Indian stock market and companies daily report (March 30, 2012, Friday)

The Indian markets are expected to open in the red tracing negative opening in most of the Asian indices. Asian stocks fell for a second day as growth in U.S. durable-goods orders trailed estimates.

The US markets drifted lower over the course of the day on account of profit booking as some traders cashed in on the recent strength in the markets amid calls by a number of analysts for a correction. Traders also reacted negatively to the latest batch of U.S. economic data, including a report from the Labor Department showing that weekly jobless claims came in above economist estimates. However the indices recovered significantly in the later sessions and eventually ended up near the opening.

Indian shares extended losses for a second consecutive session on Thursday, as concerns about growth prospects in the world's two largest economies prompted investors to square off long positions on the expiry of March series derivative contracts.

Markets Today

The trend deciding level for the day is 17,136/5,200 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,232 – 17,342/5,231 – 5,267 levels. However, if NIFTY trades below 17,136/5,200 levels for the first half-an-hour of trade then it may correct up to 17,026 – 16,930/5,164 – 5,133 levels.

TCS to provide banking solution - BaNCS to AmBank, Malaysia

TCS' financial services platform, TCS BaNCS, will replace Malaysian AmBank's core banking engine. This integrated banking suite, spanning conventional and Islamic banking, will support both retail banking and lending functionalities. TCS BaNCS will help expand AmBank's business into new areas. It will also enable development and the scalability required to meet both current and future market and regulatory needs. Due to this deployment, TCS may soon have a regional support centre for TCS BaNCS in Kuala Lumpur. We maintain Accumulate rating on the stock with a target price of Rs.1,262.

NTPC Tamil Nadu Energy Co. commissions Unit I of Vallur Power Project

NTPC Tamil Nadu Energy Co. Ltd. a JV of NTPC Ltd. and TNEB has commissioned Unit I (500 MW) of Vallur Thermal Power Project on March 28, 2012. With this, the total capacity of NTPC group has become 36,514 MW. In all NTPC group has commissioned 2,320MW of capacity in FY2012 till date, which is below the initial target of 4,320MW. At the CMP, the stock is trading at 1.6x FY2013E P/BV. We maintain a Buy on the stock with a Target Price of Rs.199.

Economic and Political News
- February infra output up 6.8% yoy
- Indian GDP to grow at 7.5% in FY2013: Fitch
- Government will clarify stance on P-Notes taxation: Finance Minister

Corporate News
- Tata Motors hikes commercial vehicle prices by up to Rs.60,000
- Tata Motors to invest Rs.600cr on defense vehicles
- NTPC to halt expansion of gas-based projects
- Bharat Forge earmarks Rs.100cr to develop artillery gun

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Indian stock market and companies daily report (March 28, 2012, Tuesday)

The Indian markets are expected to open flat to negative today tracing negative opening in most of the Asian bourses. Domestic markets gained ground in volatile trading session yesterday, as firm global cues amid signs that easy monetary policy would remain in place in the U.S. for some time underpinned sentiment. The upward move gained momentum in the afternoon session after media reports said that the government is not keen on chasing participatory notes, or derivative products that allow foreign investors to invest into Indian equities via tax havens like Mauritius under the new General Anti-Avoidance Rules targeting tax avoidance. Most of the Asian stocks also ended higher yesterday.Globally, most of the U.S. and European markets ended lower yesterday showing a lack of direction throughout much of the session. Disappointing economic data from the U.S. also weighed on the markets as the Conference Board’s confidence index fell to 70.2 in March from a revised 71.6 reading for February. A separate report
from S&P showed a continued drop in U.S. home prices in the month of January, with prices index falling by an annual rate of 3.8% compared to 4.1% drop in December. The markets will now closely watch out for U.S. GDP data for 4QCY2011 which is due to be released tomorrow.

Markets Today

The trend deciding level for the day is 17, 228/5,235 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,396 – 17,534/5,286 – 5,329 levels. However, if NIFTY trades below 17, 228/5,235 levels for the first half-an-hour of trade then it may correct up to 17,090 – 16,923/5,193 – 5,142 levels.

News Analysis

- L&T bags order worth Rs.1,700cr
- ITNL bags road BOT project worth Rs.651cr
- Sadbhav Engineering bags Rs.1,220cr project from NHAI
- Jagran group closes in on Nai Dunia buy

L&T bags order worth Rs.1,700cr

Larsen & Toubro (L&T) Metallurgical and Material Handling, part of L&T Construction, has won a contract worth Rs.1,700cr from Tata Steel for its new 6mn tonne per annum steel plant being set up at Kalinganagar in Odisha. As part of the greenfield steel plant, L&T is executing a slew of projects, like blast furnace, sinter plant, coke oven, balance of plant for steel melt shop, hot strip mill, utilities and construction works for other areas.

At the CMP of Rs.1,303, the stock is trading at PE of 18.4x FY2013E earnings,which is below the historical trading multiple for L&T. We have used the SOTP methodology to value the company to capture all its business initiatives and investments/stakes in different businesses. Ascribing separate values to its parent business on P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to Rs.1,607, which provides 23.3% upside from current levels. Hence, we maintain our Buy recommendation on the stock.

