Thursday, September 15, 2011

Stocks in action for the day: Bharti Airtel, Cairn India, KFA,

Market Outlook: Indian markets are expected to open with a positive note and trade on constructive phase taking cues from positive Asian markets. Wall St jumps 2% on euro zone relief after the head of the European Commission said it will present options for joint euro zone bonds, a tool that investors view as a step forward to addressing the region's debt crisis.

Back to domestic concern RBI rate hike looks imminent as inflation accelerates to a 13-month high of 9.78%, bankers expect the Reserve Bank of India to increase its key policy rates by 25 basis points in the upcoming policy review due tomorrow. As long as inflation does not decline to a significant level, the Reserve Bank of India (RBI) would continue its tight monetary stance. We expect there could be a hike of 25 basis points in key rates by RBI this would result in loans becoming more expensive in coming days. We are cautious on rate linked sectors like reality & Auto could underperform in coming days.

Indian Markets are following global cues, so we continue to hold a cautious outlook with support 4920 and resistance at 5100.

Global events to watch for:

Þ Consumer Price Index.

Þ Jobless Claims.

Þ Industrial Production.

Þ Philadelphia Fed Survey.

Þ Empire State Mfg Survey.

Global indices Update @ 8:

Dow Jones : 11246 (+140.8)

NASDAQ : 2572 (+40.40)

Nikkei 225 : 8660 (+142.3)

Hang seng : 19214 (+169.5)

SGX CNX Nifty : 5049 (+20.00)

Gold (USD/t oz.) : 1817.5 (- 09.00)

Nymex Crude (F) : 88.60 (+00.54)

INR / 1 USD : 47.80

Call for the day:

SELL Bharti Airtel STOP LOSS 385 TARGET 365

BUY Reliance Industries STOP LOSS 812 TARGET 858

Stocks in action for the day: Bharti Airtel, Cairn India, KFA, Infosys, RIL, Kwality Dairy, Pipavav.

Petrol prices may go up by Rs 3 a litre as rupee weakens: State-owned oil firms may have to raise petrol prices by as much as Rs 3 per litre as the rupee touched two-year low against the US dollar, increasing the cost of importing crude oil. Oil retailers are losing Rs 2.61 per litre or Rs 15 crore per day on sale of petrol. Together with local taxes, the hike needed to level domestic rates with international prices is about Rs 3 per litre. IOC , BPC L and HPCL have lost Rs 2,450 crore this fiscal on selling petrol -- whose rates were freed from government control in June last year -- below the cost. At current rate, oil firms will accrue another Rs 2,850 crore of loss on sale of petrol, taking the total loss on a fuel that was freed from control, to Rs 5,300 crore for the full fiscal. Due to hardening of crude/petroleum product prices in the international market and depreciation of rupee viz-a-viz dollar, the under-recoveries of oil marketing companies have been increasing during 2011-12. The Indian basket of crude oil averaged USD 106.94 per barrel in August and USD 110.88 a barrel in September.

Negative news for telecom sector : Draft telecom policy 2011: Roaming mobile charges could be abolished; MNP may be extended beyond base circle: Roaming charges paid by mobile users when traveling within India could be abolished, bringing down the monthly bills of frequent travellers but at the same time denting the revenues of telecom companies. These proposals, especially the one related to doing away with roaming, may be objected to by telcos, as roaming generates Rs 13,000-14,000 crore, or 10% of total revenues of operators. Under current rules, a mobile phone company can charge a maximum of Rs 1.40 per minute for a local call for a mobile user traveling outside his home network while for STD calls, the limit is Rs 2.40 per minute for all outgoing and Rs 1.75 per minute for all incoming calls while on roaming, irrespective of the distance.

Vijay Mallya-promoted Kingfisher Airlines's auditor BK Ramadhyani & Co raises doubts' over company's survival: Audit firm BK Ramadhyani & Co, which examined the books of the airline, said in remarks published in the airline's annual report that Kingfisher's ability to remain a "going concern" will depend on its promoters bringing in money into the company. Kingfisher, which had accumulated losses of Rs 4,321 crore - more than 50% of its net worth - at the end of the financial year ended March 2011,

Cairn shareholders okay conditions for Vedanta stake buy: The Cairn-Vedanta deal is one step closer to becoming a reality. Cairn India shareholders have approved the government of India (GoI) pre-conditions with majority vote of 97.29%. Majority of Cairn India shareholders today voted in favour of company reversing its earlier stand and conceding to pay royalty and cess on its mainstay Rajasthan oilfields. Cairn India board, however, added a caveat that it will agree to making royalty cost recoverable and pay Rs 2,500 per tonne cess on the Rajasthan oil only after partner Oil and Natural Gas Corp (ONGC) issues a no-objection certificate to its parent, Cairn Energy's proposal to sell controlling stake to mining group Vedanta Resources.

Maruti labour unrest spreads to 3 Suzuki units -Suzuki's power train, 2-wheeler, casting plant workers on indefinite strike. Maruti Suzuki says -No notice issued by Gurgaon union for going on strike -Production at Gurgaon plant normal -525 vehicles produced at Manesar plant today.

Marico says:-Possibility of PAT for next couple of quarters falling short of current expectations High raw material costs to impact margins -However long term potential of business is intact.

Pipavav-Mazagon JV hits roadblock-Other shipyards L&T, Bharti and ABG raise objections Shipyards allege.

MDL wrote on August 25th seeking business plan from bidders-MDL & Pipavav announced JV on September 9th-Proper procedures not followed to select JV partner-MDL board didn’t wait for proposals from all shipyards No evaluation criteria for selection of JV partner shared by MDL MDL decision lacks transparency & taken in haste.

Tata Steel -To invest EUR 800 million over 5-years at its Netherland plant - IJmuiden -IJmuiden’s annual capacity will rise by 2015-16 from 7.2 mt to 7.7 mt.

Infosys close to buying Thomson Reuters healthcare biz for USD 700 million – BS.

RIL may be allowed to develop Satellite KG Fields – ET.

Ambuja Cement acquires 60% stake in Dirk India for Rs 16.51 crore.

TN brings DHT under tax net, to levy 30% entertainment tax (negative for Sun Direct).

Kwality Dairy in talks with PE players to sell 20% stake for Rs 200 crore – FE (Market cap Rs 2552 crore).

Atul Auto rights issue opens today.

Onmobile Global buyback at maximum Rs 85/sh.

Ex Dividend: Oil India Rs 19.5/sh, Reliance Capital Rs 6.5/sh, Reliance Infra Rs 7.2/sh, BGR Energy Rs 10/sh.

F&O Ban: ABG Shipyard, Gitanjali Gems.

Amnesty scheme on anvil to get back money from foreign banks.


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