consol net profit 22.89 bln rupees vs 17.22 bln
• IDFC plans to raise 2.5 bln rupees via 3‐yr bonds at 9.52%
• Investor Jhunjhunwala ups stake in Praj Ind to 7.83% from 6.82%
• Sesa Goa to shut down two plants in Goa on iron ore shortage
• Tube Investments to buy 36 mln Shanthi Gears shrs at 81 rupee/shr
• Trade secy says India Apr‐Jun trade deficit $40.06 bln
Domestic events week ahead
• Jul 16: WPI inflation for June, to be released by commerce & industry ministry
• Jul 18: CPI for Rural, Urban and Combined for June, to be detailed by CSO
• Jul 19: President Poll. UPA candidate Pranab Mukherjee takes on Purno Sangma
Global events week ahead
• Jul 16: Europe Core CPI y‐o‐y and Core Retail Sales m‐o‐m, US Retail Sales m‐o‐m
• Jul 17: German ZEW Economic Sentiment, US Core CPI m‐o‐m and Industrial Production m‐o‐m, Fed Chairman Bernanke Testifies
• Jul 18: Spanish House Price Index q‐o‐q, US Building Permits, Housing Starts and Crude Oil Inventories
• Jul 19: US Unemployment Claims and Existing Home Sales
Weekly Sector Outlook and Stock Picks
Auto sector ‐ Earnings, likely fuel price hike to set trend
Looming diesel price hike, announcement of Apr‐Jun earnings, and monsoon rainfall are going to lend direction to auto stocks this week. Hero MotoCorp will announce its earnings for Apr‐Jun on Thursday. Reports of a hike in diesel prices after the presidential polls, which are also due Thursday, have been doing rounds for some time and any significant hike in the fuel's price could cause a knee‐jerk reaction in the auto sector, especially in Mahindra & Mahindra counter. Most
of Mahindra & Mahindra's models are diesel run. Monsoon rains, which have been 23% below normal so far this year, will also add to headwind for the auto stock counter. If rains continue to be weak it will hit sales of auto, especially in rural areas. Bajaj Auto will report its June quarter earnings Wednesday.
Capital Goods sector ‐ Seen moving in a narrow range Shares of capital goods and engineering companies are seen moving in a narrow band this week, with stock‐specific action in the absence of any major triggers. Limited orders, high interest rates, land acquisition and environmental
clearance hurdles, policy inaction, and an overall industrial slowdown are keeping investors at bay from the capital goods and engineering space. Industrial growth data released by the Central Statistics Office Thursday showed capital goods output fell 7.7% in May versus a growth of 6.2% a year ago.
FMCG Sector ‐ Seen down on likely fall in Apr‐Jun sales volume
Shares of fast moving consumer goods companies are seen down this week as leading companies of the sector are likely to post weak sales volume for Apr‐Jun. The Apr‐Jun earnings of companies would be in focus. Index heavyweights Hindustan Unilever Ltd and Dabur India Ltd will declare their Apr‐Jun earnings on Jul 23. Marico Ltd will declare the quarter's earnings on Aug 3 and Godrej Consumer Products Ltd will announce its result on Aug 4. Even as a weak monsoon is threatening to dent earnings of FMCG companies, they are working towards new strategies to counter this.These strategies include promoting low‐price products, introducing new offerings to prevent consumers from down‐trading, and stepping up marketing efforts to strengthen top‐of‐the‐mind recall and sales.
Cement Sector ‐ Bias positive this week; Apr‐Jun earnings eyed
Shares of major cement companies are seen trading in a range with an upward bias this week mainly on expectations of strong earnings in the quarter ended June. Most cement makers will announce Apr‐Jun earnings later in the month. UltraTech Cement will post its earnings on Jul 20. Cement demand across the country remained strong during the June quarter, which led companies to keep prices at elevated levels. This will help cement makers post robust operating profit margins for the quarter. However, though cement prices have been strong in recent months, they may fall now due to onset of monsoon, which is likely to limit the upside.Arrival of monsoon brings construction activity to a standstill, which hurts demand for cement in the domestic market.
