Market Outlook

India Research
August 18, 2011

Dealers Diary
The market edged higher on opening amid a bout of initial volatility. Trading remained choppy as the market regained strength to hit fresh intraday highs soon after paring initial gains in morning trade. The market trimmed gains after hitting fresh intraday high in mid-morning trade. The market further trimmed gains in early afternoon trade. Weak opening of European stocks pulled Indian shares into the red in afternoon trade, but the market soon regained the positive zone. Intraday volatility continued as the key benchmark indices pared gains once again after regaining strength in mid-afternoon trade as lower European stocks weighed on sentiment. The market strengthened again in late trade. The Sensex and Nifty closed with gains of 0.7% and 0.4%, respectively. However, the mid-cap and small-cap indices ended with losses of 0.9% and 1.6%, respectively. Among front runners, TCS, Hero MotoCorp, Coal India, Infosys and HDFC Bank gained 23%, while DLF, Maruti Suzuki, Tata Motors, ICICI Bank and Mahindra & Mahindra lost 26%. Among mid caps, Sujana Towers, Polaris Soft, VIP Inds, Balrampur Chini and Jubiliant Foods gained 514%, while Jet Air India, BF Utilities, Anant Raj Inds, Usha Martin and Jyothy Lab lost 713%.

Domestic Indices BSE Sensex Nifty MID CAP SMALL CAP BSE HC BSE PSU BANKEX AUTO METAL OIL & GAS BSE IT Global Indices Dow Jones NASDAQ FTSE Nikkei Hang Seng Straits Times Shanghai Com Indian ADRs Infosys Wipro ICICI Bank HDFC Bank

Chg (%) 0.7 0.4 (0.9) (1.6) 0.5 (0.3) (1.1) (1.2) 0.5 0.1 2.2 Chg (%) 0.0 (0.5) (0.5) (0.6) 0.4 (0.2) (0.3) Chg (%) 1.6 0.4 (1.6) 1.3

(Pts) 20.8 (55.5) (120.5) 27.8 (22.4) (101.1) 6.8 112.6 (Pts) 4.3 (12.0) (26.0) (50.2) 77.0 (4.2) (6.9) (Pts) 0.8 0.0 (0.6) 0.4

(Close) 5,057 6,342 7,341 6,022 7,931 8,360 8,337 5,163 (Close) 11,410 2,511 5,332 9,057 20,289 2,829 2,601 (Close) $54.1 $10.4 $40.5 $32.9

109.9 16,841

(126.8) 11,370 59.6 12,120

Markets Today
The trend deciding level for the day is 16,850/5,062 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,99117,141/5,1075,157 levels. However, if NIFTY trades below 16,850/5,062 levels for the first half-an-hour of trade then it may correct up to 16,70016,559/5,0124,967 levels.
Indices SENSEX NIFTY S2 16,559 4,967 S1 16,700 5,012 R1 16,991 5,107 R2 17,141 5,157

Advances / Declines Advances Declines Unchanged

BSE 890 1,954 104

NSE 378 1,051 53

News Analysis
Maruti Suzuki unveils the new Swift Sadbhav Engineering bags order worth `202cr
Refer detailed news analysis on the following page

Net Inflows (August 16, 2011) ` cr FII MFs Purch 2,531 388 Sales 2,741 299 Net (210) 89 MTD (5,825) 1,617 YTD 2,908 5,395

Volumes (` cr) BSE NSE 2,369 10,429

FII Derivatives (August 17, 2011) ` cr Index Futures Stock Futures Gainers / Losers Gainers Company Jubiliant Food. Mcleod Russel Apollo Tyres NCC Shriram Transport Price (`) 948 228 59 57 619 chg (%) 4.5 4.4 4.0 3.8 3.3 Company Jet Air DLF Ashok Leyland Educomp Sintex Industries Losers Price (`) 305 178 24 257 139 chg (%) (13.1) (6.0) (6.0) (5.8) (5.3) Sebi Registration No: INB 010996539
1

Purch 2,627 2,346

Sales 2,767 2,156

Net (140) 190

Open Interest 14,671 29,297

Please refer to important disclosures at the end of this report

Market Outlook | India Research

Maruti Suzuki unveils the new Swift

Maruti Suzuki unveiled the next generation new Swift in the premium compact car segment with base version priced at `4.22lakhs (ex-showroom Delhi) for the petrol version and `5.17lakhs (ex-showroom Delhi) for the diesel version. The new Swift has over 140 new features and is built on a completely new platform compared to its predecessor. It is also expected to offer higher fuel efficiency on account of reduction in weight due to several R&D efforts taken by the company. According to management, `550cr has been invested by Maruti and its suppliers in developing the new Swift, which has 95% localisation levels. The new Swift will replace the old Swift, production of which has already been stopped by the company since July 2011. The new Swift will be rolled out from Marutis facility in Gurgaon with an initial production capacity of 16,00018,000 units per month. The compact car segment has seen a series of new launches in the past couple of months, in the form of Toyota Liva and General Motors diesel version of Beat. The competition is set to further intensify with the launch of Honda Brio and a compact car from Hyundai. As a result, we expect Marutis market share to remain under pressure. However, we expect the new Swift to continue to see strong sales momentum as the old Swift has already received 50,000 bookings. At `1,186, the stock is trading at 13.2x and 11.7x FY2012E and FY2013E earnings, respectively. We maintain our Accumulate rating on the stock with a target price of `1,322.

Sadbhav Engineering bags order worth `202cr

Sadbhav Engineering (SEL) has bagged a road project worth `201.8cr from Bihar State Road Development Corporation Ltd., Patna. SEL will be implementing this project in a joint venture with GKC Projects, with SELs share being 50%. We maintain our Accumulate view on SEL with a target price of `161.

Economic and Political News

Government clears 18 FDI proposals worth `123cr India to be US$5.6 trillion economy by 2020: Dun & Bradstreet CCI planning to initiate investigations against more realty firms

Corporate News
Suzlon bags 48.3MW order from Indian Oil LIC hikes stake in Tata Steel to 14% Hotel Leelaventure to sell Kerala hotel for `500cr
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

August 18, 2011

Market Outlook | India Research

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August 18, 2011