Key developments during the week
* India estimates FY13 GDP growth at decade's low of 5.0%
* CSO source says weakness in Oct‐Dec pulled down FY13GDP growth
* CRISIL Research sees India economic growth below 5% inOct‐Mar
* Report says India's Consumer Confidence Index slips to38.0 in Jan
* US says India putting barriers to solar imports, approachesWTO
* Diesel price rise wipes out half of Railways' mop‐up fromfare hike
* Canara Bank to up rates on some bulk deposit tenures by 5 bps Fri
* Divest secy says expect to raise over 115 bln rupee from NTPC divest
* Cabinet OKs forming Turkmen‐Afghan‐Pakistan‐India gas pipeline SPV
* Source says Lanco Infra bid lowest to operate SAIL Tasra coal block
* GAIL in pact with EDF Trading to jointly buy assets in N America
* DLF challenges competition panel's order tweaking flat buy pact
* MCX‐SX to initially start equity trading with shrs of 1,116cos Mon
* Mercator Singapore arm seen in red Oct‐Dec; may dragparent too
* Jindal Steel withdraws plan to buy Afferro Mining's Cameroon mine
Domestic events week ahead
*Feb 12: CPI for Combined, Rural, and Urban for January, by CSO.
* Feb 12: Index of Industrial Production for December, by CSO.
* Feb 14: WPI inflation for January, by commerce and industry ministry
* Feb 14: State assembly elections in Tripura.
Global events week ahead
* Feb 11: French Industrial Production m/m, Eurogroup Meetings
* Feb 12: ECOFIN Meetings, BOC Gov Carney Speaks
* Feb 13: Europe Industrial Production m/m, US Core Retail Sales m/m, US Retail Sales m/m, US Import Pricesm/m, US Crude Oil Inventories, US 10‐y Bond Auction
* Feb 14: Japan Prelim GDP q/q, Japan Monetary Policy Statement, French Prelim GDP q/q, German Prelim GDP q/q, French Prelim Non‐Farm Payrolls q/q, ECB Monthly Bulletin, Europe Flash GDP q/q, US UnemploymentClaims
* Feb 15: Europe Trade Balance, Europe Spanish 10‐y Bond Auction, US Industrial Production m/m, US Prelim UoM Consumer Sentiment
Weekly Sector Outlook and Stock Picks
Capital Goods sector ‐ Shares seen underperforming; L&T up
Most shares of capital goods and engineering companies are seen underperforming this week. The capital goods and engineering heavyweight is expected to remain in this range till mega and ultra mega project contracts do not return to the market. Generator sets manufacturer Cummins India, which recently reported a healthy bottomline and topline growth for Oct‐Dec, will remain the sector favourite of investors, along with L&T. The results for most capital goodscompanies have been below market estimates and are seen underperforming in the near term as well. Towards the end of this week, wind power equipment supplier Suzlon Energy will report its earnings for the quarter‐ ended in December. According to an average of estimates of two brokerages, the company is seen posting net loss of 3.07 bln rupees.
FMCG Sector ‐ Down this week Shares of major fast‐moving consumer goods companies are seen falling this week as investors continue to shift to stocks in other sectors such as banks and information technology.
Over the past week, all major FMCG companies' shares shed value, and the BSE FMCG Index lost more than broader markets. This is expected to continue over the subsequent sessions as investors seek cheaper stocks where they can take positions and then profit from.
IT Sector ‐ Infosys, TCS bullish, HCL, Wipro seen sideways Shares of heavyweight information technology players such as Infosys and Tata Consultancy Services are seen having a bullish outlook this week in line with the CNX IT index, while those of companies such as HCL Technologies and Wipro are seen trading sideways. Shares of most IT companies ended up over last week's close on the positive movement of the CNX IT index. US‐based Cognizant Technology Solutions whose earnings sets the growth trend for the Indian IT sector reported its earnings on Thursday. It reported a moderate 3% sequential growth in revenue and guided for a 17% on year rise in the same, below analysts expectation of 20% growth.
Steel Sector ‐ Weak; Tata Steel, SAIL Oct‐Dec earnings eyed
With continued weakness in fundamentals, shares of major steel makers will track the broad market for cues in the coming sessions. The equity market is seen down this week on continued selling pressure. Also, steel stocks will be slightly weak ahead of the release of Oct‐Dec earnings of Steel Authority of India on Tuesday and Tata Steel on Wednesday.
