MARKET DATA

CORPORATE EVENTS

* EGM of
  + Sita Shree Food Products

* BOARD MEETING of

  + BURNPUR CEMENT to consider conversion of warrants.
  + JAIHIND PROJECTS to consider and take on record preferential
        issue of equity shares to promoters.
  + JAYANT AGRO ORGANICS to consider interim dividend.
  + UJAAS ENERGY to consider incorporation of wholly-owned foreign
         subsidiaries.
  + GLAXOSMITHKLINE CONSUMER HEALTHCARE to consider actions arising
        out of Companies Act, 2013.

* PRESS MEET of

  + Uninor Chief Executive Officer Sorby to brief on the company's internet
    plans in India. 1400 IST, New Delhi.
  + Nokia India Vice President and Managing Director Balaji to address press
    conference. 1130 IST, New Delhi.
.
.
POLITICAL DIARY

* RAHUL RALLY: Congress Vice-President Rahul Gandhi to kick off Lok Sabha
  campaign in Rajasthan with a public meeting in Deoli.
.
.
DATA ALERT

* from OVERSEAS

  > FRANCE INDUSTRIAL PRODUCTION INDEX for Dec. 1315 IST.
  > SWITZERLAND RETAIL SALES for Dec. 1345 IST.
  > ITALY INDUSTRIAL PRODUCTION for Dec. 1430 IST.
  > CANADA HOUSING STARTS for Jan. 1845 IST.
  > US EMPLOYMENT TRENDS INDEX for Jan. 1930 IST.

* from INDIA

  > AUTO SALES: Society of Indian Automobile Manufacturers to detail
    automobile sales for February and Apr-Feb. 1030 IST, New Delhi.
.
.
RBI COUNTER

* DAILY LAF TENDERS: One set of 1-day reverse repo (at 7.00%) and 1-day repo
  (at 8.00%). Bids for repo tender may be submitted between 0930 IST and
  1030 IST, and reverse repo between 1900 IST and 1930 IST.
.
.
MARKETS

Call  : Seen opening slightly above RBI's repo rate as banks may borrow to
        cover daily reserve needs. 1-day call: 8.10-8.35% vs 8.15% 2-day Sat.
.
Bonds : To take cues from US Treasury yields, rupee's exchange rate Mon.
        10-year bond yield: 8.75-8.85% vs 8.81% Fri.
.
Rupee:  Seen opening tad lower Mon post better-than-expected US job data.
        Local shares eyed. Range: 60.80-61.40/$1 vs 61.08/$1 Fri.
.
Stocks: Set to open slightly lower tracking weak Asian markets.
        Nifty range 6450-6550; Friday-end 6526.65, up 125.50 points.

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CORPORATE EVENTS
* EGM of
  + EVERONN EDUCATION
  + KIRLOSKAR BROTHERS INVESTMENTS

* BOARD MEETING of
  + GOLDEN GOENKA FINCORP, to mull terms of rights share basis.
  + TASTY BITE EATABLES, to consider delisting shares.
.
POLITICAL DIARY
* AAP's Kejriwal in Gujarat to "audit" CM Modi's development.
* SP's Akhilesh interaction in 'Candidates 2014' on Facebook Talks live.
* Congress' Rahul Gandhi to interact with fishermen at Versova, Maharashtra. He
  will also address a public rally at Sonale village, Bhiwandi bypass, in Thane
  district, Maharashtra.
.
GOVT BEAT
* FIPB to consider 33 FDI proposals including those of Walt Disney, BNP Paribas.
  1500 IST, New Delhi.
.
DATA ALERT

* from OVERSEAS

  > EU EUROZONE RETAIL PMI in February. 1440 IST.
  > GERMANY MANUFACTURING ORDERS in January. 1630 IST.
  > UK INTEREST RATE DECISION. 1730 IST.
  > EU INTEREST RATE DECISION. 1815 IST
  > US JOBLESS CLAIMS in week to Mar 1. 1900 IST.

* from INDIA

  > MONEY SUPPLY, BANK DEPOSITS, LOANS as on Feb 21, by RBI.
.
CONFERENCES

* PHARMA NORMS: Minister of State for Chemicals and Fertilisers Jena, and
  Ministry of Health and Family Welfare Joint Secretary Panda to be present
  at conference on Pharmaceutical Policies in India. 0930 IST, New Delhi.
* ASEAN-INDIA: External Affairs Minister Khurshid to speak at FICCI's Delhi
  Dialogue VI 'Realising the ASEAN-India Vision for Partnership and
  Prosperity'. 1700 IST, New Delhi.
.
RBI COUNTER

* DAILY LAF TENDERS: One set of 1-day reverse repo (at 7.00%) and 1-day repo
  (at 8.00%). Bids for repo tender may be submitted between 0930 IST and
  1030 IST, and reverse repo between 1900 IST and 1930 IST.
.
MISC.

