India Upstream: Incorporating Brent oil price forecast revisions [Harshad
Katkar]
Deutsche Bank has raised its oil price outlook for CY10-14 by 1.1-9.4% on a
stronger oil demand outlook but kept the long-term forecast unchanged at
US$100/bbl. This leads to a 1-1.4% increase in the valuations of Indian upstream
oil companies ONGC, OIL and CAIL to INR1540, INR1620 and INR365 per share,
respectively. We maintain Buy on ONGC and OIL and Hold on CAIL. ONGC
remains our top pick in the sector, as it looks well poised to benefit from diesel
deregulation and in our view, offers the best risk/ reward on reforms.
Sun Pharma: Finally proposes to delist US-listed Caraco [Abhay Shanbhag]
On Friday, Sun Pharma made a US filing proposing to take US listed Caraco private
by acquiring all its free float (~25.5%) at a cash price of USD 4.75/share.
Consolidation phase commences: Post getting control of US listed Taro in end
Sept’10 with 69% of voting rights, Sun raised stake to threshold 76% of voting
rights in Nov’10. Sun now has 2 US-listed subsidiaries – Caraco (acquired in
1990’s) and Taro. We have always been surprised by Sun keeping Caraco listed,
despite its large underutilized war-chest.
India Economics Weekly: July-Sep GDP, fiscal update, PMI, core infra, WPI
[Taimur Baig, Kaushik Das]
India's real GDP rose by 8.9%yoy in the July-September quarter, similar to the
Apr-June outturn (revised up to 8.9% from 8.8% earlier). Data for the first two
quarters of the previous year were also revised up somewhat. The latest GDP data
indicate that the non-farm growth momentum (9.5% vs. 10.0% in the previous
quarter) is somewhat stronger than we had estimated. This is primarily due the
resilience of the services sector. Going forward, we expect non-farm growth
momentum to moderate in the second half of FY10/11, owing to negative base
effect led moderation in industrial sector activity, but agricultural sector growth
would remain supportive given a favorable monsoon outcome in 2010. This
assessment coupled with the strong 1HFY10/11 GDP growth outturn of 8.9%,
therefore leads us to revise up our annual growth forecast by ½ percentage point
to 8.5%.
Commodities Special Report: Thermal Coal: Becoming Strategic [Daniel
Brebner]
On the back of our expectation of a market deficit in thermal coal of 28mt in 2011
and 30mt in 2012 we have upgraded our forecasts for these years to USD118/t
and USD140/t respectively (from USD110/t and USD120/t previously).
US Economics/Strategy Weekly: November employment clunker [Joseph
LaVorgna]
In October 2010 the Bureau of Labor Statistics announced that it planned to revise
down the level of March 2010 payrolls by 366k. This was based on more detailed
source data that showed less job creation through the first quarter of this year
than what was previously reported. However, new information since then
suggests that employment may in fact be understated. If so, this could partly
explain the grindingly slow pace of payroll gains thus far in the business cycle. The
November employment data were particularly weak. It will be interesting to see
how the disparity between what we learned in November and what we have seen
over the past few months in terms of improving tax receipts, jobless claims and
the various purchasing manager indices is ultimately resolved.
News Headlines
Sarkozy courts Indian business, clinches $20 billion deals (Reuters)
France's President Nicolas Sarkozy said on Monday he had clinched deals worth
about $20 billion with India, becoming the latest among a string of world leaders
jostling for a share of Asia's third biggest economy
India should open up FDI in multi-brand retail – adviser (Reuters)
India should open its multi-brand retail sector to foreign investors and raise its
investment cap in the insurance sector to 49 percent from the current 26 percent,
Montek Singh Ahluwalia, the deputy chairman of the Planning Commission, said.
GST meet likely to be delayed, states want more time (BS)
Introduction of a Goods and Services Tax (GST) could be delayed further with the
Centre and the states failing to reach common ground at the meeting of the
Empowered Committee of state finance ministers on Monday.
Bill to allow options trading in goods, commodity derivatives introduced (BL)
The Government on Monday introduced in Lok Sabha a new Bill that would allow
trading in options in goods and new generation of commodity derivatives so as to
provide wider opportunities for risk management.
RBI plans open market purchase of G-Secs worth Rs 12,000 cr (BL)
In a bid to ease the tight liquidity situation in the market, the Reserve Bank of India,
on Monday, announced an open market purchase of government securities worth Rs
12,000 crore. The auction will be conducted on December 9
RBI asks banks to open resource centres for financial inclusion (BS)
The Reserve Bank of India (RBI) has urged commercial banks to open financial
inclusion resource centres throughout the country. These would work as a storehouse of all relevant information pertaining to financial inclusion
Govt may consider diesel price hike - oil secretary (Reuters)
The government could consider raising diesel prices before planned share sales of
state-run companies IOC and ONGC, Oil Secretary S. Sundareshan said.
DGCA tells airlines to post fare details on websites (BS)
Passengers will soon learn more about the various fares available on any route,
thanks to the Directorate General of Civil Aviation. It has asked all airlines to post
various fare categories route-wise and date-wise on their websites by December 8.
MNP leads to minimal churn, show data from Haryana (BS)
Judging by the initial reaction, most cellphone users have no pressing desire to shift.
Mobile number portability was launched 11 days ago in Haryana. Since then, 30,000 -
35,000 customers have requested a change. Haryana has 17 million customers.
SBI to raise deposit rates from Dec 7 (Reuters)
State Bank of India, the country's top lender, said it will raise deposit rates by
between 50 and 150 basis points for various maturities, with effect from Dec. 7.
ONGC Videsh's agreement firmed for 25% stake in Kazakh oilfield (BS)
ONGC Videsh Ltd (OVL) will sign a formal agreement for taking a 25 per cent stake in
Kazakhstan’s Satpayev oilfield by the end of February 2011. It is to invest about $400
million (Rs 1,800 crore) in the 1,582 sq km North Caspian Sea oilfield.
Suzlon to asborb 2 fully owned units (Reuters)
Suzlon Energy said on Monday it would acquire the tower business division of fully
owned unit, Suzlon Towers & Structures, and the operations and maintenance
division of wholly owned Suzlon Infrastructure Services.
EU Ministers Rule Out Immediate Aid Boost (Bloomberg Finance LP)
European finance ministers ruled out immediate aid for Portugal and Spain or an
increase in the 750 billion-euro ($1 trillion) crisis fund, counting on European Central
Bank bond purchases to calm debt-spooked markets.
Bernanke Says More Fed Easing Is Possible (Bloomberg Finance LP)
Federal Reserve Chairman Ben S. Bernanke said the economy is barely expanding at
a sustainable pace and that it’s possible the Fed may expand bond purchases beyond
the $600 billion announced last month to spur growth.
China Outstrips Fed in Liquidity Surge Threatening Inflation Spike in 2011
(Bloomberg Finance LP)
China’s reluctance to allow a stronger exchange rate has hamstrung its efforts to rein
in inflation and endangered a campaign to shift economy toward domestic demand
