Page 1

SPARK INDIA DAILY

11 March 2015

Page 1

DEALER COMMENTARY

Key benchmark indices edged lower for a second consecutive session &

closed at lowest level in nearly 3-1/2 weeks. Market breadth was negative.

Market participants remained cautious ahead of IIP & CPI data on Thursday.

Financials, energy and select metal & FMCG shares were major draggers

today, while telecom stocks logged strong gains. Among BSE sectoral

indices, realty fell the most (1.83%), followed by oil & gas (0.78%), power

(0.63%) and banking (0.49%). Consumer durables index was the star-

performer (up 1.2%), followed by TECk (0.78%), metal (0.58%) and

infrastructure (0.51%). Currency factor was at play with INR, like most Asian

currencies weakened against USD. USD hit multi-year highs against the euro

and yen on growing chance of Fed hiking interest rates by mid-year. India VIX

was down 1.8% at 15.5325. About 61 stocks registered a fresh 52-week high

while 30 stocks fell to a fresh 52-week low.

WHAT’S INSIDE

MCX Ltd – SELL (TP of Rs. 1,080)

Exchange and Currency Performance

Spark Focus Stocks

Technical Indicators

Spark Model Portfolio

Today’s News & Announcements

Find Spark Research on Bloomberg (SPAK <go>),

Thomson First Call, Reuters Knowledge and Factset

0

500

1000

1500

2000

2500

40,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Ind

exed

Single stock futures Stock index futures Stock options Stock index options

30,000

Impact of STT on NSE volumes (First chart) and Turnover (Second chart)

Source: Company, Spark Capital

In 2008, STT on options contracts were reduced by changing the tax base from notional value of option

contract to option premium. No. of option contracts on NSE increased significantly (186%) in 2008 and

has been on a exponential growth since then, way higher than future growth. Today, India has one of the

highest index option trading

STT was introduced for both cash and derivative

markets for stock exchanges in 2004. Futures were

charged higher than the cash, to encourage investors

to hold stocks for long term. Options volumes were

weak till 2008 due to higher costs (Option cost + STT)

as taxes on both futures and options were charged on

notional principal

STT got

introduced

in Oct.2004

Index Options volume

increased ~300% in 2008 with

change in STT in options

Page 2 Page 2

SPARK INDIA DAILY

11 March 2015

Today 1d 5d 1m 3m 6m 12m Today 1d 5d 1m 3m 6m 12m

US (Dow Jones) 17,663 -1.8 -3.0 -1.1 0.4 3.6 8.0 -3.4 11.4 Dollar Index# 98.7 0.1 2.9 3.9 11.3 17.1 23.8 -0.1 25.1

UK (FTSE100) 6,703 -2.5 -2.7 -1.7 3.7 -1.4 0.3 -3.9 10.4 Pound 1.5 0.0 -1.3 -1.1 -4.2 -7.3 -9.3 -12.4 0.8

Japan (Nikkiei 225) 18,758 0.5 0.3 6.3 8.7 17.9 23.2 -1.2 35.1 Yen 121.4 -0.2 -1.4 -0.8 -2.3 -11.8 -15.2 -0.5 20.4

Germany (DAX) 11,500 -0.7 2.0 7.0 16.6 18.7 23.6 -0.9 37.6 Euro 1.1 -0.2 -3.6 -5.8 -14.0 -17.4 -23.0 -23.7 0.1

Brazil (IBOV) 48,293 -1.8 -5.9 0.1 -3.1 -17.2 5.7 -22.5 7.5 Real 3.1 0.7 -5.5 -8.7 -15.6 -26.2 -24.2 -2.2 42.1

Russia (Micex) 1,665 -3.7 -6.6 -5.6 14.5 14.9 27.3 -9.9 40.8 Ruble 62.5 -0.1 -1.1 4.3 -10.9 -40.0 -41.6 -21.1 86.3

India (Sensex) 28,710 -0.5 -2.5 0.6 4.0 6.3 31.5 -4.4 33.1 Rupee 62.8 -0.4 -1.4 -0.9 -1.2 -2.9 -3.1 -1.7 7.6

China (SHCOMP) 3,309 0.7 0.9 4.8 13.1 43.1 65.4 -2.9 67.6 Renminbi 6.3 0.0 0.1 -0.3 -1.2 -2.1 -2.0 -0.2 2.5

South Africa (Jalsh) 52,089 -1.0 -2.0 0.0 8.3 1.7 9.4 -2.8 13.1 Rand 12.4 0.0 -4.5 -4.4 -5.9 -11.3 -12.2 0.0 20.4

HK (H S I) 23,848 -0.2 -2.5 -1.9 2.3 -3.3 7.1 -6.0 12.8 HK Dollar 7.8 0.0 -0.1 -0.1 -0.1 -0.2 0.0 -0.1 0.2

Korea (Kospi) 1,978 -0.3 -1.0 1.7 3.2 -2.8 0.7 -5.5 5.4 Won 1,128.6 -0.5 -2.7 -2.8 -2.5 -8.2 -5.6 -0.1 11.9

Singapore (Straits) 3,388 -0.3 -0.8 -1.6 2.1 1.2 8.3 -2.0 11.0 SG Dollar 1.4 0.3 -1.3 -1.8 -5.3 -8.9 -8.6 -0.3 12.1