IT Sector ‐ : In thin range this week; Mindtree earnings eyed
Shares of major information technology companies may be confined to a narrow band next week but Apr‐Jun earnings of some companies could cause sharp movement in their stocks.Among the gainers will be stocks of Tata Consultancy Services, which reported better‐than‐expected quarterly earnings Thursday and dethroned Infosys as the sector bellwether. TCS management's bullish outlook on performance in the coming quarters will keep investors interested in the stock.
Oil Sector ‐ Oil marketing cos seen rangebound, RIL subdued
Shares of state‐owned oil marketing companies are seen rangebound with a negative bias this week, while those of Reliance Industries may remain subdued ahead of the company's Apr‐Jun earnings. High volatility in the rupee against the dollar may continue to weigh on the stocks even as crude oil prices have stabilised, albeit at higher levels. The three state‐owned companies—Indian Oil Corp Ltd, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd—are now stretched given the weakness in the broad market. This week the market will take cues from inflation data for June,
which will be released on Monday and focus will be on companies reporting Apr‐Jun numbers, so the overall trade in the oil marketing companies' shares is seen muted. Among the oil companies, only Reliance Industries is scheduled to detail earnings this week.
Telecom Sector ‐ To takes cues from EGoM meet this week
Telecom stocks this week will take cues from the meeting of the Empowered Group of Ministers on spectrum, likely on Monday or Tuesday, to decide on spectrum auction modalities, including the contentious issue of spectrum reserve price. On Apr 23, the Telecom Regulatory Authority of India had recommended a reserve price of 36.22 bln rupees per 1 MHz of spectrum in the 1800 MHz band at a pan‐India level, which has been termed as exorbitantly high by telecom
operators.
Steel Stocks Outlook ‐ To track broad market on lack of triggers
Shares of steel companies will trade in a narrow band this week, tailing key stock indices in the absence of any sector‐specific triggers.Key indices are also seen in a range, and will take cues from data on India's headline inflation data for June and companies' Apr‐Jun earnings. This week can see some upside in JSW Steel early August on likely commencement of iron ore mines operation in Karnataka. Till then, the stock is seen stuck in a range.Last week, JSW Steel announced their Apr‐Jun production and sales volumes. JSW Steel's crude steel production in the quarter rose 27% on year to 2.14 mln ton. The company's 10‐mln‐ton Vijayanagar plant in Karn ataka operated at 80%
capacity due to iron ore supply constraints. JSW Steel will be able to return to normal capacity in next two months on fresh supply of ore from Karnataka mines. Earlier this month, the Karnataka government allowed the leaseholders of eight iron ore mines to resume operations in August, which are likely to produce 6 mln tn iron ore per year.
Bank sector ‐ Mixed trend likely; Apr‐Jun earnings eyedThe trend in bank stocks in the coming week is seen mixed, with investors awaiting cues from the Apr‐Jun earnings. Axis Bank and Kotak Mahindra Bank are the key banks slated to announce their quarterly earnings in the coming week.
Pharma sector ‐ In range this week; Dr Reddy's earnings eyed Shares of pharmaceutical companies are seen trading in a range‐bound manner this week. However, investors will eye Dr Reddy's Laboratories Ltd's Apr‐Jun result to be detailed on Thursday. Apart from stock‐specific movement, the sector will take cues from the broader market in the next five trading sessions.
India's wholesale price inflation for June, which will be detailed on Monday, is likely to set the mood for the domestic indices.
Market Range for Week 5150‐ 5350
Resistance – Nifty facing Resistance level @5250 level above this levelit may go up to @5280 &@ 5350 level.
Support ‐ Support comes for market @5220 level for Nifty; below this level Nifty next support @5180 and @5150 will be the major support for Market
Technical – Last week Nifty opened at 5283 & it made a high of 5348.Last week we have seen some selling from higher level. Nifty made a low of 5216 & closed at 5227.Last week Nifty drag 132 points from its high & on weekly basis it closed at 89 point’s lower. Sensex made a weekly high of 17631 & a low of 17181 almost it drags 450 points in the week from its high.So overall last week we have seen some profit booking from higher level.
Weekly View –
Last week we had expected market range (5180‐5450) & market made a low of 5216 & made a high of 5348, so overallit hold over both side range.
