Indian stock market and companies daily report (April 12, 2012, Thursday)

The Indian markets are expected to open flat with positive bias tracking mixed opening in the Asian markets and positive closing in the U.S. markets yesterday. Asian markets fell broadly yesterday, extending recent steep losses, as fiscal concerns in peripheral European countries as well as fresh fears over dwindling global growth kept investors cautious.
The US markets gained yesterday, rebounding from an extended losing run after Spanish and Italian bond yields fell which renewed hopes about a solution to the eurozone economic crisis and aluminum maker Alcoa Inc. reported a surprising profit. Statements made by Benoît Coeuré, a Board Member of the European Central Bank, also seemed to ease concerns over Spain.
The Indian benchmark indices ended slightly lower yesterday mirroring negative sentiment on Wall Street overnight and caution prevailed ahead of industrial output and inflation data. The markets will now closely watch out for IIP data for February 2012 (Bloomberg estimate – 6.7%) due to be released today. Also, initial jobless claims data for the week ended April 4 for the U.S. economy will be on radar.

Markets Today
The trend deciding level for the day is 17,198 / 5,227 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,320 – 17,441 / 5,263 – 5,300 levels. However, if NIFTY trades below 17,198 / 5,227 levels for the first half-an-hour of trade then it may correct up to 17,077 – 16,955 / 5,191 – 5,154 levels.

Cement growth unlikely to sustain at double-digit levels
Cement demand growth is anticipated by markets to remain buoyant going ahead, in-line with ~10% growth witnessed in 2HFY2012, which has led to the recent run-up in the prices of cement stocks (market cap of our coverage stocks increased by ~18% YTD vs. Sensex registering an increase of only ~12% YTD). However, we remain cautious on the sustenance of demand at double-digit levels in FY2013E and expect yoy demand to decelerate to 8-9% levels, considering moderate overall GDP growth. Moreover, while elections are in any case scheduled in FY2013 in states accounting for only 9% of overall cement demand, even in FY2014, though elections are scheduled in states accounting for 22%+ of overall cement demand, we would not bank upon elections to be a major catalyst for demand growth to improve unless the overall GDP cycle improves from current levels.
This is because, contrary to the popular belief that elections can lead to a significant surge in demand, our analysis of all-India cement demand growth, overall GDP growth and elections – both centre and state over the last ~20 years – has led us to conclude that it is the overall GDP growth that is a major determinant of cement demand rather than the thrust provided by elections.
As per our analysis, the correlation coefficient between cement demand and election comes at +0.02 (we have considered two years’ CAGR for cement demand, as election-related activities usually pick-up in one-two years prior to the elections) i.e., it does not indicate any correlation at all. In fact, even in years when states accounting for 23%+ of overall cement consumption came up for elections, on five such occasions cement growth (two years’ CAGR) was less than 8%, mainly on account of slowness in the overall GDP cycle. Similarly, on four occasions, we found that cement growth was more than 8% on account of healthy GDP cycle despite elections only being there in states accounting for less than 13% of overall cement consumption.
Also, in four of the seven times when general elections were held, cement growth during the election year was not higher than that witnessed in the immediate preceding year. Further, in case of state assemblies’ elections in major cementconsuming states such as Maharashtra, Uttar Pradesh, Andhra Pradesh, Karnataka and Tamil Nadu, it was observed that in greater number of occasions cement growth in the election year was not higher than that registered in the immediate preceding year.
Cement sector – Outlook and valuation
In our view, the cement sector's valuations in terms of EV/sales and EV/tonne when compared to utilization levels are almost 39% more expensive than its historical valuations during periods of similar utilization levels. However, healthy pricing helped by production discipline among cement companies along with sturdy demand growth in 2HFY2012 has led to high valuations currently. Nevertheless, in our view, this is a thin investment thesis to rely on, as there is a persistent risk of a breakdown in production discipline and deceleration of demand growth to 8-9% levels in FY2013E. Hence, we remain Neutral on the cement sector. That said, we maintain our Buy view on JK Lakshmi due to its attractive valuations, as it is trading at EV/tonne of US$44 on FY2014E capacity.

