Market Outlook

India Research
March 1, 2012
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 (%) (Pts) (Close)

Dealers Diary
Indian markets are expected to open flat with mixed cues from markets worldwide. SGX nifty is trading marginally lower in the initial trade. The US markets showed a lack of direction for much of the trading session on Wednesday eventually closing firmly in the red. The markets ended lower partly due to profit taking, with traders cashing in on recent strength. Selling pressure was also generated as the Fed chief refrained from discussing further quantitative easing despite acknowledging that the pace of the U.S. economic expansion has been uneven and modest by historical standards. Most of the European markets too finished in the red on Wednesday. Meanwhile Indian shares pared early gains on Wednesday, as GDP for 3QFY2012 grew at a low 6.1% yoy (slowest pace in almost three years). The markets would be tracking the import export data due to be released today.

0.1 0.2 1.1 0.6 0.3 1.5 (0.6) 0.0 1.5 2.5 0.3
Chg (%)

21.6 17,753 9.7 69.4 42.1 21.8 115.2 (0.4) 214.6 17.6
(Pts)

5,385 6,387 6,860 6,336 7,764 9,995 8,712 6,161

(Close)

(71.0) 11,974 172.2 12,052

(0.4) (0.7) (1.0) 0.0 0.5 0.8 (1.0)

(53.1) 12,952 (19.9) (56.4) 0.7 24.3 (23.4) 2,967 5,872 9,723 2,994 2,428

Markets Today
The trend deciding level for the day is 17,811 / 5,399 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,943 18,134 / 5,445 5,505 levels. However, if NIFTY trades below 17,811 / 5,399 levels for the first half-an-hour of trade then it may correct up to 17,620 17,487 / 5,339 5,292 levels.
Indices SENSEX NIFTY S2 17,487 5,292 S1 17,620 5,339 PIVOT 17,811 5,399 R1 17,943 5,445 R2 18,134 5,505

111.4 21,680

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank

Chg (%)

(Pts)

(Close)

(1.4) (0.1) (1.0) (1.3)

(0.8) (0.0) (0.4) (0.5)

$57.7 $11.0 $36.3 $34.4

News Analysis

ECB allots 530bn (US$713bn) to banks in LTRO-2 ACC to set up a new plant in Chhattisgarh BGR Energy emerged as L1 in NTPCs 11x660 MW bulk tender Result Review: ITD Cementation Result Preview: Mphasis

Advances / Declines Advances Declines Unchanged

BSE

NSE

1,593 1,295 137

843 602 66

Refer detailed news analysis on the following page

Net Inflows (February 28, 2012)

` cr FII MFs Purch 2,955 567 Sales 2,099 1,047 Net 856 (480) MTD 24,567 (2,346) YTD 35,647 (4,201)

Volumes (` cr) BSE NSE

3,515 15,748

FII Derivatives (February 29, 2012)

` cr
Index Futures Stock Futures

Purch 1,709 1,886

Sales 1,866 2,161

Net (157) (275)

Open Interest 13,468 28,238

Gainers / Losers
Gainers Company
Bajaj Finserv Pantaloon Retl Hindustan Copp Andhra Bank JSW Ispat

Losers Company
Gitanjali Gems India Infoline United Spirits Shriram Trans L&T

Price (`)
645 189 294 131 15

chg (%)
10.7 8.7 8.6 8.2 6.0

Price (`)
384 69 572 550 1,308

chg (%)
(4.5) (3.6) (3.4) (3.1) (2.9)

Please refer to important disclosures at the end of this report

Sebi Registration No: INB 010996539

Market Outlook | India Research

ECB allots 530bn (US$713bn) to banks in LTRO-2

European Central Bank (ECB) has allotted 530bn (US$713bn) in three-year loans to Eurozone banks in its second three-year, long-term refinance operation. The interest rate for the loan amount is 1% with tenure of three years. The LTRO-2 allotment of 530bn to 800 banks was slightly above the 489bn (US$658bn) handed out to 523 banks in ECBs first offering on December 21, 2011. The LTRO-2, which is expected to be the last three-year, long-term refinancing operation, will help quell fears of a potential near-term funding crisis for Eurozone banks.

