Market Weekahead: High expectations as Modi becomes PM

Shares may look to extend gains in the first half of next week as Narendra Modi is set to be sworn in as the country's prime minister on Monday. The first task for Modi will be to pick a new cabinet, with the finance ministry expected to go to former commerce minister Arun Jaitley. Comments on the fiscal deficit, inflation, and the relationship with central bank Governor Raghuram Rajan will be of prime importance to investors. That could help sustain gains for the BSE Sensex, which on Friday became the best performing equity index in Asia-Pacific for 2014. However, the second half of the week could be volatile given the expiry of May derivatives contracts, and a slew of key earnings such as Tata Motors Ltd , Sun Pharmaceutical Industries   and  Coal India  .

Source: Moneycontrol.com

Rupee Hits 10-Month High of 59.51 Per Dollar on Exit Poll Hopes

Rupee rallied to its strongest level against the dollar since July 2013 on widespread hopes that exit polls later on Monday would show the opposition Bharatiya Janata Party winning a majority in the country's elections.

The optimism comes even as exit polls in previous elections have proved to be unreliable.

India's five-week long elections are set to conclude on Monday, with exit polls from media organisations to be released starting after 6:30 p.m. Actual results will be out on Friday.

The partially convertible rupee touched as much 59.51 per dollar on Monday, the strongest level since July 29, 2013, compared to its 60.02/03 close on Friday.

Copyright: Thomson Reuters 2014

Nifty Soars Above 7,000 Ahead of Exit Polls

The BSE Sensex surged over 550 points, while the broader Nifty broke above the key 7,000 levels for the first time as markets rallied to record highs for a second successive session on Monday. The rupee, too, strengthened to as much as 59.51 per dollar, its strongest level since July 29, 2013 from its close of 60.02/03 on Friday.

The Sensex has now jumped over 1,200 points or around 5 per cent in just two sessions. Strong buying in equities came amid rising hopes that exit polls would show Bharatiya Janata Party (BJP) and its allies winning a majority in the current elections. Exit poll results are due to be telecast at 6.30 p.m. after the five-week-long elections wind up today. Actual results will be announced on May 16.

"Markets are factoring numbers close to 230-240 seats for the BJP alone, and if that is the case, the NDA will get a majority on its own. That will lead to pro-growth, right of central, stable formation, which is enthusing for the investors," said Manishi Raychaudhri, strategist and head of research at BNP Paribas Securities.

The Nifty has surged 17 per cent since Narendra Modi was announced as the BJP's prime ministerial candidate on September 13. Polls have consistently shown the BJP ahead, raising expectations the opposition party, which is seen by markets as being more investor- and business-friendly, will either win or come close to an outright majority.

Domestic-oriented shares led the rally, with the Bank Nifty hitting a record high.Coal India, up 7.3 per cent, was the top Nifty gainer. HDFC Bank and Tata Motors closed with over 4 per cent gains, while ITC, Hero MotorCorp, Maruti Suzuki, SBI and Reliance Industries ended 3-4 per cent higher.

Infrastructure shares also gained, with Power Grid rising 4.35 per cent and Grasim Industries ending 4.3 per cent higher. State-run power equipment maker Bharat Heavy Electricals surged 2.4 per cent. 

"Infrastructure, engineering, cement, power and industrial stocks should gain if a Modi-led government comes to power," said UR Bhat, managing director, Dalton Capital Advisors.

Despite gains, analysts cautioned investors about going overboard amid the euphoric sentiments on the Street. That's because not only opinion polls, but exit polls, too, have got it horribly wrong in the past.

The BSE Sensex ended 556.77 points higher at 23,551, while the Nifty closed up 155.45 points at 7,014.25.

Source: NDTV Profit

Maruti, Toyota, M&M sales drop in April; Hyundai, Honda up

Major car makers, including Maruti Suzuki India, Toyota Kirloskar Motor and General Motors India, reported decline in domestic sales in April as demand continued to be subdued due to overall unfavorable macro-economic conditions.

Other manufacturers Hyundai Motor India Ltd, Honda Cars India and Ford, however, reported increase in April sales on the back of their new models.

The country's largest car maker Maruti Suzuki India (MSI) reported 12.6 percent decline in its April sales during the month at 79,119 units.

Sales of the company's bread and butter segment mini cars comprising M800, Alto, A-Star and WagonR declined by 25.4 percent to 26,043 units, while those of premium compact cars consisting of Swift, Estilo, Ritz rose by 9.9 percent to 23,659 units in April.

MSI said sales of its popular compact sedan Dzire declined 17.7 percent during the month under review to 16,008 units, while sales of utility vehicles, including Gypsy, Grand Vitara and Ertiga, also declined by 5.8 percent to 5,011 units in April.

Similarly, homegrown Mahindra & Mahindra also saw its domestic sales dropping by 15 percent at 34,107 units as against 39,902 in the same month previous year.

"It is unfortunate that the auto industry has not seen an upturn over the last couple of months in spite of a reduction in excise duty," M&M Chief Executive (Automotive Division) Pravin Shah said.

