For the month of November, capacity utilization of steel plants across the world rose by 250 bps YoY, highest since last more than two and half years to 69.6%. China, contrary to its announced policy of cutting steel output and consolidating production, ramped up production significantly by 5% YoY, highest ever since last more than two and half years. There is no relief in oversupply domestical
We analyse the air traffic data as available from the DGCA for the month of Nov’16. The trajectory of Indian aviation has remained largely on the same course of higher traffic, higher PLFs with weaker yields in FY17 thus far. Starting Q3, there has been significant improvement in PLFs by the market leader- IndiGo, relative to other airlines which will put pressure on the competition. We b
Cement Sector Outlook: Cautious in near term
* Cement volumes adversely impacted by liquidity crunch. Southern region unaffected by demonetization
* Cost pressures have increased with higher diesel and pet coke prices
* H2FY17 to witness volume and EBITDA de-growth led by slower demand and high cost
In our earlier report titled "Early trends indicate resilience, low probability of catastrophe", we highlighted that borrower's intention of repay remained intact through the 22 days post demonetization. While that is still largely true (most MFIs are reporting 90%+ collections despite very slow disbursements), instances of local political interference have emanated from the state
Coking coal prices down 9% WoW to USD259/t
* Indian steel market:
Long product (TMT Mumbai) prices were up 6% WoW. Sponge iron prices were also up 6% WoW while domestic scrap prices were marginally lower WoW. Domestic iron ore and pellet prices were unchanged. Domestic HRC product prices were unchanged WoW. R
CD ratio (systemic) saw a sharpest dip of over 340bps to 69.3% for the fortnight ending 25th Nov 2016 as deposit growth continued its extraordinary momentum on withdrawal of specified bank notes (SBN). However, this decline was accentuated by a sharp drop in loans of 0.8% from the fortnight ending 11th Nov 2016.
Though the decline in loan growth was partially anticipated, as larger pa
NIFTY PHARMA Current Close: 10646.50 Trend : Negative
* NIFTY PHARMA is one of the underperforming sectoral indices, as it closed down by around 2.59% at 10646.50, as against a down move of 1.48% in benchmark NIFTY 50.
* The Sector had made a recent swing high @ 12011.80 in the month
NIFTY IT Current Close: 10222.95 Trend : Positive
* NIFTY IT is the only positive sector amongst all the indices last week. It moved up a good 2.26%, as against a down move of 1.48% in benchmark NIFTY 50.
* In the month of March 2015, the Sector created a Fresh All Time High at 12908
NALCO and state-owned power producer NTPC Ltd and signed a deal to jointly set up a 2.4 giga watt (GW) power plant and one million tonne aluminium production facility in Odisha with an investment of more than Rs 36,000 crore. Formal joint venture and power purchase agreements will be in place by the end of the ongoing financial year.
The suggested power plant at Gajmara will costitute
We attended a conference hosted by India Ratings (Ind-Ra) on an asset funding study of India’s top 500 corporates. Key takeaways:
* Risky entities hold 25% of corporate debt:
Ind-Ra has analysed India’s top 500 corporates for their incremental debt deployed over FY11-FY16 towards funding productive and/or non-productive assets. Ba
Demonetization has shaken up many indices and sectors. It was announced on November 8th and its impact on the market was visible on 9th November. On 22nd November, the market traded on its low with Nifty small cap slipping to 5408 levels while the Benchmark Index Nifty itself declined to 7916 levels on 21st November.
India's information technology sector is one that has escaped th
Power Sector - Consumption growth matched by capacity addition; prefer Power Grid and CESC - ICICI Securities
In November 2016, coal despatches bucked the 3-month decline trend and were up 6.2% YoY as thermal power generation improved (~9% YoY) and coal inventory at power plants stabilised to 14 days of generation (19.5mnte in Nov’16 vs ~19mnte in Oct’16). Overall power generation growth was reported at 8.3% YoY.
* Utilisations flat as power ge
Disbursements down 50%, collection efficiency at ~80%
We hosted a call with Ms Ratna Vishwanathan, CEO of Microfinance Institutions Network (MFIN), to understand the impact of demonetization on the MFI sector. As micro finance collections are largely in cash, it is one of the most vulnerable businesses (due to demonization) in the financial services sp
Likely to remain under pressure in December
* All-India average realization is down by INR5/bag MoM in December due to price declines across regions.
