Microsec: India Strategy Feb 2013

[Rajesh Desai‏]

 

 

Dear Sir/Madam,

 

During January 2013, RBI cut Repo rate by 25bps as expected and CRR by 25bps, unexpected. Focus shifts on the Union Budget 2013-2014 with expectation of more reformist rather than populist budget. Feb-13 happens to be month of OFS as GOI got to meet the disinvestment targets to reduce the fiscal deficit. Market participation is focused on the primary market issuance (OFS) which may keep secondary market performance bit sideways during the month. 

 

After several reforms initiated last year, Government has partially deregulated diesel prices, which shall now be increased by 40-50 paisa per liter every month. This bodes well for Upstream companies like ONGC, Oil India. The deferment of GAAR till FY16 has come as a huge relief to the market and FII’s. Result season was a mixed bag with major Large caps giving good set of numbers compared to Midcaps.

 

We have seen strong earnings from private sector Banks like ICICI bank and  Axis Bank along with PSU such as PNB and Indian Bank and from Oil & Gas behemoth Reliance. We expect these companies to remain in the positive bias. Selective Infrastructure stocks seems good such as L&T, IL&FS Transportation for investment due to its strong order book and thrust on Infrastructure by Govt going forward.

Nifty EPS(E) for FY14 is currently is 438, Bloomberg consensus, down from 440 seen last month. On that basis we believe Nifty is likely to trade 13.25-13.80xFY14(E) earnings, which makes a range of 5800-6050 for February. ICICI Bank, LIC Housing, Bajaj Auto LT, Eros International, M&M, Pidilite, would remain a BUY.

 

 

Regards,

 

Team Microsec Research

 

 

 

Microsec Capital Limited

Tel: 91 33 30512100

Fax: 91 33 30512020

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CA. Rajesh Desai