[Investors Please Listen] View from Research Desk on March 23, 2009

Update on Cement sector

Our analyst spoke to cement dealers pan India. We understand that cement dealers in some parts of Maharashtra have initiated another round of price hike to the tune of Rs 5-10 per bag. Our analysis shows that demand for cement across India is stable to picking up while the pricing power is in favor of companies. Central & eastern region are showing robust growth. Central region is actually feeling the supply bottleneck while the demand growth in the region is between 11-12%. We believe ACC, Ambuja & Ultratech will be beneficiaries of strong demand in west & eastern regions while JP & Birla Corp will be befitted by robust growth in demand in central & eastern regions.

Telecom sector update

Newspaper report suggest that DOT may defer reduction in license fee by 2% which was supposed to be effective from April 01, 09. However, when this was announced it was accompanied by a similar increase in spectrum charge, thus nullifying the benefit arising out of lower fee. We are awaiting clarity on whether the deferment in fee reduction will be accompanied by deferment on increase in spectrum charge. If that too happens than this news will be insignificant. However if that does not happen then the govt's decision will be negative for Telecom operators. Bharti & RCOM will both be negatively impacted to the tome of 8% on bottom-line.

Tata Motors launches Nano

Today Nano will be launched. There is a huge euphoria built around this. Though this will be sentiment positive but to expect any major impact on Tata Motors fortunes will be naïve. Our analysis shows that contribution from Nano will not be very significant in the near term. Also the concerns on how company will respond to huge bookings which may be many times its capacity to produce thus year. How will the company treat advance deposits received from customers for bookings etc? Thus we will stay away from stock.

Global Cues: The Dow fell by 122 points on Friday amidst concerns on bonus payouts to AIG. However Treasury secretary is likely to announce details of his plans on toxic assets for banks & how to use $1 trillion rescue plan announced a few days back.

Asian mkts are all trading in positive territory as mkts are expected some positive news tonight from the Treasury Secretary's plans for banks.

Our Markets: On Friday we witnessed flat movement in the mkts with index heavy weights ONGC, Lever & HDFC providing it support. Metals counters were also strong.

For today we expect the mkts to start on a positive bias. However due to lack of any major domestic cues our mkts will be looking towards global cues for taking the direction. We expect mkts to remain lackluster & range bound.  

 

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