Fw: ValueGuide: Pressure of policy and politics

  

Sharekhan ValueGuide [April 04, 2012]  Sharekhan www.sharekhan.com

Summary of Contents EQUITY FUNDAMENTALS THE STOCK IDEAS REPORT CARD FROM SHAREKHAN'S DESK Pressure of policy and politics  After the smart gains initially this year, the equity market has hit the roadblocks of policy inaction and political logjam. Given the pressure from the 2Ps, policy (or lack of it) and politics, the sentiments have taken a hit and the market is unable to sustain its momentum. The domestic support was limited and the rally was driven by foreign inflows. However, the recent developments have spooked foreign investors and foreign fund flows have dwindled lately. SHAREKHAN TOP PICKS Sharekhan top picks  STOCK IDEA Kalpataru Power Transmission: Concerns priced in, growth ahead SHAREKHAN BUDGET SPECIAL  Union Budget 2012-13: Right on intent, low on action The Union Budget 2013 reflects another instance of the government's indecisiveness on critical policy issues. In his speech, the finance minister acknowledged that there is a need to achieve fiscal consolidation, curtail subsidy burden and revive private investments but he did little in terms of policy action to address the same. The budget proposes steps to boost revenues by rolling back fiscal stimulus (a 2% hike in both the excise duty and the service tax rate) and expresses intent to limit the subsidy bill to 2% of the gross domestic product (GDP; against 2.5% in FY2012). But there is no clear roadmap of the action needed to achieve the same. One senses that the government's focus has been on the safe passage of the finance bill and that the measures to cut down subsidy burden and to achieve the targeted fiscal consolidation will follow suit post budget. On the whole, the finance minister in this budget has set more realistic targets than he had in the previous year but he has missed out perhaps the last opportunity before the general election to take bold policy decisions.  RAILWAY BUDGET SPECIAL  Rail Budget 2012-13: Populism avoided, positive cue for Union Budget Contrary to expectations, the Railway Budget 2012-13 avoided populism and hiked passenger fares after a gap of ten years. The passenger fare hike has come on the back of a substantial increase in the freight rates effected just prior to the budget. The railway minister also detailed an extensive plan to invest a huge sum in expansion and modernisation of the railway network over the next five years and sought additional budgetary support for the same. He has set an ambitious five-year target to improve the operational ratio to 74% from the 95% revised estimate for FY2011-12. On an overall basis, the railway budget suggests that the apprehension of a hugely populist Union Budget after the Congress Party's debacle in the Uttar Pradesh assembly election has been allayed for now. However, there is strong opposition to the passenger fare rate hike from the railway minister's party and leaders.   STOCK UPDATE Aditya Birla Nuvo: Bullishness continues Bharti Airtel: Read through MTN results for Bharti CESC: Another tariff hike to set the outlook positive GlaxoSmithKline Consumer Healthcare: Annual report review Godrej Consumer Products: Price target revised to Rs547 ITC: Price target revised to Rs250 Jaiprakash Associates: New orders in bag, execution a key challenge  Mahindra & Mahindra: Tractor production cut in March 2012 Orbit Corporation: Timely clearances of projects hold the key Provogue India: Price target revised to Rs35 PTC India: Tariff hike and policy reforms the key to future growth  Reliance Industries: Price target revised to Rs890 Tata Consultancy Services: Short term hiccups, business fundamentals remain strong United Phosphorus: Price target revised to Rs167 SHAREKHAN SPECIAL Monthly economy review SWITCH IDEA Shift from Alok Industries to Raymond SECTOR UPDATE Banking: RBI caps LTV for gold loans - Negative for Mannapuram and Muthoot Pharmaceuticals: Budget 2013 is net negative for pharma players Power equipment: NTPC order - BGR shines, BHEL gets fair share, L&T misses yet again VIEWPOINT Anil: Well placed to cash in on the potential opportunity Bharat Forge: Robust business; wait for better entry point Liberty Phosphate: Subsidy reduction not to hurt volume growth  Rama Phosphates: In for good times Tech Mahindra: Tech Mahindra and Mahindra Satyam merger finalised  EQUITY TECHNICALS  Sensex: Consolidation to continue  EQUITY DERIVATIVES  Derivative view: The rollover game  COMMODITY FUNDAMENTALS  Macro-economy Crude oil: Likely to fall further on easing Iran tensions Precious metals: Weighed down by slowdown, uncertainty regarding quantitative easing Base metals: Can fall further Major economic events in April 2012   COMMODITY TECHNICALS  Gold: Down trend intact Silver: Targeting the low Light sweet crude oil: Bears take control Copper: Probability in favour of bears NG: Leaks through the channel Nickel: Near the neckline  CURRENCY FUNDAMENTALS  Currency market: Asian currencies mostly lower INR-USD CMP: Rs51.22 INR-GBP CMP: Rs81.96 INR-EUR CMP: Rs68.27 INR-JPY CMP: Rs62.36  CURRENCY TECHNICALS  USD-INR: Bears warmed up GBP-INR: Near key resistances EUR-INR: Pressure building up JPY-INR: Pattern suggests downside  PMS DESK Sharekhan PMS funds: Fund manager's view and product performance ProPrime-Top Equity ProPrime-Diversified Equity ProTech-Diversified ProTech-Nifty Thrifty ProTech-Trailing Stops  ADVISORY DESK  Monthly performance of Advisory products Smart Trades Derivative Trades MID Trades  MUTUAL FUNDS DESK  MF PICKS Sharekhan's top mutual fund picks (equity)  Sharekhan's top SIP fund picks  EARNINGS GUIDE   Click here to read report: Sharekhan ValueGuide Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.