Key developments during the week
* India core sector growth slows to 2.6% in December
* HC orders wind‐up, end of the road for Dunlop
* India Dec CPI industrial workers inflation 11.17% vs 9.55%Nov
* India revises FY12 GDP growth to 6.2% from 6.5% earlier
* India Apr‐Dec fiscal gap 4.047 trln rupees vs 3.810 trln yrago
* Cabinet panel allows ONGC Videsh to buy stake in Azerbaijan assets
* Jet Air source says shr sale deal with Etihad to be inked in a week
* Cabinet OKs 2‐bln‐rupee fincl package to revive Scooters India
* Oriental Bank to up deposit rates on some maturities from Fri
* Higher provisions pull down Allahabad Bank Oct‐Dec PAT by 45% on yr
* CMD says Union Bank of India looking to raise funds via QIP Jan‐Mar
* Cement cos look to up prices Fri even as demand remains subdued
* Tata Global Oct‐Dec consol PAT 802.60 mln rupees, up 25.3% on year
* Omaxe to raise 2.5 bln rupees via fixed deposit scheme by end FY14
* SC refers Haldia Bulk Terminal's equipment case back to Calcutta HC
Domestic events week ahead
* Feb 5: Services PMI and composite PMI for January, by HSBC.
* Feb 7: Advance estimate for GDP in 2012‐13, by CSO.Global events week ahead
*Feb 04: Spanish Unemployment Change , Europe PPI m/m, US Factory Orders m/m
* Feb 05: Spanish Services PMI, Italian Services PMI, Europe Retail Sales m/m, US ISM Non‐Manufacturing PMI
* Feb 06: German Factory Orders m/m, US Crude Oil Inventories
* Feb 07: Japan Core Machinery Orders m/m, French Trade Balance, Spanish 10‐y Bond Auction, French 10‐y BondAuction, German Industrial Production m/m, ECB Press Conference, US Unemployment Claims, USPrelim Nonfarm Productivity q/q
* Feb 08: Japan Current Account, US Trade Balance
Weekly Sector Outlook and Stock Picks
Auto sector ‐ To track Jan sales this week; M&M earnings eyed
Sales figures for the month of January detailed by automobile manufacturers would lend cues to the counters in thecoming week. Maruti Suzuki India Ltd today reported a 1.1% fall in its January total vehicle sales to 114,205 units, whichwas better than expected and would see the stock reacting positively in the coming week. Mahindra & Mahindra Ltd'stotal automotive sector sales rose 11% on year to 49,503 units in January, powered by a 33% increase in its domesticpassenger vehicles sales at 26,555 units, which would result in a marginal positive movement in its counter early thisweek. Investors will also eye automakers' Oct‐Dec earnings, with Mahindra & Mahindra Ltd slated to announce its results on Feb 8.
Capital Goods sector ‐To trade with negative bias this week Shares of most capital goods companies are seen trading with a negative bias this week due to weak Oct‐Dec earnings and high valuation of stocks. On the earnings front, out of the seven capital goods and engineering, which released Oct‐Dec earnings in the last week of January, only Cummins India reported earnings above street estimates. Electrical equipment maker Crompton Greaves, which hit a 52‐week low on the back of its disappointing Oct‐Dec results, could see some value buying if the price of the shares falls below 90 rupees, the second analyst said. Shares of boiler, generator and turbine makers like BGR Energy could also see a drop in price on account of likely dull Oct‐Dec earnings.
FMCG Sector ‐Down this week on profit booking Shares of major fast moving consumer goods companies are seen down this week due to profit booking by investors.FMCG shares are currently trading at high values, and given the below‐par Oct‐Dec earnings of some companies such asHindustan Unilever and Colgate Palmolive, there is room for correction in these shares. Over the past week, shares of Hindustan Unilever and Colgate Palmolive India fell, even as sector heavyweight ITC gained 3.2%. Marico shares gained 5.9% over the last five sessions, on the back of the company's Oct‐Dec earnings, which were at par with market expectations. Marico reported a consolidated net profit of 1.02 bln rupees for Oct‐Dec, up 21.61% year on year. Net sales rose 10.85% to 11.64 bln rupees.
