Market Outlook

India Research
August 17, 2011

Dealers Diary
The key benchmark indices opened in green following positive global market cues and continued to trade in a range-bound manner in morning trade. Soon the market pared some of its gains on reports that domestic inflation continues to rule at elevated levels. This led to concerns among investors that the central bank may persist with its monetary tightening policy to contain inflation. The indices continued to slide downwards and soon traded in red in the mid-afternoon session as European markets opened in red. The market slumped to a fresh intraday low before recovering slightly and closed the trading session close to the low levels of the day. The Sensex and Nifty fell for the third straight session and closed with losses of 0.7% each. The mid-cap and small-cap indices underperformed the broader market and closed lower by 1.8% and 2.1%, respectively. Among the front runners, TCS, BHEL, Bharti Airtel, ITC and Infosys gained 03%, while Jaiprakash Associates, DLF, Hindalco, HDFC and Cipla lost 28%. Among mid caps, Gujarat Fluorochemicals, Jubiliant Foodworks, Allcargo Global, Dish TV and Wabco TVS gained 39%, while IVRCL, Sujana Towers, SpiceJet, NCC and HDIL lost 1118%.

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) (0.7) (1.8) (2.1) (0.9) (1.0) (1.2) (0.9) (2.0) (1.0) 0.9 Chg (%) (0.7) (1.2) 0.1 0.2 (0.2) (1.5) (0.7) Chg (%) (1.8) (1.9) (4.6) (3.3)

(Pts) (37.2) (116.4) (160.0) (54.1) (81.4) (73.2) (87.0) 45.3 (Pts) (77.0) (31.8) 7.1 21.0 (48.0) (41.7) (18.6) (Pts) (1.0) (0.2) (2.0) (1.1)

(Close) 5,036 6,397 7,461 5,994 7,953 8,461 8,330 5,050 (Close) 11,406 2,523 5,358 9,107 20,212 2,833 2,608 (Close) $53.2 $10.3 $41.1 $32.5

(108.7) 16,731

(139.5) 11,497 (240.6) 12,060

Markets Today
The trend deciding level for the day is 16,813/5,061 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,953 17,175/5,107 5,178 levels. However, if NIFTY trades below 16,813/5,061 levels for the first half-an-hour of trade then it may correct up to 16,591 16,451/4,990 4,944 levels.
Indices SENSEX NIFTY S2 16,451 4,944 S1 16,591 4,990 R1 16,953 5,107 R2 17,175 5,178

News Analysis
WPI inflation for July 2011 eases to 9.22% Tata Motors reports 6% yoy decline in global sales in July 2011
Refer detailed news analysis on the following page

Advances / Declines Advances Declines Unchanged

BSE 849 1,984 107

NSE 327 1,143 31

Net Inflows (August 12, 2011) ` cr Purch FII MFs 2,381 656

Sales 2,785 460

Net (404) 196

MTD (5,615) 1,564

YTD 3,118 5,342

Volumes (` cr) BSE NSE 2,109 9,590

FII Derivatives (August 16, 2011) ` cr Index Futures Stock Futures Gainers / Losers Gainers Company Jubiliant Food. Dish TV India TCS BHEL Financial Tech. Price (`) 907 85 974 1,768 735 chg (%) 6.5 3.2 2.4 2.3 2.2 Company IVRCL NCC HDIL Lanco Infra. Punj Lloyd Losers Price (`) 40 54 104 17 56 chg (%) (18.0) (13.8) (11.7) (10.7) (10.7) Sebi Registration No: INB 010996539
1

Purch 3,084 2,346

Sales 2,285 1,832

Net 799 514

Open Interest 14,796 29,175

Please refer to important disclosures at the end of this report

Market Outlook | India Research

WPI inflation for July 2011 eases to 9.22%

Wholesale price-based inflation for July 2011 eased a bit to 9.22% from 9.44% in June 2011. Headline inflation has stubbornly remained above the 9% mark for eight consecutive months now. However, the latest headline inflation print was in-line with the median forecast (9.22%) of Bloombergs survey of economists. Core (non-food manufacturing) inflation which the RBI tracks closely rose at a faster pace of 7.5% as compared to 7.3% in June 2011. Inflation for May 2011 was revised upwards by 50bp to 9.56%. Primary articles inflation eased off considerably to its lowest level in the last 21 months. Driven by slower rise in food and non-food articles, primary articles inflation eased off to 11.3% from 12.2% in June 2011. However, inflation for minerals continued to be high at 25.0%. Fuel and power inflation also eased a bit, from 12.8% in June 2011 to 12.0%, on the back of lower rise in mineral oil prices. Electricity inflation continued to show a negative tick for the third straight month. Manufactured products, which have a weightage of ~65% in overall WPI inflation, continued to rise at an accelerated pace of 7.5%. Manufacturing articles inflation was driven by textiles (12.9%), basic metals (10.1%) and chemicals (7.9%). The spread between primary articles and manufactured products inflation, which was as high as 13.1% in January 2011, narrowed considerably to 3.8% in July 2011 indicating that bulk of pass-through of raw-material cost pressures has already taken place, in our view. Inflationary pressures are likely to ease in the coming months on falling global commodity and energy prices due to sovereign debt crisis concerns in Eurozone countries, concerns of double-dip recession in the US and expected overall slowdown in global growth.

Tata Motors reports a 6% yoy decline in global sales in July 2011

Tata Motors reported a 6% yoy (5% mom) decline in global sales volume in July 2011 to 85,392 units on account of a steep 24% yoy decline in passenger vehicle sales. Global commercial vehicles (including Tata Daewoo and Tata Hispano Carrocera range), on the other hand, witnessed healthy 16% yoy (4.3% mom) volume growth to 47,238 units. Global passenger vehicle volumes stood at 38,154 units, registering a decline of 14.4% mom, primarily on account of a decline in domestic passenger vehicle volumes. Jaguar and Land Rover (JLR) posted marginally lower-than-expected 1.4% yoy (6.1% mom) decline in volumes to 19,119 units. Jaguar sales registered an in-line 23% yoy decline (up 8.3% mom) to 4,372 units, while Land Rover sales came in lower than expected, posting modest 7.6% yoy (down 9.6% sequentially) growth to 14,747 units. Volume decline at JLR can be attributed to moderation in demand in the key markets of US, UK and Europe; however, demand in China and Russia continues to remain strong. We expect JLR sales to gain momentum going ahead, with the launch of highly anticipated Evoque in September 2011 and the new Jaguar XF. We maintain our Accumulate rating on the stock with an SOTP target price of `917.

August 17, 2011

Market Outlook | India Research

Economic and Political News

Global food prices near three-year highs in July 2011: World Bank August inflation to be close to double digits: Government Good monsoon and RBI policy to ease inflation further: Finance Minister

Corporate News
OIL signs MoU with HPCL to jointly pursue business opportunities ONGC to file prospectus for ~`12,000cr FPO by early next month Muthoot Finance to raise `1,000cr via NCD issue UTV seeks CCI approval for merger with Walt Disney NIIT Technologies acquires Spanish firm Proyecta Sistemas de Informacion SA
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

August 17, 2011

Market Outlook | India Research

Research Team Tel: 022-3935 7800 E-mail: research@angelbroking.com Website: www.angelbroking.com

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August 17, 2011