Contents
n Research Update included
Auto – February 2010 volume update
Tata Motors Ltd (TML)
q Total sales increased by 58.5% YoY to 69,427 units.
q M&HCVs sales increased by 98.0% YoY to 17,441 units.
q LCVs sales increased by 48.6% YoY to 21,764 units.
q Total car sales increased by 48.0% YoY to 22,980 units (including 4,105 units of Nano)
q Total domestic sales increased by 55.8% YoY to 66,190 units.
q Export sales increased by 145.6% YoY to 3,237 units
Q3FY10 GDP grows by moderate 6% driven by drop in agriculture output
Q3FY10 GDP (base = 2004-05) grew by moderate 6% compared with expectations of 6.8-7.0% growth mainly driven by a drop of 2.8% in the agricultural output. The growth in banking and financial services was also lower at 7.8% but was expected.
The industrial sector has grown by 11.6% yoy in line with the growth in the IIP. The manufacturing sector grew by 14.3% yoy. The construction sector has picked up growth as it grew by 8.7% yoy compared to low single digit growth in earlier quarters.
The services sector grew by slower 6.3% driven by lower growth in banking and finance as expected. The GDP from social and community services dropped by 2.2% as expected driven by lower government spends compared to last year.
On expenditure wise, the growth was largely led by investments as the GFCF grew by 9% yoy. The consumption growth was lower as PFCE grew by just 3% yoy.
n Research Update included
Budget 2010-11 : Post Budget Analysis - Fiscal Finesse
Budget 2010-11 Highlights
Fiscal Finesse
q The fiscal deficit of 5.5% for FY11 is better than our expectation of 5.7%. The roadmap to reduce it further to 4.8% and 4.1% in FY12 and FY13 is welcome
q Govt borrowings capped at Rs3.5 tn; +ve
q Indirect tax: Rollback of 2% is as per market expectation
q No change in service tax is a positive surprise
q Reduction in surcharge from 10% to 7.5% +ve, but MAT increase from 15% to 18% marginally -ve
q Overall, we believe that the budget was positive for the economy/market and there was no major negative surprise
q However, after the initial euphoria, market will start following the fundamentals of the economy, corporate earnings and the global events
However, the real debate is:
q Whether the fiscal deficit will slip beyond 5.5%?
q Whether the revenues targets are overstated and the expenses are understated?
q Why there was no commitment in the FM's speech to curb the inflation?
n Technical Comments
20-WSMA, a stiff resistance:
On w-o-w basis, Nifty closed with gains of 70 odd points, thus managing to hold on to its weekly positive streak. Currently, Nifty is trading near its 20-weekly simple moving average, from where selling was witnessed in today's session. So unless 20-WSMA packed at 5000-level is surpassed, every rise is a very good opportunity to go short. Secondly, after clearing the neckline of inverse Head-and-shoulders pattern, bulls failed to keep up to its initial gains on account of which market again felled back to the neckline for support. Now if in the coming week that neckline got pierced then the inverse H & S pattern will turn out to be a failure and we will witness massive carnage in the southward direction. Going further, the weekly momentum cycle is still standing in the favor of the bears with its negative crossover, which again shows negative mood of the market.
BSE FMCG:
With today's budget blues, BSE FMCG index saw a massive tanking on account of which the previous swing low got pierced and with that the series of falling highs still remains intact. With continuation in its downhill journey, the index finally closed at 2662 with a loss of 3.3% on w-o-w basis. We are looking for downside target of 2500 level in the coming week.
Regards,
Emkay Research
Emkay Global Financial Services Ltd.
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Worli, Mumbai - 400 013.
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