Idea Cellular and ESPNcricinfo tie up to launch Dream Fields
Idea Cellular and ESPNcricinfo have formed a long term tie up spanning content and advertising in India to launch Idea Dream Fields. It is a dedicated editorial repository within the website www.espncricinfo.com, which explores the issue of lack of cricket spaces in cities in India.
As part of this initiative, ESPNcricinfo will travel to the prominent cricket cities in the country, speak to fans, players, parents and local administrators, and visit cricket grounds to explore the issue. Idea Dream Fields will also feature content gathered from the public via social media. ESPN and Idea Cellular have an annual sponsorship deal, estimated by market experts to be in the range of US$1-1.5mn, which was initiated in August, 2011. The Dream Fields initiative is part of that deal. The initiative intends to engage the various stakeholders to present their concerns and issues regarding the cricket playing spaces in the cities in India and marks an attempt to raise this issue at a national level. The content line up for the initiative includes Maidan View, a series on popular cricket grounds; and Ground Reality, a video series exploring the state of cricket in major cities. We maintain our Neutral view on Idea Cellular.

Economic and Political News
- ADB projects moderate increase in GDP to 7% in 2012-13
- India, other emerging economies showing positive signs: OECD
- Tsunami alert in 28 nations as 8.9 quake hits Indonesia

Corporate News
- M&M to consolidate R&D units, to roll out tractor soon
- Piramal Healthcare gets EU nod for orthopaedic product
- PSL bags `570cr order from IOC
- Strides Arcolab receives US FDA nod for vancomycin oral capsules
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Indian stock market and companies daily report (April 10, 2012, Tuesday)

The Indian markets are expected to open with positive bias tracking mixed cues from Asian markets. Asian markets edged lower in limited holiday trade on Monday after weaker-than-expected US jobs data hit market sentiment while rising inflation in China also weighed on investors.
The US markets after moving sharply lower at the open, stocks saw continued weakness throughout the trading day on Monday. A negative reaction to Friday's monthly jobs report weighed on the markets, generating broad based selling pressure. The sell-off seen at the start of trading came as traders finally had an opportunity to react to the Labor Department's monthly jobs report, which was released while the markets were closed on Friday.
The Indian benchmark indices started the week with their biggest single day fall in a fortnight as investors chose to tread cautiously ahead of the results season and the Central Bank’s policy review scheduled for next week. The weak job data from US, announced last Friday also dampened investor sentiment.

Markets Today
The trend deciding level for the day is 17,276/5,250 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,353 – 17,485/5,272 – 5,310 levels. However, if NIFTY trades below 17,276/5,250 levels for the first half-an-hour of trade then it may correct up to 17,145 – 17,068/5,212 – 5,190 levels.

Tata Steel reports its 4QFY2012 production and sales numbers
Tata Steel reported its 4QFY2012 production and sales volume numbers. The company's 4QFY2012 crude steel production grew by 2.6% yoy to 1.8mn tonnes and its sales volume grew by 3.3% yoy to 1.7mn tonnes. For FY2012, the company's crude steel production and sales volume increased by 3.9% and 3.4% yoy to 7.1mn tonnes and 6.6mn tonnes, respectively. Thesenumbers are broadly in-line with our expectations. We recommend Accumulate on the stock with a target price of Rs.503.

BGR receives LOA for NTPC 2X660MW supercritical boilers
BGR Energy (BGR) announced that it has received letter of award (LOA) from NTPC for the supply of 2X660MW supercritical boilers to be set up at Solapur, Maharashtra. BGR had emerged as the L-1 bidder in NTPC’s bulk tender for the supply of 11X660MW supercritical boilers on February 29, 2012, for which it is to be awarded six units of supercritical boilers. LOAs for other sites are expected to be received over the next few weeks.
The order is valued at Rs.1,855cr, implying a rate of Rs.1.4cr/MW, which seems to be the result of aggressive bidding and is expected to put pressure on margins going forward, in our view. We maintain our Sell recommendation on the stock with a target price of Rs.274.