Cement Sector ‐ Bias weak this week on prolonged demand slump
A prolonged delay in revival of demand may lead to a negative bias for shares of cement makers this week, as companies may not be able to take the much‐awaited price hikes. Typically, cement prices are increased in Oct‐Dec as demand returns after a seasonal slump in construction activity during Jul‐Sep. But high interest rates and elections in some states led to subdued real estate and infrastructure activity in Oct‐Dec. Cement demand did not see any revival in January also. Cement makers are now anticipating a strong uptick in demand after the Reserve Bank o f India reduced key policy rates on Tuesday, which is expected to make loans for construction and buying houses cheaper.Additionally, margins of cement makers may also take a hit as they are unable to pass on the burden of high costs. Prices of diesel were raised by 5 rupees per ltr in September, and there was another marginal increase earlier this month. Also, the price hike on bulk usage of diesel has increased the cost pressure on some cement companies, as they use generators to run plants during power cuts.
IT Sector ‐ In range this week; profit sale likely in Infosys Shares of major information technology companies are seen trading in a range this week, with likelihood of some profit booking in Infosys Ltd following its upswing in the last 15 trading sessions. On Friday, shares of most IT companies fell on correction after their rise witnessed in the last six sessions on solid performance of the overall sector.
Oil Sector ‐ PSU oil retailers in range Shares of state‐owned oil marketing companies are expected to trade in a narrow range this week taking cues from the rupee‐dollar and crude prices movements. The rupee gained in strength this week against the dollar, which is good for Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd as they import over 75% of their crude oil requirements. Also, the focus will be on government's compensation to these companies for selling oil products at subsidised rates. The three company's together incurred revenue loss of around 400 bln rupees on diesel, kerosene and cooking gas sales in Oct‐Dec of which the upstream companies paid 151 bln rupees. The government is yet to announce payment of remaining money to these companies, without which they may report massive losses. However, the downside is seen limited because the government has allowed these companies to revise diesel prices regularly, which is likely to benefit the them going forward. Reliance Industries meanwhile may gain after the defence ministry has allowed work to progress on KG‐D6 block, apart from 39 other oil and gas blocks. The company is already struggling to cap the declining gas output from the block and with the defence ministry threatening to stop work, it could have taken a bigger hit.Also global oil product prices have moved up in recent weeks resulting in an improvement in refining margins. Refining is the biggest driver of the company's earnings accounting for almost 80% of its revenues
Steel Sector ‐ In range; Tata Steel, SAIL earnings eyed Shares of major steel companies are seen moving in a narrow range this week as inventory build‐up over the past few months will counteract cues from likely pick up in domestic demand for the alloy. Expectations of a rise in local demand for steel from the infrastructure and construction sectors are expected to keep stocks of steel companies in the positive zone. The upside in the stocks is, however, limited ahead of Oct‐Dec earnings of major steel producer such as Steel Authority of India Ltd and Tata Steel Ltd. Tata Steel will be detailing its earnings on Feb 13, while Steel Authority of India will detail its financial results on Feb 12.
Pharma sector ‐ In range this week; Cadila, Cipla in focus Shares of major pharmaceutical companies are seen trading in a range. Shares of Cadila Healthcare, Aurobindo Pharma and Cipla Ltd will be eyed, as the companies are slated to detail their quarterly earnings this week. Aurobindo Pharma's domestic growth is likely to get a push from strong currency realizations.
Weekly Chart View –
On daily chart market closed below short term moving avg (20DMA) & closed below channel.Apart from that osilatoralso showing negative divergens.On weekly chart osilator showing negative divergens, but still above upper trend line. So overall 5980‐5950 is support for market, closed below that can see some more downside in the market & upper side still 6050‐6080 is strong resistance & we should use caution approach at higher level unless we did not get close above 6080‐6120.
On Friday Dow rose 149 points, or 1.1%. The S&P500 rose 1% & Nasdaq gained 1.2%. Despite the day’s big gain, stocks ended modestly higher for the week.The Dow gained 0.8%, the S&P500 increased 0.6% & the Nasdaq climbed 0.9%.Weekly Chart
Market Commentary –
The focus on the stock market is currently on Q3 December 2012 results. Investors and analysts will closely watch the management commentary that would accompany the result which could cause revision in their future earnings forecast of the company for the current year and or next year.
Markit Economics will unveil HSBC India Services PMI for December 2012 on Tuesday, 5 February 2013. The HSBC services Purchasing Managers' Index, based on a survey of around 400 companies, rose to 55.6 in December 2012 from November's 52.1. Services make up nearly 60% of India's economic output.