In last week report we had mentioned, on daily chart osilator was in overbought & it was facing resistance at upperchannel line.On weekly chart market was above short term moving avg(5&20WMA), beucase of all that we had mentioned 5350‐5360 will be major resistance & 5250‐5220 will be support & market made a high of 5348 & low of 5216.Now on daily chart osilator still showing overbought position,but holding 100DMA support & upper channel
line.On weekly chart market not able to cross 100WMA, but holding 200WMA & trendline. So overall still 5350‐5360will remain major resistance & downside 5180‐5150 will be support & we can see some consolidation,apart from that result will also play important role for decide the market direction in near term. On Friday, U.S stocks rallied the Dow jumped 204 points, or 1.6%, the S&P 500 added 22 points, or 1.7% & the Nasdaq climbed 42 points, or 1.5%
Market Commentary ‐
The next batch of Q1 June 2012 corporate earnings, monthly inflation data and progress of the monsoon rains will dictate near term trend on the bourses.
The first quarter June 2012 earnings season has just begun. In the next one month, investors and analysts will closelywatch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year or the next year.A deceleration in top line growth of India Inc amid economic slowdown and slowdown in investment cycle will weigh on bottom line growth in Q1 June 2012 as the core operating profit margin could be negatively impacted by deceleration in top line growthConcerns on the monsoon front remain after director‐general of the state‐run India Meteorological Department L.S. Rathore, (IMD) on 11 July 2012 said there is a strong chance of an El Nino weather event this season
and it will likely emerge in August 2012. El Ninos are usually associated with lower rainfall. Lower rainfall this year is intensifying concerns that output of summer‐sown crops such as oilseeds, sugar and pulses will fall compared with record‐high levels in the last couple of years, hitting farm incom
• Jindal Steel raises 35 bln rupees for Odisha plant
• India Apr‐Jun indirect tax mop‐up over 1 trln rupees, up14.6%
• ITC to tap niche agarbatti market, co's business growing 35% on yr
• MTNL plans capital spend of 8 bln rupees in FY13
• Mukesh Ambani's Reliance Brands to bring in UK's Superdry
• Titan spins off third‐party watch‐retailing arm
• Cabinet defers decision on forward contract amendment bill
• IMD says India week to Jul 11 rainfall 63.8 mm, 1% above normal
• Govt source says Cairn plans to up Rajasthan output to 300,000 bpd
• PFC arm seeks bids to form equal JV for thermal project consultancy
• Greaves Cotton to supply three‐wheeler diesel engines to Atul Auto
• Cabinet panel OKs 6.48‐bln‐rupee Uttar Pradesh road two‐laning plan
• Cabinet defers decision on SAIL divestment
• Infosys Apr‐Jun consol net profit 22.89 bln rupees vs 17.22 bln
• IDFC plans to raise 2.5 bln rupees via 3‐yr bonds at 9.52%
• Investor Jhunjhunwala ups stake in Praj Ind to 7.83% from 6.82%
• Sesa Goa to shut down two plants in Goa on iron ore shortage
• Tube Investments to buy 36 mln Shanthi Gears shrs at 81 rupee/shr
• Trade secy says India Apr‐Jun trade deficit $40.06 bln
Domestic events week ahead
• Jul 16: WPI inflation for June, to be released by commerce & industry ministry
• Jul 18: CPI for Rural, Urban and Combined for June, to be detailed by CSO
• Jul 19: President Poll. UPA candidate Pranab Mukherjee takes on Purno Sangma
Global events week ahead
• Jul 16: Europe Core CPI y‐o‐y and Core Retail Sales m‐o‐m, US Retail Sales m‐o‐m
• Jul 17: German ZEW Economic Sentiment, US Core CPI m‐o‐m and Industrial Production m‐o‐m, Fed Chairman Bernanke Testifies
• Jul 18: Spanish House Price Index q‐o‐q, US Building Permits, Housing Starts and Crude Oil Inventories
• Jul 19: US Unemployment Claims and Existing Home Sales
Weekly Sector Outlook and Stock Picks
Auto sector ‐ Earnings, likely fuel price hike to set trend
Looming diesel price hike, announcement of Apr‐Jun earnings, and monsoon rainfall are going to lend direction to auto stocks this week. Hero MotoCorp will announce its earnings for Apr‐Jun on Thursday. Reports of a hike in diesel prices after the presidential polls, which are also due Thursday, have been doing rounds for some time and any significant hike in the fuel's price could cause a knee‐jerk reaction in the auto sector, especially in Mahindra & Mahindra counter. Most
of Mahindra & Mahindra's models are diesel run. Monsoon rains, which have been 23% below normal so far this year, will also add to headwind for the auto stock counter. If rains continue to be weak it will hit sales of auto, especially in rural areas. Bajaj Auto will report its June quarter earnings Wednesday.