Malaysia (KLCI) 1,783 -0.4 -2.4 -0.9 2.2 -4.5 -2.5 -6.0 6.6 Ringgit 3.7 -0.3 -1.8 -3.1 -6.1 -14.0 -11.7 -0.1 18.3

Indonesia (Jakarta) 5,430 -0.6 -0.3 1.8 5.4 5.8 15.4 -1.5 16.5 Ind Rupiah 13,190.0 -0.7 -1.5 -3.5 -6.4 -10.3 -13.6 -0.1 17.2

Commodities Commodities

Brent ($/bbl) 56.7 0.5 -6.4 3.7 -11.0 -42.2 -47.8 -51.0 25.4 Indonesian Coal ($/MT) 62.9 NA NA -1.4 -4.2 -10.5 -21.8 -18.3 0.0

WTI ($/bbl) 48.9 1.2 -5.2 -1.8 -19.7 -46.1 -46.3 -50.9 10.1 S Africa Coal ($/MT) 61.0 NA -3.7 -7.6 -6.9 -16.7 -26.4 NA NA

Copper ($/MT) 5,789 -1.8 -0.9 3.3 -10.6 -16.0 -13.1 -19.4 7.4 Australia Coal ($/MT) 61.8 NA -1.0 -0.6 -4.4 -11.9 -25.4 NA NA

Zinc ($/MT) 2,001 -1.1 -0.4 -4.8 -7.6 -12.9 -2.7 -17.3 3.4 Gold Spot $/Oz 1,163 0.1 -3.4 -5.7 -4.8 -6.2 -13.7 -16.4 2.8

Aluminium ($/MT) 1,746 -1.1 -2.0 -3.8 -9.9 -13.6 0.8 -17.4 4.7 GOLD INDEX (Rs./10g) 25,933.0 -0.8 -3.0 -5.0 -3.6 -5.0 -13.8 -14.7 2.4

Iron Ore ($/MT) 61 -1.1 -4.2 -4.2 -13.0 -25.3 -42.1 -46.2 0.0 Silver Spot $/Oz 15.7 -0.4 -3.8 -7.2 -7.7 -16.0 -25.4 -27.4 9.9

Lead ($/MT) 1,809 -1.6 4.1 -0.5 -9.7 -13.8 -12.0 -20.3 4.9 MCX Silver (Rs./KG) 35,610.0 -1.0 -4.1 -4.9 -5.4 -13.9 -21.8 -23.2 6.0

Currency

Currency Performance (%)

Performance (%) Performance (%)

Asian Asian

Chg.

from

52WH

Chg.

from

52WL

Developed Developed

BRICS BRICS

Global Indices

Equity Performance (%) Chg.

from

52WH

Chg.

from

52WL

Exchange and Currency Performance

Page 3 Page 3

SPARK INDIA DAILY

11 March 2015

101 93 107 97 125 107

38 35 30 36 53

35

101 99 94 99

154

114

-

50

100

150

200

250

300

350

1M

avg

10-M

ar

9-M

ar

5-M

ar

4-M

ar

3-M

ar

Rs. b

n

FII DII Others

NSE / BSE Category wise turnover

Last 5 Day FII Buy FII Sell Net DII Buy DII Sell Net

10-Mar-15 42.9 50.4 -7.5 18.7 15.8 2.9

9-Mar-15 57.5 49.1 8.4 14.9 15.2 -0.4

5-Mar-15 49.0 48.2 0.8 17.0 19.0 -1.9

4-Mar-15 76.4 48.6 27.9 26.4 26.2 0.2

3-Mar-15 57.3 49.6 7.7 15.7 18.8 -3.0

Market Activity FII & DII - Provisional (INR Bn)

Particulars Today 1D 1M 3M 6M 12M

Reverse Repo 24 12 53 15 107 28

Repo 167 70 106 118 43 320

MSF - 19 4 11 2 93

Net liquidity (143) (76) (56) (113) 63 (385)

Change in BPS

NSE MIBOR 7.51 - (34) (59) (53) (70)

1M CP 9.19 9 84 78 38 (121)

3M CP 8.95 - (10) 46 (9) (121)

6M CP 8.94 (1) (14) 18 (37) (117)

3M CD 8.57 10 (13) 27 (14) (119)

6M CD 8.57 10 (13) 11 (38) (114)

12M CD 8.52 4 (23) (4) (57) (119)

Change in BPS

India 10 yr 7.75 0 2 (12) (76) (99)

US 10 yr 2.13 0 11 (3) (42) (64)

Spread (India 10Y-US10Y) 562

India 10YR AAA corp 8.36 (0) 4 (20) (99) (139)

Spread (India 10Y-AAA10Y) 61

91D T.Bills 8.23 (17) (4) - (38) (92)

1Y T.Bills 7.98 9 (2) (26) (69) (101)

Call rate 7.31 (17) (29) (70) (51) (84)

Change in BPS

LIBOR 0.17 (9) (19) (46) (68) (147)

MIFOR 8.07 (19) 22 49 157 148

OIS 8.08 (15) 15 40 80 101

12m OIS fw d 7.65 1 (2) (11) (82)

Money Market Rates

Liquidity (Rs. Bn)

LIBOR, MIFOR

Bond Market

Bulk Deals (INR Mn)

