Category: Economy, Markets and Macro Views

Railway Minister Mamta Banerjee said while presenting the Railway Budget 2009-10 that she would concentrate on improving the quality of services being provided by the Indian Railways and has left the fares unchanged [both Passenger & Commercial]. To improve the infrastructure of Indian Railways, the minister said that 50 stations had been identified to be developed on lines of world class stations will best available technology. Mamta Banerjee also said that 350 more stations were identified for upgradation in order to improve the services of Railways.

The minister also said that railways will also ensure one doctor in each train and ambulances will also be arranged to stand by on routes of important trains.

Railways will buy 18,000 new wagons, a development that will help companies like BEML and Titagarh Texmaco, etc. Also planning to setup a new factory to manufacture 5,000 coaches. (more…)

Earnings forecasts are being upgraded globally and the trend is visible in India too. However, analysis of consensus aggregates suggests that revisions are mostly for 2010 while 2009 index EPS is at the same level as it has been since February 2009.

While projected 2009 EPS is still 7% below the EPS two years back in 2007, the forecast for the rebound in 2010 is only for 20% EPS growth. In other words, projected 2010 ROE is well short of 19% versus over 21% achieved in peak economic years like 2007. (more…)

The Sensex trades at 16.2x 12-month forward PE. HSBC classifies stocks between Rs 2500 to Rs 4,00 cr market cap as a Midcap.

Why Midcaps ?:
The case for investing in mid-caps lies in cheaper valuations, trading at 10.7x 12-month forward PE, which is at a 28% discount to large-caps, while the valuation discount of midcap stocks tends to persist for a longer period of time.

On average, in terms of PE, the discount is 17%. (more…)

The Political Stability fueled rally is getting back to the basic fundamentals of the market. Now we are in a period of pre-budget and hence lets have a peek into what have been Analyst expectations in the past and what Netas turned Finance Ministers have delivered and the market reaction towards the same.

The chart below shows Historical Pre-Budget and Post Budget performance of the market since 1991. (more…)

UBS in a report released just a while ago has set March 2010 Sensex target to
16,750 (from 13,500) based on 14.9x March 2011E P/E. UBS turned less bullish as there is only 16% upside potential from current levels to our Sensex target.

UBS Outlook on various sectors:

UBS has turned more bullish on Telecom as the sector that has under-performed significantly and Bharti’s valuations appear attractive. (more…)

Will the current 14 week rally fizzle out ? here is a Graph which shows historical data from 1990 to 2008 on the duration and Rise / Fall of SENSEX during Bull / Bear market. (more…)