25th January 2015

Sector Updates 19th January – 25th January

Finnacle Investments

25th January 2015

25th January 2015

IT Sector Update

(Sector Analysis: Bharat Dasaka, Melvin Matthew, Arpita Verma)

Company Previous Week Price

Current Market Price

Percentage Change

TCS 2537 2501 -1.41% Wipro 584.22 601.50 +2.87%

HCL Tech 1701 1650 -2.99%

TCS wins multi-year IT services deal from Virgin Atlantic

TCS has said that it has signed a multiyear contract with Virgin Atlantic Airways covering private

cloud, Infrastructure-as-a-Service (IaaS) and IT support services. TCS added that it will set up a

private cloud for the UK's leading airline and provide services including IaaS, end user services and

application support services across the whole of Virgin Atlantic's (VAA) technology landscape.It also

said it was recently selected for similar transformational deals with leading airlines in Europe, Asia

Pacific and North America.

Wipro energy contracts suffering as oil plunges, says CEO

Energy Companies, one of the clients for Wipro, have cut back on awarding contracts amid a record

decline in oil prices. IT projects linked to the oil industry account for about 6% of Wipro’s revenue, the

company is looking to other sectors such as manufacturing to offset the effect of the current market,

the CEO said. Wipro posted total sales of about $7.2 billion for its most recent fiscal year.

But this is not expected to impact financial performance of Wipro substantially

Wipro GE Deal

The Wipro GE Deal consisting of three employees, two of them starting a new company in healthcare

sector seems to be at pace with the deal getting a CCI nod recently. The Wipro GE 3 employee deal

was finalized in November 2014. The Deal will be result in dealership distribution of diagnostic

imaging and non-imaging products to be distributed in India.

HCL on for a structural change?

HCL might see an employee structure change in near future. The current Pyramid employee structure

is considered to be replaced by Hour glass structure. This structure is proposed to reduce the number

of software engineers doing simple software testing with lots of domain engineers. HCL is planning

this move amidst the technological advances that paved way to automation and artificial intelligence.

In the path of BONUS…

Following the recent bonus share issue by Infosys, HCL may also consider issuing BONUS share.

HCL has mentioned that it plans to discuss this issue in its upcoming annual General meeting that is

supposed to be held at 30th January.

25th January 2015

Telecom Sector Update

(Sector Analysis: Bharat Dasaka, Melvin Matthew, Arpita Verma)

Weekly Stock Performance

Company Previous Week Price Current Market Price Percentage Change

Bharti Airtel 342.26 383.70 +3.21% Idea 151.30 169.10 +11.92%

Recent developments in Telecom sector

Airtel amidst Technical Glitches?

It was a no communication day in Hyderabad on 24th January, when all no airtel sim was functional for around six hours from 6 am till noon. When asked, Airtel reported that there was system upgrade planned (shifting to a higher platform) , and it was due to this that the glitch took place

Telecom Minister Ravi Shankar Prasad woos US Companies to start

manufacturing in India

Under the Make In India initiative, telecom minister Ravi Shankar Prasad invited US technological

companies to start manufacturing in India. He offered several lucrative incentives to the companies.

"In plain terms, if you invest $100 here, we will give you $25. Then state incentives are also available,"

Prasad said. The government is making efforts to boost electronics manufacturing in the country.

India imported telecom products worth Rs 69,516.37 crore in 2013-14 while exports of such items

were at Rs 20,475.17 crore during the year, leaving a significant deficit of Rs 49,041.20 crore.

The Telecom Minister said government has opened up Electronic Development Fund worth billions of

dollars to support electronics manufacturing in the country.

Swachh Bharat cess can be levied upon telecom services

Phone and internet bills may go up as the government plans to levy a cess on telecom services to

create a corpus for funding the 'Swachh Bharat' drive. Attorney General of India is learnt to have

suggested the government not to levy Swachh Bharat Cess on telecom spectrum as it would be illegal

but can be imposed on telecom services by amending the Finance Act.

Telecom industry body COAI has opposed the cess. "We are not in favour of it. It will burden

consumers and will be against government agenda of providing affordable service specially when it is

talking about increasing rural broadband and internet penetration," COAI Director General Rajan S

Mathews said."It is not an easy exercise for us as well. We will need to work out tax on calls per

minute and make technical changes in networks," he said.

25th January 2015

Telecom Commission fixes 2,100-MHz base price at Rs 3,705 cr

Telecom Commission raises reserve price 36% over Trai-suggested rate; Cabinet to take final call this

week A few weeks ago, the Union Cabinet had increased the base price for other bands as well — by

32.5 per cent over the Trai-suggested rate for the 900-MHz band; by 17 per cent for 800-MHz and by

2.4 per cent for 1,800-MHz.

