Key developments during the week
• India Jun WPI inflation at 7.25%, sharply below estimates
• India Jun CPI combined inflation rate 10.02% vs 10.36% May
• RBI panel says banks must disclose all recast loans on book
• Source says EGoM favours deferred payment for 2G spectrum
• Cabinet OKs 1 yr extension for panel examining illegal mining cases
• Cairn India sees more prospects in Barmer with 19 satellite fields
• CERC keeps Tata Power's plea to hike Mundra tariff in abeyance
• Tata Power synchronises 800‐MW unit II of Mundra power plant
• Reliance Communications launches 3G tablet at 14,499 rupees
• Welspun Corp bids for steel pipe, plate orders worth 20 bln rupees
• Facor Steels' Nagpur plant gets pollution board'sconditional nod
• Govt asks cash‐rich state‐owned cos to expedite investment plans
• Hindustan Dorr gets 1.8‐bln‐rupee order from Nuclear Power Corp
•NMDC resumes iron ore exports, may hike Jul‐Sep overseas prices 4%
• Competition Appellate Tribunal to re‐hear DLF case Oct 6‐8
• Source says SBI in talks to pick up stake in ONGC Petro additions Ltd
Domestic events week ahead
• Jul 25: 13th President of India to be sworn in.
Global events week ahead
•Jul 24 : French Flash Manufacturing PMI, French Flash Services PMI, Flash Manufacturing PMI of Europe, Flash
Services PMI
• Jul 25 : German Retail Sales m/m, Prelim GDP q/q of Britain, Crude Oil Inventories of US• Jul 26: M3 Money Supply y/y of Europe, Unemployment Claims of US• Jul 27: German Prelim CPI m/m, Advance GDP q/q of US,
Weekly Sector Outlook and Stock Picks
Capital Goods sector ‐ To take cues from L&T Apr‐Jun results
Shares of capital goods and engineering companies are likely to take cues for this week from sector major Larsen &Toubro Ltd's Apr‐Jun earnings scheduled to be announced Monday. On Monday, investors would keenly watch L&T management's comments on any revision in the revenue and order inflow guidance for the year ending March. Markets will eagerly eye the value of order inflows made during the quarter as the company had missed its revised guidance of 5% growth in order inflows in 2011‐12 (Apr‐Mar). Any dent in margins of L&T may also lead to a slump in share prices of the company as well as of other capital goods and infrastructure companies as it would reflect the difficult scenario in which the industry is operating. Shares of Crompton Greaves are likely to decline in early trade Monday as the company posted Apr‐Jun net profit at 85.9 cr rupees.
Meanwhile, the Cabinet approval to impose import duty on power equipment, which was seen as a critical reform for power equipment manufacturers till sometime back, is now being seen as too late a move to make any impact, dashingall hopes of an upside in shares of Thermax, L&T, Bharat Heavy Electricals Ltd, and BGR Energy Systems.
FMCG Sector ‐ Apr‐Jun earnings to guide trajectory this week
The Apr‐Jun earnings of fast‐moving consumer goods industry heavyweights Hindustan Unilever Ltd and ITC Ltd are seen dictating the trajectory of shares of companies in this sector in the week ahead. Hindustan Unilever will declare its Apr‐ Jun earnings on Jul 23 and ITC will do so on Jul 26. Over the past week, while the broader indices have lost 0.4%, the BSE's FMCG index has gained 0.6%. Shares of Colgate Palmolive India Ltd and Dabur India Ltd rose around 3% each, while those of Hindustan Unilever gained 1.1%. The Apr‐Jun earnings of companies have gained in significance in the absence of any other big company‐specific or industry‐specific triggers.
Cement Sector – Bias positive this week; ACC, Ambuja in focus
Shares of major cement companies are seen rangebound this week with a positive bias as sentiment is seen good after UltraTech Cement today announced Apr‐Jun earnings which were in line with market expectation. Beating Street expectation, India's largest cement maker by capacity, UltraTech Cement Ltd today posted a 14% o n‐year rise in net profit for Apr‐Jun at 778 cr rupees on the back of higher sales. Investors are likely to closely eye for Apr‐Jun earnings of heavyweights ACC and Ambuja Cement on Thursday. Improvedrealisation, higher sales volume, and a low base effect are likely to lead Ambuja Cements profit.
