Category: Economy, Markets and Macro Views

The Reserve Bank of India (RBI) kept all rates unchanged in line with consensus and our expectation. The repo rate stands at 4.75% and the reverse repo rate at 3.25%, while the CRR of banks is at 5%.

The RBI raised its inflation target from 4% to 5% for end-March 2010 in line with market expectations. (more…)

FII ownership is coming off a 5½ year low and is well off the peak. Mutual
cash balances have reduced over the past three months, but FIIs still have substantial cash in their portfolios. In the meanwhile, the rising equity supply could cause a problem for the market if it gets bunched up, as we saw recently. Sensex is trading at 17.7x and 15x F2010 and F2011 earnings, respectively.

The prospective bottoming out of the growth cycle, reasonable policy momentum, the coming recovery in earnings growth, strong corporate balance sheets, stable (more…)

Over the past few days I spent quite a bit of time understanding the dynamics of the market. All the Research Houses from Goldman Sachs to Kotak failed in seeing the SENSEX at 14,000+.

I should admit that I am investor willing to take calculated risk, want to beat the benchmark and taste Big Money, which otherwise is possible only by leveraging and trading in Derivatives and Options. (more…)

Sintex Industries reported 1QFY10 results below estimates – PAT of Rs606 mn (up 7.3% yoy) was lower than street expectations of Rs742 mn. Revenues at Rs6.6 bn (down 9.1% yoy) were lower than our estimated Rs7.3 bn mainly due to lower pre-fab sales. EBITDA margin at 13.2% (estimated 17%) was below estimate due to the lower contribution from the pre-fab segment and lower-than-expected textile margin.

The monolithic order book at end-1QFY10 has grown to Rs16 bn from Rs14 bn at end-FY2009, implying new order additions of about Rs3.2 bn during the quarter. Fresh orders of around Rs1.9 bn for rural housing are in the pipeline which may further (more…)

Consensus estimates for Q1 results by Analysts on the street expect Metals to lead sharp earnings drop in SENSEX companies.

EPS for Sensex companies is set to decline for the 3rd consecutive quarter with forecast net profit expected to drop by 18.3%. Sales and EBITDA also decline for consecutive quarters. 10 of the 30 companies in the Sensex are expected to show drop in profits. (more…)

The FM raised MAT from 10% to 15%. Impact of MAT
Impact of MAT tax rate increase to 15% impact on EPS owing to MAT (First Cut)

– Reliance: 7%
– Cairn India: 6%
– Bharti 3.4-0.4%
– RCom 5.5-1.6%
– Idea 5.7-3.7%
– Sun Pharma (local entity’s tax rate goes up and this will result in increase in consol tax rate by 50-100bps resulting in 0.8-1.5% downgrade to EPS).
– Cipla would get impacted as they would enter MAT scenario in FY10 and FY11 (c.1.5-2% EPS downgrade).
– Mphasis BFL
– Power Grid is currently under MAT however the tax expense is a pass through for the company. (more…)