Date Script Client Type Qty Price

10/03/15 ADVANTA UPL Limited B 540,000 425.00

10/03/15 ADVANTA ITF Mauritius S 550,000 425.04

10/03/15 APLAPOLLO Emblem FII S 200,000 365.15

10/03/15 APLAPOLLO HDFC Mutual Fund B 196,000 365.05

10/03/15 MOTILALOFS HDFCMFACMIPLONGTERMPLAN S 2,406,000 292.00

10/03/15 MOTILALOFS Franklin Templeton Investment Funds B 2,000,000 292.00

10/03/15 Sintex Industries Ltd. Orange Mauritius Investments Limited S 2,040,239 113.17

10/03/15 Winsome Dmnd & Jwllry Bridge India Fund S 550,000 0.41

10/03/15 Zensar Technologies - Ganesh Natarajan S 253,000 668.59

Exchange and Currency Performance

Rank Company Delivery % 30D Del. % Price Chg

1 ULTRATECH CEMENT LTD 77.1 61.7 -1.6%

2 HCL TECHNOLOGIES LTD 76.3 63.5 -1.0%

3 HOUSING DEVELOPMENT FINANCE 75.7 64.8 -4.1%

4 HERO MOTOCORP LTD 72.7 65.3 0.7%

5 BHARAT PETROLEUM CORP LTD 69.7 48.1 0.0%

6 INFOSYS LTD 69.3 66.0 0.4%

7 LUPIN LTD 68.1 49.0 1.5%

8 NMDC LTD 68.0 52.8 1.6%

9 TECH MAHINDRA LTD 68.0 60.5 1.0%

10 OIL & NATURAL GAS CORP LTD 66.6 55.5 -0.5%

Nifty Top 10 Deliveries

Page 4 Page 4

SPARK INDIA DAILY

11 March 2015

1D 1M 3M 1Y FY15E FY16E FY15E FY16E

ASHOK LEYLAND LTD 74.5 2.5 15.9 48.0 324.5 4948.0 (0.1) 29.2 163.2 34.8 4.1 3.8 Sell

AMARA RAJA BATTERIES LTD 845.4 (2.2) 0.7 16.8 131.1 200.7 0.7 78.7 33.5 26.4 8.3 6.5 Add

GATEWAY DISTRIPARKS LTD 429.7 5.9 8.0 32.1 193.1 49.5 (0.7) 66.6 25.4 19.7 3.8 3.4 Buy

KAVERI SEED CO LTD 958.3 (4.6) 11.4 16.6 69.3 101.1 (0.4) 52.2 21.9 17.6 8.5 6.1 Buy

SUNDRAM FASTENERS LTD 185.3 1.8 0.3 (2.1) 251.9 30.6 (0.7) 63.8 19.2 14.8 4.3 3.5 NA

WABCO INDIA LTD 5426.3 (1.2) 7.5 21.4 178.5 7.4 0.2 62.5 80.3 47.2 11.8 9.6 Add

CHOLAMANDALAM INVESTMENT AND 569.8 0.3 4.7 23.0 128.4 20.1 (0.6) 73.1 3.5 2.5 3.5 2.5 Buy

CITY UNION BANK LTD 98.0 (1.1) 2.5 6.8 94.4 1323.6 1.3 93.8 2.4 2.1 2.4 2.1 Buy

DCB BANK LTD 109.0 (0.3) (4.4) (0.1) 86.4 397.0 (0.5) 53.0 2.2 1.9 2.2 1.9 Buy

FEDERAL BANK LTD 138.8 (3.0) (0.7) (2.6) 63.6 802.3 (0.5) 51.1 1.6 1.4 1.6 1.4 Buy

INDIAN BANK 175.2 3.0 (3.6) (8.7) 65.6 52.3 (0.6) 57.1 1.0 1.0 1.0 1.0 Sell

KARUR VYSYA BANK LTD 593.5 0.9 1.4 8.0 87.6 49.7 (0.7) 60.9 1.8 1.6 1.8 1.6 Buy

REPCO HOME FINANCE LTD 676.6 (1.6) 3.2 14.6 118.6 64.7 (0.4) 61.2 5.4 4.7 5.4 4.7 Buy

SHRIRAM CITY UNION FINANCE 1977.8 (1.3) (1.8) 15.9 99.3 101.9 1.0 99.0 3.2 2.9 3.2 2.9 Buy

SOUTH INDIAN BANK LTD 26.0 (1.5) 0.2 (7.0) 15.6 1247.0 (0.4) 63.7 1.1 1.0 1.1 1.0 Buy

DALMIA BHARAT LTD 462.7 1.2 0.4 (4.5) 86.3 20.5 (0.1) 63.8 NA 17.4 1.2 1.2 Buy

RAMCO CEMENTS LTD/THE 327.5 (1.9) (0.8) 0.9 65.0 47.9 (0.6) 70.2 25.8 13.5 2.9 2.4 Add

BLUE STAR LTD 325.9 3.6 1.8 (0.5) 97.5 31.6 (0.4) 78.0 40.9 25.8 5.8 5.1 Sell

TTK PRESTIGE LTD 3658.9 (1.8) 7.8 (2.0) 24.1 11.5 (0.6) 42.0 39.0 31.3 6.4 5.6 Sell