+ India Ratings to release Public Finance Outlook Report. 1200 IST, New Delhi.
.
MARKETS

Call  : Seen opening slightly above RBI's repo rate on demand from banks to meet
        mandatory reserve needs. 1-day call: 8.25-8.75% vs 8.75-8.90% Wednesday.
.
Bonds : Seen higher as India's Oct-Dec current account deficit narrows to
        0.9%. 10-year bond yield: 8.80-8.90% vs 8.84% Wednesday.
.
Rupee : Seen tad up on good Oct-Dec CAD data. Custodian inflows may help. Local
        shares to lend cues. Range: 61.50-62.00/$1 Thu vs 61.75/$1 Wednesday.
.
Stocks: May extend gains on positive sentiment; overseas cues eyed.
        Nifty range 6280-6360; Wednesday-end 6328.65, up 30.70 points.
.

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ABB Improving margins but valuations remain expensive

Improved execution, cost rationalization helping stabilize margins: ABB
reported sales of Rs22bn, up 7.4% YoY (PLe: Rs19.5bn). Execution in the power
product (up 10% YoY) and power system (up 13% YoY) segments continued to
improve, while sales for processes automation (down 16%) continued to be
subdued. EBITDA was up 303% YoY to Rs1.4bn. Gross margin improved 620bps
YoY and 10bps QoQ. EBITDA margin improved 500bps YoY to 6.8% (PLe: 6.5%).
Improved mix (in favour of products) and focus on cost control measures are
helping margin improvement. RM percentage sales ratio has stabilised at ~70%
over the last few quarters and management believes it is working on measures
to bring down the ratio further. PAT was up 2.5x to Rs586m (PLe: Rs515m).

Increasing focus on short cycle/base orders to counter slowdown: Order inflow
for the quarter was up 5% YoY and for CY13, was down 4% YoY. Base
orders/short cycle from a wider spectrum of customers and improved exports
helped offset dearth of large projects in domestic markets. Export order inflow
for CY13 (~15 of inflows) was up 30% YoY and management believes this growth
is sustainable even for CY2014. The company continues to tap sectors like
renewable energy, data centre, railways, grid stability, mining and oil & gas
which look increasingly promising. Order book at the end of CY13 was down
11% YoY to Rs77bn.]

Outlook and Valuation: ABB has been investing in capacities in India as they
remain optimistic on the long-term outlook for Indian markets. We believe ABB
should benefit from the capacities created and cost rationalization measures as
demand environment improves over the next few years. Despite factoring in
50% earnings CAGR over CY13-15E, the stock is still trading at an expensive
valuation of 36x CY15E earnings. We believe expensive valuation and uncertain
outlook in the near term will restrict any meaningful upside on the stock in the
near term.

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SALES TRADERS COMMENTARY

The Indian market settled on a buoyant note on Tuesday on account of positive global cues, led
by gains in banking, capital goods and power stocks, whereas FMCG stocks dipped.
The Sensex ended 170 points higher at 20634, while the Nifty jumped 46 points to 6127.
Major gainers were Jindal Steel & Power (6.93%), Housing Development Finance Corporation
(2.99%), ICICI Bank (2.80%), Maruti Suzuki India (2.57%), Tata Power Company (2.45%) and
Larsen & Toubro (2.02%).
Major losers were GAIL (India) (1.45%), Bharti Airtel (0.95%), ITC (0.80%), Wipro (0.68%), Coal
India (0.55%) and Cipla (0.53%).
The Bankex was at 12074.22, up 275.85 points or 2.34%. Major gainers were Canara Bank
(1.86%), H D F C Bank (1.54%), Bank of India (1.45%), Bank of Baroda (0.74%) and Federal Bank
(0.2%).
The Capital Goods index was at 9620.47, up 196.52 points or 2.09%. Major gainers were A B B
India (12.8%), AIA Engineering (3.32%), Alstom India (3.09%), Bharat Heavy Electricals (1.42%)
and BEML (0.66%).
The Power index was at 1545.95, up 26.24 points or 1.73%. Major gainers were A B B India
(12.8%), Adani Power (5.26%), Reliance Infrastructure (3.55%), Bharat Heavy Electricals (1.42%)
and C E S C (1.36%).
On the other hand, the FMCG index was at 6386.74, down 18.16 points or 0.28%. Major losers
were Dabur India (0.87%), Colgate-Palmolive (India) (0.8%), I T C (0.8%) and United Breweries
(0.63%).
Globally, Asia was trading higher—while Nikkei was up 450 points to 14844, Hang Seng jumped
52 points to 22587; European indices were also trading lower
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2014-2015 Budget Highlight

