Banking and Financial Sector

(Sector Analysts: Akshat Kulshrestha, Ankita, Jyoti Gupta)

Market Performance:

The merger of Kotak Mahindra bank and ING Vysya bank caused their stocks to rally in the past

week. The swap ratio for the deal was 725:1000. The highest gain was seen by IndusInd bank

followed by JK bank. The stocks rallied as there are speculations of interest rate cuts.

News and Happenings:

Corporate houses are allowed to setup payment banks

The RBI announced the guidelines for setting up of payment banks and small banks. It has allowed

corporate banks and telecom companies to set up payment banks. They also have an option to enter

into joint venture with commercial banks. Banks will have to use “Payment bank” in their name. It can

accept demand deposits from individuals, small businesses and other entities. It will be able to setup

branches and ATMs. The maximum balance that one can hold is of INR 1 lakh. Banks won’t be

allowed to use credit cards. They will not be allowed to undertake NBFC activities.

United Bank of India and Central Bank of India to face lending curbs

Banks facing stress due to exercise NPAs have been asked by RBI to expedite the process of

recovery. Gross NPAs of public sector banks stand at 5.32%. CBI has the highest level of stressed

assets at 20.49%. It is followed by union bank of India (UBI) at 19.7%. RBI wants all restructured

loans to attract provisions in line with substandard assets; that is 15 % for secured advances,

compared with 5% applicable for standard restructured advances at present.

References:

http://www.business-standard.com/

http://www.moneycontrol.com

http://www.economictimes.com

STOCK PRICE % CHANGE

ICICI Bank 1734 1.19%

HDFC Bank 932.50 2.67%

Axis Bank 476.85 0.88%

Kotak Bank 1199.65 0.22%

ING vysya Bank 816.80 0.23%

FMCG Sector Update

(Sector Analysts: Kirti Chablani and Amrit Pal Singh)

Weekly Stock price performance of key companies

STOCK PRICE(in INR) CHANGE

ITC 363.15 -1.86%

Dabur 240.90 +4.30%

Marico 322.10 -0.03%

Colgate 1861.05 -3.28%

Nestle 6204 -2.01%

India moves towards ban on loose cigarettes , ITC falls

The health ministry has accepted the recommendation of an internal panel to ban the sale of

loose cigarettes. The proposal will be presented for cabinet approval before implementation.

The panel has also recommended an increase in minimum age for smoking.

More than 70% of cigarettes sold in India are loose. On 25th November, shares of ITC fell

nearly 5% and Godfrey Philips fell by 9% in response to the news. Morgan Stanley said that

the ban is a clear negative sentiment for ITC, although its implementation is tough.

ITC planning to invest Rs.9000 crores to expand its hotel portfolio

ITC hotels, one of the largest hotel chain which currently operates 102 hotels, plans to invest

Rs.9000 crores in next three to four years to expand its hotel portfolio to 150. As a part of this

ambitious plan ITC opened a 104-suite resort in New Delhi on 27th November. ITC’s

hospitality subsidiary reported a 5.44% increase in net profits for the fiscal year 2013-14 at

Rs.139.7 crores. These projects will be funded internally by ITC.

References

http://www.moneycontrol.com/news/buzzing-stocks/itc-falls-13-as-detailsproposed-smoking-curbs-

emerge_1238925.html

http://articles.economictimes.indiatimes.com/2014-11-28/news/56540596_1_itc-hotels-150-hotels-

hotel-portfolio

Metal Mining & Real Estate Sector

(Sector Analysts: Arihanth Jain, Manish Rathore, Priyanka Mohanty)

Stock price performance of key Metal & Mining companies

Name Change % Related news

Tata steel --0.6% TATA steel uses human development index to keep track of CSR in villages.

Sesa Sterlite -3.8% Sesa Sterlite Ltd, Jharsuguda Unit BAGS CII-Odisha Award.

Coal India limited +2.7% Coal India to start mining in Mozambique

NMDC -3.6% NMDC may slash iron ore prices in December.

Sand Mining: Private mineral sand mining is all set to start after a division bench of Kerala high

court has dismissed the appeal by state government.