* India core sector growth slows to 2.6% in December
* HC orders wind‐up, end of the road for Dunlop
* India Dec CPI industrial workers inflation 11.17% vs 9.55%Nov
* India revises FY12 GDP growth to 6.2% from 6.5% earlier
* India Apr‐Dec fiscal gap 4.047 trln rupees vs 3.810 trln yrago
* Cabinet panel allows ONGC Videsh to buy stake in Azerbaijan assets
* Jet Air source says shr sale deal with Etihad to be inked in a week
* Cabinet OKs 2‐bln‐rupee fincl package to revive Scooters India
* Oriental Bank to up deposit rates on some maturities from Fri
* Higher provisions pull down Allahabad Bank Oct‐Dec PAT by 45% on yr
* CMD says Union Bank of India looking to raise funds via QIP Jan‐Mar
* Cement cos look to up prices Fri even as demand remains subdued
* Tata Global Oct‐Dec consol PAT 802.60 mln rupees, up 25.3% on year
* Omaxe to raise 2.5 bln rupees via fixed deposit scheme by end FY14
* SC refers Haldia Bulk Terminal's equipment case back to Calcutta HC
Domestic events week ahead
* Feb 5: Services PMI and composite PMI for January, by HSBC.
* Feb 7: Advance estimate for GDP in 2012‐13, by CSO.Global events week ahead
*Feb 04: Spanish Unemployment Change , Europe PPI m/m, US Factory Orders m/m
* Feb 05: Spanish Services PMI, Italian Services PMI, Europe Retail Sales m/m, US ISM Non‐Manufacturing PMI
* Feb 06: German Factory Orders m/m, US Crude Oil Inventories
* Feb 07: Japan Core Machinery Orders m/m, French Trade Balance, Spanish 10‐y Bond Auction, French 10‐y BondAuction, German Industrial Production m/m, ECB Press Conference, US Unemployment Claims, USPrelim Nonfarm Productivity q/q
* Feb 08: Japan Current Account, US Trade Balance
Weekly Sector Outlook and Stock Picks
Auto sector ‐ To track Jan sales this week; M&M earnings eyed
Sales figures for the month of January detailed by automobile manufacturers would lend cues to the counters in thecoming week. Maruti Suzuki India Ltd today reported a 1.1% fall in its January total vehicle sales to 114,205 units, whichwas better than expected and would see the stock reacting positively in the coming week. Mahindra & Mahindra Ltd'stotal automotive sector sales rose 11% on year to 49,503 units in January, powered by a 33% increase in its domesticpassenger vehicles sales at 26,555 units, which would result in a marginal positive movement in its counter early thisweek. Investors will also eye automakers' Oct‐Dec earnings, with Mahindra & Mahindra Ltd slated to announce its results on Feb 8.
Capital Goods sector ‐To trade with negative bias this week Shares of most capital goods companies are seen trading with a negative bias this week due to weak Oct‐Dec earnings and high valuation of stocks. On the earnings front, out of the seven capital goods and engineering, which released Oct‐Dec earnings in the last week of January, only Cummins India reported earnings above street estimates. Electrical equipment maker Crompton Greaves, which hit a 52‐week low on the back of its disappointing Oct‐Dec results, could see some value buying if the price of the shares falls below 90 rupees, the second analyst said. Shares of boiler, generator and turbine makers like BGR Energy could also see a drop in price on account of likely dull Oct‐Dec earnings.
FMCG Sector ‐Down this week on profit booking Shares of major fast moving consumer goods companies are seen down this week due to profit booking by investors.FMCG shares are currently trading at high values, and given the below‐par Oct‐Dec earnings of some companies such asHindustan Unilever and Colgate Palmolive, there is room for correction in these shares. Over the past week, shares of Hindustan Unilever and Colgate Palmolive India fell, even as sector heavyweight ITC gained 3.2%. Marico shares gained 5.9% over the last five sessions, on the back of the company's Oct‐Dec earnings, which were at par with market expectations. Marico reported a consolidated net profit of 1.02 bln rupees for Oct‐Dec, up 21.61% year on year. Net sales rose 10.85% to 11.64 bln rupees.
Cement Sector ‐ Bias weak this week on prolonged demand slump
A prolonged delay in revival of demand may lead to a negative bias for shares of cement makers this week, as companies may not be able to take the much‐awaited price hikes. Typically, cement prices are increased in Oct‐Dec as demand returns after a seasonal slump in construction activity during Jul‐Sep. But high interest rates and elections in some states led to subdued real estate and infrastructure activity in Oct‐Dec. Cement demand did not see any revival in January also. Cement makers are now anticipating a strong uptick in demand after the Reserve Bank o f India reduced key policy rates on Tuesday, which is expected to make loans for construction and buying houses cheaper.Additionally, margins of cement makers may also take a hit as they are unable to pass on the burden of high costs. Prices of diesel were raised by 5 rupees per ltr in September, and there was another marginal increase earlier this month. Also, the price hike on bulk usage of diesel has increased the cost pressure on some cement companies, as they use generators to run plants during power cuts.
