market outlook 25th november 2011

8/3/2019 Market Outlook 25th November 2011

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Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539 1

Market OutlookIndia Research

November 25, 2011

Dealer’s Diary

Indian markets are headed for a flattish opening following mild weakness across Asian markets. The domestic indices edged higher after a choppy trade yesterday

over reports that showed easing of food inflation on a yearly basis. An early rally

in European stocks also aided partially recovery in the stocks.

Global cues remain mixed. The European markets declined after an early rally as

Germany differed on views over Euro bonds. German reluctance to backstop the

debt of Eurozone has raised concerns that borrowing costs for the member

countries will continue to rise. US bourses remain closed on account of

ThanksGiving holiday.

The domestic bourses have slightly gained after extending recent steep losses.

Policies initiatives are gaining traction, with approval for 51% FDI in multi brand

retail and 100% in single brand retail. Thus, markets are likely to cheer the news;

nonetheless they will struggle to find direction as global issues are worsening day

by day.

Markets Today

The trend deciding level for the day is 15,747 / 4,722 levels. If NIFTY trades

above this level during the first half-an-hour of trade then we may witness a

further rally up to 16,013 – 16,168 / 4,805 – 4,854 levels. However, if NIFTY

trades below 15,747 / 4,722 levels for the first half-an-hour of trade then it may

correct up to 15,592 – 15,325 / 4,673 – 4,590 levels.

Indices S2 S1 R1 R2

SENSEX 15,325 15,592 16,013 16,168

NIFTY 4,590 4,673 4,805 4,854

News Analysis Eurozone update

Cabinet approves FDI in retail sector

HCC-led JV bags order worth ` 987cr

Refer detailed news analysis on the following page

Net Inflows (November 23, 2011)

` cr Purch Sales Net MTD YTD

FII 1,726 2,797 (1,071) (2,414) (1,899)

MFs 694 470 224 443 5,573

FII Derivatives (November 24, 2011)

` cr Purch Sales Net Open Interest

Index Futures 5,220 5,528 (308) 11,893

Stock Futures 7,533 7,228 305 24,632

Gainers / Losers

Gainers Losers

Company Price (`) chg (%) Company Price (`) chg (%)

IFCI 24 12.8 Mundra Port 118 (4.7)

Pantaloon Retl. 201 12.3 SAIL 85 (3.2)

Indiabulls Fin. 132 10.2 HPCL 281 (2.9)

Opto Circuits 219 10.0 Container Corp 913 (2.8)

Sun TV 270 8.4 EIH 83 (2.5)

Domestic Indices Chg (%) (Pts) (Close)

BSE Sensex 1.0 158.5 15,858

Nifty 1.1 50.0 4,756MID CAP 1.4 77.2 5,591

SMALL CAP 0.4 22.9 5,999

BSE HC 1.7 98.2 5,953

BSE PSU 1.0 64.6 6,653

BANKEX 1.0 93.2 9,743

AUTO 2.5 202.2 8,472

METAL 0.2 16.7 10,040

OIL & GAS 0.9 74.6 8,030

BSE IT 1.3 70.5 5,517

Global Indices Chg (%) (Pts) (Close)

Dow Jones (2.1) (236.2) 11,258

NASDAQ (2.4) (61.2) 2,460

FTSE (0.2) (12.2) 5,128

Nikkei (1.8) (149.6) 8,165

Hang Seng 0.4 70.7 17,935

Straits Times 0.0 0.6 2,677

Shanghai Com 0.1 2.5 2,398

Indian ADRs Chg (%) (Pts) (Close)

Infosys (2.7) (1.4) $49.6

Wipro (2.9) (0.3) $9.1

ICICI Bank (3.3) (0.9) $27.4

HDFC Bank (3.8) (1.0) $25.2

Advances / Declines BSE NSE

Advances 1,460

Declines 1,313 658

Unchanged 119 55

Volumes (` cr)

BSE 2,013

NSE 12,222



Market Outlook | India Research

November 25, 2011 2

Eurozone update

The situation in the Eurozone appears to be worsening day by day. The scenario is

stretching the Eurozone’s leaders and institutions to the farthest limits. Despite

various proposals, dialogues and rounds of meetings, EU leaders are struggling to

find a direction to improve the dire state of the countries, namely Greece, Spain

and Italy. The episode has touched new depths as it ousted two prime ministers in

three days. In case of Greece, the deeply unpopular austerity measures are set to

kick-off, as Greece is likely to go ahead with Euro130bn bailout package in order

to avert default. All in all, the crisis has undoubtedly invaded the once considered

muscular pillars of the global economy.

Concerns loom large; Greek Central Bank warns about the possible Eurozoneexit

In a harsh warning, Greece's Central Bank cited a possibility of Greece’s

unmanageable exit from the Eurozone. Stemmed from the fact that the country is

in the fifth-year of recession, the economy is projected to shrink by ~5% this year.

The long continuing debt crisis in Greece has flagged concerns about its

sustainability in the Eurozone. According to experts, exit from the Eurozone would

be disastrous, as it will lead to a disorderly financial situation and severely impact

foreign banks having exposure to the nation. In addition, this could derail the

already slowing global economic recovery.

