Key developments during the week
• Rupee hits new all‐time low against dollar
• India Apr CPI combined inflation rate 10.36% vs 9.38% Mar
• India Apr WPI inflation rate 7.23% vs 6.89% Mar
• Govt says may issue compliance orders on austeritymeasures
• Pantaloon Retail sells 38.5% in Future Capital to arm FutureValue
• Indian cos expansion may be hit as market conditions poorfor IPOs
• WGC says global gold demand down 5% Jan‐Mar as Indiademand falls
• Bharti Airtel introduces new "affordable" 3G tariff plans
• Ind‐Swift, Wockhardt UK launch generic atorvastatin tablets in UK
• RIL buys back 14.13 mln shares as of May 15 for 10.29 bln rupees
• RBI says India to offer $2‐bln FX swap facility to SAARC
• Infosys to supply technology to Airtel‐Axis Bk mobile banking ops
• Piramal Healthcare to buy Decision Resources for around $635 mln
• Uttar Pradesh seeks bids to set up Kushinagar international airpor
• Pranab says plan to introduce Direct Taxes Code Bill nextsession
• RBI says India Mar services exports $12.89 bln, imports$9.08 bln
• Glenmark arm gets US FDA OK for anti‐epileptic lamotrigine generic
Domestic events week ahead
• May 22: Budget session of Parliament to end
Global events week ahead
•May 22: Consumer Price Index y‐o‐y of Britain.
• May 23: Trade Balance of Japan, Crude Oil Inventories of US
• May 24: German Final GDP q‐o‐q of Europe, French Flash Manufacturing & Services PMI, Europe Flash Manufacturing & Services PMI, Unemployment Claims of US
Weekly Sector Outlook and Stock Picks
Auto sector ‐ To track broad market this week Shares of automobile companies are likely to move in line with the overall market in the coming week. The market is waiting for Jan‐Mar earnings of Mahindra & Mahindra Ltd and Tata Motors Ltd due in the last week of May for further cues. The recent moderation in sales numbers, depreciating rupee and the uncertainty in the international markets are likely to keep the stocks under pressure. India's passenger cars sales in April grew at the slowest pace for the month in 10 years at a mere 3.4%.
Pharma sector ‐ Seen underperforming broad market this week Pharmaceutical stocks are seen underperforming the broad market, which is likely to see a temporary pull‐back driven by short‐covering. Pharmaceutical stocks are defensive in nature, which tend to move against the broad market. However, the broad market will also track the movement in International bourses and any negative trigger may pull down the indices to the lower trading range. Local markets will predominantly take cues from the developments in Europe and rupee movement against the dollar this week.Stock movement will remain news‐driven with many companies expecting approvals from the US Food and Drug Administration. Cadila Healthcare is expecting the USFDA to approve its Ahmedabad plant, which was inspected in March this year. If the company gets the approval, then it may launch 7‐10 injectables in the market soon. Also in the queue are Ranbaxy Laboratories and Ipca Laboratories, which are seeking the USFDA's nod. While Ranbaxy is looking for approval for
its molecule Isoproneon that is in the developmental stage, Ipca Laboratories is expecting the US regulator's nod for its Indore plant. Also, the Group of Minister's decision on the National Pharmaceutical Pricing Policy would impact pharmaceutical counters. The GoM seeks to regulate prices of 348 essential drugs and its combinations sold across the country. The panel had earlier met in April‐end, but had deferred its decision on capping the prices of essential medicines due to lack of consensus among stakeholders and the ministries concerned.
Capital Goods sector ‐ In line with market ; BHEL earnings eyed Shares of capital goods and engineering companies are likely to track the market, sentiment for which is seen weak, and
will take cues from Bharat Heavy Electricals Ltd's Jan‐Mar earnings on 23 rd May. Action, if any, would be stock‐specific.Shares of Larsen & Toubro Ltd have risen since Monday last week after the company posted higher growth in topline and bottomline for Jan‐Mar. L&T's net profit grew 14% to 1920.41 cr rupees in Jan‐Mar, and net sales rose 20% to 18775.1 cr rupees. The company guided for 15‐20% growth in sales and order inflow for 2012‐13, even though it failed to meet the
5% order inflow guidance for 2011‐12.
