Archive for October 27th, 2009

Corporate India is Likely to Register 22.8% Growth

corporate India is likely to clock 22.8% growth in net profit in 2009-10

corporate India is likely to clock 22.8% growth in net profit in 2009-10

Corporate India is likely to register 22.8% growth in net profit in 2009-10 despite the slowdown in the global economy and bad monsoon.

🙂

Centre for Monitoring Indian Economy (CMIE) in its latest report has attributed theimprovement in the margins..due to fall in input costs” as the major reason for the concerned growth of corporate India.

According to the report, the revenue of the companies will grow at much slower pace.

🙂

The report said, “Corporate sales growth will average at a meagre 4.1% in 2009-10.

At the same time, profit after tax (PAT) will rise by a robust 22.8%.”

🙂

The performance of the manufacturing sector, excluding petroleum sector, would be encouraging.

The report said the sectors PAT would manage to grow at 24.3% mainly on account of low raw material prices and soft interest rates.

PAT of the financial and nonfinancial services would rise by 32.2% and 20.4% respectively, the report projected.

🙂

According to the report, corporate India took a hit on its sales due to the fall in commodity prices, drying up of export demand and postponement of purchases by the domestic consumer following the global liquidity crisis.

The report estimated that corporate profits have grown by 44% in the second quarter of 2009-10 due to the handsome profit likely to have been made by the petroleum products sector as against the losses incurred in the year ago quarter.

Aggregate PAT of the rest of the manufacturing sector is also estimated to have risen by a modest 4.5% in the second quarter, the report said.

CMIE estimated the PAT of the financial and non-financial services to have risen by 26%-29%.

Sales, however, is estimated to have fallen by 5.3%, it said.

The fall in sale realization is also because of sharp fall in the prices of the commodities.

The report said that non-financial services chose to keep their employees cost and other expenses on a tight leash and enjoyed benefit of fall in interest rates.

🙂

Market to Go Volatile This Week, Due to Host of Factors

Market to Go Volatile This Week, Due to Host of Factors

The Market is likely to remain volatile this week as a host of triggers are set to guide investor sentiments. These factors are :

1. Expiry of the October series of derivatives contracts,

2. September quarter results of some key companies such as Reliance Industries and

3. the RBI money policy review.

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Global cues may also induce some choppiness in the market.

Noted Market analyst, Jagannadham Thunuguntla, head of equities at SMC Capital quoted that;

“The market is facing heavy pressure.  There a wide gap between fundamentals and stock valuations.  The second quarter results have come up less than what most investors had anticipated”.

He also added “though the average profits of companies, which have so far reported second quarter results, have grown 30-40 per cent on cost-cutting measures, growth in net sales has been sluggish“.

Also Thunuguntla said that “we have huge liquidity in the market thanks to the 100 per cent rally and this has helped the market sustain at this level till now. No doubt, fundamentals are catching up with valuations slowly”.

🙂

Thunuguntla said the market was in a consolidation phase.

“It may remain volatile this week ahead of the expiry of near-month futures and options contracts and the RBI policy review.”

On the global front, the US will disclose its third quarter GDP figures on Thursday.

Meanwhile, the rate of inflation jumped to 1.21 per cent for the week ended October 10 against 0.92 per cent a week ago.

The BSE Sensex slipped 512.01 points, or 2.96 per cent, last week to close at 16,810.81.01.

The Nifty index on the NSE dipped 145.10 points, or 2.82 per cent, to end the week at 4,997.05.

🙂

According to other observers, Nifty has a support at 4,900.
Market sentiment may get hurt if this level is breached.

Thunuguntla also said investors would keenly follow the quarterly results of Reliance Industries as well as global cues.

“Amid the fight between the Ambani brothers, investors will watch the RIL results keenly.  Global cues will also be followed after a few bad economic numbers from the US last week,” he said.

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Foreign institutional investors (FIIs) on Friday remained net sellers, offloading equities worth Rs 295.70 crore, according to figures available at the website of market regulator Sebi.

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Lower Output of Rice will Shift More Demand for Wheat

Hello Friends, just an extension of our previous blog “wheat may move in range with up bias”.

Lower Output of Rice will Shift More Demand for Wheat

Lower output of rice and maize will shift more demand for wheat

Despite record wheat production in 2007-08, wheat consumption in 2008/09 is estimated to have declined to around 70.2 million tonnes from 76.2 million tonnes in the previous year due to high prices.

Domestic prices have shot up after a significant hike in the minimum support price discouraging consumption.

Highly subsidized rice distribution program of some state government also tempered wheat demand.

Domestic wheat consumption in 2009-10 is expected to rise by 70.2 million tonnes to 76.88 million tonnes ; likely decline in rice and maize production may lift wheat demand.

Export ban may continue, import at this juncture is viable

With bumper production and significant built up of stock wheat export was earlier estimated to be 2 million tonnes in 2009-10.

Even government relaxing ban placed in February, 2007 allowed two million tonnes of government-to government export.

But weak monsoon and poor sowing prospects of paddy forced
government to scrap government-to-government export allowed earlier.

It is likely that government would continue with its stance on export of wheat at least till the end of current marketing year.

After importing wheat in 2006-07 (6.2 million tonnes) and 2007-08 (1.8 million tonnes), India did not import any wheat in 2008/09 as the domestic supply situation improved considerably.

As domestic supply situation is comfortable, import is also not likely in the current season.

However imports are currently viable as international prices of wheat (equivalent to domestic mill quality) are lower.

Ukraine origin wheat is trading $ 180-200 per tonne and

Australian wheat is at $ 210-230 per tonne, while wheat prices on Southern India is at around $275-300 per tonne.

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In Next Blog, We would touch upon the aspects like Domestic and International price trend of wheat. demand and supply scenario in coming months, price trend and on Export Ban.

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