HCC JV bags Rs.162cr project from North Frontier Railway
HCC, in a joint venture (JV) with Coastal Projects, has bagged a project worth Rs.162cr from North Frontier Railway to develop a rail tunnel between Kambiron Road and Thingou station in Imphal, Manipur. HCC is the lead partner with 60% share in the JV (HCC’s share is Rs.97cr). The project will be completed in 28 months. We maintain our Neutral view on the stock.

Economic and Political News
- Bank deposit growth rate falls despite higher interest rates
- Imports of sensitive items up 43% during April-January
- India, Qatar sign initial pact for cooperation in the energy sector
- India's 2012-13 cotton output may fall to 32.3mn bales: Report

Corporate News
- L&T commissions 40MW solar plant of Reliance Power in Rajasthan
- Panel recommends green nod to NTPC's coal project in Orissa
- Glenmark gets U.S. nod for generic contraceptives
- Reliance, BP set to kick off imported LNG marketing

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Indian stock market and companies daily report (April 09, 2012, Monday)

The Indian markets are expected to open in red tracking cues from Asian markets which are trading in negative zone reacting to reports which showed that inflation in China grew more than expected raising fears of slowdown in global growth.
The U.S markets showed a lack of direction throughout the trading day on Thursday as investors remained on the sidelines ahead of the long weekend and release of the March jobs report on Friday. As per the U.S. Labor Department data, employment saw continued growth in the month of March, although the pace of job growth came in well below economist estimates. The non-farm payroll employment increased by 120,000 jobs in March against economist’s expectation of 201,000 jobs. However, despite the weaker than expected job growth, the unemployment rate edged down to 8.2% in March from 8.3% in February.
While reaction to the US monthly jobs report is likely to drive trading in the global markets today (U.S. stock markets closed for Good Friday), reports on the U.S. trade deficit, consumer sentiment, and producer and consumer price inflation are likely to be in focus later in the week.

Markets Today
The trend deciding level for the day is 17,492/5,322 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,547 – 17,609/5,339 – 5,355 levels. However, if NIFTY trades below 17,492/5,322 levels for the first half-an-hour of trade then it may correct up to 17,431 – 17,375/5,306 – 5,289 levels.

Marico to sell 4.8% stake to raise Rs.500cr
Marico plans to sell 4.8% stake to Singapore's sovereign wealth fund GIC and Baring Private Equity India to raise a sum of Rs.500cr. Indivest Pte. Ltd., an investment arm of GIC, will invest Rs.375cr to subscribe over 2.2cr shares, while Baring India Private Equity Fund will invest Rs.125cr to subscribe over 0.73cr shares on a preferential basis, valuing each share of the company at Rs.170. The preferential issue is primarily for funding the acquisition of Paras Pharmaceuticals as well as other capital expenditure and is subject to shareholders’ approval in the EGM scheduled on May 2, 2012. Around two months earlier, the company had bought personal care brands such as Setwet, Livon and Zatak from Reckitt Benckiser, which in turn had acquired these brands from Paras Pharmaceuticals last year. At the CMP, the stock trades at price to earnings multiple of 20.8x FY2014E. We maintain our Neutral view on the stock.

HUL sells Mumbai property to Ajay Piramal Group for Rs.452cr
HUL has sold its one acre sea-facing property at Worli in Mumbai to Ajay Piramal group for Rs.452cr. The property was put up for sale after the company had shifted its training centre from there to its new premises at Andheri. HUL has been trying to sell this property, so as to unlock value from idle assets including real-estate. At CMP, the stock trades at price to earnings multiple of 24.8x FY2014E. We maintain our Neutral view on the stock.

Economic and Political News
- Power Ministry eyes 920,000mn units of electricity in FY2013
- Cotton Association demands removal of ban on cotton exports
- PMO to hasten languishing port projects
- Strengthen recovery mechanism for NBFCs: Finance Ministry
- Government initiates exercise to revise WPI series

Corporate News
- Coal India may import coal to ensure adequate fuel to power firms
- Coal Ministry's nod pending for ONGC's pilot UCG project
- Hindustan Copper plans to raise Rs.1,250cr via ECB

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The need of commodities in trading

Commodity markets are markets where raw or unfinished products are exchanged. These raw commodities are dealt on regulated commodities exchanges in which they are purchased and sold as per the standardized contracts.

