Stock Market Updates For April 17th , 2014 …


Corporate / Results Corner.

Bajaj Auto’s Chakan workers threaten strike starting Apr28 – Sentimentally negative in short term for Bajaj Auto (-ve); Accumulate on dips for medium to long term perspective

Less than a year after workers at Bajaj Auto’s Chakan plant near Pune went on a 50-day strike, they are gearing up for another one starting April 28. In a notice issued to the management by Vishwa Kalyan Kaamgar Sanghatana (VKKS) on April 14, the union has again demanded an issuance of 500 shares at a discounted price of Rs 10 to each permanent worker. Around 850 permanent workers, employed in the morning shift at the Chakan plant, are expected to stop work from April 28.

In a strike which lasted almost 2 months last year, the same union has demanded for discounted shares at Re 1 and revision of wage agreement.The company currently manufacturers its premium bikes at the Chakan plant – including, Pulsar, KTM and Avenger. The company has clarified that it is not worried or concerned about the stoppage of production as it has capabilities to shift production to its other plants. The company’s Chakan plant currently employs around 900 permanent workers and about 400 trainee workers.

VKKS last year withdrew its strike, after trying to negotiate and communicate with the Bajaj management for almost 50 days.The two parties are currently fighting a legal battle over the wage agreement terminated by the union last year. We believe that this development may have negative sentimental impact in short term on Bajaj Auto. Any correction offers good opportunity to accumulate the same from medium to long term perspective.

HCC bags order worth Rs.3,000mn from DMRC. Positive in short to medium term for HCC

Hindustan Construction Company (HCC) has secured a Rs 3,000mn contract for design and construction of a 1.54 km twin tunnel on the Dwarka-Najafgarh corridor (phase III) of the Delhi Metro. This is the third contract awarded by the Delhi Metro Rail Corporation to HCC under phase III aggregating ~Rs 15,390mn.The contract includes construction of one of the biggest underground stations Municipal Corporation which will be 290 metres long and 30 metres wide at a depth of 18 metres. The work is scheduled for completion in 36 months. We believe this to be positive for HCC in short to medium term for HCC.

Economic and Other News

NHAI plans to award 5,000-km highways contracts in 2014- 15

The National Highways Authority of India (NHAI), after a dismal show in 2013-14, is readying its work plan for this financial year, one that reflects the pessimism enveloping the sector. It is planning to award about 2,000 km through cash contracts, or EPC mode, and is ready with 3,000 km to be bid via the public-private partnership (PPP) mode.

NHAI officials said they have informed the highways ministry of their targets for 2014-15 but awarding projects on the EPC mode can only take off if NHAI is able to acquire 90% of the land. In addition, the final award on PPP mode would depend on the market response, which has been poor of late, and may need to be converted to the EPC mode if no bids are received.

12 Govt. ports see 2% rise in traffic growth

12 Government-owned major ports registered a 1.78% growth in traffic for the period between April 2013 and March 2014. As the growth has come after two years of falling cargo volumes, ports are hoping for some recovery this year. Globally though, the trade is expected to grow marginally keeping the freight rates for the shipping lines under pressure for yet another year. The increase in traffic volumes is also an encouraging sign for ports and private operators to invest in building capacities. The shipping ministry had recently awarded 4.8 million TEUs (twenty foot equivalent units) fourth container terminal project at the Jawaharlal Nehru Port Trust (JNPT). The project is expected to double JNPT’s total capacity.

World News

U.S. Industrial Production Climbs 0.7% In March, More Than Expected

Industrial production in the U.S. rose by more than expected in the month of March, with the report also showing a notable upward revision to the pace of production growth in the previous month.

The industrial production increased by 0.7% in March after surging up by an upwardly revised 1.2% in February. Economists had been expecting production to rise by about 0.5% compared to the 0.6% increase originally reported for the previous month.

Japan February Industrial Output Falls As Estimated

Japan’s industrial production declined as estimated in February. Industrial production was down 2.3% MoM in February, in line with preliminary estimate. On a yearly basis, output plunged 7%. The decline in shipments was confirmed at 1%. At the same time, inventories dipped 0.9% instead of the initial estimate of 0.8%. Capacity utilization slipped 2.6% on month vs a 5.9% rise in January.

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