Bonds lose luster

Spain sold three-month bills at an average yield of 5.11%, which was more than

4.63% paid by Greece (for 13-week bills sold on November 15 and 4.895% paid

by Portugal for three-month bills on November 16). German bonds also saw one

of the poorest debt sale since the launch of single currency, as Bundesbank was

forced to retain almost half of the targeted sale of EUR6bn new 10-year note due

to a shortage of bids by investors. The new bonds, which promised to pay out a 2%

interest rate (lowest ever), were sold at an average yield of 1.98%.

France pushed hard on ECB intervention – Rift begins with Germany

European Central Bank (ECB) is viewed as a lender of the last resort and is pressedby France to expedite efforts by exercising its exceptional powers to buy unlimited

assets, including sovereign bonds. France fears that if no quick action is taken, the

Eurozone will be forced into a vicious cycle where austerity policy clearly arrests the

growth of the economy. Hence, France wants ECB to act promptly on its current

special measures program under which it can buy bonds of weaker Eurozone

nations and restore economic stability.

However, this move is strictly opposed by Germany as it feels that ECB lacks the

authority to carry on a major bond purchase operation. ECB’s most conservative

members also offered support to Germany’s view, but ECB’s president, Jean-

Claude Trichet, insisted that such measures were necessary to ensure stability inthe financial system. Experts believe that ECB may end up with no choice but to

become the lender of last resort.




November 25, 2011 3

Fitch comes hard on Portugal; downgrades to junk

Fitch has cut Portugal’s credit rating by one notch to BB+, implying ‘junk’ or ‘non-

investment’ grade. Fitch reasoned the country’s large fiscal imbalances, high

indebtedness and bleak macroeconomic outlook for the downgrade action. Whilethe Eurozone must have seen this coming, it will further add to negative cheers for

the region.

FDI in retail cleared; 50% in multi brand and 100% in singlebrand

The Union Cabinet yesterday cleared 50% foreign direct investment (FDI) in multi-

brand retail and 100% FDI in single brand retail (under which companies in the

food, lifestyle and sports businesses operate stores). A decision in favor of the FDI

will allow global mega chains such as Walmart, Carrefour and Tesco to enter

India. The investment is subject to a minimum of US$100mn, of which half should

be in the form of back-end infrastructure such as cold chains, processing and

packaging. In addition, retailers will have to source at least 30% of their

requirements from the micro, small and medium enterprises (MSME) sector.

At present, the organized retail market is estimated to be worth around US$28bn

(around ` 1.45lakh cr) and could be nine times bigger by 2020. The retail sector

has welcomed the move, as it brings in the much required capital, which will help

the segment expand enormously in the next 3-5 years. In addition, consumers are

likely to be benefited with more choices and better prices. Although the Cabinetapproved the long awaited move, at the ground level the decision will have to be

taken by individual states as retail trade is a state subject and requires all requisite

clearances to come from local authorities.

We believe this move of the government is favorable to companies like Pantaloons

Retail, Shoppers Stop, Koutons Retail and Kewal Kiran Clothing Ltd., as opening of

the floor to foreign players will ensure JVs and flow of investments with local

retailers towards setting up of shops. Also CESC, which has a 94% stake in

Spencer’s Retail, will be benefited from this positive development, thus we maintain

our Buy recommendation on CESC with a target price of `379.

HCC-led JV bags order worth `987cr

Hindustan Construction Company (HCC) in a joint venture with DSD Brouckenbau

GmbH, Germany, and VNR Infrastructures Ltd. has bagged an order worth ` 987cr

from Northeast Frontier Railway to construct the superstructure of Bogibeel rail-

cum-road bridge over river Brahmaputra near Dibrugarh, Assam. HCC’s share in

this order is 51% ( ` 503cr), DSD Brouckenbau GmbH has 20% share and VNR

Infrastructures Ltd. has a share of 29%.




November 25, 2011 4

Bogibeel rail-cum-road bridge will be a double-decked bridge having two railway

tracks on the lower deck and a three-lane road on the upper deck. The road level

will be 10.5 meters above the railway line. The total length of the bridge will be

4.3km. The project will be completed in 48 months. With this order, HCC’soutstanding order book now stands at ~ ` 16,678cr (4.1x FY2011 revenue). Owing

to concerns such as uncertainty on Lavasa project (on the complete project as

clearance from MOEF was for Phase 1only), slowdown in order inflow, high

debt and stretched working capital we maintain our Neutral view on the stock.

Economic and Political News

Cabinet clears Companies Bill; to be taken up this session

Food inflation falls to single digit at 9.01%

Sebi sets minimum allotment size of ` 5cr for anchor investors in an IPO

No immediate hike in fuel prices, indicates Reddy Air India faces whopping debt of ` 43,777cr

RBI approves loan extension to Air India

No proposal for hike in rail passenger fares at present say MoS for Railways

Corporate News

SBI abolishes penalty on pre-payment of housing loans

M&M says looking at more Korean assets, sourcing

Strides receives USFDA approval for two cancer drugs

Jet Airway's unpaid fuel bills up 65% in first half of FY12 Source: Economic Times, Business Standard, Business Line, Financial Express, Mint




November 25, 2011 5

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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market outlook 25th november 2011

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