IT Sector ‐ In range this week; HCL Tech earnings eyed
Shares of major information technology companies may trade in a range this week mainly tracking the broader market movement. The market may get some reprieve as Reliance Industries reported better‐than‐expected Apr‐Jun earnings today. Movement in the sector will also be stock‐specific as the sector will be eyeing Apr‐Jun earnings of major companies such as Wipro Ltd and HCL Technologies. Wipro Ltd and Polaris Financial Technologies Ltd are set to announce Apr‐Jun earnings on Tuesday, while HCL Technologies will be detailing its earnings Wednesday.
Oil Sector ‐ RIL seen subdued, oil retailers range bound
Shares of Reliance Industries Ltd may open slightly up on Monday because of the improvement in the company's gross refining margins during Apr‐Jun, but the euphoria is unlikely to last long because of the decline in overall operating performance. For the week, the stock is seen subdued. The company's net profit for the quarter ended June declined 21% on year to 4473 cr rupees, but was better than the estimated at 4365 cr rupees. The bottomline was better only because of tax reversals and lower depreciation, while the operating margin slumped to 7.3% from year ago eriod's
12.2% and 7.7% in the previous quarter. The company though managed to get back the premium in refining margin overthe Singapore benchmark, a crown it had lost in Oct‐Dec. The market is keenly awaiting the results of the presidential poll, after which the government is expected to take a call on key policy reforms, including raising prices of diesel and cooking gas.
Telecom Sector ‐ Stock specific movement this week, results eyed
Action is likely to be stock specific in the telecom sector this week with focus on earnings for Apr‐Jun. Idea Cellular,which will announce its Apr‐Jun earnings on Monday. Tata Teleservices (Maharashtra) will announce its earnings for thequarter on Wednesday. On Friday, the empowered group of ministers on spectrum recommended t o the Cabinet 140‐160 bln rupees as reserve price for 5 Mhz of pan‐India GSM (global system for mobile communications) spectrum for the
proposed 2G auction, according to sources. Besides the reserve price, the ministerial panel is also learnt to have decided on spectrum usage charge of 3‐6% of the company's adjusted gross revenue and allowed deferred payment option for the operators for the spectrum
Steel Stocks Outlook ‐ Seen choppy; JSW Steel Apr‐Jun earnings eyed
Shares of steel companies are seen choppy this week tracking the key stock indices and taking cues from JSW Steel Ltd's Apr‐Jun earnings. In the broad market, trade is expected to be largely rangebound as several companies are slated to report quarterly earnings and due to the expiry of the July futures contract. One of the key steel players, JSW Steel, will report its first quarter earnings on Thursday. Higher interest cost and foreign exchange losses is likely to weigh on the
company's net profit on a consolidated basis
Bank sector‐ Mixed; Apr‐Jun results, RBI norms impact eyed
Bank stocks are seen trading in a mixed trend in the coming week, as Bank Nifty continues to face resistance on the upside and investors continue to eye Apr‐Jun earnings for stock‐specific cues. Among the mid‐sized and small banks, Indian Bank, State Bank of Bikaner and Jaipur, ING Vysya Bank, YES Bank, Vijaya Bank, and State Bank of Mysore will release their earnings in the coming week. Changes in priority sector loan norms and proposed guideline revision for loan restructuring are also likely to have an impact on share prices of banks in the coming week.
Auto sector ‐ Flat to negative; market to eye Apr‐Jun results
Shares of automobile companies are seen tracking the broad market this week, but the bias seems negative given that the sales volume outlook for the sector remains challenging. Investors also will eye Apr‐Jun earnings to take companyspecific cues on auto stocks. Ashok Leyland will announce its results on Tuesday and Maruti Suzuki India will detail its result Saturday. Any clarity from Maruti on whether it will resume operations at its Manesar plant after Wednesday's labour riot would lend direction to the stock that has taken a beating on the bourses following the news.
Monsoon rains will also determine the trend for auto sales in the country, and consequently will have an impact on stocks. Rains were 29% below normal in June and 15% below normal so far in July. If the monsoon continues to be weak, it will add to headwind for the auto stocks.
Market Range for Week 5080‐ 5350
Resistance – Nifty facing Resistance level @5250 level above this level it may go up to @5280 &@ 5350 level.
Support ‐ Support comes for market @5180 level for Nifty; below this level Nifty next support @5150 and @5120 will be the major support for Market.
Technical – Last week Nifty opened at 5232 & it made a high of 5257.Last week we have seen some rangebound market. Nifty made a low of 5169 & closed at 5205.Last week Nifty gain 88 points from its low & on weekly basis it closed at 22 point’s lower. Sensex made a weekly high of 17318 & a low of 17038 almost it gain 280 points in the week from its low.So overall last week we have seen some rangebound market with stocks specific action.
