The execution of delayed public sector projects is gathering pace under the impetus of a cabinet oversight committee set up to overcome delays and obstructions in official approvals. This will lead to acceleration in GDP driven by public expenditure and provides some background to a Dun and Bradstreet report that its business optimism index is on the turn in the April to June quarter. The improvement is attributed to interest rate cuts and the steady advance of economic reforms. India’s standing as the fastest-growing major economy is providing a base for optimism on investment returns.
28 Apr 2016
Lupin has launched two generic postmenopausal osteoporosis prevention tablets in the US market. Indraprashtha Gas has reported its highest ever daily sales of 2.7mil kg of CNG in the Capital Area as more vehicles are switched to cleaner fuel and the city’s odd/even rule bites. Nestle is enjoying a strong recovery in its market standing as Maggi Instant Noodles have powered back to 50% share on the strength of four out of a previous nine lines. The company is leveraging this recovery to launch new premium products such as instant mocha and Greek yogurt. Dish TV, a pioneer and market leader in satellite television is launching a new premium service called “Miniplex” in a tie-up with Shemaroo Entertainment. Shemaroo is a leading content provider, especially Hindi films, by way of cross-platform subscription. Bajaj Auto has extended its assembly and distribution partnership with KTM AG of Austria for Duke and RC motorcycles up to 400cc in Indonesia, the largest motorcycle market in South East Asia.
27 Apr 2016
The prospect of the government’s major reform, the introduction of national GST, is starting to look better on reports that the Congress Party has agreed the legislation subject to three conditions. One of these, a cap at 18% is subject to further negotiations but this may be a major feature of the resumed Budget session of parliament, stating next week. Domestic air travel continues to grow at a rapid pace, with passenger numbers growing at 25.3% in March. After three years on the books, India finally looks like achieving its target of 5% blending of ethanol with petroleum this year.
Posted by #richardneve at 4/27/2016
26 Apr 2016
The Trade deficit fell for the third successive month in February, to $5.1bn as key import categories, such as energy continued to benefit from soft global prices. This time, the value of imports fell faster than that of exports which disappointed again. The Index of Industrial Production reversed a declining trend in March, registering 2% growth. On the inflation front, CPI declined against expectations, from 5.2% to 4.8% while WPI was stable at -0.9%. The inflation outlook remains benign, reinforced by the first formal monsoon forecast from the IMD. The vital seasonal rainfall is forecast to reach 105% of the long-term average (LTA); normal is defined as 96-104% of the LTA, so this forecast is above normal. This will be good for food prices which will benefit from higher agricultural production, which will also boost rural incomes and overall consumer demand. It will be particularly welcome in states like Maharashtra, where it is reported that seven out of eleven drinking water reservoirs are empty.
The Bellwether stocks announced their fourth quarter results. Infosys delivered a fourth successive positive surprise, going a long way to recovering its ring of confidence. Sales were 23.4% ahead, year on year and profits were 16.1% ahead. TCS reported sales ahead by 16.7% and profits by 6%. HDFC Bank reported net interest income ahead by 23% and, entirely predictably, profits by 20.2%. Finally, of interest to us, Supreme Industries reported sales ahead by 10.9% and profits by 7%.
25 Apr 2016
The past two weeks saw three public holidays in India with a paucity of news until the fourth quarter results started to flow. They also saw steady upward momentum in the equity markets as post-budget optimism was sustained by a repo rate cut and emerging signs of accelerating activity, especially in public sector investment. The Nifty 50 added 344 points during the period to close 4.6% ahead at 7899, after trading in a range of 6%. Average daily trading volume was $3bn, around the trailing average. FPIs resumed net buying, of $256mil while domestic institutions were net sellers of $82mil. Volatility was fairly stable: the India VIX traded up to 18 at first but then faded to 14 before closing where it opened, at 16. There was some concentration both upside and downside, as Infosys, ICICI and Axis Banks made substantial points’ contributions, while TCS and Reliance went the other way. Index futures closed at a premium of 1% to cash.
Posted by #richardneve at 4/25/2016
14 Apr 2016
The Healthcare sector was undermined by a series of USFDA '483' letters to pharmaceutical manufacturers containing observations on processes and procedures. Lupin received observations on its Goa and Mandideep factories, the supply to critical US business. On mature consideration, it appears that the inspection reports will not affect the company’s approval pipeline or US shipments. Meanwhile, Lupin received approval to launch a generic sublingual insomnia drug called Zolpidem, with a 180-day exclusivity period. Torrent Pharma is looking to raise additional capital, including by way of a Qualified Institutional Placing (QIP) as it lines up an offer for Hyderabad-based Gland Pharma.
Posted by #richardneve at 4/14/2016
13 Apr 2016
Nestle’s Maggi instant noodles have recovered market leadership with a share of almost 50% within just for months of the additives controversy. The annualised value of sales is running at more than $300mil. Pidilite faces new competition in its market dominance in adhesives from Asian Paints, which is to distribute the American Loctite products. Pidilite’s entrenched national distribution and service network should withstand the threat. HCL Technologies will strengthen its engineering services by acquiring Geometric from Godrej interests. The acquisition will increase its revenues from the engineering sector above 20%, more than industry peers. The relatively high-cost acquisition will bring more than sixty new clients, as well as some 2,600 skilled staff working in 13 international operating centres. The incremental revenue contribution will be about $150ml.
At its April monetary policy review, the RBI cut the repo rate by 25 basis points, as widely expected. The market did not react strongly, because the announcement also included a comprehensive revision of the liquidity management framework aimed at easing constraints on the policy transmission mechanism. The RBI wants to ease 'crowding out' factors, such as funding seasonal tax payments or government financing requirements. Thus sustaining an embryonic recovery in lending. The inflation target is maintained at 5%, subject to upside concerns on this year’s monsoon and the oil price. Downside pressure may emerge from continuing fiscal consolidation and soft global growth.
12 Apr 2016
The Foreign Investment Promotion Board (FIPB) approved fifteen new FDI proposals, including four in the Insurance sector, with a total value of $1.1bn. Japan is providing development loans totalling more than $2bn for projects including the Dedicated Freight Corridor. The Department of Telecom will auction spectrum including the 700mhz range in July, expecting to raise up to $80bn for the government coffers.
Posted by #richardneve at 4/12/2016