Newsletter oct 1st

Newsletter oct 1st

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  Fortuna Public RelationsPvt. Ltd. OCTOBER - 2013 Dehati Aurat, Shahzada and the Agenda-setting Theory Mr. Narendra Modi is on a warpath. As soon as BJP announced Mr. Modis candidature for the PMs post for the 2014 elections, he’s set the ball rolling. Sunday rallies, in different parts of the country, seem to be the order of the day. And with these rallies he is setting the agenda for media writings; which not only keep the Congressmen busy through the week but also shape up common man’s perception. This, of course, is a very useful ploy in a politician’s ‘Art of War’ book. Interestingly, the theory behind this is called the Agenda-setting Theory which describes the “ability [of the news media] to influence the salience of topics on the public agenda”. That is, if a news item is covered frequently and prominently the audience will regard the issue as more important. Agenda-setting theory was formally developed by Dr. Max McCombs and Dr. Donald Shaw in a study on the 1968 presidential election. In the 1968 “Chapel Hill study,” McCombs and Shaw demonstrated a strong correlation between what 100 residents of Chapel Hill, North Carolina, thought was the most important election issue and what the local and national news media reported was the most important issue. By comparing the salience of issues in news content with the public’s perceptions of the most important election issue, McCombs and Shaw were able to determine the degree to which the media determines public opinion. Since the 1968 study, published in a 1972 edition of Public Opinion Quarterly, more than 400 studies have been published on the agenda-setting function of the mass media, and the theory continues to be regarded as relevant. Bottom of the Pyramid and the Demographic Dividend Analysts and market gurus to describe the forces that will transform India from an under-developed nation to a developed nation have often quoted these two terms (Bottom of the Pyramid and the Demographic Dividend). Surprisingly, we hardly see a mention of these terms in the business press today. Exactly like how the, so-very-popular, mid cap or small cap ideas occupy much lesser mindshare with the investment fraternity now. These classes of companies are considered pariahs!
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  Were you awareof this? (Rs. crs) Market Capitalisation Peak (Oct ’10) Current (Oct ’13) A BSE 7,300,000 6,500,000 -11% B Sensex 3,000,000 3,300,000 +10% % of A 41% 51% C BSE 500 6,900,000 6,000,000 -13% % of A 95% 92% (rounded, Source: BSE India) The rich keep getting richer. The gap between the haves and have-nots is increasing by the day. That’s the phenomenon world over. In optimistic times, one generally tends to miss this. The bottom-of-the-pyramid is given a sense of false euphoria to live with. However, the gap becomes stark and apparent when this cycle changes and pessimism sets in. 2 Fortuna Public Relations Pvt. Ltd. OCTOBER - 2013
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  KEY ECONOMIC DEVELOPMENTS Sep30 - Current account deficit widens to $21.8 bn India’s current account deficit rose to $21.8 billion or 4.9 % of the country’s GDP in the quarter ended June, official data showed Monday. The current account deficit was recorded at $16.9 billion or 4 % of GDP in the corresponding quarter of last financial year. http://t.in.com/eC9W Sep 29 - RBI likely to finish scrutiny of bank licence applications in a month The Reserve Bank of India (RBI) is likely to complete initial scrutiny of 26 applications for new bank licences in a month, an RBI official said. Thereafter, the shortlisted names would be forwarded to the Bimal Jalan panel for further action. The names will go to the High Level Advisory Committee chaired by former RBI Governor Bimal Jalan. http://t.in.com/9C6W Sep 26 - India may set record wheat output this year on good rain: Government The government today said the country’s wheat production this year may surpass the previous record of 94.88 million tonnes after good rains took water reservoir levels to a 10-year high. India, the world’s second-biggest wheat grower, had produced a record 94.88 million tonnes of wheat in the 2011-12 crop year (July-June), buoyed by a good