Market Outlook

India Research
September 30, 2011

Dealers Diary
The market edged lower in early trade. A bout of volatility was witnessed in mid-morning trade as the key benchmark indices trimmed losses after hitting fresh intraday lows. The market gradually ascended and bypassed the base line by early afternoon trade on the back of positivity erected in the market. Indices further strengthened on the back of strong opening of European bourses. Media reports about German parliaments approval on measures to enhance the lending power and flexibility of the Eurozone bailout fund offered strong hopes. The overall market breadth turned positive and the bourses closed on an upbeat note. The Sensex and Nifty gained 1.5% and 1.4%, respectively. However, the mid-cap and small-cap indices lost 0.2% and 0.1%, respectively. Among the front runners, JP Associates, Tata Motors, Infosys, HDFC Bank and M&M gained 3-6%, while L&T, Coal India, Sterlite, SBI and Sun Pharma lost 1-2%. Among mid caps, HT Media, Bombay Dyeing, India Cements, Alok Inds. and KGN Inds. gained 5-6%, while SpiceJet, Jubilant Foods, Hathway Cable, Thermax and Shree Global Tradefin lost 5-6%.

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 (%) 1.5 1.4 (0.2) (0.1) (0.1) 0.4 1.5 2.4 0.3 1.5 2.0 Chg (%) 1.3 (0.4) (0.4) 1.0 (0.7) 0.3 (1.1)

(Pts) 69.6 (9.7) (7.3) (7.4) 27.5 198.4 125.5 106.1 (Pts) (10.8) (20.8) 85.6 7.0 (26.7)

(Close) 5,015 6,165 6,942 5,903 7,526 8,651 8,551 5,339 (Close) 2,481 5,197 8,701 2,708 2,365

252.1 16,698

159.4 11,055 31.9 11,299

143.1 11,154

Markets Today
The trend deciding level for the day is 16,590/ 4,985 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,864 17,030/ 5,064 5,113 levels. However, if NIFTY trades below 16,590/ 4,985 levels for the first half-an-hour of trade then it may correct up to 16,424 16,151/ 4,936 4,857 levels.
Indices SENSEX NIFTY S2 16,151 4,857 S1 16,424 4,936 R1 16,864 5,064 R2 17,030 5,113

(119.5) 18,011

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank Advances / Declines Advances Declines Unchanged Volumes (` cr)

Chg (%) 1.8 1.7 3.5 4.5

(Pts) 0.9 0.2 1.3 1.3 BSE 1,247 1,538 103

(Close) $51.8 $9.6 $36.9 $30.7 NSE 621 805 55

News Analysis
German parliament passes expanded bailout fund Ashok Leyland bags exports order worth US$36.6mn
Refer detailed news analysis on the following page

Net Inflows (September 28, 2011) ` cr Purch Sales FII MFs 2,744 319 2,493 476

Net 252 (157)

MTD (835) (731)

YTD (1,643) 5,544

FII Derivatives (September 29, 2011) ` cr Index Futures Stock Futures Gainers / Losers Gainers Company Jaiprakash Asso Container Corp India Cements Adani Power Torrent Power Price (`) 74 966 73 87 226 chg (%) 6.3 6.0 5.0 4.6 4.3 Company Sun TV Network Jubl. Food Thermax ABB Pantaloon Retl Losers Price (`) 244 825 461 705 207 chg (%) (7.0) (5.2) (5.1) (4.5) (4.3) Purch 5,635 7,130 Sales 6,118 6,544 Net (484) 585 Open Interest 12,755 26,256

BSE NSE

2,272 13,122

Please refer to important disclosures at the end of this report

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Market Outlook | India Research

German parliament passes expanded bailout fund

German lawmakers on Thursday approved an expansion of the euro-area rescue funds firepower, freeing the way for European officials to focus on what next steps may be needed to stem the debt crisis. Consequently, the size of the European Financial Stability Fund (EFSF) stands enhanced to 440bn (US$593bn) from 250bn earlier. The lower house of the German parliament passed the measure with 523 votes in favour and 85 against, granting the fund powers to buy bonds in secondary markets, enabling bank recapitalisations and offering precautionary credit lines. It raises Germanys guarantees to 211bn (US$287bn) from 123bn. The measure will be put to the upper house of the parliament on Friday, where it is expected to be passed.

Ashok Leyland bags exports order worth US$36.6mn

Ashok Leyland (ALL) has bagged an order worth US$36.6mn from the Government of Tanzania to supply 723 trucks, buses and special application vehicles to be executed in the current fiscal year. With the new order, ALL has increased its global footprint and is aggressively expanding its network in the African market. The company has network offices in Nigeria and Ghana in the West; Malawi and Mozambique in the South; and Kenya and Tanzania in the East, apart from offices in South Africa and Egypt. ALLs exports performance, which is witnessing strong growth traction, will be further boosted by the new order. ALL is targeting volume growth of over 20% yoy or ~12,000 units in the exports market for FY2012E and has already achieved volumes of 4,649 units YTD in FY2012. We maintain our Buy rating on the stock with a target price of `31.

Economic and Political News

Government to borrow `53kcr more, shocks debt markets New mining law to give `10,000cr to 60 tribal districts 2-3% interest relief for exporters likely

Corporate News
Power Grid commissions transmission lines for Mundra UMPP Reliance Broadcast Network raises `1,000cr from QIBs Coal Ministry asks Neyveli Lignite Corp. to seek board nod for further disinvestment CNG prices to rise by `2/kg this week
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

September 30, 2011

Market Outlook | India Research

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September 30, 2011