Microsec: India Strategy July 2012.....
RAJESH DESAI
Dear Sir/Madam,
With all eyes on the corporate results for June’12 ending quarter, presidential elections and RBI Monetary Policy will be the other key events to watch, besides the regular IIP, Inflation data and monsoon, which may act as key indicators to prompt RBI action on July 31st. With strong words going around on ignition of reforms post presidential elections, some investors have already built on to Equity Portfolios leading to a decent rally last month, hence positive moves towards the same may further aid sentiments. Among the global developments, investigations into major global banks on manipulating libor is on and hence negative news flows from that circle may add to global market volatilities. We expect results to be mixed bag with IT being major beneficiaries and most other sector feeling the pinch of INR depreciation. Revenue may remain strong but margin erosion may compel bottom-line to compromise. The initial signals from monsoon arrivals do not augur well, however, decline in crude oil prices have eased some concerns on rising inflation. INR vs USD may trade in the 57-53 band in July.
However, we strongly believe that Indian market reflects most negatives, domestic and global, and investors should built on to Equity portfolios. Companies with strong management, high and sustainable earnings visibility should be considered for investment. Nifty may remain volatile and trade between 12.7-13.3xFY13E EPS of 404 which makes a range of 5150-5400 for July 2012. BUY Bharti Airtel, SBI, TCS, Apollo Tyre and Exide on dips and Indian Hotels, IL&FS Trans, M&M, Godrej Ind, Cummins India, HUL and LIC housing with long term horizon.
Regards,
Team Microsec Research
Microsec Capital Limited
Tel: 91 33 30512100
Fax: 91 33 30512020
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CA. Rajesh Desai