* Price decline across regions is ~INR2-6/bag due to demand weakness. Also, price hikes in select regions have been rolled back due to poor demand.
* Prices in east are likely to decl
It is difficult to quantify the impact of demonetisation on media stocks as the current situation is fluid and commentary from most players is diplomatic, guiding for short-term pain with long-term gains. Demonetisation and GST should lead to shift in business from unorganised to organised and it is the organised players who are the advertisers. We buy into the commentary and factor in lower ad
Regulator (TRAI) released monthly subscriber and MNP (mobile number portability) data, including Reliance Jio (RJIO), for Sep-16. Industry active (VLR) net adds rose to 18.6mn, led by 16mn net adds by RJIO; while net adds for top-3 were stable at 1.9mn. Average industry net adds for past six month were 0.9mn subs. RJIO captured active subscriber market share of 1.7%. We believe net adds for RJI
India Automobiles - Demonetization hazes the performance windshield; to likely demystify by FY18 - Emkay Global
The recent demonetization of Rs500/1000 currency notes is likely to affect discretionary spending, thus impacting both 4W as well as 2W sales. We believe the impact on 2Ws could be severe for Q3FY17 as a majority of 2W buying is cash denominated; while in case of 4Ws the proportion stands at 30-40% with the remaining purchases being through
The Indian Pharmaceutical Market (IPM) grew at a healthy 15.3% YoY in Nov’16, backed by a low base and strong anti-diabetic/cardiac sales (+12.6% excluding these two segments). Volume growth rebounded to 9.6% YoY, but pricing remained weak. The NLEM and FDC segments saw some improvement but remained in negative territory, in contrast to a recovery in other segments. Therapy-wise, anti-dia
NIFTY PHARMA Current Close: 10929.45 Trend : Negative
* NIFTY PHARMA is the only underperforming sectoral indices, as it closed down by around 0.98% at 10929.45, as against an up move of 2.16% in benchmark NIFTY 50.
* The Sector had made a recent swing high @ 12011.80 in the mon
NIFTY METAL Current Close: 2865.25 Trend : Positive
* NIFTY METAL is one of the most outperforming sector amongst all the indices last week. It moved up a good 5.43%, as against an up move of 2.16% in benchmark NIFTY 50.
* In the month of November, the Sector created a Fresh 52
The 0.75% discount introduced by the government on fuel bought via digital methods at state-run pumps is more marketing strategy than masked subsidy. Assuming 70% of transactions at OMC outlets go digital, IOCL, BPCL and HPCL could see a worst-case earnings hit of 8-14% in FY18 if they are unable to pass on these costs (which is unlikely). There are additional benefits of improved transparency
As per RBI data, deposit growth for the fortnight ended 25 November increased to 15.9% YoY, largely due to the sharp increase in deposits collected via demonetisation. The RBI in its recent monetary policy stated that banks have collected old currency worth Rs 11.6tn during the demonetisation drive up to 7 December. Credit growth weakened further to 6.6% while investment growth surged to 20.8%
Agri Input & Chemical Sector - Gujarat Visit - Agri-input demand resilient despite demonetization call - Emkay Global
Key highlights of our Gujarat visit
* Demand in the cash market had fallen by ~50% during the first 4-5 days post the demonetization call while demand in the credit market did not witness any significant impact. Expect demand to normalize by end of December as money circulation improves.
* Purchasing on credit and by cheques has increased wh
Upstream Oil & Gas - OPEC agrees to output cut; raise FY17E-FY18E Brent to US$48-52.5/bbl - ICICI Securities
Organisation of Petroleum Exporting Countries (OPEC) at its November 30 meeting agreed on cutting output to 32.5m b/d (numbers in OPEC press release add up to 32.7m b/d) from Jan’17. The output cut agreement is valid for six months with an option to extend for another six months. Non-OPEC members may also cut output by 0.6m b/d, including 0.3m b/d cut by Russia. The focus would now shift
* Crude oil declines:
Brent Crude oil closed lower by 9.8% MoM to $45/bbl for the month of November’16 as doubts emerged on the confirmation of production cut at the month end summit of OPEC. Also increase in US inventory with sluggish product demand and certain geo-political factors contributed to the fall in crude oil prices. Light-Heavy (L-H)