ACC to set up a new plant in Chhattisgarh

ACC has decided to set up a new clinker production facility of 2.79mtpa and allied grinding facility at Jamul in Chhattisgarh and will eventually phase out the existing clinkering and grinding lines at the same place. The company, which currently has total capacity of 30.1mtpa, is also planning to set up additional decentralized grinding stations to use clinker produced at Jamul. The project is scheduled for completion in CY2015. We remain Neutral on the stock, as it trades at EV/tonne of US$136 on CY2012E capacity.

BGR Energy emerged as L1 in NTPCs 11x660 MW bulk tender

BGR Energy (BGR) has emerged as L1 in the boilers category of NTPCs retendering of 11x660 MW bulk tender. The tender was for the supply of 660 MW supercritical boilers for five projects of NTPC. As per the tender conditions of NTPC, BGR would be awarded contract for seven boilers and the order value is ~`6,500cr (@`1.41cr per MW). Similarly, BHEL and L&T have emerged as L2 and L3, respectively. After securing orders for turbine generators in the previous bulk tender by NTPC in September 2011, this is a further positive development for BGR, which desperately needs big orders to lend revenue visibility to its manufacturing venture. With its 4GW BTG manufacturing unit scheduled to be commissioned in FY2013/14, we believe the order will start contributing to its revenue from FY2014. Notably, the order seems to have been bagged on aggressive terms the bid is ~14% lower compared to the previous bulk tender bid by Doosan (`1.64cr per MW), thus implying a tight rope walk for the company on the margin front. We await more clarity on the revenue structure, the overall profitability and other details of this order. We remain Neutral on the stock.

March 1, 2012

Market Outlook | India Research

Result Review: 4QCY2011

ITD Cementation
For 4QCY2011, ITD Cementation reported 11.8% qoq growth in its top line to `327cr (`292cr) which was above our estimate of `309cr. The company's operating margin expanded by 209bp qoq to 13.5% mainly because of lower raw-material cost as a percentage of revenue. Also, there was a tax credit of `5cr during the quarter, which added to the company's profit. Profit for the quarter soared by 664.2% qoq to `12cr (`2cr) which was much above our expectation of `1cr. For CY2011, the company reported a 21.0% increase in its revenue to `1,297cr (`1,072cr) marginally above our expectation of `1280cr. Operating margin for CY2011 improved by 145bp to 10.5%. Other income for the year declined by 45.8% to `13cr. The companys profit for the year witnessed a substantial jump of 140.3% to `23cr (`9cr) way above our estimate of `11cr. We remain positive on the stock and will shortly come up with an update on the company with revised target price.

Result Preview: 1QFY2012

Mphasis
Mphasis is slated to announce its 1QFY2012 results. We expect the company to record revenue of US$276mn, almost flat qoq. In INR terms, the companys revenue is expected to come in at `1,400cr, up 6.5% qoq. The companys EBITDA margin is expected to increase by 360bp qoq to 21.5%, largely due to INR depreciation. PAT is expected to come in at `214cr, up 17.1%. In our view, there is a good possibility that the company may use its cash pile (~`2,000cr) to announce a buyback. We continue to maintain our Accumulate rating on the stock.

Economic and Political News

Govt to auction 4G spectrum this year: Sibal Govt. to increase health outlay to 2.5% of GDP Cabinet to consider cash-rich PSUs Buyback plan today

Corporate News

Rcom pays $1.18bn to redeem outstanding FCCBs Marutis new union to put wage demand in 15 days NTPC to supply 250MW power to Bangaladesh

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

March 1, 2012

Market Outlook | India Research

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E-mail: research@angelbroking.com

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March 1, 2012