For the coming week the market range we expect 5080‐5350.
Weekly View –
Last week we had expected market range (5150‐5350) & market made a low of 5169 & made a high of 5257, so overall it hold over both side range.
In last week report we had mentioned, on daily chart osilator was in overbought, but it was taking support at100DMA.On weekly chart it was facing resistance at 100WMA, but holding 200WMA & trendline, because of all that we had mentioned market will be in range & all we have seen same.Now on daily chart market still holding 100& 50 DMA support level.On weekly chart market still not able to cross 100WMA, but holding upper channel line, so overall still we can see some consolidation with stocks specific action.Apart from that we have F&O expiry so we can see some
volatility with in range.
On Friday, U.S stocks dropped 121 points, or 0.9%, the S&P500 dipped 14 points, or 1%, & the Nasdaq fell 41 points, or 1.4%.Despite Friday’s losses, the three major indexes ended the week with modest gains.The Dow & S&P500 rose 0.4%,while the Nasdaq climbed 0.6%.
Market Commentary ‐
The market may remain volatile as traders roll over positions from the near‐month July 2012 series to August 2012series.
Stock‐specific action will be at the fore as the first quarter June 2012 earnings season is underway. Investors andanalysts will closely watch 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.
The progress of monsoon rains will be closely watched. Rainfall in the country till July 15 was 22% short of the long‐termaverage, raising concerns that farm output may be hurt and could lead to a rise in food prices. The monsoon rains‐‐which make up around 70% of India's annual rainfall‐‐are crucial to the nation's agriculture sector and broader economy.
More than 60% of the country's farmland is rain‐fed. The timing, distribution and quantity of rainfall are all important for crops.
The counting of votes and voting results for election of the country's 13th president with UPA nominee Pranab Mukherjee against BJP‐backed candidate P.A. Sangma for the post is scheduled on Sunday, 22 July 2012. Polling for thepresidential election took place on 19 July 2012.
There has been speculation that the government will raise fuel prices after the presidential polls to lighten its subsidyburden and improve fiscal position.
• India Jun WPI inflation at 7.25%, sharply below estimates
• India Jun CPI combined inflation rate 10.02% vs 10.36% May
• RBI panel says banks must disclose all recast loans on book
• Source says EGoM favours deferred payment for 2G spectrum
• Cabinet OKs 1 yr extension for panel examining illegal mining cases
• Cairn India sees more prospects in Barmer with 19 satellite fields
• CERC keeps Tata Power's plea to hike Mundra tariff in abeyance
• Tata Power synchronises 800‐MW unit II of Mundra power plant
• Reliance Communications launches 3G tablet at 14,499 rupees
• Welspun Corp bids for steel pipe, plate orders worth 20 bln rupees
• Facor Steels' Nagpur plant gets pollution board'sconditional nod
• Govt asks cash‐rich state‐owned cos to expedite investment plans
• Hindustan Dorr gets 1.8‐bln‐rupee order from Nuclear Power Corp
•NMDC resumes iron ore exports, may hike Jul‐Sep overseas prices 4%
• Competition Appellate Tribunal to re‐hear DLF case Oct 6‐8
• Source says SBI in talks to pick up stake in ONGC Petro additions Ltd
Domestic events week ahead
• Jul 25: 13th President of India to be sworn in.
Global events week ahead
•Jul 24 : French Flash Manufacturing PMI, French Flash Services PMI, Flash Manufacturing PMI of Europe, Flash
Services PMI
• Jul 25 : German Retail Sales m/m, Prelim GDP q/q of Britain, Crude Oil Inventories of US• Jul 26: M3 Money Supply y/y of Europe, Unemployment Claims of US• Jul 27: German Prelim CPI m/m, Advance GDP q/q of US,
Weekly Sector Outlook and Stock Picks
Capital Goods sector ‐ To take cues from L&T Apr‐Jun results
Shares of capital goods and engineering companies are likely to take cues for this week from sector major Larsen &Toubro Ltd's Apr‐Jun earnings scheduled to be announced Monday. On Monday, investors would keenly watch L&T management's comments on any revision in the revenue and order inflow guidance for the year ending March. Markets will eagerly eye the value of order inflows made during the quarter as the company had missed its revised guidance of 5% growth in order inflows in 2011‐12 (Apr‐Mar). Any dent in margins of L&T may also lead to a slump in share prices of the company as well as of other capital goods and infrastructure companies as it would reflect the difficult scenario in which the industry is operating. Shares of Crompton Greaves are likely to decline in early trade Monday as the company posted Apr‐Jun net profit at 85.9 cr rupees.
