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Markets will remain closed on 24th April 2014 on account General Elections (Lok Sabha).
Easing Ukraine crisis lifts markets 
(Sat, 8 Mar RoundUp) 
The week started with a jolt as Russia-Ukraine tensions rose, sending global stocks plummeting while pushing oil, gold and silver prices higher. Once tensions eased, markets settled down. Stocks recovered from sharp losses. For the week, global stock indices were mixed.

Although economic data generally showed the impact of abnormally harsh winter weather on a sluggish US economy, 175,000 jobs were added in February, many more than the roughly 150,000 estimated. The stronger than expected jobs report makes it more likely that the US Federal Reserve will continue the gradual tapering of monetary stimulus at its meeting on 18 - 19 March. The US markets ended 0.8% up for the week.

The Eurozone's composite purchasing managers' index rose to 53.3 in February from 52.9 in January, the sharpest rise since June 2011. Separately, the European Union's statistics agency reported that the region's monthly retail sales grew in January by the largest amount in more than 12 years. At its regular policy meeting, the European Central Bank responded by deciding not to add any further economic stimulus. Majority of the European shares closed in the red.

The Indian equity markets shielded itself from weak economic cues and remained in an uptrend on hopes of a stable government at the centre that will kick start the reform process and revitalize the economy. The Indian equity markets closed 3.8% up for the week.

Key world markets during the week
Source: Yahoo Finance

Majority of the sectoral indices ended in positive territory for the week with Realty (up 13%), Banking (up 10.4%) and capital goods (up 8.1%) being the biggest gainers. IT (down 2.8%) and Pharma (down 4.3%) were the only losers for the week.

BSE indices during the week
Source: BSE

Now let us discuss some of the economic developments of the week gone by.

India's current account deficit fell to its lowest in eight years and stood at US$ 4.2 bn, or 0.9% of the gross domestic product (GDP), a sharp fall from US$ 31.9 bn (6.5%) in the year-ago period. The fall in CAD has been due to the government-imposed curbs on gold imports and the RBI's subsidy for non-resident Indians' US dollar deposits which boosted capital flows. However, whether this is sustainable remains to be seen. Placing curbs on gold imports is more of a short term measure and it is questionable whether this can go on for long given the increasing pressure to reduce these restrictions. The longer term solution would be to bolster exports by making them more competitive.

The Reserve Bank of India (RBI) has issued a circular regarding the issue of withdrawal of all pre-2005 currency notes. The RBI has increased the deadline for exchanging such notes to Jan 1st 2015. The RBI in its Jan 23rd 2014 circular had asked the public to approach bank branches to exchange all pre-2005 notes after 31st March 2014. The RBI has said that this deadline is being extended after a review of the matter. The notes will continue to remain legal tender. After Jan 1st 2015, such notes will not be available for circulation. The RBI has requested co-operation from the public.

As per a leading financial daily, a survey conducted by Confederation of Indian Industry (CII) and ASCON points to deterioration in the growth performance of industries with an increase in the number of sectors hit by the economic slowdown. As per the survey out of 110 sectors, the number of sectors witnessing contraction has risen from 21 sectors (21%) in December 2012 quarter to 31 sectors (28%) in December 2013 quarter. A major chunk of 58 sectors (53%) mainly in the basic, intermediate and capital goods sectors are in the low growth phase. Even the quantum of high growth sectors has narrowed down from 19 sectors (19%) in December 2012 quarter to 12 sectors (11%) in December 2013 quarter.

Movers and shakers during the week
Company28-Feb-147-Mar-14Change52-wk High/Low
Top gainers during the week (BSE-A Group)
Yes Bank304.7375.723.3%547/216
Indian Bank88.0106.521.0%182/61
Adani Enterprise254.3301.818.7%309/126
DLF Limited140.0167.019.3%289/120
Hindalco105.0124.618.7%127/83
Top losers during the week (BSE-A Group)
Jaiprakash Power1714-13.4%30/9
GSK Pharma3,0462,649-13.0%3054/2100
IPCA Labs887829-6.6%907/492
Godrej Consumer789739-6.4%971/672
Dr Reddy's Lab2,9012,726-6.0%2940/1733
Source: Equitymaster

Now let us move on to some more developments in India Inc....

