Market Outlook

India Research
September 28, 2011

Dealers Diary
The market opened on a firm note tracing a rally in Asian stocks stocks, triggered by reports that European policy makers are considering new plans to support European countries struggling with debt. This bolstered the otherwise weak sentiment that circled the markets for a while. In addition, reports about the Finance Ministrys consideration over some tax cuts on equities to lower transaction costs and broaden participation in the market boosted the sentiment. The market breadth remained strong and increased buying was witnessed in infrastructure, auto and metal stocks, which had witnessed steep slides. The indices held their firm ground and continued their gradual ascend in the afternoon session. The market closed on a strong note with the Sensex and the Nifty gaining 3.0% and 2.8%, respectively. The mid-cap and small-cap indices also gained 1.6% and 1.4%, respectively. Among the front runners, DLF, JP Associates, Tata Motors, RIL and Hindalco gained 4-8%. There were no majors losers in the Sensex. Among mid caps, Hathway Cable, Dewan Housing, Sun Pharma Advanced Research Com., Rajesh Exports and Hexaware Technologies gained 7-17%, while Shree Global Tradefin, Pipav Shipyard, Jyothy Labs, Kirloskar Oil Engines and Manappuram Finance lost 2-10%.

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

Chg (%) 3.0 2.8 1.6 1.4 0.7 2.1 2.7 2.7 2.6 3.5 3.6 Chg (%) 1.3 1.2 4.0 2.8 4.2 2.7 0.9

(Pts) 135.9 98.4 93.9 37.9 156.5 225.4 282.4 178.1 (Pts) 30.1 204.7 235.8 71.6 21.9

(Close) 4,971 6,230 7,017 5,885 7,509 8,553 8,417 5,184 (Close) 2,547 5,294 8,610 2,726 2,415

472.9 16,524

294.1 11,033 286.7 11,470

146.8 11,191

Markets Today
The trend deciding level for the day is 16,453/4,953 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,623 16,722/5,001 5,031 levels. However, if NIFTY trades below 16,453/4,953 levels for the first half-an-hour of trade then it may correct up to 16,354 16,184/4,923 4,875 levels.
Indices SENSEX NIFTY S2 16,184 4,875 S1 16,354 4,923 R1 16,623 5,001 R2 16,722 5,031

722.8 18,131

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank Advances / Declines Advances Declines Unchanged

Chg (%) 5.1 5.1 2.4 3.2

(Pts) 2.5 0.5 0.9 0.9 BSE 1,873 952 108

(Close) $51.2 $9.8 $36.6 $30.1 NSE 1,156 316 55

News Analysis
Dabur Enters Sri Lanka; Sets up new beverage venture Areva T&D secures orders worth `40cr
Refer detailed news analysis on the following page

Net Inflows (September 26, 2011) ` cr Purch Sales FII MFs 1,250 457 2,257 420

Net (1,007) 37

MTD (1,176) (768)

YTD (1,984) 5,506

Volumes (` cr) BSE NSE 2,387 9,780

FII Derivatives (September 27, 2011) ` cr Index Futures Stock Futures Gainers / Losers Gainers Company DLF Jaiprakash Asso Tata Motors IVRCL LTD IFCI Price (`) 217 73 156 38 32 chg (%) 8.5 5.9 5.9 5.5 5.2 Company Pipavav Shipyard Sun TV Manappuram Fin. JSW Steel Glaxo. Consumer Losers Price (`) 78 276 52 611 2,290 chg (%) (4.4) (2.8) (2.1) (1.3) (0.8) Purch 7,437 6,573 Sales 6,181 6,140 Net 1,256 433 Open Interest 17,355 30,573

Please refer to important disclosures at the end of this report

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Market Outlook | India Research

Dabur Enters Sri Lanka; Sets up new beverage venture

Dabur India has forayed into the beverages category in Sri Lanka by setting up of an overseas subsidiary Dabur Lanka (Pvt.) Ltd. The company has signed an agreement with the Board of Investment of Sri Lanka to establish this venture. About the venture: Dabur will invest `70cr to set up a new export-oriented manufacturing facility for producing a range of fruit-based beverages in Gampaha, north of Colombo. According to the management, the new manufacturing facility will have a production capacity of 2.8 lakh cases of fruit-based beverages every month and become operational from August-September 2012. The company plans to set up the plant in over 50 acres of land and will employ 75 personnel in the early stage and will take the strength to 200 employees by 2013-14. Daburs management indicated that its fruit-based juices and beverages under the Ral brand have been reporting strong growth and to support the underlying demand of its products it is setting up this new facility. Dabur is the leader in the fruit juice category with 52% market share in India. In addition to the companys presence in Nepal and Bangladesh, a facility in Sri Lanka would aid in heightened strength of the company in SAARC region. The company also has operations in Dubai, Ras-al-Khaimah, Nigeria, Egypt and Turkey. We have not factored the venture in our revenue and earnings estimates and wait for further clarity. At the CMP, the stock is trading at 22.2x FY2013E EPS. We maintain our Accumulate view on the stock with a target price of `115.

Areva secures orders worth `40cr

Areva T&D (Areva) has won a contract from Reliance Power for turnkey design and construction of 220kV substation. The order valued at `40cr is for the proposed 350MW Doorsar Solar Power Plant in Rajasthan. This plant is Indias largest solar power project. The turnkey contract involves design and construction of the substation, including transformers, control, protection, monitoring systems and civil works of the plant. This order falls in the base-order category, and we expect the company to witness base/low value orders as a bigger portion of order inflows for the current quarter. This will categorically lead to a dip in order backlog growth, thereby raising concerns on future visibility. In addition, we believe the near-term outlook will be challenging ordering activity in the T&D space is likely to be muted given the overall malaise in the T&D space. The stock currently trades at rich valuations of 27.9x and 19.7x CY2011E and CY2012E EPS, respectively. Given fewer triggers, the stock seems to be fairly valued and upside from the current level seems limited. Hence, we continue to remain Neutral on the stock.

Economic and Political News

RBI issue revised draft norms for securitization of loans Core sector grows 3.5% in August Cellphone shipments dip 3% qoq in Apr11-Jun11, up 6% yoy Finance Ministry to monitor 10-15 large infrastructure project

Corporate News
JSW Steel to shut plant if iron ore supply does not improve Reliance Communications in advanced talks to sell tower unit stake Glenmark Pharmas US arm gets US FDA nod for migraine tablets GMR Infra bags `7,200cr highway project
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

September 28, 2011

Market Outlook | India Research

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September 28, 2011