FMCG Sector ‐ Seen gaining on defensive buying by investors Shares of fast‐moving consumer goods companies are seen gaining in the week ahead as investors continue to play defensive and shore up investments in these stocks. It is expected that these shares are likely to continue as investors continue to park money in defensive categories such as FMCG and Pharmaceutical stocks. In the Jan‐Mar quarter, sales volume growth of some big companies such as Hindustan Unilever, Asian Paints Ltd and Dabur India were above street expectations, which is encouraging investors. Domestic sales volume growth of FMCG companies will remain healthy as penetration levels and per capita usage will remain attractive for years to come, and both rural and urban India will drive demand. The only possible glitch in the volumes story could be the Packaged Commodities Rules, 2011 which, when implemented, could lead to slower volume expansion. The rules are expected to come into force in July.
Cement Sector ‐ Seen rangebound with negative bias this week Shares of major cement companies may continue see a rangebound trade with a negative bias this week, as investors are likely to remain cautious due to reports the Competition Commission of India may impose heavy fines on ement makers in an alleged price rigging case. The news has been weighing on the stocks for the past two months.
IT Sector ‐ Seen slightly up on rupee depreciation vs dollar Shares of information technology companies are seen up in the week ahead because of rupee's depreciation against the dollar. However, the disappointing results and guidance given by tier‐I companies including Infosys and Wipro that indicate gloomy demand environment will continue to weigh on these stocks. The local currency has been depreciating on the back of risk aversion seen globally. If the rupee continues to depreciate, it is really going to help the software companies and is in fact the sole positive factor for the sector. Depreciation in the rupee against the dollar benefits the Indian software exporters as they get nearly 65% of their revenue from the US.
Oil Sector ‐ PSU retailers up, RIL subdued this week Shares of state‐owned oil retailers are seen up this week ahead of their earning for Jan‐Mar. Bharat Petroleum Corp is reporting its earnings for the quarter on Friday 25 th May. Jan‐Mar is a usually a good quarter for these companies as they
get the major part of the compensation due to them from the government for subsidized sale of fuels. The bottomline of all the three companies is expected to rise manifold. Apart from the earnings, softening of the crude prices will also lift the shares. The rupee's decline, against the dollar, though remains a concern and limits the upside. There is a possibility of fuel price hike (diesel, LPG and kerosene) during June 2012 will drive the stock in the near term.r ‐ PSU retailers up, RIL subdued this week Shares of state‐owned oil retailers are seen up this week ahead of their earning for Jan‐Mar. Bharat Petroleum Corp is reporting its earnings for the quarter on Friday 25
th May. Jan‐Mar is a usually a good quarter for these companies as they get the major part of the compensation due to them from the government for subsidized sale of fuels. The bottomline of
all the three companies is expected to rise manifold. Apart from the earnings, softening of the crude prices will also lift the shares. The rupee's decline, against the dollar, though remains a concern and limits the upside. There is a possibility of fuel price hike (diesel, LPG and kerosene) during June 2012 will drive the stock in the near term.
Telecom Sector ‐ In range with slight negative bias this week Telecom stocks are seen trading rangebound to slightly down this week due to lack of any positive trigger in the near term. The stocks have been trading with a weak bias on account of regulatory uncertainty, with telecom companies strongly opposing the recommendations of the Telecom Regulatory Authority of India on spectrum auction norms. Investors' sentiment on the market remains bearish as inflows from foreign institutional investors have slowed down due to policy paralysis, retrospective tax proposals by the government and also due to the worsening Eurozone debt crisis.
Market Range for Week 4750‐ 5150
Resistance – Nifty facing Resistance level @4950 level above this levelit may go up to @5050 &@ 5150 level
Support ‐ Support comes for market @4850 level for Nifty; below this level Nifty next support @4800 and @4750 will be the major support for Market.
Technical – Last week Nifty opened at 4934 & it made a high of 4957.Last week we have seen some volatile trade in the market. Nifty made a low of 4788 & closed at 4891.Last week Nifty drag 168 points from its high & on weekly basis it closed at 37 point’s lower. Sensex made a weekly high of 16390 & a low of 15809 almost it drags 581 points in the week from its high.So overall last week we have seen some volatile trade with stock specific action in the market.
For the coming week the market range we expect 4750‐5150.