Coal Block Allocation: Coal minister Piyush Goyal on Thursday said e-auctioning of the canceled

coal blocks would be completed by March 31, 2015. In case the bidding process is delayed, then a

designated authority has been empowered by a recently promulgated ordinance to would take over

the mines.

GDP growth: GDP grew at 5.3 % in july-september quarter . Mining was up by 1.9% in the July-

September period as against an almost flat output during the same period of the earlier year.

Gold prices: Gold prices reached 2 week low after RBI eased up the import curbs. RBI scrapped

the controversial scheme, which is likely to enhance supplies and check smuggling of the precious

metal.

Stock price performance of key Real Estate companies

STOCKS CHANGE RECENT NEWS

GMR INFRA

-3.4% GMR Infrastructure has received market regulator Sebi's approval to raise up to Rs 1,500 crore through rights issue.

DLF +7.4% DLF allowed to deposit remaining Rs 480 cr fine in instalments

Growth in Assam: The north-east is not far behind the rest of the country when it comes to growth

in the real estate sector. Guwahati is fast emerging as an investment hotspot with a growing demand

for real estate resulting in huge expansion in both commercial and residential complexes.

Dubai Real estate: Dubai’s real estate sector firms are entering into hospitality sector.It is in

congruence with positive performance in hospitality sector.

Godrej properties: It is planning double its revenue from Gulf region. As of now, 15 per cent

(250,000 sq ft) of the company’s sales are accounted for by the Gulf region.

Qatar venture: Sobha developers is looking to venture into opportunities in Qatar.Apart from that

Saudi Arabia and Kuwait are the main places to look into.

Legal case: Equity research company Veritas locks horns with Indiabulls again. Canadian equity

research firm Veritas Investment Research Corp has filed suit in Ontario claiming $11 million from

Indiabulls Group in damages, saying that the conduct of Indiabulls caused irreparable damage to their

business, reviving the two-year-old legal fight between the two companies.

Oil & Gas Sector

(Sector Analysts: Ashwin Jain, Mili, Piyush Sethi)

OPEC starts price war with USA

Oil prices continue to fall and is now hovering around 70$ per barrel. The OPEC members recently

had a meeting and it looks like the cartel will continue to let prices fall so that the many of the US

Shale projects become unviable and close shop.

ONGC project in Tripura to launch

ONGC’s Rs 10000 crore power and gas production project in Tripura is set to be inaugurated. It

would be supplying power to all states in the North East and may sell the surplus commercially to any

interested party.

References:

http://www.vox.com/2014/11/28/7302827/oil-prices-opec

http://articles.economictimes.indiatimes.com/2014-11-27/news/56515715_1_otpc-palatana-power-

plant

Pharma Sector Update

(Sector Analysts: Kanika Singh, Krishna Karanam, Neha Kumar)

PM will unveil the new industry friendly drug policy

Prime Minister Narendra Modi will soon roll out the new bulk drug pharma policy which will be

industry-friendly and will help the industry to eradicate the existing irritants and prevailing ills that

restrict the growth of the sector.

The policy is expected to have multiple concessions which will be beneficial for all stakeholders. It will

also help the pharma sector (currently at 1.8lakh crores in size) to match the expected potential of 4-5

times in the next 7 years. The credit for the sector’s performance entirely went to the private sector as

government has done very little for the sector.

With the new policy, the government plans to address all pending issues since 1940 and to liberate

and completely decontrol the pharma sector as also simplifying the export regulations on it.

Sun-Ranbaxy deal will finally be sealed by December end

Despite procedural delays, the Sun-Ranbaxy merger will take shape by the end of December 2014.

The merger is highly speculated to stifle competition in the market by having clear domination in key

segments like anti-diabetic and cardiology

As the Competition Commission of India (CCI) is suggesting remedies to overcome the domination, it

has devised a mechanism that would ensure that the merged entity could be prevented from

foreclosing the market to its competitors by preventing practices such as use of long-term or exclusive

contracts, creation of switching costs for customers and tying or bundling.

This acquisition was the first merger deal to receive a show-cause notice which created a major

hurdle. Both companies were served a notice asking why a public investigation should not be ordered

into the deal based on the possibility that it could affect the prices of essential life-saving drugs in the

domestic market.