Indian Finance Minister P. Chidambaram presented the interim budget for the fiscal year 2014/15 on Monday to cover expenditure until the government's term ends in May.
• GDP expansion in 2013/14 third and fourth quarters will be at least 5.2 percent 
• Fiscal deficit seen at 4.6 percent of GDP in 2013/14 
• Fiscal deficit seen at 4.1 pct of GDP in 2014/15 
• Need to bring down fiscal deficit to 3 percent of GDP by 2016/17
• Current account deficit for 2013/14 projected at $45 billion 
• Forex reserves to rise by $15 billion by end of 2013/14 
• Merchandise exports seen at $326 billion in 2013/14, up 6.3 percent year on year. 
• Agriculture exports expected to touch $45 billion in 2013/14, up from $41 billion in 2012/13 
• Plan expenditure for 2014/15 seen at same level as previous year 
• Non plan spending estimated at about 12.08 trillion rupees in 2014/15 
• Total spending on food, fertilisers and fuel at 2.5 trillion rupees in 2014/15 
• Spending raised to 2.24 trillion rupees in 2014/15, up 10 percent year on year 
• Govt to provide 112 billion rupees capital infusion in state run banks in 2014/15 
• No major changes in tax rates. 
• To cut excise duty on small cars, two wheelers, commercial vehicles to 8 pct from 12 pct 
• To reduce factory gate tax rate to 10 pct from 12 pct on some capital goods, consumer durables in 2014/15 
• Proposes to restructure factory gate tax for manufacturing of mobile handsets 
• Customs duty on non-edible grade industrial oil cut to 7.5% 
• Customs duty on fatty acids, fatty alcohol cut to 7.5% 
• Excise duty on goods under Chapter 84-85 cut to 10% vs 12% 
• To rationalize excise duty on soaps to up local production

INR TOUCHES 3-WEEK HIGH ON POSITIVE ECONOMIC DATA

THE WEEK THAT WAS...

•  Indian Rupee continued its winning streak and hit a three week high last Friday. The local currency closed with a gain of 0.57% last week against the US dollar. Gains were seen mostly on the back of better than expected economic data like WPI and CPI. Above all, positive CAD for January makes Rupee relatively better currency in the EM pack. Rupee’s out-performance continued on the back of positive domestic as well as Asian stocks and weak economic data out of the US. But month-end dollar demand by Oil Importers, coupled with their repayment of swap dues to RBI on or before 31st May will likely keep Rupee under some pressure. Markets are looking forward to a pragmatic interim budget from the Finance Minister on Monday.
•  US Dollar lost ground against most major world currencies on Friday amid mixed US economic data on industrial production and consumer sentiment. Chinese inflation data boosted the Aussie and the Euro advanced amid a report showing pick-up in Eurozone economic recovery. The US markets will be closed on Monday in observance of Presidents Day.

CURRENCY OUTLOOK FOR THIS WEEK

 Indian Rupee is likely to trade with a positive bias for the week on the back of strong economic data released last week. US markets will remain shut on Monday on account of US presidents day. So, trading in Indian currency markets will be slightly subdued on Monday and the rupee could trade range bound

CURRENCY INSIGHTS

• Declining US bond yields are seen as positive for the rupee amid lingering fears that the impending QE tapering could result in outflows of foreign capital from the Emerging Markets.
•  As per charts, USDINR saw a breakdown on Friday but was not able to sustain. Also, currently USDINR is trading below short-term moving average, pointing to some marginal weakness in the local unit in coming sessions. The currency has to breach 60.90 in spot to continue its southward journey towards 60 and below.
•  For the coming week, USDINR is likely to trade in a range of 63.00-61.00 in spot market

CURRENCY OUTLOOK FOR THE DAY

•  Rupee is likely to trade with a positive bias on the back of weak USD and positive local equity markets. Positive trend in Euro and Pound will likely keep USD under pressure against the rupee.
•  In the spot market, USDINR is likely to open lower at 61.80 versus the closing of 61.93 on Friday. USDINR February futures are likely to open at 62.00 versus Friday’s closing of 62.10.

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WEDNESDAY'S LEADERS

* Interim Railway Budget.
* Earnings==> BPCL, Cipla, Coal India, Apollo Tyres.
* Data alert==> CPI for combined, rural and urban for
January by CSO; IIP; Japan machine tool orders; Eurozone
 industrial output; US mortgage applications, petroleum
stocks.
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