• Rupee hits new all‐time low against dollar
• India Apr CPI combined inflation rate 10.36% vs 9.38% Mar
• India Apr WPI inflation rate 7.23% vs 6.89% Mar
• Govt says may issue compliance orders on austeritymeasures
• Pantaloon Retail sells 38.5% in Future Capital to arm FutureValue
• Indian cos expansion may be hit as market conditions poorfor IPOs
• WGC says global gold demand down 5% Jan‐Mar as Indiademand falls
• Bharti Airtel introduces new "affordable" 3G tariff plans
• Ind‐Swift, Wockhardt UK launch generic atorvastatin tablets in UK
• RIL buys back 14.13 mln shares as of May 15 for 10.29 bln rupees
• RBI says India to offer $2‐bln FX swap facility to SAARC
• Infosys to supply technology to Airtel‐Axis Bk mobile banking ops
• Piramal Healthcare to buy Decision Resources for around $635 mln
• Uttar Pradesh seeks bids to set up Kushinagar international airpor
• Pranab says plan to introduce Direct Taxes Code Bill nextsession
• RBI says India Mar services exports $12.89 bln, imports$9.08 bln
• Glenmark arm gets US FDA OK for anti‐epileptic lamotrigine generic
Domestic events week ahead
• May 22: Budget session of Parliament to end
Global events week ahead
•May 22: Consumer Price Index y‐o‐y of Britain.
• May 23: Trade Balance of Japan, Crude Oil Inventories of US
• May 24: German Final GDP q‐o‐q of Europe, French Flash Manufacturing & Services PMI, Europe Flash Manufacturing & Services PMI, Unemployment Claims of US
Weekly Sector Outlook and Stock Picks
Auto sector ‐ To track broad market this week Shares of automobile companies are likely to move in line with the overall market in the coming week. The market is waiting for Jan‐Mar earnings of Mahindra & Mahindra Ltd and Tata Motors Ltd due in the last week of May for further cues. The recent moderation in sales numbers, depreciating rupee and the uncertainty in the international markets are likely to keep the stocks under pressure. India's passenger cars sales in April grew at the slowest pace for the month in 10 years at a mere 3.4%.
Pharma sector ‐ Seen underperforming broad market this week Pharmaceutical stocks are seen underperforming the broad market, which is likely to see a temporary pull‐back driven by short‐covering. Pharmaceutical stocks are defensive in nature, which tend to move against the broad market. However, the broad market will also track the movement in International bourses and any negative trigger may pull down the indices to the lower trading range. Local markets will predominantly take cues from the developments in Europe and rupee movement against the dollar this week.Stock movement will remain news‐driven with many companies expecting approvals from the US Food and Drug Administration. Cadila Healthcare is expecting the USFDA to approve its Ahmedabad plant, which was inspected in March this year. If the company gets the approval, then it may launch 7‐10 injectables in the market soon. Also in the queue are Ranbaxy Laboratories and Ipca Laboratories, which are seeking the USFDA's nod. While Ranbaxy is looking for approval for
its molecule Isoproneon that is in the developmental stage, Ipca Laboratories is expecting the US regulator's nod for its Indore plant. Also, the Group of Minister's decision on the National Pharmaceutical Pricing Policy would impact pharmaceutical counters. The GoM seeks to regulate prices of 348 essential drugs and its combinations sold across the country. The panel had earlier met in April‐end, but had deferred its decision on capping the prices of essential medicines due to lack of consensus among stakeholders and the ministries concerned.
Capital Goods sector ‐ In line with market ; BHEL earnings eyed Shares of capital goods and engineering companies are likely to track the market, sentiment for which is seen weak, and
will take cues from Bharat Heavy Electricals Ltd's Jan‐Mar earnings on 23 rd May. Action, if any, would be stock‐specific.Shares of Larsen & Toubro Ltd have risen since Monday last week after the company posted higher growth in topline and bottomline for Jan‐Mar. L&T's net profit grew 14% to 1920.41 cr rupees in Jan‐Mar, and net sales rose 20% to 18775.1 cr rupees. The company guided for 15‐20% growth in sales and order inflow for 2012‐13, even though it failed to meet the
5% order inflow guidance for 2011‐12.