Capital Goods sector ‐ Seen moving in a narrow range Shares of capital goods and engineering companies are seen moving in a narrow band this week, with stock‐specific action in the absence of any major triggers. Limited orders, high interest rates, land acquisition and environmental
clearance hurdles, policy inaction, and an overall industrial slowdown are keeping investors at bay from the capital goods and engineering space. Industrial growth data released by the Central Statistics Office Thursday showed capital goods output fell 7.7% in May versus a growth of 6.2% a year ago.
FMCG Sector ‐ Seen down on likely fall in Apr‐Jun sales volume
Shares of fast moving consumer goods companies are seen down this week as leading companies of the sector are likely to post weak sales volume for Apr‐Jun. The Apr‐Jun earnings of companies would be in focus. Index heavyweights Hindustan Unilever Ltd and Dabur India Ltd will declare their Apr‐Jun earnings on Jul 23. Marico Ltd will declare the quarter's earnings on Aug 3 and Godrej Consumer Products Ltd will announce its result on Aug 4. Even as a weak monsoon is threatening to dent earnings of FMCG companies, they are working towards new strategies to counter this.These strategies include promoting low‐price products, introducing new offerings to prevent consumers from down‐trading, and stepping up marketing efforts to strengthen top‐of‐the‐mind recall and sales.
Cement Sector ‐ Bias positive this week; Apr‐Jun earnings eyed
Shares of major cement companies are seen trading in a range with an upward bias this week mainly on expectations of strong earnings in the quarter ended June. Most cement makers will announce Apr‐Jun earnings later in the month. UltraTech Cement will post its earnings on Jul 20. Cement demand across the country remained strong during the June quarter, which led companies to keep prices at elevated levels. This will help cement makers post robust operating profit margins for the quarter. However, though cement prices have been strong in recent months, they may fall now due to onset of monsoon, which is likely to limit the upside.Arrival of monsoon brings construction activity to a standstill, which hurts demand for cement in the domestic market.
IT Sector ‐ : In thin range this week; Mindtree earnings eyed
Shares of major information technology companies may be confined to a narrow band next week but Apr‐Jun earnings of some companies could cause sharp movement in their stocks.Among the gainers will be stocks of Tata Consultancy Services, which reported better‐than‐expected quarterly earnings Thursday and dethroned Infosys as the sector bellwether. TCS management's bullish outlook on performance in the coming quarters will keep investors interested in the stock.
Oil Sector ‐ Oil marketing cos seen rangebound, RIL subdued
Shares of state‐owned oil marketing companies are seen rangebound with a negative bias this week, while those of Reliance Industries may remain subdued ahead of the company's Apr‐Jun earnings. High volatility in the rupee against the dollar may continue to weigh on the stocks even as crude oil prices have stabilised, albeit at higher levels. The three state‐owned companies—Indian Oil Corp Ltd, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd—are now stretched given the weakness in the broad market. This week the market will take cues from inflation data for June,
which will be released on Monday and focus will be on companies reporting Apr‐Jun numbers, so the overall trade in the oil marketing companies' shares is seen muted. Among the oil companies, only Reliance Industries is scheduled to detail earnings this week.
Telecom Sector ‐ To takes cues from EGoM meet this week
Telecom stocks this week will take cues from the meeting of the Empowered Group of Ministers on spectrum, likely on Monday or Tuesday, to decide on spectrum auction modalities, including the contentious issue of spectrum reserve price. On Apr 23, the Telecom Regulatory Authority of India had recommended a reserve price of 36.22 bln rupees per 1 MHz of spectrum in the 1800 MHz band at a pan‐India level, which has been termed as exorbitantly high by telecom
operators.