The acquisition is uncommon in the pharmaceutical sector and gives 46 drug formulation portfolio to

the combined entity creating a 9.5% market share. The deal is set to create the fifth largest generic

drug maker globally and the largest in the Indian Pharma sector. Abbott will be the second larges

company at a market share of 6.5%.

Sun Pharma had agreed to buy Ranbaxy for $3.2 billion in stock from its Japanese parent Daiichi

Sankyo Co. Ltd. It also agreed to take on $800 million of Ranbaxy’s debt.

Expiring $170 billion worth patents, brings global market opportunity for Indian

Pharma Industry

From garnering the much-required revenues, to spurring drug research and increase job openings,

the patent expiry phase will now enable Indian pharma on an upward trajectory.

Losing patent rights opens a window for generic drug manufacturers, especially in the developing

countries to manufacture and offer drugs at affordable price.

The Indian pharma garners will be able to grab the business opportunity from global markets. All big

players in the country have been extremely proactive and well prepared by lining up their pipeline to

propel growth. These companies will now further expand presence in the US which is biggest in terms

of value and volume for generics.

MSF urges PM not to cave under US pressure against weakening of Indian patent law

The international medical humanitarian organisation Médecins Sans Frontières (MSF) has urged

Prime Minister Narendra Modi to take a strong stand against weakening of Indian patent law under

US pressure. It stated that the Indian patent law has helped millions of people in India and across the

developing world get access to affordable life-saving medicines.

India’s patent law has allowed robust competition among generic drug producers to drive medicines

prices down, leading to upto 99%t reduction in the price of HIV medicines, from more than $10,000

per person per year in 2000 to roughly $100 today.

India has faced fierce pressure from the US government and the pharmaceutical industry as it has

made use of public health measures in its patent law. Through strict criteria in India’s patent law that

outlines what does and does not deserve a patent, India has avoided granting excessive monopolies

to companies for new forms of existing medicines.

Despite the fact that both of these moves were entirely in line with India’s obligations under World

Trade Organization rules, the US government and pharmaceutical industry have together increased

pressure on India to weaken its law ever since.

Other BRICS nations are watching closely to see whether the country will cave in under US pressure

or not as this decision would affect their markets as well.

NPPA proposes to add several cancer drugs to NLEM to make them affordable

The National Pharmaceutical Pricing Authority (NPPA) proposes to bring several drugs belonging to

the oncology segment under the National List of Essential Medicines (NLEM) in the forthcoming

revision of the NLEM being undertaken by the union health ministry to make these now costly drugs

within the reach of common people of the country.

The NPPA also proposes to bring some palliative and supportive medicines such as Zoledronic acid,

Megestrol acetate and Letrozole under the NLEM to make them affordable.

The NPPA was assigned with the task of making necessary recommendations with respect to

updating the list of scheduled drugs in order to ensure that all essential and lifesaving drugs of mass

consumption are under price control for safeguarding public interest.

The recommendations are based on a careful review, taking into consideration several factors. Higher

priority is given to drugs that have the potential to cure over the drugs that only prolong lives.

Some drugs that were recommended for deletion from NLEM include Busulphan, Raloxifene and

Danazol which are not used commonly in oncology at present.

Pharma Stock Recommendation:

The below stock recommendation is based on comparison of the Bloomberg Estimated Median

Target price and the current price of the stock.

STOCK BEst Median Target Price

Price Recommendation

SUN PHARMACEUTICAL INDUS 980 839.7 BUY

DR. REDDY'S LABORATORIES 3453 3606.25 SELL/HOLD

RANBAXY LABORATORIES LTD 694 612.35 BUY

CIPLA LTD 637.5 635.15 HOLD

LUPIN LTD 1526 1480.45 BUY

GLENMARK PHARMACEUTICALS LTD 788 819.55 SELL/HOLD

CADILA HEALTHCARE LTD 1522 1547.15 SELL/HOLD

BIOCON LTD 512 456.45 BUY

WOCKHARDT LTD 500 844.25 SELL/HOLD

TORRENT PHARMACEUTICALS LTD 1027 1027.55 SELL/HOLD

Telecom and IT Sector Update

(Sector Analysts: Arpita Verma, Bharat Dasaka, Melvin Mathew)

Recent developments in Telecom & IT industry

Vodafone, Bharti Airtel fined most for tariff and MNP rules violations

Telecom operator Vodafone has been fined the most for tariff rule violations till date,

while Bharti Airtel has been penalised the maximum amount for breaching mobile

number portability norms.