FMCG Sector ‐ Seen gaining on defensive buying by investors Shares of fast‐moving consumer goods companies are seen gaining in the week ahead as investors continue to play defensive and shore up investments in these stocks. It is expected that these shares are likely to continue as investors continue to park money in defensive categories such as FMCG and Pharmaceutical stocks. In the Jan‐Mar quarter, sales volume growth of some big companies such as Hindustan Unilever, Asian Paints Ltd and Dabur India were above street expectations, which is encouraging investors. Domestic sales volume growth of FMCG companies will remain healthy as penetration levels and per capita usage will remain attractive for years to come, and both rural and urban India will drive demand. The only possible glitch in the volumes story could be the Packaged Commodities Rules, 2011 which, when implemented, could lead to slower volume expansion. The rules are expected to come into force in July.
Cement Sector ‐ Seen rangebound with negative bias this week Shares of major cement companies may continue see a rangebound trade with a negative bias this week, as investors are likely to remain cautious due to reports the Competition Commission of India may impose heavy fines on ement makers in an alleged price rigging case. The news has been weighing on the stocks for the past two months.
IT Sector ‐ Seen slightly up on rupee depreciation vs dollar Shares of information technology companies are seen up in the week ahead because of rupee's depreciation against the dollar. However, the disappointing results and guidance given by tier‐I companies including Infosys and Wipro that indicate gloomy demand environment will continue to weigh on these stocks. The local currency has been depreciating on the back of risk aversion seen globally. If the rupee continues to depreciate, it is really going to help the software companies and is in fact the sole positive factor for the sector. Depreciation in the rupee against the dollar benefits the Indian software exporters as they get nearly 65% of their revenue from the US.
Oil Sector ‐ PSU retailers up, RIL subdued this week Shares of state‐owned oil retailers are seen up this week ahead of their earning for Jan‐Mar. Bharat Petroleum Corp is reporting its earnings for the quarter on Friday 25 th May. Jan‐Mar is a usually a good quarter for these companies as they
get the major part of the compensation due to them from the government for subsidized sale of fuels. The bottomline of all the three companies is expected to rise manifold. Apart from the earnings, softening of the crude prices will also lift the shares. The rupee's decline, against the dollar, though remains a concern and limits the upside. There is a possibility of fuel price hike (diesel, LPG and kerosene) during June 2012 will drive the stock in the near term.r ‐ PSU retailers up, RIL subdued this week Shares of state‐owned oil retailers are seen up this week ahead of their earning for Jan‐Mar. Bharat Petroleum Corp is reporting its earnings for the quarter on Friday 25
th May. Jan‐Mar is a usually a good quarter for these companies as they get the major part of the compensation due to them from the government for subsidized sale of fuels. The bottomline of
all the three companies is expected to rise manifold. Apart from the earnings, softening of the crude prices will also lift the shares. The rupee's decline, against the dollar, though remains a concern and limits the upside. There is a possibility of fuel price hike (diesel, LPG and kerosene) during June 2012 will drive the stock in the near term.
Telecom Sector ‐ In range with slight negative bias this week Telecom stocks are seen trading rangebound to slightly down this week due to lack of any positive trigger in the near term. The stocks have been trading with a weak bias on account of regulatory uncertainty, with telecom companies strongly opposing the recommendations of the Telecom Regulatory Authority of India on spectrum auction norms. Investors' sentiment on the market remains bearish as inflows from foreign institutional investors have slowed down due to policy paralysis, retrospective tax proposals by the government and also due to the worsening Eurozone debt crisis.
Market Range for Week 4750‐ 5150
Resistance – Nifty facing Resistance level @4950 level above this levelit may go up to @5050 &@ 5150 level
Support ‐ Support comes for market @4850 level for Nifty; below this level Nifty next support @4800 and @4750 will be the major support for Market.
Technical – Last week Nifty opened at 4934 & it made a high of 4957.Last week we have seen some volatile trade in the market. Nifty made a low of 4788 & closed at 4891.Last week Nifty drag 168 points from its high & on weekly basis it closed at 37 point’s lower. Sensex made a weekly high of 16390 & a low of 15809 almost it drags 581 points in the week from its high.So overall last week we have seen some volatile trade with stock specific action in the market.
For the coming week the market range we expect 4750‐5150.