Lupin has won approval from US Food & Drug Administration (USFDA) to market generic version of Bayer's Cipro in the US market. The final approval is for oral suspension of Ciprofloxacin in 250 mg/ml and 500 mg/ml that is used in the treatment of infections. Being the first company to file an abbreviated new drug application (ANDA) for Cipro oral suspension, the company is also entitled to 180-days of marketing exclusivity. Lupin's US subsidiary would commence marketing the products shortly. Additionally, the company has also received USFDA approval to market generic version of Aqua Pharmaceuticals' Monodox capsules also used in the treatment of infections. As per IMS sales data, 2013 US sales of Monodox capsules stood at $180.6 m whereas that for Cipro Oral suspension was US $8.6 m.

Bharat Forge has been de-risking its business over the last five years by increasingly selling forged products to non-automotive sectors such as oil & gas, power, railways, defence, mining and construction. The share of its domestic revenues from the non-automotive segment has risen from 28% in FY09 to 39% in FY13. Bharat Forge wants to raise the share of non-auto sales to 60% in two years. Several of the company's diversification ventures are in partnerships. In defence, the company has a joint venture with Israel based company Elbit Systems and an alliance with defence and security company Saab.

As per a leading financial daily, the software major TCS has partnered with Microsoft Business Solutions (MBS) for the development of online and on-premise versions of Microsoft Dynamics CRM (customer relationship management). As per the partnership, TCS has established a development centre to support the upcoming releases and updates to the Microsoft Dynamics CRM Roadmap, namely Mira and Leo. The development centre aims to enhance roadmap platform through the development of innovative marketing business applications and additions to core technology and mobility platforms. The company has also invested in a test center which will work to identify and create solutions that will improve the user experience, drive process agility and automation.

Finance Minister P. Chidambaram opines that bad loans of Indian PSU banks are expected to be slightly higher by March-end from a year earlier. He has also urged the public sector banks to focus on recovery of bad loans, which happen to be high among large corporate accounts. NPAs or bad loans of PSU banks rose by 28.5% from Rs 1,830 trillion in March 2013 to Rs 2,360 trillion in September last year. The Minister also said the banks recovered Rs 18.9 bn worth of bad loans during the April-December period. As per him, the model code of conduct, which came into force today following the announcement of general elections, will not affect the process of issuance of new banking licenses by the Reserve Bank.

Tata Motor's subsidiary Jaguar Land Rover Company plans to invest £100 m in Saudi Arabia to manufacture 100,000 vehicles per year in order to cater to the rising demand for its cars in the Middle East region. The proposed plant will initially make a new version of its Land Rover Discovery and is expected to employ 4,000-5,000 workers. It will be the company's third biggest factory in its overseas expansion drive after the deals to open plants in China and Brazil. It is expected that the Saudi government will invest in the plant as it seeks to develop its automotive industry. The company is expected to assemble cars from components made in Britain and then progress to taking more parts from Saudi companies.

Oil and Natural Gas Corporation Ltd's (ONGC) revenues and net profits may grow by Rs 160 bn and Rs 96 bn respectively post the domestic gas price hike to US$8 per unit from US$4.2 per unit from April 1, 2014. However, as per the management, most of the incremental revenue is likely to go back to the Government (which happens to be the majority shareholder the company) in form of higher taxes, royalty and dividend. As such, the net retention is expected at Rs 52 bn. The management has further stated that even at US$ 8 per unit, not all gas discoveries by the company will be viable and that it will need a higher price of US$ 11 per unit for that to happen. ONGC's cost of gas production is estimated at US$ 4 per unit.

Going ahead, global markets are expected to be volatile from the ongoing problems in Ukraine as well as economic concerns in US and Euro zone countries. In India, the markets continued to revel in the pre-election rally. A clear mandate in the 2014 elections is expected to boost the economy and thereby attract domestic and foreign equity investors. Apart from these short term fluctuations, India's long term growth story remains intact.
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