{LONGTERMINVESTORS} India Infoline Weekly Newsletter - January 15, 2016

 

There seems to be no respite to the ongoing downtrend. Indices have lost further ground closing lower by more than 2% this week after plunging nearly 5% in the previous week; both the key indices hit their respective 52-week lows during the week amid weak global cues and weakening Indian currency against the US Dollar. The rupee weakened and hit 28-month low of Rs67.69 against the US Dollar.

 

The result season has begun and nothing really in it so far to exude confidence as far as corporate earnings are concerned barring Infosys which delivered better than expected results. Infosys delivered growth of 2% qoq in constant currency terms adjusting for one time revenue in the preceding quarter. Volume growth was strong at 3% qoq despite furloughs and challenges in some top clients. Buoyed by a good performance in Q3, the company has raised full year dollar growth guidance to ~13% yoy in constant currency terms.

 

Going ahead, the slow economic recovery and poor show reported by Corporate India, quarter‐after‐quarter, will continue to be a concern. The coming week has a number of larger companies announcing their results. These include RIL, HCL Tech, Axis Bank and Asian Paints. We expect RIL to report a GRM of US$11/bbl as compared to US$7.3/bbl reported in Q3 FY15 and US$10.6/bbl in Q2 FY16. Petrochemical prices too have seen a correction in line with the crude oil prices but we expect the spreads to remain flattish. While it may be difficult to predict the timing of broad earnings pick up, but a recovery has started in many companies outside the Nifty. It would be prudent for investors to identify these stocks and sectors rather than wait for a full‐fledged recovery.

 

Click below for the India Infoline Weekly Newsletter:

http://www.indiainfoline.com/article/news-top-story/world-economic-situation-low-crude-prices-iip-december-wpi-inflation-and-the-week-that-was-116011500574_1.html

 

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