monsoon. Poor rains in 2012-13 lowered the output to 92.46 million tonnes. http://t.in.com/bDyy Sep 25 - Indirect tax collections up 4.1% in Apr-Aug According to a finance ministry official, in August, total indirect tax collection stood at Rs 31,200 crore, up 9 per cent from the same month last year. Total collection of indirect taxes - excise, customs and service tax - stood at about Rs 1,67,000 crore during the first five months of the 2012-13 fiscal. http://t.in.com/8Dbg Sep 25 - Coal block auction policy for private firms gets Govt nod The Cabinet, on Tuesday, approved the methodology for auctioning coal blocks, providing for upfront and production-linked payments and benchmarking of coal sale prices. Coal blocks will be put for auction after the Environment Ministry reviews them. http://t.in.com/5DbZ Sep 20 - RBI ups repo rate by 25 bps on inflation concerns, cuts MSF The RBI raised repo rates by 25 bps to 7.5 percent in its mid-quarter policy review. The policy, however, reduced the marginal standing facility (MSF) rate by 75 basis points from 10.25 per cent to 9.5 percent and lowered the minimum daily maintenance of the cash reserve ratio (CRR) from 99 percent to 95 percent of the requirement, effective from the fortnight beginning September 21, 2013. http://t.in.com/9CUP Sep 17 - WPI, CPI divergence seen in food inflation Data released on Monday showed that food inflation based on WPI spiked from 9.3% last August to 18.2% on an annualized basis, while the food inflation figure for CPI for August, which was released last week, showed a decline from 12% to 11% over the same period. http://t.in.com/7Dhk Sep 15 - More items under duty drawback scheme for exporters Government today rationalised the duty drawback and brought more items under the scheme for tax refund to exporters to give a boost to overseas shipments. The revised All Industry Rates of duty drawback, which have been notified, will come into effect from September 21, a Finance Ministry statement said. http://t.in.com/fC5W Fortuna Public Relations Pvt. Ltd. 3 OCTOBER - 2013
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  WHAT RATING AGENCIESSAY Sep 27- India may miss fiscal deficit target of 4.8%: Fitch The Indian government may overshoot its fiscal deficit target of 4.8% of GDP as the 17% rupee depreciation in the last five months could inflate the oil subsidy bill, said Fitch group company India Ratings & Research, raising the spectre of a possible credit rating downgrade. Unless the prices of diesel, petrol and LPG are raised, the fiscal deficit could exceed 5%, it said. http://t.in.com/6C4s Moodys had warned India on sovereign rating September beginning. (Last month, they had talked about India’s rating not getting impacted in account of the sharp currency depreciation). As also, S&P had talked about seeing downgrade risk rising for India last month. INFLUENCER SPEAK Sep 27 - India likely to see growth downgrade going ahead: Macquarie According to Richard Gibbs, Global HD – Macquarie, the Indian economy may see a growth downgrade going ahead due to the recent measures taken by the RBI. He recommends caution on the emerging markets as Fed tapering is still uncertain. He also adds that the emerging markets may well have a six month respite with no movement until March of next year due to the need to install a new Fed chairman by the end of January. Sep 25 - Don’t see Nifty below 5K or beyond 6K; book profits: UBS Nifty may not go below 5000-5200 level, or break out beyond 6000 in a sustainable way by 2013 end, says Gautam Chhaochharia, Head of India Research, UBS. More clarity will emerge only post elections, more progress and economic recovery will be seen after that, but still it is critical to buy at the right levels, he says. Sep 25 - Mkt to dip 6-8% in few weeks; bet on telecom, auto: BofA ML Jyotivardhan Jaipuria, Head of Research - BofA Merrill Lynch, feels that elections will now become a major overhang for the market and things won’t pick up just because of new government. The liquidity that drove asset prices up in emerging markets is about to run dry, and investors should now get ready for a correction. Sep 24 - Optimistic on mkt, see Sensex at 21000 for 2013: Deutsche Abhay Laijawala, HoR - Deutsche Equities, is constructive on the Indian market and expects Sensex to touch 21,000 