Rising raw material cost of steel and increase in steel product prices amid subdued demand for the alloy will keep the metal market subdued in the coming sessions. Rashtriya Ispat Nigam and JSW Steel have raised product prices for February to bring it in line with the global trend. JSW Steel raised prices of select flat steel products by around 3%, while unlisted Rashtriya Ispat hiked product prices by an average 500 rupees per tn from Feb 1. Jindal Steel and Power also hiked prices of plates and rebars by an average 1,000 rupees per tn. Jindal Steel & Power is expected to take a hit in the coming sessions after it reported the withdrawal of talks to acquire Afferro Mining Inc's iron ore mine at Cameroon in Africa. Mining company Afferro Mining has four iron ore concessions in Cameroon in Africa. Since last year, Jindal Steel & Power has been trying to build its coal and iron ore resource overseas but has not been successful. Development on the company's takeover bid for the entire share of the Australian arm of Gujarat NRE Coke at A$0.20 (11.06 rupees) per share will also be eyed by the market this week. Gujarat NRE Coke's Australian arm had asked its shareholders to take no action on the steel producer's open offer to buy the latter.
Gujarat NRE Coke's Australian subsidiary has said the company will release a statement for its shareholders by Feb 14.
Jindal Steel & Power (Australia), a subsidiary of Jindal Steel and Power, on Jan 31 made a takeover bid for the entire share of the Australian arm of Gujarat NRE Coke
Bank sector ‐ Muted on NPA concerns; SBI earnings eyed
Bank stocks are likely to remain muted and trade with a downward bias this week on continued concerns over asset quality, especially of state‐owned banks, and fears that slowing economic growth will slow down the pace of loan growth. Expectation that selling pressure will continue in the market, will also keep stocks of banks subdued in the coming week. Investors will also eye India's industrial output data for December, due on Tuesday. According to a poll, industrial growth is likely to rise 1.0% in December following a contraction of 0.1% in November. Focus on asset quality has increased due to rise in non‐performing assets and restructured loans of most banks, especially state‐owned, over the last 2‐3 quarters. The Reserve Bank of India's decision to increase provision requirements for stressed loans has also contributed to a hit on bank's profitability in Oct‐Dec and will hurt profits over the coming two years. SBI shares are also
likely to be in the limelight ahead of the bank's Oct‐Dec earnings on Thursday.
Pharma sector ‐ Subdued this week; to eye Dr Reddy's, Wockhardt
Shares of major pharmaceutical stocks are expected to be subdued this week, except the ones that are reporting their quarterly earnings. Dr Reddy's Laboratories Ltd and Wockhardt Ltd will detail their Oct‐Dec earnings Thursday.
Telecom Sector ‐ Seen weak this week but downside limited
Shares of telecom service providers are seen weak this week on broader concerns surrounding the industry but downside in these shares is limited. "There are two broad concerns weighing on the investor sentiment at this point of time. One is what happens to one‐time spectrum fee issue and the other is how do the spectrum auctions go in March”. On Jan 9, the telecom department had asked the established telecom companies to collectively pay around 200 bln rupees as one‐time spectrum fee.
The Union Cabinet had in November approved two sets of one‐time spectrum fee. Operators with spectrum beyond 4.4 MHz are to be charged prospectively for spectrum held beyond that limit based on the market price discovered in the 2G spectrum auction for the remaining period of their licence. The ministerial panel had also decided to levy a retrospective charge from July 2008 on spectrum held beyond 6.2 MHz to a price indexed to 16.58 bln rupees, the rate paid by an operator for pan‐India spectrum in 2001 up to the date of applicability of the auction‐determined price. The fee would be annualised based on State Bank of India's prime lending rate. Various telecom operators have already secured stay orders from various high courts and the Telecom Disputes Settlement and Appellate Tribunal. The spectrum auction will take place from Mar 11 and could further weaken the already‐stretched balance sheets of the service providers. Idea Cellular Ltd recently hiked the base rate of its pre‐paid local voice and 2G data services inMumbai. The hike was effected between Jan 28 and Feb 4.
Market Range for Week 6020‐ 5800
Resistance – Nifty facing Resistance level @5950 level above this level it may go up to @5980 &@ 6020 level.
Support ‐ Support comes for market @5880 level for Nifty; below this level Nifty next support @5850 and @5800 will be the major support for Market.