ITNL bags road BOT project worth Rs.651cr

IL&FS Transportation Networks Ltd. (ITNL) has bagged a road project worth Rs.650.8cr from Public Works Department, Rajasthan. The project involves development and operation of Sikar-Bikaner section in Rajasthan. The project, under PPP model, would be executed on DBFOT basis and involves grant of Rs.247.3cr. The project is on toll basis with a concession period of 25 years including construction period of two years. ITNL was the sole bidder for the project. We recommend Buy on the stock with an SOTP target price of Rs.235.

Sadbhav Engineering bags Rs.1,220cr project from NHAI

Sadbhav Engineering (SEL) has bagged a Rs.1,220cr order from NHAI for four-laning of the Solapur-Bijapur section of NH-13. The project would be executed on BOT (Toll) basis, under NHDP Phase-III. The concession period of the project is 20 years from the appointed date. We maintain our positive view on the stock; however, our target price is currently under review.

Jagran group closes in on Nai Dunia buy

According to news reports, the Jagran group that publishes the country’s most widely read Hindi newspaper, Dainik Jagran, is close to buying out Nai Dunia, the Indore-based Hindi daily promoted by Vinay Chhajlani. The deal size is expected to be around Rs.300cr. According to the Indian Readership Survey (IRS) Q4 report, Dainik Jagran has average issue readership of 16.41mn, making it the most read publication across the country, while Nai Dunia has average readership of 1.64mn. Currently the group publishes two editions in Madhya Pradesh and if the deal goes through Jagran would get an avenue to expand in Central India and particularly in Madhya Pradesh, where Nai Dunia is second largest read daily. At CMP, the stock trades at price to earnings multiple of 13.4x FY2013E. We maintain a Buy on the stock with a Target Price of Rs.137.

Economic and Political News

- 65% of government’s borrowing to be in 1HFY2013
- No subsidy for digitalization but implementation on track: Government
- Rs.2.73lakh cr of I-T dues locked up in disputes: Government

Corporate News

- REpower signs contract for supplying 54 turbines in Germany
- Patni gets Rio Tinto outsourcing order
- Gammon Infra bags Rs.935cr road project from NHA

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Stock Markets in India

The Indian markets are expected to open in the green today tracing positive opening in most of the Asian bourses. Asian stocks rose the most in two weeks, after Federal Reserve Chairman Ben S. Bernanke said monetary policy needs to focus on creating jobs and South Korea’s consumer confidence improved.

The US markets (Nasdaq and the S&P 500) closed at their fresh multi-year highs on Monday. The strong upward move by stocks came on the heels of a speech by Bernanke, who noted that the U.S. unemployment rate has declined faster than the Fed predicted but cautioned that the jobs market remains far from normal. He also assured that the Fed's zero-interest rate policy and other support measures would continue to reduce unemployment over time by promoting economic growth.

Weak global cues on fears over Spain's fiscal outlook and lingering worries about slowing global growth dragged Indian shares sharply lower on Monday. Also, with the government preparing to pass retrospective amendments to the income-tax laws, investors fear that new tax rules could affect capital inflows through participatory notes.

Markets Today

The trend deciding level for the day is 17,151 / 5,211 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,280 – 17,506 / 5,248 – 5,311 levels. However, if NIFTY trades below 17,151 / 5,211 levels for the first half-an-hour of trade then it may correct up to 16,924 – 16,795 / 5,148 – 5,111 levels.

Proposed hike in stamp duty by Maharashtra govt. to have a negative impact on the real estate sector

The Maharashtra state government has proposed to increase stamp duty on residential and commercial leave and license agreements according to Times of India. The proposed plan is to increase stamp duty to 0.1% on residential properties from a maximum of Rs.25,000 paid currently for 60 months and 0.4% on commercial properties from a maximum of Rs.50,000 paid currently for 60 months. The commercial and residential segments, which were already witnessing a significant decline in demand from end-users due to high prices and interest rates, have been witnessing an increase in leasing activity since the past one year. If this plan is implemented, it will further affect the leasing segment negatively, as it will push up the overall leasing cost. Stamp duty is paid by the end-user and, thus, developers would not be impacted directly but would find it difficult to increase rents and could witness a decline in demand. This move may affect companies that have a high exposure to the leasing segment in Maharashtra. We continue to remain Neutral on the real estate sector.

Reliance Industries – BP to jointly work on KG-D6

Reliance Industries (RIL) and its partner BP are expected to submit an integrated development plan to increase natural gas from all the 18 discoveries in the KGD6 block to the government by October 2012. Both the companies are projected to commence production from R-Series, the third largest gas find in the eastern offshore KG-D6 block, from CY2015 and production from satellite fields from CY2016. KG-D6 gas block had hit an all-time low production of 28mmscmd, as RIL had shut six wells due to water and sand ingress during the week ending March 4, 2012. Further, Dhirubhai 1 and 3 gas fields in the eastern offshore KGDWN- 98/3 output had plummeted to 28mmscmd during the same week.Including the gas production of 6.5mmscmd from MA fields, total production from KG-D6 block averaged 35mmscmd (significantly below the field development plan of 70mmscmd approved during 2006) during the same week. We continue to await further clarity on the issue. Meanwhile, we maintain our Buy recommendation on the stock with a target price of Rs.923.