by the year end. He also believes the worst of the currency crisis is over. He believes market will continue to follow global as well as domestic cues and will take directions from there. Sep 24 - Mkt volatility to rise; enter with 2-3 yr frame: BlackRidge BlackRidge Capital Advisors recommends entering the market with a 2-3 year horizon. Its MD and CEO, Arindam Ghosh, believes that the volatility in the market is set to rise given the complexity of domestic and global factors. Pressure on the currency will also continue in the long-term, he says. Sep 23 - Nifty too volatile, won’t call It investor’s market: IL&FS According to Vibhav Kapoor, Director - IL&FS, the market is extremely volatile at this point in time and therefore it is no longer a surprise to see even 100-200 point movement on the Nifty everyday. He calls this market speculative to some extent, and considers it unfit for investment. Kapoor further adds that Nifty is likely to trade in a broad range of 5400-6200. 4 Fortuna Public Relations Pvt. Ltd. OCTOBER - 2013
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  FUND ACTIVITY FROMAROUND THE GLOBE Sep 23 - Record equity fund inflows after Fed holds back on tapering: EPFR Global investors committed record amounts of money into equity funds last week as the US Federal Reserve decided to avoid tapering quantitative easing. Fund flow data provider EPFR Global shows equity funds benefited from net inflows of $25.94bn during the week ending 18 September 2013, surpassing the previous record set in the third quarter of 2007. Meanwhile, bond funds saw their outflow streak extend to an eighth week. http://t.in.com/9C62 Sep 18 - Pan-European equity fund flows hit 5 year record in August: Lipper Money flowing into pan-European equity funds hit a post-crisis monthly record in August, according to the latest estimates from fund research firm Lipper, as evidence builds of a sustained recovery in the region. Net inflows to the 5,811 mutual funds and exchange-traded funds (ETFs) in Lipper’s five Europe-wide equity sectors reached 5.4 billion euros in August, the third straight month of net inflows and the biggest monthly inflow in at least five years. http://t.in.com/cDaN Sep 17 - Investors valuing India positively; EMs attractive: EPFR Due to the massive beating seen in EMs, they are likely to be more attractively valued asset class, says Cameron Brandt, director- research, EPFR Global. Cameron says that the emerging markets (EMs) equity funds in the last week have observed one of its best weeks in terms of flows in the past 7-and-a-half months . Brandt says that there is now a renewed appetite among investors for individual markets, leading which is Brazil and Korea. “India seems to be one of the bigger individual markets that investors seem to be reappraising positively,” he adds. http://t.in.com/5DkK Source: RBI CHART ART Fortuna Public Relations Pvt. Ltd. 5 OCTOBER - 2013
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  Why Mauritius isimportant to India... As India continues to worry about capital outflows, the regions that originate most of the FDI coming into the country hold importance. As per RBI, Mauritius continues to corner more than 44% of the FDI coming into the country. And despite the quandary over Mauritius’ tax haven status, the government may not be able to take a firm decision on this. One may recall that India was earlier planning to review the double-taxation avoidance agreement (DTAA) with Mauritius. The reason behind the review is to prevent misuse of the treaty and track illicit money allegedly stashed in the African island nation. The country was losing more than US$ 600 m every year in revenue because of the tax treaty, besides incurring the risk of militant groups using it to route money into India. However, all such considerations seem to be in the backburner for the time being. More importantly, besides Mauritius even Netherland and Cyprus seem to be emerging as the new tax havens. http://t.in.com/3C2B READ YOU MAY FIND INTERESTING Innovation: a Make-or-Buy Decision In good times and in bad, companies often struggle with whether or not to invest in innovation. To make matters worse, many companies have cut costs so much during the recession that they don’t have the infrastructure to grow through internal innovation. Lacking