Technical – Last week Nifty opened at 6025 & it made a high of 6038.Last week we have seen some downside in the market. Nifty made a low of 5883 & closed at 5903.Last week Nifty drag 135 points from its high & on weekly basis it closed at 95 point’s lower. Sensex made a weekly high of 19902 & a low of 19414 almost it drags 488 points in the week from its high.So overall last week we have seen some selling from higher level.
Weekly Chart View –
Last week we had expected market range (6080‐5880) market made a high of 6038 & low of 5903 so it hold our both side range.
In last week report we had mentioned, on daily chart market was closed below short term moving avg(20DMA) , closed below channel & osliator was in negative divergens.On weekly chart also osilator was in negative divergens, because of all that we had mentioned below 5980‐5950 we can see some more downside & all we have see same. Now on daily chart market below 50DMA & below trendline.On weekly chart osilator showing negative divergens & if we join two points (4770 & 5548) draw a trendline market has given close below that line. So overall still use caution approach at every higher level.
On Friday Dow & S&P500 both rose between 0.3% & 0.5% Friday. The Nasdaq jumped nearly 1%. After a somewhat bumpy week, both the Nasdaq & S&P500 logged their sixth straight week of gains.
Weekly Chart
Market Commentary –
The Central Statistics Office (CSO) will unveil data on industrial production for December 2012 on Tuesday, 12 February 2013.The CSO will unveil data on inflation based on the combined consumer price index for urban and rural India for January 2013 on Tuesday, 12 February 2013. Inflation based on the combined consumer price index for urban and rural India edged up to 10.56% in December 2012 from 9.9% in November 2012.
Once the results season concludes on 14 February 2013, investors' focus will shift to expectations from Union Budget 2013‐14 to be presented to the Parliament on 28 February 2013. Investors will focus on changes, if any, in excise duty and service tax in the Budget. It remains to be seen if the government announces measures to revive weak investment growth. It also remains to be seen if the government announces more economic reforms. A key figure to watch out is the divestment target for 2013‐14. It remains to be seen if the Budget contains a clear roadmap for the implementation of Goods and Services Tax (GST). There has been some debate over taxing the super‐rich. It remains to be seen if the Budget provides a clear roadmap to cap the government's subsidy bill. It also remains to be seen if there are measures
to increase agriculture production to rein in food inflation.
* India estimates FY13 GDP growth at decade's low of 5.0%
* CSO source says weakness in Oct‐Dec pulled down FY13GDP growth
* CRISIL Research sees India economic growth below 5% inOct‐Mar
* Report says India's Consumer Confidence Index slips to38.0 in Jan
* US says India putting barriers to solar imports, approachesWTO
* Diesel price rise wipes out half of Railways' mop‐up fromfare hike
* Canara Bank to up rates on some bulk deposit tenures by 5 bps Fri
* Divest secy says expect to raise over 115 bln rupee from NTPC divest
* Cabinet OKs forming Turkmen‐Afghan‐Pakistan‐India gas pipeline SPV
* Source says Lanco Infra bid lowest to operate SAIL Tasra coal block
* GAIL in pact with EDF Trading to jointly buy assets in N America
* DLF challenges competition panel's order tweaking flat buy pact
* MCX‐SX to initially start equity trading with shrs of 1,116cos Mon
* Mercator Singapore arm seen in red Oct‐Dec; may dragparent too
* Jindal Steel withdraws plan to buy Afferro Mining's Cameroon mine
Domestic events week ahead
*Feb 12: CPI for Combined, Rural, and Urban for January, by CSO.
* Feb 12: Index of Industrial Production for December, by CSO.
* Feb 14: WPI inflation for January, by commerce and industry ministry
* Feb 14: State assembly elections in Tripura.
Global events week ahead
* Feb 11: French Industrial Production m/m, Eurogroup Meetings
* Feb 12: ECOFIN Meetings, BOC Gov Carney Speaks
* Feb 13: Europe Industrial Production m/m, US Core Retail Sales m/m, US Retail Sales m/m, US Import Pricesm/m, US Crude Oil Inventories, US 10‐y Bond Auction
* Feb 14: Japan Prelim GDP q/q, Japan Monetary Policy Statement, French Prelim GDP q/q, German Prelim GDP q/q, French Prelim Non‐Farm Payrolls q/q, ECB Monthly Bulletin, Europe Flash GDP q/q, US UnemploymentClaims
* Feb 15: Europe Trade Balance, Europe Spanish 10‐y Bond Auction, US Industrial Production m/m, US Prelim UoM Consumer Sentiment
Weekly Sector Outlook and Stock Picks
Capital Goods sector ‐ Shares seen underperforming; L&T up
Most shares of capital goods and engineering companies are seen underperforming this week. The capital goods and engineering heavyweight is expected to remain in this range till mega and ultra mega project contracts do not return to the market. Generator sets manufacturer Cummins India, which recently reported a healthy bottomline and topline growth for Oct‐Dec, will remain the sector favourite of investors, along with L&T. The results for most capital goodscompanies have been below market estimates and are seen underperforming in the near term as well. Towards the end of this week, wind power equipment supplier Suzlon Energy will report its earnings for the quarter‐ ended in December. According to an average of estimates of two brokerages, the company is seen posting net loss of 3.07 bln rupees.