Economic and Political News
- Govt. allows 1mn tonnes of extra sugar exports
- Power companies lost 8.7bn units due to coal shortages: govt.
- Interest rates on post-office operated small savings scheme hiked up by 0.5%

Corporate News
- Car making operations at Gurgaon plant will continue: Maruti
- Bank of Maharashtra get shareholders nod for Rs.995cr pref. issue
- Gammon Infra bags Rs.935 cr road project from NHA

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Investment in India

Investing in India is a great prospect thanks to various economic reforms that have brought about a consistency in India’s economy.

Currently, India is ranked as 3rd in terms of the most preferred investment destination. Relaxed reforms in foreign direct investment both through direct automatic and approval routes along with release of the revised FDI policy have been eased and expedited the investment processes in India. Other factors that work in favour of India are its demographics, a suitable business climate, lower cost in terms of labour and availability of an overall high grade talent pool.

As per the advance estimate of GDP for 2009-2010 which was released by the central statistical organization, the economy is expected to continue to grow at 7.2% in 2012-2013. The industrial and service sectors are also expected to continue growing at 8.2 and 8.7% respectively. On an encouraging note, the Prime Minister has said that the growth could even exceed expectations by touch 9 % this fiscal. India’s GDP grew by 6% during October to December 2011 over the corresponding quarter of the previous year as per the data released by the CSO. 6 core infrastructure industries grew at 5.5% in February 2012 over the corresponding moth this year primarily due to a substantial increase in output of electricity.

Foreign institutional investors worth US$ 4.37 billion in equity and US$ 2.09 billion in debt instruments in the month of March 2011 according to the data released by Securities and Exchange Board of India.

The number of registered FIIs increased to 1713 on 31st March 2011 and the total FII inflow was during January to March 2011. The total came up to 4.54 billon US$ while the debt was around 4.71 billion US$.

As on March 26, 2011, India’s foreign exchange reserves totaled to US$ 277.04 billion, an increase of US$ 24.71 billion over the same period achieved last year. These statistics were supplied according to RBI’s India’s weekly supplement. Moreover, India has received a total FDI worth US$ 24.68 billion during the same period in April 2011 to February 2012 with FDI flow in India on February 2011 alone being US$ 1.72 billion. According to the department of industrial policy and promotion, the 6 infrastructure sectors – crude, petroleum refinery products, coal, electricity, cement and finished steel – constituted of 26.68 percent in index of industrial production.

This is a growth of 5.3% more as compared to last year and 2.9% growth in the same period in 2010. More than 200 companies from 50 countries form a part of the World Economics’ Forum’s Global Companies Community. India today has the second largest representation with a total of 18 GGCs. Indian GGCs arrive from every sector with a strong representation in Information Technology and electronics, retail consumer goods and banking.

Demat account In India

In India, a Demat account means dematerialized account for people to invest in securities online.

The investor opens a demat account while registering with an investment broker. This account number is used by the broker for all transactions that are used in online stock trading.

To access a demat account, the investor requires an internet password and a transaction password. This allows an initiation of buying or selling of securities on the demat account.

A demat account reduces brokerage charges considerably. It makes transfer of shares easier, enables quick ownership of shares by settlement resulting in an increased liquidity.

It also avoids confusion in ownership of securities and provides easy receipts for public issue allotments.

In the last 15 years, the capital market in India has witnessed an unprecedented boom. However, in the early 80’s a lot of paperwork and tedious maintenance meant that the common man kept himself away from the capital market.

Due to overwhelming number of paper shares they were becoming increasingly tedious to maintain and archive.

Problems like fake and stolen shares, forged signatures, mismatch of signatures, duplication of shares, transfer problems plagued the traditionally paper based trading and settlement system.

To top it all, the system had some very irritable procedures and an overdose of paperwork that made retail and institutional investors from entering the capital market. Investors felt that they were gaining less for the risks undertaken by them.

Lack of modernization in a large and inefficient system became a major hurdle to the growth of the Indian capital market.

Thus, Indian stock market adopted the Demat system for electronic bookkeeping where the securities are representated and maintained electronically. It erased the troubles that one would associate with paper shares.

After the introduction of the depository system by the Depository Act of 1996, the procedure for buying, selling and transfers of shares became much easier and most of the risks associated with paper certificates were eliminated.

Advantages of a demat account:

• Convenient, easier and safer ways of holding securities

• Instant transfer of securities

• Zero stamp duty on transfer of securities

• Less transaction cost

• Even a single share can be sold or purchased

• Flexibility for traders to work from anywhere

• A single demat account can hold both equity as well as debt investments

• Address change recorded with a DP will get registered with all companies in which the investor holds his securities, thus it erases the need to contact all of them separately and save time.