The company expects that post the general elections, sentiments would improve, leading to a better economic situation and hence increased demand, he added.

General Motors India also reported a 35.30 percent decline in April sales at 5,302 units.

"Customer sentiment continues to remain negative even with price reduction on account of excise duty cut and other market promotion schemes," General Motors India Vice President P Balendran said.

Going by the market scenario, the company expects the challenging times to continue as the general economic conditions continue to remain depressed, he added.

"The buoyancy in the market is completely missing and we don't see any upturn before the new government assumes office," Balendran said.

Toyota Kirloskar Motor also saw its domestic sales decline by 16.04 percent at 7,562 units in April. The company, which saw labour unrest at its Bangalore facility, said it resumed normal production from April 22.

In contrast, Hyundai Motor India, saw its sales increase by 8.78 percent in its domestic sales at 35,248 units last month. 

Commenting on the sales performance, HMIL Senior Vice-President (Sales and Marketing) Rakesh Srivastava said the domestic volume growth is in line with this year's objective of growth in volume and market share.

"Growth is led by sedan and utility vehicles across geographies, with new products Xcent, Grand and Santa Fe adding volumes with an overwhelming response from customers," he added.

Similarly, Honda Cars India posted a 30 percent increase in domestic sales at 11,040 units in April, riding on the success of its premium sedan City.

The company sold 7,044 units of the car in April.

Ford India also posted rise in domestic sales last month. The company sold 6,651 units in April, up 66.15 percent from same month previous year.

"Despite on-going business challenges faced by Indian automotive industry, Ford India sales have held steady in April," Ford India Executive Director (Marketing, Sales and Service) Vinay Piparsania said.

In the run up to the formation of the next government, the company remains cautious and watchful in anticipation of progressive policy interventions to energise the Indian automotive sector, he added.

In the two-wheeler segment, Honda Motorcycle & Scooter India posted 20.92 percent rise in sales at 3,13,942 units last month. Yamaha Motor India posted a 42.39 percent increase in domestic sales at 51,158 units in April. 

Source: PTI
http://zeenews.india.com/

‘Auto Slump Claims 2 lakh Jobs’ Biggest job losses likely to have occurred at the retail level, says SIAM

The longest period of slump in India’s automobile market, with sales declining for a second straight year, has taken its toll with production cuts leading to the loss of 200,000 jobs, according to the Society of Indian Automobile Manufacturers. 
“Last year was one of the most difficult periods for the auto industry,” said Vikram Kirloskar, the president of SIAM, who is also the vice-chairman of Bangalore-based automaker Toyota Kirloskar Motors. “I personally feel that across the entire value chain in the auto industry, right from raw materials to the dealerships, there could be around 1.5-2 lakh job losses.” 
The Indian auto industry employs 19 million direct and indirect workers. 
The industry is already falling behind its target on the job front as it was estimated to employ more than 25 million workers by 2016 under the 10-year Auto Mission Plan of the government. 
A consistent fall in demand and sales for the past two years is likely to create a huge employment gap. 
Car sales in India fell for the second consecutive fiscal ended March 2014 with a 4.65% drop as the auto industry continued to struggle in a sluggish economy. Besides the decade’s steepest decline in car sales, heavy trucks and buses continued its negative sales streak for the past 25 months. 
The industry is not expecting an immediate turnaround, even with a cut in excise duty. According to industry sources, the biggest job losses would have occurred at the retail levels, mainly dealerships that sell all class of vehicles — from bikes to trucks. It also hit the component manufacturers hard. 
Many auto companies have gone for downsizing. India’s largest auto company by revenues, Tata Motors, had undertaken an Early Separation Scheme last year to reduce manpower by as much as 5,000 workers across its plants at Jamshedpur, Pune and Lucknow. 
More than 500 managers had left the Chennai-based Ashok Leyland as part of its voluntary retirement scheme in November 2013. Due to declining sales for the past two years, companies are enforcing regular production cuts and industry executives said that job losses in the sector are quite common. 
Market leader Maruti Suzuki had closed its five plants for eight days in June last year to reduce its swelling inventory at factory and dealers, while others like Mahindra & Mahindra, General Motors, Skoda Auto also undertook plant shutdowns and retrenched their casual and temporary workers to align production with the slowing market conditions. 
In a major setback to the passenger car segment Hoover India, which was a master franchise of Japanese carmaker Nissan, shut its office leaving hundreds of its employees jobless. Analysts tracking the sector said that the trucks and buses segment was the hardest hit. 