VA TECH WABAG LTD 1635.1 (1.7) 9.0 6.9 135.4 49.8 0.2 77.9 38.9 30.3 4.7 4.2 Add

V-GUARD INDUSTRIES LTD 931.1 (0.2) (1.6) (14.7) 106.0 7.0 (0.4) 70.3 35.8 26.8 7.4 6.1 Buy

CYIENT LTD 545.5 (0.9) 2.3 (3.6) 63.0 390.3 4.2 97.3 17.4 16.4 3.4 3.0 Add

FIRSTSOURCE SOLUTIONS LTD 31.2 0.3 7.6 (9.6) 14.3 394.5 (0.7) 53.8 9.2 7.4 0.8 0.7 Buy

HEXAWARE TECHNOLOGIES LTD 274.7 4.8 10.5 32.0 73.4 269.1 (0.4) 35.8 18.6 16.3 5.7 5.2 Add

POLARIS CONSULTING & SERVICE 145.8 0.4 7.1 (25.9) 1.4 142.2 (0.7) 41.3 8.5 8.2 1.5 1.3 Add

REDINGTON INDIA LTD 122.0 (1.2) 1.2 (9.3) 76.9 173.4 (0.8) 55.9 13.0 10.7 2.0 1.7 Buy

BIOCON LTD 432.5 0.3 1.9 (5.0) 0.0 97.4 (0.6) 21.6 20.5 17.3 2.5 2.3 Reduce

APOLLO HOSPITALS ENTERPRISE 1358.1 (0.4) 6.3 18.2 58.8 95.6 (0.1) 58.8 50.6 40.8 5.8 5.2 Reduce

BAJAJ CORP LTD 479.7 0.1 1.0 39.6 132.6 139.2 0.3 67.3 34.2 28.4 14.5 14.3 Buy

BERGER PAINTS INDIA LTD 206.8 (1.1) (5.3) 4.3 96.2 266.8 (0.2) 57.3 22.1 19.1 10.6 8.9 Add

JYOTHY LABORATORIES LTD 283.0 1.3 (8.2) 15.6 47.8 53.0 (0.8) 64.8 38.1 31.2 6.6 6.0 Buy

KEWAL KIRAN CLOTHING LTD 1918.5 0.1 12.5 1.0 72.4 1.3 (0.5) 62.6 36.1 23.0 7.4 6.3 Add

LA OPALA RG LTD 373.8 (1.2) (13.8) (7.1) 166.8 13.2 (0.7) 67.3 49.7 36.5 11.2 9.0 Add

RELAXO FOOTWEARS LTD 707.1 (0.4) 9.7 36.7 170.8 6.9 (0.3) 54.3 52.5 39.4 12.0 9.4 Add

Consumption

Returns (%)

Auto, Agri &

logistics

Financials

Cement

Pharma

Top Del. % Company Price

IT Services

Delivery

Volume

('000)

Rating

PE for all sectors & P/ABV

for banksEV/EBITDA (x)

Capital Goods

% inc/dec to

30D avgDelivery %

Spark Focus Stocks

Page 5 Page 5

SPARK INDIA DAILY

11 March 2015

0

200

400

8000

8100

8200

8300

8400

8500

8600

8700

8800

8900

9000

9100

9200

9300

9400

9500O

I ('0

00)c

on

tracts Call Put

0150300450600

8000

8050

8100

8150

8200

8250

8300

8350

8400

8450

8500

8550

8600

8650

8700

8750

8800

8850

8900

8950

9000

9050

9100

9150

9200

9250

9300

9350

9400

9450

Rs. b

n

Total Call Value Total Put Value

Nifty Open Interest (‘000 contracts)

Technical Indicators

0.8

1.0

1.2

1.4

23-J

an

25-J

an

27-J

an

29-J

an

31-J

an

2-F

eb

4-F

eb

6-F

eb

8-F

eb

10-F

eb

12-F

eb

14-F

eb

16-F

eb

18-F

eb

20-F

eb

22-F

eb

24-F

eb

26-F

eb

28-F

eb

2-M

ar

4-M

ar

6-M

ar

8-M

ar

10-M

ar

Nifty PCR Nifty PCR (30D avg)

FII Open Interest 3-2 3-3 3-4 3-5 3-9 Delta 3-10 Delta Delta

Index Futures 196 222 236 235 233 (1.5) 217 (16.4) (2.5)

Stock Futures 580 600 614 601 606 5.0 591 (15.7) (2.1)

Stock Options 13 21 25 29 30 1.2 31 0.3 (0.5)

Index Options 466 488 519 548 564 16.1 586 21.8 6.5

Total (Rs. Bn) 1255 1331 1393 1413 1434 20.9 1424 (10.0) 1.4

Top CompanyPrice

Change

OI

Change

Close

Price

(Rs. / sh)