FMCG Sector ‐ Down this week Shares of major fast‐moving consumer goods companies are seen falling this week as investors continue to shift to stocks in other sectors such as banks and information technology.
Over the past week, all major FMCG companies' shares shed value, and the BSE FMCG Index lost more than broader markets. This is expected to continue over the subsequent sessions as investors seek cheaper stocks where they can take positions and then profit from.
IT Sector ‐ Infosys, TCS bullish, HCL, Wipro seen sideways Shares of heavyweight information technology players such as Infosys and Tata Consultancy Services are seen having a bullish outlook this week in line with the CNX IT index, while those of companies such as HCL Technologies and Wipro are seen trading sideways. Shares of most IT companies ended up over last week's close on the positive movement of the CNX IT index. US‐based Cognizant Technology Solutions whose earnings sets the growth trend for the Indian IT sector reported its earnings on Thursday. It reported a moderate 3% sequential growth in revenue and guided for a 17% on year rise in the same, below analysts expectation of 20% growth.
Steel Sector ‐ Weak; Tata Steel, SAIL Oct‐Dec earnings eyed
With continued weakness in fundamentals, shares of major steel makers will track the broad market for cues in the coming sessions. The equity market is seen down this week on continued selling pressure. Also, steel stocks will be slightly weak ahead of the release of Oct‐Dec earnings of Steel Authority of India on Tuesday and Tata Steel on Wednesday.
Rising raw material cost of steel and increase in steel product prices amid subdued demand for the alloy will keep the metal market subdued in the coming sessions. Rashtriya Ispat Nigam and JSW Steel have raised product prices for February to bring it in line with the global trend. JSW Steel raised prices of select flat steel products by around 3%, while unlisted Rashtriya Ispat hiked product prices by an average 500 rupees per tn from Feb 1. Jindal Steel and Power also hiked prices of plates and rebars by an average 1,000 rupees per tn. Jindal Steel & Power is expected to take a hit in the coming sessions after it reported the withdrawal of talks to acquire Afferro Mining Inc's iron ore mine at Cameroon in Africa. Mining company Afferro Mining has four iron ore concessions in Cameroon in Africa. Since last year, Jindal Steel & Power has been trying to build its coal and iron ore resource overseas but has not been successful. Development on the company's takeover bid for the entire share of the Australian arm of Gujarat NRE Coke at A$0.20 (11.06 rupees) per share will also be eyed by the market this week. Gujarat NRE Coke's Australian arm had asked its shareholders to take no action on the steel producer's open offer to buy the latter.
Gujarat NRE Coke's Australian subsidiary has said the company will release a statement for its shareholders by Feb 14.
Jindal Steel & Power (Australia), a subsidiary of Jindal Steel and Power, on Jan 31 made a takeover bid for the entire share of the Australian arm of Gujarat NRE Coke
Bank sector ‐ Muted on NPA concerns; SBI earnings eyed
Bank stocks are likely to remain muted and trade with a downward bias this week on continued concerns over asset quality, especially of state‐owned banks, and fears that slowing economic growth will slow down the pace of loan growth. Expectation that selling pressure will continue in the market, will also keep stocks of banks subdued in the coming week. Investors will also eye India's industrial output data for December, due on Tuesday. According to a poll, industrial growth is likely to rise 1.0% in December following a contraction of 0.1% in November. Focus on asset quality has increased due to rise in non‐performing assets and restructured loans of most banks, especially state‐owned, over the last 2‐3 quarters. The Reserve Bank of India's decision to increase provision requirements for stressed loans has also contributed to a hit on bank's profitability in Oct‐Dec and will hurt profits over the coming two years. SBI shares are also
likely to be in the limelight ahead of the bank's Oct‐Dec earnings on Thursday.
