Market Perspective - December 8, 2012 - Eastern Financiers

Following Parliament's approval to the contentious FDI in multi brand retail, investors next week are anticipated to keenly eye out the Winter session of the Parliament that has heavy legislative agenda along with the developments on the global arena that is set to mark the FOMC meet amidst other sets of impending releases.

On the domestic macro façade, the Industrial output for October and the monthly WPI for November 2012 that are due on Wednesday and Friday respectively, shall be closely watched out. Industrial production declined 0.4% in September 2012, and Inflation eased to 7.45% in October 2012 from 7.81% in September 2012.

The key financial sector reforms bills that the government intends to pass this session includes the Insurance and Pension bills and the Banking Laws (Amendment) Bill, 2011. The insurance bill will aim to raise the limit for foreign direct investment in the sector to 49% from 26%, while the pension bill will seek to allow foreign investments of up to 49% in local pension-fund managers. The Banking Laws (Amendment) Bill, 2011 calls for removing 10% voting ceiling in private sector banks, increase in voting ceiling in state-run banks to 10% from 1%, and giving the central bank more powers. The Reserve Bank of India has held back approvals of new bank licenses, urging the government to first get the bill passed in parliament.

Two IPO's are set to hit the capital markets next week, one is Bharti Infratel and the other is of PC Jeweller. The IPO of Bharti Infratel, a subsidiary of Bharti Airtel, opens for subscription on Tuesday, 11 December 2012. The price band for the IPO has been fixed at between Rs 210-Rs 240 per share. The IPO is a combination of fresh issue of 14.62 crore equity shares and an offer for sale of 4.26 crore equity share by some existing shareholders. Bharti Airtel itself is not selling any shares in the IPO. The IPO closes on Friday, 14 December 2012.

The IPO of PC Jeweller opens for subscription on Monday, 10 December 2012 and the issue closes on Wednesday. The company is selling about 4.51 crore equity shares of face value Rs 10 each with a price band of Rs 125 to Rs 135 per share. The IPO will constitute 25% of the post issue paid-up equity share capital of the company.

The key event on the global space among others is the twoday meeting of the Federal Open Market Committee (FOMC) on interest rates in the United States on 11-12 December. As per market talks, concerns about US economy would lead Federal Reserve to continue the Treasury purchase portion of the program known as Operation Twist. That will be on top of the mortgage-debt buying program known as its third round of quantitative easing.

Source : Equity Bulls

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