JSW Energy Ltd 0.5% 2.2% 114

Colgate-Palmolive India Ltd 1.7% 2.0% 2,106

Aurobindo Pharma Ltd 0.9% 1.3% 1,103

Ranbaxy Laboratories Ltd 1.5% 0.5% 818

Indian Oil Corp Ltd 0.4% 0.1% 350

- - 0.0% -

- - - -

- - - -

- - - -

- - - -

Divi's Laboratories Ltd -0.6% 8.6% 1,762

Hindalco Industries Ltd -4.9% 6.1% 141

Yes Bank Ltd -3.8% 5.9% 824

Cairn India Ltd -1.8% 4.3% 235

GAIL India Ltd -4.2% 4.2% 386

Bank of India -2.9% 4.0% 223

Steel Authority of India Ltd -1.6% 3.7% 66

Aditya Birla Nuvo Ltd -3.1% 3.6% 1,634

IRB Infrastructure Developers -5.3% 3.4% 243

Reliance Pow er Ltd -4.5% 3.4% 58

Bharat Petroleum Corp Ltd -2% -8% 764

Union Bank of India -1% -5% 170

Rural Electrif ication Corp Ltd -3% -5% 342

Bharti Airtel Ltd -1% -5% 343

Kotak Mahindra Bank Ltd -3% -4% 1,365

Shriram Transport Finance Co L 0.6% -7.0% 1,195

Sun TV Netw ork Ltd 0.5% -4.2% 436

Dabur India Ltd 2.9% -4.1% 274

Dr Reddy's Laboratories Ltd 0.8% -4.0% 3,468

Petronet LNG Ltd 0.4% -3.8% 180

Lo

ng

Un

win

dS

ho

rt

Co

veri

ng

Lo

ng

Bu

ild

up

Sh

ort

Bu

ild

up

Nifty PCR

Max Pain Theory (based on Index Options) – Indicative Nifty closing for next Expiry

Page 6 Page 6

SPARK INDIA DAILY

11 March 2015

10.60

10.43

25.16

8.21

14.30

5.20

98.90

5.63

9.99

15.99

5.00

6.23

3.13

55.03

4.23

9.30

15.05

3.78

3.81

2.57

44.83

0 20 40 60 80 100 120

V 1.0 (Oct'13 - Jan'14)

V 1.1 (Jan'14 - Apr'14)

V 1.2 (Apr'14 to Aug'14)

V1.3 (Aug'14 to Sep'14)

v1.4 (Sep'14 to date)

v1.5 (Jan'15)

Total

Sensex BSE200 Spark

Spark Model Portfolio

C o mpanyB SE 200

Weights

Spark

Weights

M cap (R s.

B n)C M P

6M A vg (R s.

M n)

A bso lute 1 Yr

R eturn

F inancials - OW 29.6% 33.0% 28.7%

HDFC Bank Ltd 6.0% 2,653 1,059 1,992 45.4%

Kotak M ahindra Bank Ltd 4.0% 1,054 1,365 1,610 81.5%

IndusInd Bank Ltd 5.0% 474 895 729 92.3%

Power Finance Corp 3.0% 382 290 870 72.0%

Yes Bank Ltd 6.0% 344 824 2,319 119.0%

Federal Bank Ltd 3.0% 122 143 549 69.1%

Karur Vysya Bank 3.0% 71 588 92 89.2%

Cholamandalam Inv. 3.0% 82 568 68 135.4%

C o nsumer - OW 13.1% 17.0% 11.9%

Asian Paints Ltd 4.0% 779 813 1,290 69.4%

Dabur India Ltd 3.0% 482 274 338 60.4%

Bajaj Corp Ltd 2.0% 71 479 115 0.0%

Bata Ltd 3.0% 79 1,230 253 13.2%

Redington Ltd 2.0% 49 124 260 0.0%

Whirlpool Ltd 3.0% 86 681 114 230.3%

A uto - OW 10.8% 15.0% 8.0%

Tata M otors Ltd 4.0% 1,688 565 2,802 43.3%

M aruti Suzuki India Ltd 3.0% 1,109 3,671 1,134 0.0%

Hero M otocorp Ltd 3.0% 519 2,599 2,115 33.7%

Exide Industries Ltd 3.0% 151 178 498 52.4%

Wabco India Ltd 2.0% 104 5,493 42 182.1%

H ealthcare - UW 7.1% 6.0% 5.1%

Sun Pharma Ltd 4.0% 2,156 1,041 2,173 74.7%

Torrent Pharma 2.0% 185 1,092 99 104.9%

Info rmatio n T echno lo gy - UW 12.8% 6.0% 2.2%

Wipro Ltd 4.0% 1,630 660 1,164 20.5%

Cyient Ltd 2.0% 62 550 59 68.4%

Oil & Gas - UW 7.6% 6.0% 5.2%

BPCL Ltd 4.0% 552 764 1,180 86.9%

GSPL Ltd 2.0% 62 109 167 84.0%

Infrastructure - UW 10.7% 10.0% 13.8%

Gujartat P ipavav Port Ltd 3.0% 116 241 279 208.1%

Cummins India Ltd 2.0% 249 897 193 77.0%

Sadbhav Engineering Ltd 2.0% 61 357 78 301.7%

Shree Cement Ltd 3.0% 387 11,104 154 115.4%

Others 2.0% 1.8%

Kaveri Seed Ltd 2.0% 69 1,005 181 89.3%

C ash & Others 8.3% 5.0%

T o tal 100.0% 76.6%

Spark Portfolio returns vs. BSE 200 returns

Spark Returns

Spark Portfolio returns outperformance to BSE 200

0

50

100

150

Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15

%

Spark Portfolio BSE 200 INDEX

-20

0

20

40

60

Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15

%

Page 7 Page 7

SPARK INDIA DAILY

11 March 2015

Today’s News

Sector News

Macro RBI buys $12.2 billion from markets in January

Indian CAD for Q3 at 1.6 % of GDP

Lok Sabha clears Land Acquisition Bill

Natural rubber output in February drops 13.5%

China Feb producer price index slide shows deflation lurks

Consumption Bangladesh demand hits copra supply in India

‘Gold Council’ status for Bullion Association?

