Market Outlook

India Research
September 6, 2011

Dealers Diary
Despite closing in deep red, Indian equity benchmarks recovered more than half of their losses in the second half of the trade, outperforming global peers. A weak opening pulled the indices downwards in the opening trade. The market extended losses in morning trade. Volatility continued in early afternoon trade. The market once again trimmed losses after sliding to a fresh intraday low in afternoon trade. Volatility ruled the roost as the key benchmark indices weakened once again after staging a strong intraday rebound in midafternoon trade. The Sensex and Nifty closed with losses of 0.6% and 0.5%, respectively. The mid-cap and small-cap indices logged gains of 0.5% and 0.2%, respectively. Among the front runners, Hero MotoCorp, JP Associates, Bajaj Auto, Jindal Steel and Tata Steel gained 1-5%, while Wipro, ONGC, Infosys, RIL and Sterlite lost 2-4%. Among mid caps, BF Utilities, Alfa Laval, Sujana Towers, SpiceJet and Amtek Auto gained 7-17%, while KEC Intl., KGN Inds, Polaris Soft, Bhushan Steel and Bajaj Electricals lost 4-5%.

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 (%) (0.6) (0.5) 0.5 0.2 (0.7) (0.6) 0.4 1.3 0.2 (1.8) (1.4) Chg (%) (2.2) (2.6) (3.6) (1.9) (3.0) (2.5) (2.0)

(Pts) (22.8) 32.2 12.7 (39.9) (42.7) 111.2 (151.1) (72.0) (Pts) (65.7) (189.5) (166.3) (69.9) (49.5)

(Close) 5,017 6,357 7,146 5,990 7,623 8,683 8,383 4,924 (Close) 2,480 5,103 8,784 2,773 2,479

(108.1) 16,713

40.7 10,990 22.8 12,452

(253.3) 11,240

Markets Today
The trend deciding level for the day is 16,678/5,004 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,79516,877/5,0445,070 levels. However, if NIFTY trades below 16,678/5,004 levels for the first half-an-hour of trade then it may correct up to 16,59716,480/4,9784,938 levels.
Indices SENSEX NIFTY S2 16,480 4,938 S1 16,597 4,978 R1 16,795 5,044 R2 16,877 5,070

(596.5) 19,616

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

Chg (%) (2.7) (1.2) (3.6) (4.2)

(Pts) (1.4) (0.1) (1.4) (1.4) BSE 1,481 1,330 117

(Close) $49.6 $9.7 $38.0 $32.0 NSE 729 695 65

News Analysis
BHEL secures contract from NMDC worth `1,395cr Auto numbers: Ashok Leyland August 2011 NCC bags orders worth `629cr
Refer detailed news analysis on the following page

Net Inflows (September 2, 2011) ` cr Purch Sales FII MFs 4,673 378 3,495 647

Net 1,178 (269)

MTD 1,178 (269)

YTD 370 6,006

Volumes (` cr) BSE NSE 2,550 11,342

FII Derivatives (September 5, 2011) ` cr Index Futures Stock Futures Gainers / Losers Gainers Company Amtek Auto NCC Tech Mahindra Jai Corp IVRCL Price (`) 139 62 680 85 38 chg (%) 7.5 7.4 6.8 6.5 6.2 Company Bhushan Steel Patni Computer Wipro Dabur India Hindustan Zinc Losers Price (`) 340 276 322 108 127 chg (%) (4.6) (4.2) (3.7) (3.5) (3.5)
1

Purch 2,418 1,560

Sales 2,984 1,211

Net (566) 350

Open Interest 15,655 27,686

Please refer to important disclosures at the end of this report

Sebi Registration No: INB 010996539

Market Outlook | India Research

BHEL secures contract from NMDC worth `1,395cr

BHEL has won a contract from NMDC for setting up raw-material handling system (RMHS) package for its 3mn tonne per annum steel plant at Nagarnar, Chhattisgarh, on a turnkey basis. The scope of the project includes EPC of the complete RMHS, from receipt of various raw materials (including coal and iron ore), wagon tippling to crushing. This order provides fractional support in the challenging environment where order wins have been dismal for players such as BHEL. With no order wins in the BTG space since the last quarter, it is evident that the power sector is yet to witness meaningful recovery. Hence, the attractive valuation of 12.9x FY2012E EPS and 10.9x FY2013E EPS is largely overshadowed on account of ongoing concerns on the power sector. In addition, the FPO element will remain an overhang in the near term, thereby providing a limited upside. Given the long-term structural concerns, we continue to remain Neutral on the stock.

Auto numbers: Ashok Leyland August 2011

Ashok Leyland (ALL) reported weak set of volume data for August 2011, registering a decline of 3.5% yoy (7.9% mom) to 7,218 units. Total volume performance was lower than expected and can be attributed to weakness in the overall product portfolio. M&HCV passenger vehicle volumes declined by 6.9% yoy (9.9% mom), while M&HCV goods vehicle volumes fell by 2.6% yoy (7.4% mom). Overall, domestic M&HCV vehicle volumes declined by 8% yoy (8.9% mom). However, exports continued their strong momentum and registered strong growth of 35.5% yoy (flat qoq) during the month. At `26, ALL is trading at 11.4x FY2012E and 9.2x FY2013E earnings. We maintain our Buy view on the stock with a target price of `31.

NCC bags orders worth `629cr

Nagarjuna Construction Company (NCC) has bagged orders aggregating to `629cr in various segments. The first order worth `399cr is from the Water Resources Division Raigarh, Chhattisgarh, for the construction of Saradih Barrage with vertical lift gates. The second order worth `159cr from Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL), Mumbai, involves turnkey contracts for Single Phasing Scheme. The last order valued at `71cr is secured from the Bharat Coking Coal Ltd., Dhanbad, for removal of over burden, extraction and transportation of coal. Construction period for these orders is 12-24 months. With these orders, the companys outstanding order book stands at ~`17,000cr (3.4x FY2011 revenue), which provides good revenue visibility. We have valued NCC on an SOTP basis with a target price of `82/share by assigning 8x FY2013E earnings (standalone). The companys real estate venture has been valued on P/B basis and its BOT assets have been valued on DCF basis. Our target price implies an upside of ~33.2% from current levels. Hence, we maintain our Buy view on the stock with a target price of `82.

September 6, 2011

Market Outlook | India Research

Economic and Political News

Industry jittery over new land law India asks China to open up IT sector to bridge trade gap Moody's issues positive outlook on India local-currency debt Business mood may perk up in 2QFY2012 with higher sales and exports: CII Survey

Corporate News
ONGC likely to launch US$2.5bn FPO on September 20 Expect no cut, delay in outsourcing contracts: TCS TCS readies US$500mn war chest to buy Lufthansa infotech arm HDFC launches own version of fixed-rate home loans
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

September 6, 2011

Market Outlook | India Research

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

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Ratings (Returns):

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September 6, 2011