1. Market Outlook
India Research
June 1, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
Key benchmark indices surged to the day's high in late trade, extending three- BSE Sensex 0.5% 81.6 16,945
day gains, as robust GDP data and steady progress of the monsoon lifted Nifty 0.4% 19.8 5,086
investor sentiment. Global cues were supportive with Asian and European
MID CAP 1.2% 78.9 6,835
markets trading higher. The market moved between the positive and negative
SMALL CAP 0.6% 52.7 8,547
terrains in afternoon trade after slipping into the red to hit the day's low. Buying
BSE HC 1.8% 95.7 5,490
demand at lower levels helped the market cut losses in mid-afternoon trade.
Late buying frenzy propelled the market to the day's high in late trade. The BSE PSU 2.7% 240.5 9,134
Sensex and Nifty closed with gains of 0.5% and 0.4%, respectively. BSE mid-cap BANKEX 0.8% 79.8 10,657
and small-cap indices also closed with gains of 1.2% and 0.6%, respectively. AUTO 1.9% 141.5 7,700
Among the front-liners, M&M, ONGC, BHEL, SBI and Hero Honda were up by METAL 0.3% 39.7 15,147
1-5%, while Sterlite Industries, RCom., Jaiprakash Associates, DLF and ACC OIL & GAS 1.7% 166.4 10,181
were down by 1-3%. In the mid-cap segment, JM Financial, STC, Dredging BSE IT -0.5% (26.1) 5,175
Corporation, Karnataka Bank and Educomp were up by 11-20%, while Punj
Lloyd, Bayer Cropscience, Rajesh Exports, REI Agro and Anant Raj Ind. were Global Indices Chg (%) (Pts) (Close)
down by 6-13%. Dow Jones 0.0% 0.0 10,137
Markets Today NASDAQ 0.0% 0.0 2,257
FTSE 0.0% 0.0 5,188
The trend deciding level for the day is 16907/ 5074 levels. If NIFTY trades
Nikkei 0.1% 5.7 9,769
above this level during the first half-an-hour of trade then we may witness a
Hang Seng -0.0% (1.5) 19,765
further rally up to 17008–17072/ 5110 – 5133 levels. However, if NIFTY trades
below 16907/ 5074 levels for the first half-an-hour of trade then it may correct Straits Times 0.5% 12.9 2,753
up to 16844–16743/ 5051-5015 levels. Shanghai Com -2.4% (63.6) 2,592
Indian ADRs Chg (%) (Pts) (Close)
Indices S2 S1 R1 R2
Infosys 0.0% 0.0 $57.5
SENSEX 16,743 16,844 17,008 17,072 Wipro 0.0% 0.0 $21.2
NIFTY 5,015 5,051 5,110 5,133 Satyam 0.0% 0.0 $5.2
ICICI Bank 0.0% 0.0 $36.8
News Analysis
HDFC Bank 0.0% 0.0 $139.0
 Steel prices may fall by Rs1,000/tonne
 Result Reviews: GPIL, Jaiprakash Associates, KS Oils Advances / Declines BSE NSE
Refer detailed news analysis on the following page. Advances 1,620 751
Declines 1,210 564
Net Inflows (May 28, 2010)
Unchanged 80 32
Rs cr Purch Sales Net MTD YTD
FII 2,542 2,058 484 (9,975) 19,735
Volumes (Rs cr)
MFs 878 688 (190) (728) (7,957)
BSE 3,771
FII Derivatives (May 31, 2010)
NSE 12,303
Open
Rs cr Purch Sales Net
Interest
Index Futures 1,194 1,581 (387) 12,457
Stock Futures 1,017 835 182 25,269
Gainers / Losers
Gainers Losers
Price Price
Company Chg (%) Company Chg (%)
(Rs) (Rs)
Hind. Copper 483 19.3 Punj Lloyd 120 (12.7)
Educomp Sol. 535 11.0 Suzlon Energy 56 (7.8)
EIL 341 8.0 Anant Raj Ind. 107 (5.6)
IVRCL Infra. 168 7.7 Sterlite Ind. 663 (2.8)
United Phos. 182 6.9 Apollo Hosp. 743 (2.7)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 0109965391