The Telecommunication Tariff order provides that all tariffs are to be reported to TRAI

within 7 working days from the date of implementation. It also provides for financial

disincentive of Rs 5,000 per day for each day delay subject to a maximum of Rs 2

lakhs, according to Telecom Minister Ravi Shankar Prasad said in the Rajya Sabha.

With regard to mobile number portability, which allows subscribers to change their

service providers while retaining the same number, all the telecom operators.

Penalties of over Rs 6.5 crore have been imposed on telecom operators for providing

below standard quality of service. The name of telecom service providers were not

disclosed in the reply.

Infosys hits fresh record high

Shares of Infosys have moved higher and hit a fresh record high of Rs 4,363 in trade on National Stock Exchange (NSE) ahead of record date for bonus issue in ratio of 1:1.

The company has fixed Record Date as December 3, 2014 for the purpose of allotment of bonus shares / stock dividend, Infosys said in a statement on November 21.

The board of directors of the company at its meeting held on October 10, 2014 had recommended a bonus issue of one equity share for every equity share held.

Since then, the stock has rallied 20% from Rs 3,646 on October 9, as compared to about 7% rise in the benchmark CNX Nifty.

Why HP, Wipro and SAP scouting for enterprise mobility specialists

According to IDC, the Indian enterprise mobility market is set to grow at a CAGR of

63 per cent and hit $1.8 billion by 2017. If you are a techie with sound experience in mobile app development then you can look at claiming a share of this pie!

This is because companies like HP, Wipro and SAP are scouting for mobility specialists like you, in a bid to strengthen their enterprise mobility offerings.

Today, the nature of workforce is evolving into a mix of desk workers, part time workers, virtual workers and on-the-move workforce.

One common demand from all of them is the need for quick access to enterprise apps such as ERP, CRM, business intelligence, analytics and more.

To enable efficient working of different kinds of workforce, organisations are experiencing a strong business need to make core enterprise apps available via different mobile device platforms.

Tech product companies and IT consulting companies are gauging this need and actively working on building enterprise mobility products and solutions.

BSNL Launches Msecure Mobile Security Service With Location Tracking

State-run telecom operator BSNL on Thursday launched mobile security value added service that will allow its customers to track location of their lost mobile phones, remotely lock the device and erase data, among others.

BSNL is offering the solution, Msecure, in association with Beyond Evolution.The application will also provides complete call log details of the lost mobile at pre-determined intervals to emergency number feeded in the mobile.

Through the application, user will be able to remotely lock device, erase data and track location of the lost device.

The application will send the location details through SMS to the emergency number. The application also allows a user to remotely raise an alarm on the lost or misplaced device.

Security of mobile handsets has become a cause for concern owing to important data stored in it. Loss or theft may leads to unauthorised access and possible misuse of such data," BSNL said.

Vodafone India seeks license extension in six circles

Vodafone India sought the extension of licences in six circles due to expire in

December 2015 in a petition filed in the Supreme Court on Friday, following a similar

one filed in February that's still pending.

The India arm of the world's third-largest telecom company has also asked the

country's top court to restrain the department of telecommunications (DoT) from

auctioning airwaves in Maharashtra, Gujarat, Haryana, Uttar Pradesh (east) and

Rajasthan in the interim.

The petition, filed through lawyer R Chandrachud, came up for hearing before a two-

judge bench comprising justices Anil Dave and Kurian Joseph that did not pass any

interim order.

Under clause 4.1 of the licence agreement, the company held the permits for more

than 20 years and is entitled to continue with these contracts in the circles in which it

operates.

References:

http://www.moneycontrol.com/news/

http://economictimes.indiatimes.com/

http://www.business-standard.com/article/companies/