Sources:

http://articles.economictimes.indiatimes.com/2015-01-23/news/58382554_1_hcl-technologies-

software-exporter-automation

http://articles.economictimes.indiatimes.com/2015-01-22/news/58344218_1_wipro-ge-healthcare-

proposed-combination-vertical-relationship

http://profit.ndtv.com/news/market/article-after-infosys-hcl-tech-may-issue-bonus-shares-729176

http://www.thehindu.com/news/cities/Hyderabad/airtel-services-hit-in-

hyderabad/article6818414.ece

http://economictimes.indiatimes.com/industry/telecom/telecom-minister-ravi-shankar-prasad-

woos-us-companies-to-start-manufacturing-in-india-offers-sops/articleshow/46009392.cms

http://articles.economictimes.indiatimes.com/2015-01-20/news/58268264_1_education-cess-cess-

burden-swachh-bharat-kosh

http://www.business-standard.com/article/economy-policy/spectrum-auction-telecom-

commission-clears-rs-3700-cr-base-price-for-2-100-mhz-115011900345_1.html

25th January 2015

Pharma Sector Update

(Sector Analysis: Kanika Singh, Neha Kumar, Ravi Karanam)

Current Market Price of Pharma stocks

Stock CMP (in INR) Sun Pharmaceuticals 923.75

Dr. Reddy's Laboratories 3344.85 Cipla 674.75 Lupin 1489.35

Aurobindo Pharma 1177.50 Indoco Remedies 318.65 Alembic Pharma 476.90

Government to negotiate price of patent drugs prior to market entry The government would negotiate the prices of patented medicines with the manufacturers before pharma companies launch them in India. The move which is first in its kind would also be applied to the patented drugs already being sold in the country. An inter-ministerial commission has recently asked for detailed information of such drugs from the National Pharmaceutical Pricing Authority (NPPA). The move is major as it is expected to drive down the prices of many medicines widely used in treatment of life threatening diseases such as cancer, HIV/AIDS and Hepatitis C. Currently, patented drugs are outside the territory of NPPA which mandates a price cap on 348 vital medicines.

India to have a indigenously made low price Rotavirus vaccine this year India is all set to have a locally manufactured low cost rotavirus vaccine as part of government's

universal immunization programme (UIP). The vaccine would be available at one-fifteenth of the

current market cost. "Bharat Biotech”, that possesses the license for manufacturing of this vaccine

has already made 5-6 million doses. But the requirement is way more to meet the UIP demand. The

vaccine would be launched in the market and in the UIP in 2015. The company will supply the vaccine

for the public programme at Rs 55-60 per dose, while the market price might vary. Diarrhea caused

by rotavirus kills approximately 80,000 children each year and results in 10 lakh hospitalizations

pushing many Indian families below the poverty line. It also causes an economic burden of Rs 300

crore each year on the country. This move by UIP would offset the effects of disease and restore the

balance.

Ipca Labs smacked by USFDA for violations of production practice

The USFDA issued import alert on medicines manufactured at IPCA Labs Ratlam in Madhya Pradesh

after which it stopped shipment of Active Pharmaceutical Ingredients (APIs) to the America. Following

an inspection at the company's API manufacturing unit by US Food and Drug Administration, the

officials communicated the concerns related to non-compliance of manufacturing standards

discovered during the inspections at manufacturing units

25th January 2015

References:

http://economictimes.indiatimes.com/articleshow/45988531.cms?utm_source=contentofinterest

&utm_medium=text&utm_campaign=cppst

http://economictimes.indiatimes.com/articleshow/46000352.cms?utm_source=contentofinterest

&utm_medium=text&utm_campaign=cppst

http://economictimes.indiatimes.com/articleshow/45987228.cms?utm_source=contentofinterest

&utm_medium=text&utm_campaign=cppst

25th January 2015

Power Sector Update

(Sector Analysis: Anshu Mishra and Ankit Bacchuka)

Legal challenge against Adani’s Carmichael mine in Australia

Adani Enterprises Ltd $7 billion Carmichael coal mine project in the Galilee Basin is facing legal

challenge byaAn Australian environmental group. I is seen as a key issue in election campaingn in

Queensland state by Premier Campbell Newman

Govt asks coal block bidders to fix dates for site visit

Moving ahead with the process of auction of mines, the government has invited bidders to come up

with dates to visit the coal blocks besides inspecting land documents of the mines. The invite notice to

the bidders by the coal ministry is for the 23 producing coal blocks to be auctioned next month. For

site visit, the government has kept five days (16, 19, 20, 21 and 22 January), while for inspection of

land documentation document, the ministry has fixed four days (16, 19, 20 and 21 January).