Snapdeal in talks to buy Komli Media for $300 million

Myntra in talks with global firms to acquire 3D technology to boost user

experience

Snapdeal, Alibaba in talks for Rs 6,200 crore funding round: Sources

Titan scouts for tech partner for its smart-watch

Reforms expected to provide boost to textile sector: Raymond

Luxury brands want PAN for Rs 1 lakh purchase to go

Government to flag off Rs 4000 crore investments with nod for 17 mega

food parks

Infra/Power Bulk shipping rates sink further as cargo volumes dip

SembCorp, Kepco in talks to buy GMR’s Odisha plant - Livemint.com

Today’s News

Today’s News

Sector News

Auto Hero ropes in Ashok Bhasin as Sales, marketing & customer care head

Audi plans 10 launches in India to maintain leadership status

Maruti Suzuki recalls 33,098 units of Alto 800, Alto K10

Pharma Dr Reddy’s in talks to buy UCB India business for $135mn

US court rules in Natco’s favour on swine flue drug

Natco to launch Hepatitis C drug in India soon

Bldg. Materials Cheaper cement up for grabs on newly launched government portal

Cement, fertilizer companies disappointed over electricity duty

Page 8 Page 8

SPARK INDIA DAILY

11 March 2015

Today’s Announcements

Asian Paints Signs Memorandum of Understanding (MoU) with the Government of Andhra Pradesh

Dabur India Insider Trading

Today’s Announcements

Page 9

MCX Ltd. CMP

Rs. 1,200

Target

Rs. 1,080

Rating

SELL

Stock performance (%)

1m 3m 12m

MCX 42% 39% 132%

Sensex 1% 3% 31%

CNXIT 2% 12% 26%

Financial summary

Year ADTV (Rs. bn) Revenues (Rs. mn) EBITDA (Rs. mn) PAT (Rs. mn) EPS (Rs.) P/E(x) EV/EBITDA(x) ROE(%)

FY15E 223 2,493 1,020 1,213 23.9 50.3 51.5 10.3%

FY16E 297 3,108 1,617 1,680 33.0 36.4 31.9 13.2%

FY17E 402 3,916 2,173 2,196 43.1 27.8 23.2 15.9%

Rating: ◄► Target price: ◄► EPS: ◄►

Date Mar 11, 2015

Market Data

SENSEX 28710

Nifty 8712.05

Bloomberg MCX IN

Shares o/s 51mn

Market Cap Rs. 62bn

52-wk High-Low Rs. 1,290-425

3m Avg. Daily Vol Rs. 990mn

Index member BSE Midcap

Latest shareholding (%)

Promoters 0.0

Institutions 56.3

Public 43.7

Update Is commodity option a game changer for MCX? - Unlikely

In the union budget 2015-16, the Finance Minister announced the much anticipated merger of SEBI and FMC.

Given the powers accorded to SEBI, launching of Commodity Options and enabling FII to trade in Indian

commodity exchanges could get easier. In this note we explore the impact Commodity Options could have on

MCX. We believe commodity options market in India would be unlike other global markets. We are not changing

our estimates, but increase our P/E multiple to 25x given higher comfort in our ADTV estimates. We retain our

sell recommendation and caution investors that allowing only Commodity options and not allowing FII

participation could impact transaction revenues adversely.

Globally commodity options account for 20-30% of futures notional turnover. In markets such a LME it is very low at 3%

In India we believe Commodity options would cannibalise futures trading and become the primary instrument if CTT is

applied along the same principles of STT

Analysis of NSE F&O trading pattern post change in application of STT for options trading from notional turnover to

Option premium indicate a surge in options trading at the cost of futures. STT cost on trading is substantially lower in

Options as STT is charged only on option premium, whereas in futures STT is charged on contract value.

BSE announced its intention to launch commodity exchange that could be credible competitor given backing of

Deutsche Borse and latest technology platform. We note that BSE has been able to garner 40% market share in

currency derivatives in a period of 18 months.

We believe MCX’s would have to price options trading competitively as competition would offer it for free or at very low

cost. BSE’s pricing of Currency derivates is at 2% of NSE’s price.

Global exchanges such as CME / ICE charge on a per contract basis and not on option premium. Conversion of the

charges to “as percentage of option premium” indicates 15 – 30 bps as trading cost in comparison to 2bps charged by

NSE. We expect MCX pricing to be lower than other global exchanges.

At 2 bps of trading cost MCX would need to have an ADTV of Rs. 640bn to make incremental transaction revenues of

Rs. 500mn.

SRIVATHSAN RAMACHANDRAN, CFA srivathsan@sparkcapital.in +91 44 4344 0039

AISHWARIYA KPL aishwariya@sparkcapital.in +91 44 4344 0040

Page 10

MCX Ltd. CMP

Rs. 1,200

Target

Rs. 1,080

Rating

SELL

0

500

1000

1500

2000

2500

40,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Ind

exed

Single stock futures Stock index futures Stock options Stock index options

30,000

Impact of STT on NSE volumes (First chart) and Turnover (Second chart)

Source: Company, Spark Capital

Analysis of NSE suggests options could become primary instrument

In 2008, STT on options contracts were reduced by changing the tax base from notional value of option

contract to option premium. No. of option contracts on NSE increased significantly (186%) in 2008 and

has been on a exponential growth since then, way higher than future growth. Today, India has one of the

highest index option trading

STT was introduced for both cash and derivative

markets for stock exchanges in 2004. Futures were

charged higher than the cash, to encourage investors

to hold stocks for long term. Options volumes were

weak till 2008 due to higher costs (Option cost + STT)

as taxes on both futures and options were charged on

notional principal

STT got

introduced

in Oct.2004

Index Options volume

increased ~300% in 2008 with

change in STT in options

… it still contributes ~ 45% of F&O revenues of NSE

Source: NSE, Spark Capital

Despite the sharp rise in Options Volume and Turnover..