in internal research and development, many companies grow by making acquisitions, whichresearch shows often destroy value. But some CFOs say there’s a places for both ways of generating growth. To make the most of their investments (and to make the case for investing at all), their companies set guidelines that help them decide when to innovate internally and when to acquire. http://t.in.com/5Dnh Post-deal Integration: Top M&A Concern for Directors and CFOs Corporate board members and CFOs agree on a number of issues regarding risk oversight and value creation in M&A activities, including viewing post-merger integration as the leading risk concern, according to a report released in August by Deloitte and Corporate Board Membermagazine. The report, Bridging the Gap: M&A—Are CFOs and Boards Aligned?, reflects the responses of nearly 200 corporate board members and CFOs from public companies with annual revenue of $500 million or more to a range of questions on risk issues related to M&A. Furthermore, according to the survey, both directors and CFOs agree that the greatest cause for concern during merger integration is achieving cultural fit. http://t.in.com/cDcT 6 Fortuna Public Relations Pvt. Ltd. OCTOBER - 2013
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  TOP 5 MONTHLYGAINERS - NSE Stock CMP (Rs.) Close on 30 Sep 2013 (Rs.) % chg MoM GMR Infrastructure L 22.30 12.78 74.49% JSW Steel 749.60 499.05 50.21% Multi Commodity Ex 382.40 255.40 49.73% Coromandel Internati 232.15 169.15 37.25% Bharat Heavy Ele 141.40 103.35 36.82% Source: stockmarketindian TOP 5 MONTHLY LOSERS - NSE Stock CMP (Rs.) Close on 30 Sep 2013 (Rs.) % chg MoM Container Corpor 696.00 1070.75 -35.00% Gitanjali Gems 54.70 73.40 -25.48% Essar Oil Ltd. 52.85 66.50 -20.53% Pipavav Defence & Of 52.20 65.00 -19.69% Adani Enterprises Lt 141.35 162.40 -12.96% Source: rediff FLOWS FII (Rs. Crore) Gross Net Purchase / salesMonth Purchase Sales Sep-13 68,120 56,944 11,176 Aug-13 70,693 78,163 -7,470 YTD 5,88,441 5,39,314 49,127 DII (Rs. Crore) Gross Purchase / salesMonth Purchase Sales Sep-13 19,922 29,052 -9,130 Aug-13 31,034 24,749 6,285 YTD 2,06,346 2,50,254 -43,908 Source: moneycontrol.com SUMMARY OF CURRENT INTEREST RATES Country/region Current rate Previous rate Change United States 0.250 % 1.000 % 16-Dec-08 Great Britain 0.500 % 1.000 % 3-May-09 China 6.000 % 6.310 % 7-Jun-12 Europe 0.500 % 0.750 % 5-Feb-13 India 7.250 % 7.500 % 5-Mar-13 Source: global-rates.com SUMMARY OF INFLATION Country/region Period Monthly basis Yearly basis China 1 August, ‘13 0.50% 2.515 % France 1 August, ‘13 0.464 % 0.869 % Germany 1 August, ‘13 0.00% 1.531% India 1 August, ‘13 0.85% 10.748% Japan 1 August, ‘13 0.300 % 0.905 % United States 1 August, ‘13 0.120 % 1.518 % Europe 1 August, ‘13 0.128 % 1.340 % Source: global-rates.com Key Currency Value 52-WK High 52-WK Low EUR-USD 1.35 1.37 1.27 USD-JPY 97.79 103.74 77.44 USD-HKD 7.76 7.77 7.75 USD-SGD 1.25 1.29 1.22 USD-INR 62.49 68.85 51.39 Source: Bloomberg ENERGY COMMODITY FUTURES Commodity Units Price Contract Crude Oil (Brent) USD/bbl. 107.48 Oct-13 NYMEX Natural Gas USD/MMBtu 3.67 Oct-13 Gold Spot USD/t oz. 1,317.67 N/A COMEX Silver USD/t oz. 21.86 Dec-13 Source: Bloomberg INDEX Current % Change over Sep 15th 1 Year Nikkei 225 14,484.72 8.18% 64.66% Hong Kong Hang Seng Inde... 22,859.06 5.19% 9.69% NASDAQ Composite Index 3,771.48 5.06% 21.03% Shanghai Stock Exchange ... 2174.67 3.64% 4.24% S&P 500 Index 1,681.55 2.97% 16.41% Dow Jones Industrial Ave... 15,129.67 2.16% 11.95% FTSE 100 Index 6,449.15 0.56% 10.80% source: Bloomberg INDEX Current % Change over Sep 15th 1 Year CNX DEFTY 3,165.62 14.36% n.a. CNX MIDCAP 6,997.95 6.83% -9.64% CNX 100 5,621.65 6.30% 1.71% CNX NIFTY 5,735.30 6.00% 1.50% CNX SMALLCAP 2,739.20 4.94% -20.01% INDIA VIX 26.65 -9.40% 57.60% Source: NSE SECTORAL Current % Change over Sep 15th 1 Year CNX FMCG 17,637.40 9.83% 26.52% CNX PSU BANK 2,134.45 9.39% -36.27% CNX INFRA 2,135.65 9.19% -14.70% CNX CONSUMPTION 2,453.25 8.07% 17.40% BANK NIFTY 9,617.80 8.01% -15.78% CNX AUTO 4,681.95 7.71% 8.94% CNX PHARMA 7,361.05 7.47% 32.90% CNX METAL 2,067.80 4.79% -24.37% CNX REALTY 149.65 -0.07% -39.44% CNX IT 8,167.80 -0.96% 29.95% Source: NSE Fortuna Public Relations Pvt. Ltd. 7 OCTOBER - 2013
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