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Market Outlook India Research

September 28, 2010

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

Dealer’s Diary The benchmark indices eked out small gains to attain their highest closing levels in more than 32 months, as firm global stocks and the recent strong foreign fund inflows underpinned sentiment. Realty, capital goods, metal and consumer durables stocks rose, while FMCG stocks declined. IT stocks, too, fell on a firm rupee. However, profit booking pulled the market off its intraday highs in afternoon trade. Stocks further trimmed gains in late trade. The market pared gains after hitting a 32-month high at the onset of the trading session. The Sensex and Nifty closed up by 0.4% and 0.3%, respectively. BSE mid-cap and small-cap indices gained 0.3% and 0.1%, respectively. Among the front liners, Hindalco, Sterlite Ind., Tata Steel, NTPC and Sun Pharma gained 1–3%, while HDFC Bank, HUL, HDFC, Infosys and TCS lost 0–2%. Among mid caps, JM Financial, Man Infra, Puravankara Project, MVL Ltd. and ARSS Infra projects gained 6–17%, while AstraZeneca Pharma, Graphite India, Usha Martin, Texmaco and Mahindra & Mahindra finance lost 4–9%.

Markets Today

The trend deciding level for the day is 20156 / 6042 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 20229 – 20342 / 6067 – 6098 levels. However, if NIFTY trades below 20156 / 6042 levels for the first half-an-hour of trade then it may correct up to 20044 – 19970 / 6011 - 5987 levels.

Indices S2 S1 R1 R2

SENSEX 19,970 20,044 20,229 20,342

NIFTY 5,987 6,011 6,067 6,098

News Analysis Cement prices may rise from October 1 L&T bags Rs1,610cr order M&M to raise vehicle prices from October 1, 2010

Refer detailed news analysis on the following page.

Net Inflows (September 24, 2010) Rs cr Purch Sales Net MTD YTD

FII, 4,287 2,948 1,339 22,238 81,364

MFs 396 674 (278) (4,128) (19,920) FII Derivatives (September 27, 2010)

Rs cr Purch Sales Net Open

Interest

Index Futures 6,152 5,883 268 22,307

Stock Futures 6,658 6,920 (262) 42,569

Gainers / Losers

Gainers Losers

Company Price (Rs)

chg (%)

Company Price (Rs)

chg (%)

India Info 117 4.8 Nagarjuna Cont. 165 (2.7)

Videocon Ind. 273 4.1 PTC India 119 (2.5)

Balrampur Chini 92 4.0 Godrej Consumer 401 (2.4)

Hind Zinc 1,126 3.8 HDFC Bank 2,439 (2.1)

Oriental Bank 458 3.8 IRB Infra 275 (2.1)

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

BSE Sensex 0.4% 72.2 20,117

Nifty 0.3% 17.3 6,036

MID CAP 0.3% 27.1 8,142

SMALL CAP 0.1% 13.2 10,281

BSE HC 0.6% 37.5 6,013

BSE PSU 0.8% 84.1 10,397

BANKEX -0.0% (1.6) 13,912

AUTO 0.5% 46.0 9,554

METAL 2.1% 357.6 17,009

OIL & GAS 0.9% 90.8 10,737

BSE IT -0.5% (28.4) 5,945

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

Dow Jones -0.4% (48.2) 10,812

NASDAQ -0.5% (11.4) 2,370

FTSE 0.0% - 5,573

Nikkei 1.4% 131.5 9,603

Hang Seng 1.0% 221.4 22,341

Straits Times 0.7% 20.8 3,113

Shanghai Com 1.4% 36.4 2,628

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

Infosys -1.1% (0.8) $66.1

Wipro -1.6% (0.2) $14.4

Satyam -4.5% (0.2) $4.5

ICICI Bank -0.8% (0.4) $48.9

HDFC Bank -2.0% (3.6) $180.5

Advances / Declines BSE NSE

Advances 1,510 626

Declines 1,506 721

Unchanged 84 55

Volumes (Rs cr)

BSE 4,948

NSE 15,387

September 28, 2010 2

Market Outlook | India Research

Cement prices may rise from October 1

Media reports suggest that cement manufacturers are set to hike prices by around Rs20 per 50kg bag from October 1 in Gujarat, while a similar hike is being contemplated for Maharashtra, including the key market of Mumbai, to cash in on the spurt in demand following the monsoons. Companies including UltraTech Cement, Ambuja Cements, Sanghi Industries, Gujarat Siddhi Cement, Saurashtra Cement, Binani Cement, JK Lakshmi Cement and Jaiprakash Associates will raise the prices of the commodity.

