China’s July 2012 inflation came in at 1.8% the fourth straight month of falling inflation. China’s June inflation was 2.2% and May inflation was 3%. Markets are expecting rate cuts by the PBOC (People’s Bank of China) given falling inflation and weak trade data. China’s export growth fell sharply in July leading to fears of a sharp slowdown in growth in the Export driven economy. China rate cut hopes drove equities higher last week with Asian and global indices closing positive week on week.
Indian equities shrugged off negative IIP (Index of Industrial Production) growth numbers to close positive week on week. IIP growth for June 2012 came in at -1.8% against a growth rate of 2.5% seen in May. India’s inflation for July is expected at 7.4%. Markets are expecting rate cuts by the RBI given weak IIP growth numbers.
Corporate results were muted in India with Tata Motors showing negative growth in its domestic business and SBI showing higher bad loans for the first quarter 2012-13.
The derivative market is indicating strength in equities with Nifty index near month futures open interest rising and implied volatility on Nifty index near month put options falling.
The Euro fell week on week on the back of continued worries on Eurozone debt and on expectations of ECB buying sovereign bonds. The Indian Rupee gained week on week on positive sentiments in the equity markets. Euro should trend down further while the Rupee will show strength given positive equity market sentiments.
Select gainers and losers in BSE 500 last week.
Contributed by research associates Ketan Verma and Ajith BP
Bajaj Finserve rose on strong growth expectations.
Wockhardt reported sustained operating profit and net profit performance, both in terms of value and margins in its June 2012 results. The company recently concluded the divestment of its Nutrition business to Danone for Rs 1,280 crore. This has significantly improved the balance sheet position for the company and its net debt to equity ratio now stands below 1.
Motherson Sumi Systems Ltd posted a consolidated net profit of Rs 8.14 crore for the first quarter ended June 30, 2012. The company’s board recommended issue of bonus shares in the ratio of 1:2.
Bharti Airtel disappointed in its first quarter fy 13 results, which has shown a 37% decline in net profit. This is the 10th straight quarter during which Bharti Airtel reported a drop in net profit. It’s Africa operations, which it acquired from Zain in 2010, posted a net loss at Rs 670 crore compared to the year-ago period, and this hit the company’s consolidated numbers.
Aurobindo Pharma reported a 4.97% widening of its consolidated net loss to Rs 128.91 crore for the quarter ended June 30, 2012, mainly on account of high manufacturing costs.
Jaypee Infratech reported a decline of 11.71% in net profit to Rs 209.94 crore for the quarter ended June 30, 2012, largely due to increase in total expenditure.
Idea cellular fell on negative sentiment for telecom sector and due to negative growth in its first quarter 2012-13 result.