2. Market Outlook | India Research
Steel prices may fall by Rs1,000/tonne
According to steel secretary, steel prices may fall further by another Rs1,000/tonne in June
2010 due to a softening global trend originating from the financial crisis in Europe and
demand slowdown ahead of the monsoons. Last month, many large players reduced long
products prices by Rs1500–2000/tonne, while flat product prices were cut by Rs1000–
1500/tonne. We believe this will narrow the gap between domestic prices and import
prices of steel. Price cuts will not materially impact our estimates as our price assumptions
are lower even if the price cut takes place. We continue to maintain our Buy rating on JSW
Steel and Tata Steel.
4QFY2010 Result Reviews
Godawari Power and Ispat (GPIL)
GPIL’s consolidated 4QFY2010 results were in line with our estimates. Net revenue grew
by 21.3% yoy to Rs238.5cr during the quarter, against our estimate of Rs237.3cr. Lower
sales volume of sponge iron, HB wire and power was compensated by a) higher sales of
billets, power and ferro alloys and b) higher realisations across segments, except power.
During the quarter, the company also sold 8,473 tonnes of pellet. EBITDA grew by 47.5%
qoq and 136.7% yoy to Rs46.7cr, as margins expanded by 392bp qoq and 955bp yoy to
19.6%. Interest expense and depreciation increased by 68.4% yoy and 17.8% yoy to
Rs10.9cr each during the quarter. Lower tax rate of 10.9%, as compared to 20.8% in
4QFY2009, led to adjusted net income growing by 194% yoy to Rs24.3cr, in line with our
estimate of Rs25cr.
We believe the stock is at an inflection point, as full benefits of the 0.6mn tonne
pelletization plant will be seen in FY2011E and savings of Rs125cr–150cr are expected in
FY2011E. Consequently, earnings are expected to grow at a 78.7% CAGR over FY2010-
12E. We maintain our Buy rating on the stock with a Target Price of Rs309, valuing the
stock at 3.5x FY2012E EV/EBITDA.
Jaiprakash Associates
Jaiprakash Associates reported top-line growth of 60.5% to Rs3,345cr in 4QFY2010. On
the operating profit front, the company reported margin of 25.8%. Bottom-line registered a
yoy decline of 36.7% to Rs244cr.
The company’s sales grew 68% to Rs10,355cr in FY2010, against Rs6,148cr in FY2009.
Net profit stood at Rs 1708cr for FY2010, as compared to Rs 897cr in FY2009, growing
90%. For FY2010, revenue from the cement segment registered growth of 62.7%, while
that from the construction and real estate segments reported growth of 90.9% and 48.1%,
respectively. The stock is under review.
KS Oils
KS Oils’ 4QFY2010 results were below our estimates. Sales for the quarter grew 20% yoy
to Rs1,063cr, against our estimate of Rs1,198cr. During 4QFY2010, the company’s edible
oil segment grew 20% yoy, and the power segment registered growth of 71% yoy. OPM
came in at 11.2%, marginally ahead of our expectation of 11%. For the quarter, EBIT
margin for the edible oil segment contracted by 100bp to 9.8% yoy. Higher depreciation
(61% yoy) and interest costs (103% yoy) led to a decline in overall profit. PAT for the
quarter dropped by 21% yoy to Rs38cr. We currently have a Buy rating on the stock, which
will be revised post the conference call.
June 1, 2010 2

3. Market Outlook | India Research
Economic and Political News
 Manufacturing helps GDP grow 7.4% in FY2010
 OECD economies expand 0.7% in 1QFY2010
 Govt. may soon give its nod for divestment in Coal India and three others
 DoT expects Rs 40,000cr from BWA auction
 Indian Railways raised iron ore freight cost for exports by Rs300/tonne for June 2010
 Tobacco exports surged by 7.4% to 21,659 tonnes in the first month of FY2011
Corporate News
 McLeod Russel expects FY2011 tea production at 102mn kgs
 NMDC doubles iron ore price supplied to foreign mills
 J&K Bank has invested Rs100cr in Lavasa Corporation, a subsidiary of HCC Ltd
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Event for the day
NRB Bearings Bonus
June 1, 2010 3

4. Market Outlook | India Research
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