RESEARCH REPORTS
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INDIAN BANKS : RBI’s 2Q policy – provisioning shock? not really
The eye-catcher: RBI’s credit policy announced the 70% provisioning coverage required on NPLs (non-performing loans) to be met by Sep-2010. As a consequence, bank stocks fell up to 8% post announcement given the potentially large impact on earnings and book values. While the measure is clearly aimed at prudency, given the risk of rising NPLs as well as potential slippages in banks’ restructured portfolios
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RELUCTANT BUYERS (HSBC)
Since our Quarterly was published on October 6, we have been around Asia and Europe exchanging views with clients. In three weeks, we have seen almost 70 institutions in six countries (and next week we will be in the US). The mood among investors varies greatly from one location to another. We found most CIOs in London shared our view that the current environment is positive for equities, with growth likely
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FINANCIAL STRATEGY: POSITIONING FOR RECOVERY (CITI)
In the aftermath of the Lehman bankruptcy last September, firms around the world embarked on drastic steps to preserve liquidity. Companies undertook deep cuts in capex and operating expenditures, a near halt of share buyback programs and the fastest increase in dividend cuts in fifty years. During this period of extreme volatility in capital markets and uncertainty in the global economy
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India look for ways to strengthen climate talks hand
India may be preparing for long-running climate change talks that go well beyond the Copenhagen Summit in December, as it is starting to enter long term regional and bilateral pacts which will reinforce its negotiating firepower when it faces western nations. While keeping an optimistic face on the prospect of a convincing roadmap for the future being hammered out at the
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Strong rand puts pressure on platinum producers
Platinum miners’ balance sheets are under strain as the South African rand strengthens, offsetting a strong recovery in metals prices from last year’s lows. Investors, however, either haven’t taken notice or are betting that as the world economy recovers, demand for platinum group metals will again outstrip supply, propelling prices even higher and ultimately boosting
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Jewelry demand to return despite higher gold prices
Gold is in unchartered territory for the traditional consumer in the jewelry market, but many are facing up to the reality that higher prices are here to stay, with burgeoning investment demand making up for any a dip in jewelry demand this year. That is forcing even traditional buyers back in to the market as they reluctantly accept elevated price levels…
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The G20 and the new global order (MACQUARIE RESEARCH)
The recent Group of Twenty Finance Ministers and Central Bank Governors (G20) summit in Pittsburgh made clear the global economic order is transitioning to a more multilateral axis post the financial crisis. Comprising the major advanced and emerging economies, 85% of global gross national product, 80% of world trade and two-thirds of world population, the G20…
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TITAN INDUSTRIES (EDELWEISS)
Disappointing performance; net profit down 11.6% Y-o-Y: Titan Industries’ (TIL) Q2FY10 revenues grew only 5.3% Y-o-Y, to INR 11.5 bn, below our expectation of INR 12.5 bn. In spite of festive season, revenues failed to show buoyancy, signaling a substantial decrease. In Q1FY10, the company changed its accounting policy (to FIFO instead of weighted average method) for valuing gold inventory…
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EVERONN EDUCATION (EDELWEISS)
Numbers in line with estimates; Eduresource grew substantially: Everonn Education (Everonn) reported consolidated sales of INR 731 mn, up 70% Y-o-Y, in Q2FY10. A substantial portion of the incremental revenues was contributed by its hardware trading subsidiary Eduresource that grew 2.4 times Yo-Y. Revenues in its Vitels segment grew 67%, to INR 348 mn, while ICT segment
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INDIAN BROKING SECTOR (KREDENT FINANCE)
■ India Infoline, Motilal Oswal & Geojit BNPPARIBAS, the three major brokerage under our coverage universe have come up with their Q2FY10 results ■ All three have delivered results which are better than the street expectations ■ The companies scored on top line front mainly on account of increased revenue realization from equity and commodity brokerage segments while
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Just Deserts and Markets Being Silly Again
I can’t tell you how surprised, even embarrassed I was to get the Nobel Prize in chemistry. Yes, I had passed the dreaded chemistry A-level for 18-year-olds back in England in 1958. But did they realize it was my third attempt? And, yes, I will take this honor as encouragement to do some serious thinking on the topic. I will also invest the award to help save the planet. Perhaps that was really the Nobel Committee’s sneaky motive…
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UNITED STATES : PORTFOLIO STRATEGY (GOLDMAN SACHS)
Investor focus has shifted from earnings to valuation. We are now most often asked at what P/E should the market trade. We offer four approaches: (1) history of multiple expansions from bear market lows suggests 14.1x; (2) our top-down P/E model suggests 13.7x; (3) our DDM-derived 2009 price-target of 1060 implies 13.1x; and (4) the Fed Model implies 16.4x…
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Emerging As One of the Top Destinations for FDI (MORGAN STANLEY)
In this week’s EcoView, our spotlight focuses on the recent trend and outlook for FDI inflows into India. With the revival in global business confidence and risk appetite, FDI inflows into India have rebounded sharply over the last six months. Indeed, if the current trend is maintained, we expect FDI inflows in 2009 to reach the high of US$41.2 billion received in 2008. Read the detailed note to see the analysis o
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U.S. Dollar Drowning In A Sea Of Liquidity (WELLS FARGO LIMITED)
The greenback has been especially weak in 2009, falling by 15% on a trade-weighted basis since March. However, we view the dollar’s fall as more cyclical than structural. Instead, we believe a massive injection of liquidity by central banks has supported equity and commodities markets, and related commodity and emerging currencies, at the expense of the greenback. For 2010 we expect a reversal of these trends
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CREDIT POLICY ANALYSIS, OCTOBER 27, 2009 (KREDENT FINANCE)
The share of agriculture in GDP has been declining over time, and as of 2008-09 it was 17.0 per cent. However, experience shows that a deficient rainfall can have a disproportionate impact on overall economic prospects and on the sense of well-being. Poor output will push up prices and depress rural labor incomes. Given the inter-sectoral supply-demand linkages…
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RELIANCE INDUSTRIES (MERRILL LYNCH)
■ First exploration well in KG D9 dry; retain Underperform: The first exploration well in the KG D9 block of Reliance Industries (RIL) has been abandoned due to poor results. The KG D9 block is believed to be one of the most prospective exploration blocks of RIL. On the basis of just one dry well one cannot conclude that KG D9 would not see large reserve accretion. However, the dry well is a setback..