Meanwhile, the Cabinet approval to impose import duty on power equipment, which was seen as a critical reform for power equipment manufacturers till sometime back, is now being seen as too late a move to make any impact, dashingall hopes of an upside in shares of Thermax, L&T, Bharat Heavy Electricals Ltd, and BGR Energy Systems.
FMCG Sector ‐ Apr‐Jun earnings to guide trajectory this week
The Apr‐Jun earnings of fast‐moving consumer goods industry heavyweights Hindustan Unilever Ltd and ITC Ltd are seen dictating the trajectory of shares of companies in this sector in the week ahead. Hindustan Unilever will declare its Apr‐ Jun earnings on Jul 23 and ITC will do so on Jul 26. Over the past week, while the broader indices have lost 0.4%, the BSE's FMCG index has gained 0.6%. Shares of Colgate Palmolive India Ltd and Dabur India Ltd rose around 3% each, while those of Hindustan Unilever gained 1.1%. The Apr‐Jun earnings of companies have gained in significance in the absence of any other big company‐specific or industry‐specific triggers.
Cement Sector – Bias positive this week; ACC, Ambuja in focus
Shares of major cement companies are seen rangebound this week with a positive bias as sentiment is seen good after UltraTech Cement today announced Apr‐Jun earnings which were in line with market expectation. Beating Street expectation, India's largest cement maker by capacity, UltraTech Cement Ltd today posted a 14% o n‐year rise in net profit for Apr‐Jun at 778 cr rupees on the back of higher sales. Investors are likely to closely eye for Apr‐Jun earnings of heavyweights ACC and Ambuja Cement on Thursday. Improvedrealisation, higher sales volume, and a low base effect are likely to lead Ambuja Cements profit.
IT Sector ‐ In range this week; HCL Tech earnings eyed
Shares of major information technology companies may trade in a range this week mainly tracking the broader market movement. The market may get some reprieve as Reliance Industries reported better‐than‐expected Apr‐Jun earnings today. Movement in the sector will also be stock‐specific as the sector will be eyeing Apr‐Jun earnings of major companies such as Wipro Ltd and HCL Technologies. Wipro Ltd and Polaris Financial Technologies Ltd are set to announce Apr‐Jun earnings on Tuesday, while HCL Technologies will be detailing its earnings Wednesday.
Oil Sector ‐ RIL seen subdued, oil retailers range bound
Shares of Reliance Industries Ltd may open slightly up on Monday because of the improvement in the company's gross refining margins during Apr‐Jun, but the euphoria is unlikely to last long because of the decline in overall operating performance. For the week, the stock is seen subdued. The company's net profit for the quarter ended June declined 21% on year to 4473 cr rupees, but was better than the estimated at 4365 cr rupees. The bottomline was better only because of tax reversals and lower depreciation, while the operating margin slumped to 7.3% from year ago eriod's
12.2% and 7.7% in the previous quarter. The company though managed to get back the premium in refining margin overthe Singapore benchmark, a crown it had lost in Oct‐Dec. The market is keenly awaiting the results of the presidential poll, after which the government is expected to take a call on key policy reforms, including raising prices of diesel and cooking gas.
