Rajesh Jain: Markets looking forward to FY12 earnings

April is the beginning of a new financial year and investors have high expectations from this fiscal. The strong trend which was witnessed from first two months of the year has come to a halt in the month ended March 2012. The sentiment was diminished when The Reserve Bank of India (RBI) maintained status quo in its mid-quarter monetary policy review and left all its key rates unchanged.

In the Union Budget 2012-13, the Finance Minister set only modest targets for trimming a ballooning fiscal deficit and also there was a lack of any big reform announcement in the Budget.

The adoption the General Anti-Avoidance Rules (GAAR) could affect FIIs
investments through the Mauritius route. However, Finance Minister clarified that the new tax avoidance rules are meant to check tax avoidance through complicated deals, and not directed against any particular mode of investment like participatory notes (PNs).

The debt crisis in Europe may also affect the exports from India and moderate the flow of capital in to the country.

Market is likely to remain sluggish for some more time. As it is waiting for the fresh triggers to move ahead. The next major trigger for the market is Q4 FY12 earnings which will begin from mid April 2012. Any positive surprise could boost the sentiment further and could lead the next move of the market.

Stocks to Watch

Gujarat Mineral Development Corporation Ltd. (GMDC)

GMDC operates in two segments Mining and Power. Lignite and bauxite dominate the mining portfolio in volume terms. The company is the sole merchant seller for Lignite in India. Lignite mining is among the most profitable divisions for the company. By end-2014, the company is expected to mine 30% more  lignite. This is expected to aid a good volume growth. Higher lignite & bauxite volumes, better power plant performance and ongoing capacity expansion plans makes the company a good opportunity for
investment.

Ashok Leyland

Ashok Leyland is engaged in the manufacturing of commercial vehicles and related components. Recently the company has offered a brand new brand DOST which in comparison to the products presently available in the SCV segment, promises a new experience and technology at an increased payload of 1.25 Tons.

The sales of Dost in Tamil Nadu are carried out under JV banner in order to enjoy sales tax benefit from Tamil Nadu government. The company is expecting its sales volume to grow by 4-6% in FY13.

Havells India

Havells is one of largest electrical and power distribution equipment manufacturer Company in India. The restructuring of Sylvania has strengthened the performance and the company expects a significant jump in its financial performance in FY12&FY13. In the domestic market, Havells is expected to continue its robust sales growth trend, led by switchgears, consumer durables, cables and wires segments, and  helped by industrial expansion, ramp-up in power capacity and strong demand for consumer products. Its strong growth in domestic market, new product launches and capacity additions will be key growth drivers for the company.

(Author is EVP & Head Retail Research with Religare Securities)