Stock Market Updates For February 20, 2014…

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Corporate News/Results Corner

As per media reports, Shree Renuka Sugars likely to sell 25% stake to Wilmar International – Deal if done will be positive in short term for Shree Renuka Sugars

As per media reports, Singapore-based Wilmar International is likely to pick up 25% stake in Shree Renuka Sugars Ltd. Renuka Sugars, that operates 11 integrated sugar mills globally, four in Brazil and seven in India, is likely to issue fresh shares to Wilmar International at Rs 35-45 a share. An announcement of the deal is expected shortly.

Renuka Sugars was considering various options to pare its debt of over Rs 80 bn, which built up following its two Brazilian acquisitions. In 2009, Renuka acquired Distillery Valley Ivai SA (Renuka Vale do Ivai) for $240 million. In 2010, it bought 59.4% stake in Equipav SA (Renuka do Brasil) for $250 mn.

Wilmar International’s business activities include oil palm cultivation, oilseeds crushing, edible oils refining, sugar milling and refining, speciality fats, oleo-chemicals, bio-diesel and fertilizers manufacturing and grains processing.

Wilmar International has over 450 manufacturing plants and an extensive distribution network in China, India, Indonesia and about 50 other countries. We believe the fresh issue of shares to Wilmar will aid Renuka to pare its debt and will be positive in short to medium term for Shree Renuka Sugars.

Macro-Economic and Other News

McKinsey Global wants next government to target poverty

A report by McKinsey Global Institute points to daunting challenges for India’s next government, as it suggests the spending of Rs 3.3tn over the next 10 years to empower 680 million Indians who are only marginally better than those under the poverty line.

With the government’s spending on various development schemes not effectively reaching much of the public, the study suggests a rise in expenditure on the social sector by 91%, to Rs 10.8tn by 2022. Currently, it says, only 36% of public spending on health reaches the public, as does 52% of that on the national rural job guarantee scheme (MGNREGS) and 64% of the spending on food.

Growth outlook bleak for India, to report weak earnings in first half of fiscal 2015: Jim Walker

India’s economic outlook will remain bleak and India Inc will report weak earnings in the first half of fiscal 2015, said Jim Walker, founder and managing director, Asianomics Macro.

Speaking on the occasion of IIFL Institutional Investors Conference ‘Enterprising India’, Walker said, “There will be more weakness in economic growth data as the private sector deleverages and balance sheets are repaired.” He also held the view that interest rates are likely to rise in the face of persistent inflation, but rupee, at its current level, will correct the current account deficit within the year.

International News

Fed Members Divided On Tapering Plans, Minutes Reveal

Some members of the Federal Reserve questioned whether to taper the central bank’s massive bond-buying plan amid signs the economic recovery has stalled, minutes from its January policy meeting revealed. At that two-day meeting ending Jan 29, the U.S.central bank went ahead with trimming its monthly bond-buying program. The Fed has cut its asset purchases by $10bn at each of the last two meetings.

New Chairman Janet Yellen has told Congress she plans to continue current monetary policy, with tapering to remain on pace despite harsh winter weather that may have further hindered economic growth. Although January’s vote to taper was unanimous, there was considerable disagreement among participants about tightening monetary policy .

China Manufacturing PMI Slides To 48.3 – HSBC

The manufacturing sector in China is contracting at an accelerating pace, the latest PMI from HSBC and Markit Economics revealed. The PMI came in with a score of 48.3 for February, touching a seven-month low. The headline figure was well shy of forecasts for 49.5, which would have been unchanged from the January reading. The manufacturing output index came in at 49.2 – also a seven-month low – down from 50.8 in January.

Greece Logs First Current Account Surplus On Record

Greece recorded the first ever current account surplus in 2013, mainly due to a narrowing in the trade deficit that is attributable to record tourist receipts and falling imports. The current account showed a surplus of EUR 1.2bn versus a deficit of EUR 4.6bn in 2012, the Bank of Greece said. It is the first surplus since the series began in 1948. In 2011, Greece posted a deficit of EUR 20.6bn.

Money Trend

CNX-NIFTY – CMP 6152

Synopsis

Nifty opened with a flat bias traded in a tight range, but found buying support at all dips & finally closed the day marginally 0.3% positive.

Going forward, 6080 is an important support which if held, can lead to a further short covering upmove till 6160.

Only on a break of 6080 & sustaining below it, support zone of 6020-6030 would be retested.

Daily Momentum is in positive territory while Weekly momentum is in negative indicating choppy price action at higher levels.

Bank – Nifty – CMP – 10609

Synopsis

Bank opened with a flat bias traded in a tight range, but found buying support at all dips & finally closed the day marginally 0.3% positive.

Going forward, 10420 is an important support which if held, can lead to a further short covering upmove till 10700.

Only on a break of 10420 & sustaining below it, support zone of 10200-10140 would be retested.

Daily Momentum is in positive territory while Weekly momentum is in negative indicating choppy price action at higher levels.

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