The upcoming general elections sees Credit Suisse optimistic on Indian cyclicals and believes that there are factors that support for an upward movement in HCL Technologies, Wipro, Tata Motors, Reliance, Sesa Sterlite and Cairn Energy
Credit Suisse is overweight on India, with the general election acting as a catalyst according to their latest research report. It stated: “Our overweight call on India is based on the general election acting as a catalyst for a potential inflection point on return on equity (ROE).” It feels that the three consecutive upward revisions in EPS provide support to their bullish call. Credit Suisse prefers cyclicals over defensives. Their top stock picks are HCL Technology, Wipro, Tata Motors, Reliance Industries, Sesa Sterlite and Cairn Energy.
It is bullish on cyclicals, given that the relative valuation gap between cyclicals and defensive is large enough to pick the former. The report stated: “We continue to favour cyclicals over defensives, particularly in India. The cyclicals defensive price-to-book gap in India at -4.2X is the biggest in the region.” The chart below shows the relative valuation gap.
Moreover, it feels that global factors, especially the United States economy will tip the scales in favour of cyclicals over defensives. The report said, “While Indian cyclicals have outperformed defensives by 22% since the lows on 30 April2 013, we believe valuations, EPS revisions and recent rises in US bond yields suggest further cyclicals outperformance.” The chart below shows the potential market bottoming associated with three consecutive “upwards” revisions in EPS.
According to Credit Suisse, it uses the MCSI’s broader definition of cyclicals which includes technology, energy, materials, consumer cyclicals and industrials; defensives include consumer staples, utilities and telecom.
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RBI allowed Karur Vysya Bank to increase FII investment limit to 40 % from 35%
Private sector lender Karur Vyasa Bank (KVB) has been allowed by the Reserve Bank of India’s (RBI) to increase investment limit to 40% from 35% for foreign institutional investors (FIIs).
However RBI saidt, equity shares held by single FII should not exceed 10% of the paid-up equity capital of the bank and the investments made should be within the stipulated ceilings.
RBI’s approval to Karur Vysya Bank for raising FIIs investment limit to 40% is subject to the condition that aggregate foreign investment in the bank should not exceed the composite sectoral cap of 49% (49% under automatic route and beyond 49% to 74% under government route).
The present policy of Department of Banking Operations and Development (DBOD) requires RBI’s acknowledgement for acquisition or transfer of shares of 5% and more of a private sector bank by FIIs.
As on September 2013, FII holding in Karur Vysya Bank stood at 24.89%, Domestic Institutional Investor holdings at 13.30%, public holding at 58.75% and Promoter holdings stood at 3.06%.
Karur Vysya Bank closed Friday 1.4% higher at Rs349 on the BSE while the 30-share Sensex ended marginally down at 20,851.
The judicial commission on Adarsh Housing Scam had indicted several bureaucrats and politicians, including four former CMs of Maharashtra. The state government, which earlier rejected the commission report, has now partially accepted it. Here are excerpts from the report
Maharashtra government that was 'forced' to reconsider the judicial panel report on Adarsh Cooperative Housing Society (Adarsh CHS) scam, on Thursday, partially accepted the report and decided to form a committee to decide upon further action.
Last month, the Maharashtra government rejected the report of the judicial commission of inquiry on the Adarsh CHS scam that indicted several politicians, including four former chief ministers of Maharashtra, for blatant violations of statutory provisions. The report of the two-member commission headed by retired High Court Judge JA Patil came down heavily on those in authority, describing the scam as a bad precedent.
The report of the two-member judicial commission had indicted several politicians including four former chief ministers—Ashok Chavan, late Vilasrao Deshmukh, Sushilkumar Shinde and Shivajirao Nilangekar Patil—for blatant violations of statutory provisions. Several bureaucrats were also indicted in the report.
While accepting the judicial commission report in parts, the Prithviraj Chavan-led Congress government accepted quid pro quo allegations against former chief minister Ashok Chavan. On the other hand, it gave a clean chit to former chief ministers, Sushilkumar Shinde and late Vilasrao Deshmukh, and ministers Sunil Tatkare and Rajesh Tope.
Here are excerpts from the Adarsh Report (remember Rs7 crore of public money has been spent for making this report and politicians from Maharashtra have ‘partially’ accepted it):
The complete report can be downloaded from http://www.satyamevajayate.info/