Telecom Sector ‐ Stock specific movement this week, results eyed
Action is likely to be stock specific in the telecom sector this week with focus on earnings for Apr‐Jun. Idea Cellular,which will announce its Apr‐Jun earnings on Monday. Tata Teleservices (Maharashtra) will announce its earnings for thequarter on Wednesday. On Friday, the empowered group of ministers on spectrum recommended t o the Cabinet 140‐160 bln rupees as reserve price for 5 Mhz of pan‐India GSM (global system for mobile communications) spectrum for the
proposed 2G auction, according to sources. Besides the reserve price, the ministerial panel is also learnt to have decided on spectrum usage charge of 3‐6% of the company's adjusted gross revenue and allowed deferred payment option for the operators for the spectrum
Steel Stocks Outlook ‐ Seen choppy; JSW Steel Apr‐Jun earnings eyed
Shares of steel companies are seen choppy this week tracking the key stock indices and taking cues from JSW Steel Ltd's Apr‐Jun earnings. In the broad market, trade is expected to be largely rangebound as several companies are slated to report quarterly earnings and due to the expiry of the July futures contract. One of the key steel players, JSW Steel, will report its first quarter earnings on Thursday. Higher interest cost and foreign exchange losses is likely to weigh on the
company's net profit on a consolidated basis
Bank sector‐ Mixed; Apr‐Jun results, RBI norms impact eyed
Bank stocks are seen trading in a mixed trend in the coming week, as Bank Nifty continues to face resistance on the upside and investors continue to eye Apr‐Jun earnings for stock‐specific cues. Among the mid‐sized and small banks, Indian Bank, State Bank of Bikaner and Jaipur, ING Vysya Bank, YES Bank, Vijaya Bank, and State Bank of Mysore will release their earnings in the coming week. Changes in priority sector loan norms and proposed guideline revision for loan restructuring are also likely to have an impact on share prices of banks in the coming week.
Auto sector ‐ Flat to negative; market to eye Apr‐Jun results
Shares of automobile companies are seen tracking the broad market this week, but the bias seems negative given that the sales volume outlook for the sector remains challenging. Investors also will eye Apr‐Jun earnings to take companyspecific cues on auto stocks. Ashok Leyland will announce its results on Tuesday and Maruti Suzuki India will detail its result Saturday. Any clarity from Maruti on whether it will resume operations at its Manesar plant after Wednesday's labour riot would lend direction to the stock that has taken a beating on the bourses following the news.
Monsoon rains will also determine the trend for auto sales in the country, and consequently will have an impact on stocks. Rains were 29% below normal in June and 15% below normal so far in July. If the monsoon continues to be weak, it will add to headwind for the auto stocks.
Market Range for Week 5080‐ 5350
Resistance – Nifty facing Resistance level @5250 level above this level it may go up to @5280 &@ 5350 level.
Support ‐ Support comes for market @5180 level for Nifty; below this level Nifty next support @5150 and @5120 will be the major support for Market.
Technical – Last week Nifty opened at 5232 & it made a high of 5257.Last week we have seen some rangebound market. Nifty made a low of 5169 & closed at 5205.Last week Nifty gain 88 points from its low & on weekly basis it closed at 22 point’s lower. Sensex made a weekly high of 17318 & a low of 17038 almost it gain 280 points in the week from its low.So overall last week we have seen some rangebound market with stocks specific action.
For the coming week the market range we expect 5080‐5350.
Weekly View –
Last week we had expected market range (5150‐5350) & market made a low of 5169 & made a high of 5257, so overall it hold over both side range.
In last week report we had mentioned, on daily chart osilator was in overbought, but it was taking support at100DMA.On weekly chart it was facing resistance at 100WMA, but holding 200WMA & trendline, because of all that we had mentioned market will be in range & all we have seen same.Now on daily chart market still holding 100& 50 DMA support level.On weekly chart market still not able to cross 100WMA, but holding upper channel line, so overall still we can see some consolidation with stocks specific action.Apart from that we have F&O expiry so we can see some
volatility with in range.
On Friday, U.S stocks dropped 121 points, or 0.9%, the S&P500 dipped 14 points, or 1%, & the Nasdaq fell 41 points, or 1.4%.Despite Friday’s losses, the three major indexes ended the week with modest gains.The Dow & S&P500 rose 0.4%,while the Nasdaq climbed 0.6%.
Market Commentary ‐
The market may remain volatile as traders roll over positions from the near‐month July 2012 series to August 2012series.
Stock‐specific action will be at the fore as the first quarter June 2012 earnings season is underway. Investors andanalysts will closely watch 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.
The progress of monsoon rains will be closely watched. Rainfall in the country till July 15 was 22% short of the long‐termaverage, raising concerns that farm output may be hurt and could lead to a rise in food prices. The monsoon rains‐‐which make up around 70% of India's annual rainfall‐‐are crucial to the nation's agriculture sector and broader economy.
More than 60% of the country's farmland is rain‐fed. The timing, distribution and quantity of rainfall are all important for crops.
The counting of votes and voting results for election of the country's 13th president with UPA nominee Pranab Mukherjee against BJP‐backed candidate P.A. Sangma for the post is scheduled on Sunday, 22 July 2012. Polling for thepresidential election took place on 19 July 2012.
There has been speculation that the government will raise fuel prices after the presidential polls to lighten its subsidyburden and improve fiscal position.