Steel Stocks Outlook ‐ To track broad market on lack of triggers
Shares of steel companies will trade in a narrow band this week, tailing key stock indices in the absence of any sector‐specific triggers.Key indices are also seen in a range, and will take cues from data on India's headline inflation data for June and companies' Apr‐Jun earnings. This week can see some upside in JSW Steel early August on likely commencement of iron ore mines operation in Karnataka. Till then, the stock is seen stuck in a range.Last week, JSW Steel announced their Apr‐Jun production and sales volumes. JSW Steel's crude steel production in the quarter rose 27% on year to 2.14 mln ton. The company's 10‐mln‐ton Vijayanagar plant in Karn ataka operated at 80%
capacity due to iron ore supply constraints. JSW Steel will be able to return to normal capacity in next two months on fresh supply of ore from Karnataka mines. Earlier this month, the Karnataka government allowed the leaseholders of eight iron ore mines to resume operations in August, which are likely to produce 6 mln tn iron ore per year.
Bank sector ‐ Mixed trend likely; Apr‐Jun earnings eyedThe trend in bank stocks in the coming week is seen mixed, with investors awaiting cues from the Apr‐Jun earnings. Axis Bank and Kotak Mahindra Bank are the key banks slated to announce their quarterly earnings in the coming week.
Pharma sector ‐ In range this week; Dr Reddy's earnings eyed Shares of pharmaceutical companies are seen trading in a range‐bound manner this week. However, investors will eye Dr Reddy's Laboratories Ltd's Apr‐Jun result to be detailed on Thursday. Apart from stock‐specific movement, the sector will take cues from the broader market in the next five trading sessions.
India's wholesale price inflation for June, which will be detailed on Monday, is likely to set the mood for the domestic indices.
Market Range for Week 5150‐ 5350
Resistance – Nifty facing Resistance level @5250 level above this levelit may go up to @5280 &@ 5350 level.
Support ‐ Support comes for market @5220 level for Nifty; below this level Nifty next support @5180 and @5150 will be the major support for Market
Technical – Last week Nifty opened at 5283 & it made a high of 5348.Last week we have seen some selling from higher level. Nifty made a low of 5216 & closed at 5227.Last week Nifty drag 132 points from its high & on weekly basis it closed at 89 point’s lower. Sensex made a weekly high of 17631 & a low of 17181 almost it drags 450 points in the week from its high.So overall last week we have seen some profit booking from higher level.
Weekly View –
Last week we had expected market range (5180‐5450) & market made a low of 5216 & made a high of 5348, so overallit hold over both side range.
In last week report we had mentioned, on daily chart osilator was in overbought & it was facing resistance at upperchannel line.On weekly chart market was above short term moving avg(5&20WMA), beucase of all that we had mentioned 5350‐5360 will be major resistance & 5250‐5220 will be support & market made a high of 5348 & low of 5216.Now on daily chart osilator still showing overbought position,but holding 100DMA support & upper channel
line.On weekly chart market not able to cross 100WMA, but holding 200WMA & trendline. So overall still 5350‐5360will remain major resistance & downside 5180‐5150 will be support & we can see some consolidation,apart from that result will also play important role for decide the market direction in near term. On Friday, U.S stocks rallied the Dow jumped 204 points, or 1.6%, the S&P 500 added 22 points, or 1.7% & the Nasdaq climbed 42 points, or 1.5%
Market Commentary ‐
The next batch of Q1 June 2012 corporate earnings, monthly inflation data and progress of the monsoon rains will dictate near term trend on the bourses.
The first quarter June 2012 earnings season has just begun. In the next one month, investors and analysts will closelywatch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year or the next year.A deceleration in top line growth of India Inc amid economic slowdown and slowdown in investment cycle will weigh on bottom line growth in Q1 June 2012 as the core operating profit margin could be negatively impacted by deceleration in top line growthConcerns on the monsoon front remain after director‐general of the state‐run India Meteorological Department L.S. Rathore, (IMD) on 11 July 2012 said there is a strong chance of an El Nino weather event this season
and it will likely emerge in August 2012. El Ninos are usually associated with lower rainfall. Lower rainfall this year is intensifying concerns that output of summer‐sown crops such as oilseeds, sugar and pulses will fall compared with record‐high levels in the last couple of years, hitting farm incom
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