CLP Holdings Ltd to invest $2 billion in India

CLP Holdings Ltd, Hong Kong’s biggest electricity provider will invest around $2 billion to boost its

power production capacity in India by 2,000 megawatts (MW), resolving to put additional resources in

the country some two years after threatening to exit it because of erratic fuel supplies to its plants.

SunEdison, Adani in a agreement to build $4 billion Gujarat solar facility

Adani Enterprises Ltd, the flagship company of the $9.4 billion Adani Group, on Sunday signed an

agreement with US-based SunEdison Inc. to set up a joint venture that will build a solar photovoltaic

manufacturing facility in Gujarat with an investment of around $4 billion.

Sources:

http://www.livemint.com/Politics/DOXon5Zu6DKALCGmIA7wYK/Legal-challenge-

against-Adanis-Carmichael-mine-in-Australia.html?utm_source=copy

http://www.livemint.com/Industry/RxH5jLORCLRvJfwizZUQCL/Govt-asks-coal-

block-bidders-to-fix-dates-for-site-visit.html?utm_source=copy

http://www.livemint.com/Industry/7m1MtDTCBvGZVU40IauqJO/CLP-to-invest-2-bn-

to-boost-India-capacity.html?utm_source=copy

http://www.livemint.com/Industry/hBLp1etYY06mPlRiZ5ElwM/SunEdison-Adani-to-

build-4-bn-Gujarat-solar-facility.html?utm_source=copy

25th January 2015

Oil and Gas Sector Updates

(Sector Analysts: Ashwin Jain, Mili, Piyush Sethi)

Weekly stock price performance:

Stock Stock Price (in INR) As on 5th Jan

% Gain/Loss

Oil Drilling and Exploration ONGC 348.55 +0.66 GAIL 423.10 -0.34 CAIRN India 247.70 +6.79 Oil India 551.80 +4.53 Petronet LNG 188.40 -4.70

Refineries

RIL 886.95 +2.06 IOC 332.45 -1.46 BPCL 674.30 +2.61 HPCL 576.45 +0.75

Cabinet to consider sale of stake in Indian Oil: Sources

Cabinet Committee on Economic Affairs will discuss the sale of a 10 percent stake in Indian Oil Corp,

two sources with knowledge of the matter said, as the government finds ways to meet its fiscal deficit

target. The sale of a stake in India's largest oil refiner, raise more than $1 billion towards its asset sale

target of $10 billion for the fiscal year ending in March

Domestic crude oil production falls 1.4% in December

India's crude oil production fell 1.4 per cent in December as output from oilfields operated by private

companies like Cairn Crude oil production at 3.21 million tons in December 2014 was 1.4 per cent

lower than 3.25 million tons in the same month a year ago, according to latest data released

Buoyed by diesel price decontrol, Reliance Industries reopens fuel stations

Reliance Industries has reopened about one-fifth of its 1,400 fuel stations, which were shut down

when state firms were selling heavily subsidized fuel. RIL had shut down all of its 1,432 petrol pumps

around March 2008 because of huge losses in incurred in trying to match its public sector firms, who

sold fuel at rates much lower than their cost as they got government subsidies. Diesel, India's most

consumed fuel, was deregulated in October last year and since then private retailers have again

entered the market

25th January 2015 Sources:

http://economictimes.indiatimes.com/articleshow/45962795.cms?utm_source=cont

entofinterest&utm_medium=text&utm_campaign=cppst

http://economictimes.indiatimes.com/articleshow/45966900.cms?utm_source=cont

entofinterest&utm_medium=text&utm_campaign=cppst

http://economictimes.indiatimes.com/articleshow/45929386.cms?utm_source=cont

entofinterest&utm_medium=text&utm_campaign=cppst

25th January 2015

FMCG Sector Update

(Sector Analysts: Amrit Pal Singh)

Current market price of key companies

STOCK Previous Week CMP(in INR) % Change

ITC 360 349.25 -2.77%

Dabur 251.40 248.15 -1.19%

Marico 350.25 358.30 +2.28%

Colgate 1959.10 1911.20 -2.45%

Nestle 6985.20 7234.85 +3.56%

HUL 941.05 962.55 +2.23%

Companies ordered to pay taxes on ad, marketing & promotion expenses

incurred over and above industry average

The income-tax department has ordered several MNCs, mostly fast moving consumer goods (FMCG)

companies, to pay taxes on advertising, marketing and sales promotion (AMP) expenses incurred

over and above the industry average.

