Indian Markets May Open Positive As Auto Sales Inch Up In April.

Indian equity markets may open on a positive note as car sales for month of April add cheer to investor’s sentiments. The SGX Nifty is trading up by 30 points at 5270 indicating a gap up opening to markets today.

Overnight, U.S. stocks advanced, propelling the Dow Jones Industrial Average to its highest close since late 2007, after a report indicated U.S. manufacturing expanded in April, offsetting concern about the economic recovery. However, European stocks have been weak since Monday as Spain’s banks came under pressure after a round of credit-rating downgrades and weak growth data for the country.

On the domestic turf, the Indian car markets amid fears of slipping into negative zone following increase in central tax and prevailing high fuel prices along with subdued customer sentiments., has managed to rope in a positive surprise as sales scaled a marginal increase in April 2012. Yet again it was the sale of diesel cars that outpaced those of petrol dependents. Going forward, in line with the government’s decision to hike duties and taxes on automobiles and the expectations of an eminent fuel price hike over the coming months, we expect the car market demand to remain subdued. Any uptick in sales activity would be majorly driven by new launches and diesel car sales.  

In other news, all eyes today would be on the IPO of Samvardhana Motherson Finance (SMFL) which has decided to tap the primary markets to raise Rs 1665 crore through a fresh offering of Rs 1,344 crore and offer for sale of stake by a promoter entity amounting to Rs 321 crore. The fresh equity offering amount would be utilized by the company to majorly repay the group’s debt obligations and partly fund its investments in the rear view mirror business. 

Without arguing much over SMFL’s business prowess, operational ability and strong brand value, we at DSIJ recommend investors to give this offer a miss owing to its steep valuations. Despite the numerous growth opportunities promised by SMFL through its IPO, we advise investors to stay away from the offer as we expect the shares to list at a considerable discount to the offer price.

On the macroeconomic front, the industrial performance for 2011-12 seems to be ending on a sad note, as the crucial eight sectors, which have a weight of 38 per cent in the index of industrial production (IIP) grew a dismal two per cent in March, against 6.9 per cent in February, owing to contraction in crude oil and natural gas and slowing growth in electricity. So, unless the remaining of 62 per cent of IIP fares really well in March 2012, industrial growth would not see much rise.

In conclusion, for today we see markets to recover from last week’s fall but advice investors to remain cautious going ahead. With the March quarter results’ season picking up pace, one has keep a close track of stocks which are going to announce their March quarter results since the management guidance will provide cues for the stock as well as for the sector. We advise investors to remain cautious while making investment decisions. 

Chennai-based TVS Motor Company reported 4% increase in sales for April at 174,455 units as against 167,744 units in the same month last year. The company recorded a 7% growth in domestic sales at 151,181 units, as against 141,619 units in April 2011. Its two-wheeler sales grew 4% last month at 171,551 units, as against 164,183 units in April, 2011. The company's scooter sales stood at 35,833 units, up 2%, as against 35,074 units in the same month last year. Motorcycle sales accounted for 67,966 units as against 69,573 units in April 2011. Its total exports stood at 22,272 units last month, as against 25,275 units in April last year.

Tata Motors reported 7% decline in sales during April, 2012 at 60,086 units over the same month last year. Last month, it had registered a 7% decline in passenger vehicle sales in the domestic market to 23,658 units from 25,436 units in April, 2011. In the commercial vehicles segment, Tata Motors recorded a 6% decline in domestic sales in April to 34,647 units, compared to 36,738 units in the same month year-ago. Light commercial vehicle sales last month stood at 24,818 units, up 9%, while medium and heavy commercial vehicle sales stood at 9,829 units -- 29% down compared to April, 2011. The company’s total exports for the month of April 2012 declined by 35% to 2781 vehicles.

Despite slowing growth and higher input cost, Hindustan Unilever (HUL) one of the largest FMCG player in India posted robust March quarter numbers which were above the street expectations. For the March quarter of FY12, Net Profit increased by 21 per cent to Rs 687 crore against the market expectations of Rs 649 crore. Company’s domestic business grew by 20 per cent with a volume growth of 10 per cent. The stock might see an up move in today’s trading session on the back of above news.

According to media reports, Wipro acquires Analytics co, Promax application group for approximately Rs 35 million Australian dollars. The deal will probably be ended by June. Management said the acquisition will help the company to strengthen its position in analytics and information management services. Based on the above news the stock may see a movement in today’s trading day. 

According to media reports, one of the leading credit rating agency in the world, Moody has put under review major financial institutions like LIC, and private sectors banks like HDFC, ICICI and Axis leading to a possible downgrade. According to the reports, rating agency says “Moody’s believes that the credit quality of financial institutions, with high levels of domestic sovereign debt holdings, and low geographically diversified revenue and earnings sources, is closely linked to the sovereign’s credit strength” The above mentioned institutions share price  may see a negative movement in today’s trading day.

Auto-maker Mahindra & Mahindra today reported 27% jump in sales at 40,719 units for April, 2012. The company had sold 32,090 units in the same month last year. In the domestic market, the company registered 29% rise in sales to 39,299 units, compared to 30,349 units in the year-ago period.  M&M's exports declined to 1,420 units during the month from 1,741 units in April 2011.

The country's largest carmaker Maruti Suzuki India today reported 3.4% increase in sales to 1,00,415 units during April, 2012. The company had sold 97,155 units in April last year. The domestic sales were up 3.6% at 90,255 units last month, compared to 87,144 units in the same month last year. The exports increased 1.5% to 10,160 units in April, from 10,011 units in the year-ago period. 

According to Economic Times, Bharat Oman Refineries, a company promoted by state-run Bharat Petroleum Corporation with equity participation from Oman Oil Company, is raising $140 million (Rs 737 crore) of external commercial borrowing for its refinery project at Bina in Madhya Pradesh. BORL will raise the US-dollar term loan at an annual interest rate of 3.45% above Libor, or London inter-bank offered rate. BORL has set up a 6-milliontonne-a-year, or 120,000-barrels-a-day, refinery project at Bina in Madhya Pradesh. The Rs 12,700-crore project that includes crude oil import facilities and a cross-country pipeline was inaugurated in May 2011. The funds raised through the ECB would be primarily used for ancillary infrastructure for the project. BORL plans to scale up the capacity of the Bina refinery in phases to 9 MT and subsequently to 15 MT.