Cement prices had cracked to around Rs150 in August from its peak of Rs225 in mid-May, owing to sluggish construction activity in the monsoons and scarcity of sand and, with the proposed hike, prices of the commodity will be around Rs180 per 50kg bag in Ahmedabad. In Mumbai, the hike is being considered and may be implemented in a different way by withdrawing a discount of at least Rs10 per bag that is being offered to dealers, said a city-based large cement stockist. The southern region, which witnessed two rounds of price hike in September, despite low demand and over capacity is also set to witness another round of price hike. In Hyderabad, prices may be hiked by Rs30 per bag, pushing cement prices to around Rs240; while Chennai prices may be hiked by as much as Rs40. Stockists and dealers in the central and northern regions have not been intimated about any hike in these regions yet. However, cement companies may announce some hikes in these regions depending on the response to the hikes in southern and western India.

We maintain Buy on India Cements with a Target Price of Rs139, Madras Cements with a Target Price of Rs139 and JK Lakshmi Cement with a Target Price of Rs92, due to their attractive valuations. We recommend Accumulate on Ultratech with a Target Price of Rs1,087.

L&T bags Rs1,610cr order

Larsen & Toubro (L&T) has bagged an order worth Rs1,610cr from Visa Steel and Power Company for executing Balance of Plant (BOP) package for a 2x600MW power plant, coming up at Raigarh-Chhattisgarh. The expected period of execution is between 29–32 months. This order from VISA Power Ltd. follows a recent order for Rs6,500cr received last month from Jaiprakash Power Ventures Ltd., a Jaiprakash Group Power Company for a 3x660MW supercritical Boiler–Steam Turbine Generator Package Karchana power project. L&T is one of the few companies to bag consistent orders in recent times, especially from the power segment. This is very much reflected in the sharp run up in the stock price as well. At Rs2,026, stock is trading at P/E of 29.5x and P/BV of 4.9x to its FY2012E on standalone basis. We believe most of the positives are factored in and, hence, maintain our Neutral rating on the stock. However, since we believe the near-term catalysts are in place for the stock, we recommend investors to remain equal weight despite rich valuations.

September 28, 2010 3

Market Outlook | India Research

M&M to raise vehicle prices from October 1, 2010

M&M plans to raise prices of its passenger and commercial vehicle products, effective from October 1, 2010. The price increase would be in the range of Rs3,000 to Rs8,000, depending on the model. The increase in prices comes on expected lines, as the company intends to protect its margins in the wake of increased cost due to introduction of new emission norms (Bharat Stage III), effective from October 2010, and the recent hike in raw-material prices. Because of the recent positive movement in the stock price, we recommend Accumulate on the stock with an SOTP Target Price of Rs771.

Economic and Political News

Govt. neutralises tax impact of 1st year of DTC regime

Govt. imposes anti-dumping duty on chemical from China

Steel prices may go up by Rs1,500 a tonne next month

Industry ad budget up 30–40% in 2010–11

Foreigners to fund up to 30% of Indian roads

Corporate News

PFC to issue infra bonds of Rs1,000cr by December-end

IndusInd Bank raises US $253mn through QIP

IDFC launches first tax-free infra bonds to raise Rs3,400cr

IRB Infra to raise Rs750cr debt for Karrnataka road project

AstraZeneca’s plan to delist rejected

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

September 28, 2010 4

Market Outlook | India Research Research Team Tel: 022-4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com

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