Source: The Economics Times

Slashing TV Prices to Woo Buyers Sony, Panasonic, Videocon slash prices of entry-level LCD & LED TVs to attract users upgrading from CRT models

Television makers such as Sony, Panasonic and Videocon are bringing down the prices of their entry-level LCD and LED TV sets to target first-time buyers and those who want to upgrade from CRT models, a segment which is shrinking fast. 
Sony, for the first time, is entering the 22-inch LED television segment — one of the fastest-selling screen sizes in India — while Panasonic and Videocon will soon be unveiling models costing less than . 8,000, bringing down the starting price of flatpanel televisions from . 9,900 at present. 
“CRT television replacement is a big market opportunity in India and we are poised to grow there by launching a smallsize model which we believe will trigger 60% growth in television business for us this year,” said Sony India sales head Sunil Nayyar. The company is going to price its 22-inch LED TV in the sub-. 15,000 segment, cheaper than its entry-level offering now, a 24-inch model priced at . 17,000. Panasonic India managing director Manish Sharma said his company will launch new entry-level LED models targeting the CRT market in smaller towns. “There would be two models which we developed in our Indian R&D centre,” he said. 
Market leader Samsung too is widening its entry-level portfolio, which includes models in 22- and 23-inch screen sizes, as it plans to launch two 24-inch TVs soon. “There is an upward swing in demand for flat-panel televisions in B- and C-class towns due to faster transition from CRT television,” said Samsung India Electronics deputy MD Ravinder Zutshi. 
The latest moves come after LG exited the CRT television market in India last year, becoming the last multinational brand to do so. The CRT television market — 8.5 million units in 2013 — is expected to shrink to four million units this year, according to industry estimates. At the same time, sales of flatpanel televisions are projected to grow to 8.5 million units in 2014 from 6.2 million last year. Apart from Videocon and Onida, there are a slew of small local brands in the CRT television market. But Videocon too plans to drive the increasing conversion rate from CRT televisions to flat-panel TVs by launching a 16-inch LED television model this month, priced at. 7,990. 
“This will be the lowest price point in flat-panel TV in India and will compare favourably with the CRT models which are sold at . 6,000. We are also giving a CRTtype look to these televisions by bringing protruding speakers,” said Videocon chief operating officer CM Singh. 
Pulkit Baid, director of eastern India’s largest durable retailer, Great Eastern Appliances, said TV makers were trying to fill the void in sales created by the exit of major CRT television brands. “There is a sizeable sub-. 10,000 TV market which the companies were not able to fill with their current line-up, which has forced all to launch smaller screens,” said Baid. 
Television makers believe the move will help put the industry back on track for high growth rate. The sector has been hit by poor consumer sentiment in a weak economy amid a 10-12% increase in prices due to a weaker rupee. . 

Source: The Economics Times

UNCERTAIN FUTURE FOR EMPLOYEES ...Nokia may Leave India Plant Out of MS Deal

Nokia is likely to exclude its manufacturing plant in Chennai from the global purchase of its devices business by Microsoft, as the Finnish firm runs out of time and options to resolve its tax dispute with Indian authorities, people familiar with the matter said, leaving the future of 8,000 direct employees uncertain. 
The tax authorities attached the factory soon after the Nokia-Microsoft deal was announced last September. Nokia India has offered to put . 2,250 crore in an escrow account, and has already paid . 700 crore separately to free up the plant. As directed by the Delhi High Court, it also agreed to furnish a . 3,500-crore bank guarantee covering the amount it had transferred to its parent as dividend. But it opposed another condition — to furnish another bank guarantee from the parent covering unspecified potential future tax liabilities — and appealed against it in the Supreme Court, which upheld the HC order. Time Running Out for Nokia 
Nokia hasn’t yet revealed its future course of action following the SC order. With the $7.2-billion deal on the verge of closing, given its April deadline, time is running out for Nokia to resolve the India dispute. 
“The writing is on the wall. They have no other option” but to leave the plant out of the deal for now, a person close to developments in Nokia said, requesting anonymity due to the matter’s sensitivity. The people said the recent voluntary retirement scheme offered to employees at the Chennai plant indicates that Nokia is preparing to scale down operations, trying to conserve as much cash as possible as it seeks to sort out the dispute and eventually transfer the unit to Microsoft. 
Any sale to a third party doesn’t seem likely as several handset makers that ET spoke to said they won’t be willing to pay even close to what Microsoft could be offering for the plant. Shutting down the plant totally also remains an option, people said. 
The two companies had previously said the deal closure won’t be affected by the tax dispute in India. And Nokia has already warned it may be forced to close the plant down if the dispute wasn’t resolved. 
Overseas investors have been regarding India with some trepidation as tax rules have been changed with retrospective effect and courts have overturned government decisions, forcing companies to write off investments. The inability to resolve the India hurdle comes as Nokia recently said it has received approvals from China, the European Commission, the US Department of Justice and other jurisdictions for the Microsoft deal. The case is among the high-profile tax disputes involving overseas companies that are being closely watched by foreign investors along with the one involving UK’s Vodafone Group Plc. “It will be a pity if the global deal happens leaving India out of its ambit. It will reinforce the perception in the minds of the international investing community that India has an aggressive tax jurisdiction where it is difficult to do business,” said Dinesh Kanabar, deputy CEO at KPMG India. 
(With inputs from Anandita Singh Mankotia)

Source: The Economic Times