IT Sector ‐ In range this week; profit sale likely in Infosys Shares of major information technology companies are seen trading in a range this week, with likelihood of some profit booking in Infosys Ltd following its upswing in the last 15 trading sessions. On Friday, shares of most IT companies fell on correction after their rise witnessed in the last six sessions on solid performance of the overall sector.
Oil Sector ‐ PSU oil retailers in range Shares of state‐owned oil marketing companies are expected to trade in a narrow range this week taking cues from the rupee‐dollar and crude prices movements. The rupee gained in strength this week against the dollar, which is good for Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd as they import over 75% of their crude oil requirements. Also, the focus will be on government's compensation to these companies for selling oil products at subsidised rates. The three company's together incurred revenue loss of around 400 bln rupees on diesel, kerosene and cooking gas sales in Oct‐Dec of which the upstream companies paid 151 bln rupees. The government is yet to announce payment of remaining money to these companies, without which they may report massive losses. However, the downside is seen limited because the government has allowed these companies to revise diesel prices regularly, which is likely to benefit the them going forward. Reliance Industries meanwhile may gain after the defence ministry has allowed work to progress on KG‐D6 block, apart from 39 other oil and gas blocks. The company is already struggling to cap the declining gas output from the block and with the defence ministry threatening to stop work, it could have taken a bigger hit.Also global oil product prices have moved up in recent weeks resulting in an improvement in refining margins. Refining is the biggest driver of the company's earnings accounting for almost 80% of its revenues
Steel Sector ‐ In range; Tata Steel, SAIL earnings eyed Shares of major steel companies are seen moving in a narrow range this week as inventory build‐up over the past few months will counteract cues from likely pick up in domestic demand for the alloy. Expectations of a rise in local demand for steel from the infrastructure and construction sectors are expected to keep stocks of steel companies in the positive zone. The upside in the stocks is, however, limited ahead of Oct‐Dec earnings of major steel producer such as Steel Authority of India Ltd and Tata Steel Ltd. Tata Steel will be detailing its earnings on Feb 13, while Steel Authority of India will detail its financial results on Feb 12.
Pharma sector ‐ In range this week; Cadila, Cipla in focus Shares of major pharmaceutical companies are seen trading in a range. Shares of Cadila Healthcare, Aurobindo Pharma and Cipla Ltd will be eyed, as the companies are slated to detail their quarterly earnings this week. Aurobindo Pharma's domestic growth is likely to get a push from strong currency realizations.
Telecom Sector ‐ Bharti Airtel seen down this week, on weak result Bharti Airtel Ltd is seen trading with a weak bias this week, after announcing a disappointing set of results for Oct‐Dec quarter, while Idea Cellular Ltd and Reliance Communications are expected to trade firm. Bharti Airtel reported a sequential decline in its consolidated net profit for the 12 th straight quarter to 2.83 bln rupees, down 60.7% quarter‐on‐ quarter.
For the coming week the market range we expect 6080‐5880
Technical – Last week Nifty opened at 6064 & it made a high of 6111.Last week we have seen some range bound market. Nifty made a low of 5983 & closed at 5998.Last week Nifty drag 128 points from its high & on weekly basis it closed at 76 point’s lower. Sensex made a weekly high of 20203 & a low of 19736 almost it drags 467 points in the week from its high.So overall last week we have seen some rangebound market with negative bias
Weekly Chart View –
On daily chart market closed below short term moving avg (20DMA) & closed below channel.Apart from that osilatoralso showing negative divergens.On weekly chart osilator showing negative divergens, but still above upper trend line. So overall 5980‐5950 is support for market, closed below that can see some more downside in the market & upper side still 6050‐6080 is strong resistance & we should use caution approach at higher level unless we did not get close above 6080‐6120.
On Friday Dow rose 149 points, or 1.1%. The S&P500 rose 1% & Nasdaq gained 1.2%. Despite the day’s big gain, stocks ended modestly higher for the week.The Dow gained 0.8%, the S&P500 increased 0.6% & the Nasdaq climbed 0.9%.Weekly Chart
Market Commentary –
The focus on the stock market is currently on Q3 December 2012 results. Investors and analysts will closely watch the management commentary that would accompany the result which could cause revision in their future earnings forecast of the company for the current year and or next year.
Markit Economics will unveil HSBC India Services PMI for December 2012 on Tuesday, 5 February 2013. The HSBC services Purchasing Managers' Index, based on a survey of around 400 companies, rose to 55.6 in December 2012 from November's 52.1. Services make up nearly 60% of India's economic output.
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