Source: NSE, Spark Capital

0%

20%

40%

60%

80%

100%

FY08 FY09 FY10 FY11 FY12 FY13

No

tio

na

l T

urn

ov

er

Futures Options

0%

20%

40%

60%

80%

100%

FY08 FY09 FY10 FY11 FY12 FY13

Reven

ue

Futures Options

Page 11

MCX Ltd. CMP

Rs. 1,200

Target

Rs. 1,080

Rating

SELL

Transaction charges in options across global exchanges

Specifications US$/

COMEX/NYMEX – Cost per contract per side

Gold Options 100 Troy ounces 2.2

Silver Options 5,000 Troy ounces 2.2

Copper Options 25,000 Pounds 1.8

Brent Crude Oil Options 1,000 Barrels 1.0

Natural Gas Weekly 4 Options 10,000 MMBtu 1.0

LME - Per leg/ per side/ per lot

Futures, Carries, Traded options and TAPOs 0.9

ICE – Per contract

Gold / Silver options 100 / 5000 troy ounces 0.6

Energy options 1.3

Assumed as for square off trades for a member

Globally options continue to be low as % of notional turnover (options & futures)

Source: Bloomberg, Spark Capital Research

Global Exchanges

Options account for 5 – 30% of total turnover in exchanges such as CME

/ ICE / LME

Moreover most volumes are only in near month contract only with low

market depth for other month contracts

Exchanges charge on “per contract basis” for F&O trades in both equity

and commodity markets unlike in India. In India exchange transactions

are on “Contract Value” or “Option premium”.

NSE’s option pricing is Rs. 200 per million for stock option premium and

Rs. 3 per million for currency option premium.

0%

10%

20%

30%

Jan/1

3

Fe

b/1

3

Mar/

13

Apr/

13

May/1

3

Jun/1

3

Jul/13

Aug/1

3

Sep/1

3

Oct/

13

Nov/1

3

Dec/1

3

Jan/1

4

Fe

b/1

4

Mar/

14

Apr/

14

May/1

4

Jun/1

4

Jul/14

Aug/1

4

Sep/1

4

Oct/

14

Nov/1

4

Dec/1

4

Jan/1

5

As %

of

no

tio

na

l tu

rno

ver

CME ICE Futures US LME

In Global exchanges options account only for small portion of turnover

Page 12

MCX Ltd. CMP

Rs. 1,200

Target

Rs. 1,080

Rating

SELL Financial Summary

FY14 FY15E FY16E FY17E FY14 FY15E FY16E FY17E

Profit & Loss account Cash flows

Revenues 3,197 2,273 2,864 3,643 Cash from operating 385 1,663 1,866 2,848

Other Operating Income 209 220 244 273 Cash from investing 527 1,042 1,065 1,233

Total income 3,407 2,493 3,108 3,916 Cash from financing -1,133 -439 -609 -1,061

Softw are support charges 622 408 438 518 Free cash flow 326 1,623 1,806 2,788

Contribution to SGF 171 31 37 125 Key metrics

Others 1,499 1,284 1,210 1,265 Turnover (Rs. bn) 86,543 58,301 78,227 1,05,307

EBITDA 1,457 1,020 1,617 2,173 Agg. Charges 1.76 1.84 1.75 1.67

EBIT 1,114 770 1,423 2,008 Transaction revenues 3,053 2,144 2,736 3,515

Interest expense 11 15 - - Ratios(%)

Interest income 993 936 976 1,129 Revenue grow th -35% -27% 25% 26%

PBT 2,096 1,691 2,399 3,137 PAT grow th -49% -21% 38% 31%

Taxes 569 478 720 941 EBIT margins (%) 33% 31% 46% 51%

PAT 1,528 1,213 1,680 2,196 PAT margins (%) 45% 49% 54% 56%

Diluted EPS 30.1 23.9 33.0 43.1 ROE 13% 10% 13% 16%

Balance sheet ROCE 9% 6% 9% 11%

Share capital 510 510 510 510 ROIC 27% 20% 39% 71%

Reserves & surplus 10,931 11,704 12,775 13,910 Valuation metrics

SGF 1,720 1,898 2,083 2,373 O.shares (mn) 51 51 51 51

Other long term liabilities 449 449 449 449 Diluted shares 51 51 51 51

Total 13,610 14,561 15,818 17,242 Market cap 60,819 61,010 61,112 61,112

Net f ixed assets 1,735 1,531 1,397 1,292 EV 52,493 52,507 51,593 50,365

Other long term assets 413 413 413 413 P/E (x) 39.8x 50.3x 36.4x 27.8x

Cash and equivalents 14,183 16,449 18,771 21,791 EV/EBITDA (x) 36.0x 51.5x 31.9x 23.2x