This article emphasizes on the past and current arguments regarding global commodity markets. It covers physical products such as food, metals, electricity but not particularly about those services, including the stock markets, bond markets and currency markets that need to be addressed separately as issues in more depth.

The focus of this article is more on the relationship between money involved with simple commodities and the more complex instruments that are offered in the commodity markets.

The modern commodity markets have their traditional roots in the trading of agricultural products. Wheat, corn, cattle and pigs were widely used as standard trading instruments in the 19^th century in the USA. Other basic food materials such as soybeans were added only recently in most markets.

For a commodity market to be established there must be a broad consensus on the variety in the product that make it acceptable for different purposes.

The economic impact in the development of the commodity markets is hard to overestimate. Throughout the 19^th century, the exchanges became effective spokesmen for and innovators of improvements in the transport system, warehousing and financing which paved the way to expand the international trade.

Since the ancient Sumerian use of sheep or goats, people used pigs, rare seashells or other various items as commodity money, people have found different ways to standardize and then trade contracts in deliveries of such items to render trade to make it smooth and predictable.

Commodity money and the commodity markets in a crude early from are  believed  to have been originated in Sumer where small baked clay  tokens in shapes of sheep, goats, were used in different forms of trade.

Sealed in various clay vessels a number was written outside that represented a promise to deliver that particular number. This made them a form of commodity money.  – More than a I.O.U but less than a guarantee of the total number that was outside but  more than an I.O.U. but less than a guarantee by a nation-state or bank. However, they were also known to contain promises of time and date of delivery - this made them like a modern futures contract. Regardless of the details, it was only possible to verify the number of tokens inside by shaking the vessel or by breaking it, at which point the number or terms written on the outside became subject to doubt.

Become a Sub Broker

A sub-broker is any individual who is not a member of a stock exchange but acts on behalf of a member –broker as an agent or otherwise for assisting the investors in purchasing, selling or dealing in securities through member-brokers.

All sub-brokers have to submit to obtain a certificate of registration from SEBI failing to which they are not allowed to deal in securities. SEBI has issued a notice stating that no broker will be allowed to deal with an individual who is acting as a sub-broker unless he is registered with SEBI and it shall be the responsibility of that member-broker to ensure that his clients are not acting in any capacity as a sub-broker unless they are registered with SEBI as a sub-broker.

It is compulsory for member-brokers to enter into an agreement with all the sub-brokers. The agreement lays down the rights and responsibilities of member-brokers as well as sub-brokers.

According to SEBI, there are certain norms and regulations which he has to follow. Some of them are listed below:

1) A sub-broker will have to maintain separate account books in respect to his dealings with his affiliated members, if he is doing business with more than one member. Under no circumstances he will be allowed to mix funds received from payable member with that of another.

2) A sub-broker agrees to the fact that he will not except with the consent of the sub-broker, commit on his behalf transactions in commodity futures in excess of the amount mutually agreed upon in writing from time to time being the aggregate value of such transactions agreed upon to be transacted in any contact and the maximum outstanding position due of a client will also be limited to such limits as specified by the sub-broker.

3) The sub-broker and member will have to agree that both will ensure protection to their clients regarding their rights and neither of them shall together or individually do anything which will in most likely harm the interest of clients for whom they have committed transactions and commodity futures.

4) It will be the responsibility of the member to inform the sub-broker and keep him informed about any form of trading/settlement cycles, delivery payment schedules, charges if any included from time to time. It shall also be his responsibility in return of the sub-broker to agree with such procedures of the mentioned exchange of which the member is a member.

Angel Broking believes in growing with its business partners and franchisees. Our dedicated efforts and continuous improvement in our services has made us one of the most respected broking houses with the largest network of business partners and franchisees across India.

Become a sub broker