Pharma sector ‐ Subdued this week; to eye Dr Reddy's, Wockhardt
Shares of major pharmaceutical stocks are expected to be subdued this week, except the ones that are reporting their quarterly earnings. Dr Reddy's Laboratories Ltd and Wockhardt Ltd will detail their Oct‐Dec earnings Thursday.
Telecom Sector ‐ Seen weak this week but downside limited
Shares of telecom service providers are seen weak this week on broader concerns surrounding the industry but downside in these shares is limited. "There are two broad concerns weighing on the investor sentiment at this point of time. One is what happens to one‐time spectrum fee issue and the other is how do the spectrum auctions go in March”. On Jan 9, the telecom department had asked the established telecom companies to collectively pay around 200 bln rupees as one‐time spectrum fee.
The Union Cabinet had in November approved two sets of one‐time spectrum fee. Operators with spectrum beyond 4.4 MHz are to be charged prospectively for spectrum held beyond that limit based on the market price discovered in the 2G spectrum auction for the remaining period of their licence. The ministerial panel had also decided to levy a retrospective charge from July 2008 on spectrum held beyond 6.2 MHz to a price indexed to 16.58 bln rupees, the rate paid by an operator for pan‐India spectrum in 2001 up to the date of applicability of the auction‐determined price. The fee would be annualised based on State Bank of India's prime lending rate. Various telecom operators have already secured stay orders from various high courts and the Telecom Disputes Settlement and Appellate Tribunal. The spectrum auction will take place from Mar 11 and could further weaken the already‐stretched balance sheets of the service providers. Idea Cellular Ltd recently hiked the base rate of its pre‐paid local voice and 2G data services inMumbai. The hike was effected between Jan 28 and Feb 4.
Market Range for Week 6020‐ 5800
Resistance – Nifty facing Resistance level @5950 level above this level it may go up to @5980 &@ 6020 level.
Support ‐ Support comes for market @5880 level for Nifty; below this level Nifty next support @5850 and @5800 will be the major support for Market.
Technical – Last week Nifty opened at 6025 & it made a high of 6038.Last week we have seen some downside in the market. Nifty made a low of 5883 & closed at 5903.Last week Nifty drag 135 points from its high & on weekly basis it closed at 95 point’s lower. Sensex made a weekly high of 19902 & a low of 19414 almost it drags 488 points in the week from its high.So overall last week we have seen some selling from higher level.
Weekly Chart View –
Last week we had expected market range (6080‐5880) market made a high of 6038 & low of 5903 so it hold our both side range.
In last week report we had mentioned, on daily chart market was closed below short term moving avg(20DMA) , closed below channel & osliator was in negative divergens.On weekly chart also osilator was in negative divergens, because of all that we had mentioned below 5980‐5950 we can see some more downside & all we have see same. Now on daily chart market below 50DMA & below trendline.On weekly chart osilator showing negative divergens & if we join two points (4770 & 5548) draw a trendline market has given close below that line. So overall still use caution approach at every higher level.
On Friday Dow & S&P500 both rose between 0.3% & 0.5% Friday. The Nasdaq jumped nearly 1%. After a somewhat bumpy week, both the Nasdaq & S&P500 logged their sixth straight week of gains.
Weekly Chart
Market Commentary –
The Central Statistics Office (CSO) will unveil data on industrial production for December 2012 on Tuesday, 12 February 2013.The CSO will unveil data on inflation based on the combined consumer price index for urban and rural India for January 2013 on Tuesday, 12 February 2013. Inflation based on the combined consumer price index for urban and rural India edged up to 10.56% in December 2012 from 9.9% in November 2012.
Once the results season concludes on 14 February 2013, investors' focus will shift to expectations from Union Budget 2013‐14 to be presented to the Parliament on 28 February 2013. Investors will focus on changes, if any, in excise duty and service tax in the Budget. It remains to be seen if the government announces measures to revive weak investment growth. It also remains to be seen if the government announces more economic reforms. A key figure to watch out is the divestment target for 2013‐14. It remains to be seen if the Budget contains a clear roadmap for the implementation of Goods and Services Tax (GST). There has been some debate over taxing the super‐rich. It remains to be seen if the Budget provides a clear roadmap to cap the government's subsidy bill. It also remains to be seen if there are measures
to increase agriculture production to rein in food inflation.