Current assets 15,267 17,549 20,019 23,362 EV/Sales (x) 15.4x 21.1x 16.6x 12.9x

Margin deposits 2,585 3,656 4,566 6,006 P/BV (x) 5.3x 5.0x 4.6x 4.2x

Current liabilities 3,805 4,926 6,006 7,819 DPS 10 7 10 17

Total 13,610 14,561 15,818 17,242 Earning yield 2.5% 2.0% 2.7% 3.6%

Financial summary - standalone

Page 13

MCX Ltd. CMP

Rs. 1,200

Target

Rs. 1,080

Rating

SELL Financial Summary

0

200

400

600

800

1000

1200

1400

1600

1800

1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14 1-Jan-15

Historical Target

MCX

Report Date CMP (Rs.) TP (Rs.) Recommendation

16/Feb/15 860 860 Reduce

18/Nov/14 871 760 Sell

30/Sep/14 816 720 Sell

Page 14

MCX Ltd. CMP

Rs. 1,200

Target

Rs. 1,080

Rating

SELL Disclaimer

Spark Disclaimer

Spark Capital Advisors (India) Private Limited (Spark Capital) and its affiliates are engaged in investment banking, investment advisory and institutional equities and

infrastructure advisory services. Spark Capital is registered with SEBI as a Stock Broker and Category 1 Merchant Banker.

We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered in the last five years. We

have not been debarred from doing business by any Stock Exchange/SEBI or any other authorities, nor has our certificate of registration been cancelled by SEBI at any point of

time.

Spark Capital has a subsidiary Spark Investment Advisors (India) Private Limited which is engaged in the services of providing investment advisory services and is registered

with SEBI as Investment Advisor. Spark Capital has also an associate company Spark Infra Advisors (India) Private Limited which is engaged in providing infrastructure

advisory services.

This document does not constitute or form part of any offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.

This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Nothing in this document should

be construed as investment or financial advice, and nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of

companies referred to in this document.

Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies

referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. This

document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published,

copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to or use by any person or entity who is a citizen or resident of or located in

any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Spark Capital

and/or its affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to

a certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such applicable restrictions. This

material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal.

Spark Capital makes no representation or warranty, express or implied, as to the accuracy, completeness or fairness of the information and opinions contained in this

document. Spark Capital , its affiliates, and the employees of Spark Capital and its affiliates may, from time to time, effect or have effected an own account transaction in, or

deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit

investment banking or other business from, any company referred to in this report.

This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through an independent analysis by Spark

Capital. While we would endeavour to update the information herein on a reasonable basis, Spark Capital and its affiliates are under no obligation to update the information.

Also, there may be regulatory, compliance or other reasons that prevent Spark Capital and its affiliates from doing so. Neither Spark Capital nor its affiliates or their respective

directors, employees, agents or representatives shall be responsible or liable in any manner, directly or indirectly, for views or opinions expressed in this report or the contents

or any errors or discrepancies herein or for any decisions or actions taken in reliance on the report or the inability to use or access our service in this report or for any loss or

damages whether direct or indirect, incidental, special or consequential including without limitation loss of revenue or profits that may arise from or in connection with the use of

or reliance on this report.

Absolute

Rating

Interpretation

BUY Stock expected to provide positive returns of >15% over a 1-year horizon REDUCE Stock expected to provide returns of <5% – -10% over a 1-year

horizon

ADD Stock expected to provide positive returns of >5% – <15% over a 1-year

horizon SELL Stock expected to fall >10% over a 1-year horizon

Page 15

MCX Ltd. CMP

Rs. 1,200

Target

Rs. 1,080

Rating

SELL

Spark Capital and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency,

Spark Capital has incorporated a disclosure of interest statement in this document. This should however not be treated as endorsement of views expressed in this report:

Disclosure of interest statement MCX

Analyst financial interest in the company No

Group/directors ownership of the subject company covered No

Investment banking relationship with the company covered No

Spark Capital’s ownership/any other financial interest in the company covered No

Associates of Spark Capital’s ownership more than 1% in the company covered No

Any other material conflict of interest at the time of publishing the research report No

Receipt of compensation by Spark Capital or its Associate Companies from the subject company covered for in the last twelve months:

Managing/co-managing public offering of securities

Investment banking/merchant banking/brokerage services

products or services other than those above

in connection with research report

No

Whether Research Analyst has served as an officer, director or employee of the subject company covered No

Whether the Research Analyst or Research Entity has been engaged in market making activity of the Subject Company; No

Analyst Certification of Independence

The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research

analyst’s compensations was, is or will be, directly or indirectly, related to the specific recommendation or views expressed in the report.

Additional Disclaimer for US Institutional Investors

This research report prepared by Spark Capital Advisors (India) Private Limited is distributed in the United States to US Institutional Investors (as defined in Rule 15a-6 under

the Securities Exchange Act of 1934, as amended) only by Decker and Co, LLC, a broker-dealer registered in the US (registered under Section 15 of Securities Exchange Act

of 1934, as amended). Decker and Co accepts responsibility on the research reports and US Institutional Investors wishing to effect transaction in the securities discussed in

the research material may do so through Decker and Co. All responsibility for the distribution of this report by Decker and Co, LLC in the US shall be borne by Decker and Co,

LLC. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if Spark Capital

Advisors (India) Private Limited or Decker and Co, LLC is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should

satisfy yourself before reading it that Decker and Co, LLC and Spark Capital Advisors (India) Private Limited are permitted to provide research material concerning investment

to you under relevant legislation and regulations;

Cont’d