This hard line has been adopted in the latest transfer pricing audit as demands have intensified with

January 31 being the last date by which these can be made. The tax department's argument is this: If

the Indian subsidiary spends more than the average AMP expenses, then this additional amount is

going towards promoting the brand and not the product, justifying the levy. The I-T

department contends that when a company spends more than the industry average, it's creating

"marketing intangibles".

Companies that face tax demands based on this extra ad spend include Hindustan Unilever, P&G,

L'Oreal, LG and Maruti Suzuki. Industry experts peg the total demand raised by the I-T department on

this count at about Rs 10,000 crore.

HUL and ITC fails to impress with third quarter earnings

Shares of HUL and ITC lost ground as their third quarter earnings figures failed to impress street.

HUL’s domestic sales, a proxy for consumer demand in the country, grew 8% to Rs 7,774.4 crore

from Rs 7,223.3 crore a year ago, with volume growing at 3%. The Indian unit of Anglo-Dutch

Unilever said net profit rose 18% to Rs 1,252 crore after exceptional income from the sale of

properties. Excluding this, net profit rose 2% to Rs 955 crore."There are a lot of local companies

coming in detergents, skin cleansing and tea as crude prices fall. We have stepped up A&P

(advertising and promotion) and trade promotions in some markets where it is getting intensely

25th January 2015 competitive," said chief financial officer PB Balaji. Advertising and promotion rose 5% to Rs 977.12

crore or 12.9% of total sales.

ITC’s volume growth in the cigarette segment came in below expectations, and both the topline and

net earnings for the quarter missed estimates. Total operating income for the three months to

December 2014, increased 2.5% to R8,942.6 crore compared to R8,726.85 crore in the same quarter

last year. Reported profit rose 10.5% to R2,635 crore against R2,385.3 crore last year. The subdued

quarterly numbers were attributed to increasing impact of excise duty hike announced in the Union

budget in July 2014 as well as hikes in value added tax (VAT) on cigarettes by Tamil Nadu, Kerala

and Assam that turned effective in the three months.

Sources:

http://articles.economictimes.indiatimes.com/2015-01-23/news/58382395_1_tax-

department-tax-demands-intangibles

http://www.financialexpress.com/article/markets/indian-markets/itc-share-price-tanks-

as-earnings-disappoint-street-may-see-pre-budget-volatility/33331/

http://articles.economictimes.indiatimes.com/2015-01-20/news/58268215_1_volume-

growth-hul-crore

25th January 2015

Banking and Financial Services Sector Update

(Sector Analysts: Jyoti Gupta, Ankita Kumar, Akshat Kulshrestha)

Bank market updates

NSE Bank Nifty continued with the scorching pace this week. It went up by 100 points. Seven of the

12 stocks in Bank Nifty hit new 52 week highs. This gives an indication that Indian economy would

achieve higher growth in coming months and interest rate will continue with its downward journey.

Two of PSU bank stocks- SBI and Bank of Baroda touched new heights. SBI which went for 10:1

stock split reached a new 52 week high of Rs 327.60 before easing marginally down to Rs 326.45.

Bank of Baroda also went for stock split. (Face value Rs 10 to Rs 2)

NEWS

Jan DhanYojana crosses 100-mn mark

The ambitious plan of government to achieve financial inclusion for all has taken a step closer to its

target of 98.4% household in India having bank accounts. Under this Yojana, Prime Minister,

Narendra Modi has set 26 January as a deadline to open 75 million bank accounts. Target was later

revised to around 100 million.

HDFC Bank launches 11 toll-free numbers to cater to 32 nations

HDFC Bank came out with 11 international toll free numbers to cater to 32 countries for phone-

banking assistance for its pre-loaded card. Private sector lender issues around 12,000 pre-loaded

forex cards each month. Card can be issued in 18 different countries including Euro, Pound, Yen,

Dollar, Oman Riyal

Toll- free numbers are initiated to provide accessibility and convenience for customer travelling

overseas with pre-loaded forex card. Business issuance of these cards are growing at 25% year on

year

Yes Bank leads race for Deutsche's mutual fund business in India

India lender Yes Bank is the main suitor in the race for Deutsche Asset Management (India) Pvt. Ltd’s

mutual fund business in India. The deal which the sources has estimated to be around 2 billion rupees

($ 32.5 million), is coming at a time of optimism in Indian markets after a surprise interest rate cute

and hopes of reform ahead of government’s maiden budget in February.