1. Market Outlook
India Research
October 1, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
Markets opened on a negative note following weak cues from the overnight US BSE Sensex 0.6% 112.8 20,069
markets. The Sensex continued to trade in the negative territory till the Nifty 0.6% 38.6 6,030
midsession; however, it recovered most of the early losses and hovered near the MID CAP -0.2% (19.8) 8,084
baseline in early afternoon trade. Staging a strong rebound, the Sensex SMALL CAP 0.1% 11.0 10,246
regained the 20,000 level as buying was witnessed in metal and banking BSE HC -0.1% (5.2) 5,996
stocks. The key benchmark indices ended on a firm note, with the Sensex and BSE PSU -0.5% (52.4) 10,280
Nifty ending up 0.6% each. BSE mid-cap lost 0.2%, while small-cap gained BANKEX 0.8% 105.8 14,025
0.1%. Among the front liners, HDFC, Sterlite Ind., Hindalco Ind., ITC and Wipro AUTO -0.5% (49.1) 9,528
gained 1–3%, while ACC, ONGC, Reliance Infra, RIL and RCOM lost 1–2%.
METAL 0.8% 138.0 16,865
Among mid caps, Wockhardt, Kwality Dairy, Kansai Nerolac, Shriram City
OIL & GAS -1.2% (123.5) 10,447
Union Finance and Honeywell Auto gained 6–7%, while Patni Computers,
BSE IT 0.3% 15.4 5,947
Sigrun Holdings, Gujarat State Petronet, MAH Holidays and Resorts and
Global Indices Chg (%) (Pts) (Close)
AstraZeneca Pharma lost 3–5%.
Dow Jones -0.4% (47.2) 10,788
Markets Today NASDAQ -0.3% (7.9) 2,369
The trend deciding level for the day is 20016 / 6014 levels. If NIFTY trades FTSE -0.4% (20.7) 5,549
above this level during the first half-an-hour of trade then we may witness a Nikkei -2.0% (190.0) 9,369
further rally up to 20168 – 20266 / 6064 – 6099 levels. However, if NIFTY Hang Seng -0.1% (20.5) 22,358
trades below 20016 / 6014 levels for the first half-an-hour of trade then it may Straits Times -0.3% (8.4) 3,098
correct up to 19917 - 19766 / 5980 - 5929 levels. Shanghai Com 1.7% 45.0 2,656
Indices S2 S1 R1 R2 Indian ADRs Chg (%) (Pts) (Close)
SENSEX 19766 19917 20168 20266 Infosys 0.3% 0.2 $67.3
NIFTY 5929 5980 6064 6099 Wipro -1.3% (0.2) $14.5
Satyam -4.7% (0.2) $3.9
News Analysis ICICI Bank 1.3% 0.6 $49.9
CEBBCO IPO Note: Avoid HDFC Bank 0.9% 1.6 $184.4
Gateway Distriparks wins tender for 2.58 hectare plot
Refer detailed news analysis on the following page.
Advances / Declines BSE NSE
Net Inflows (September 28, 2010)
Advances 1,299 541
Rs cr Purch Sales Net MTD YTD
Declines 1,698 811
FII 3,541 2,647 895 24,440 83,566
Unchanged 81 49
MFs 467 1,035 (568) (5,606) (21,399)
FII Derivatives (September 29, 2010) Volumes (Rs cr)
Open BSE 4,599
Rs cr Purch Sales Net
Interest
NSE 20,014
Index Futures 5,233 4,652 581 16,750
Stock Futures 7,354 7,836 (482) 37,521
Gainers / Losers
Gainers Losers
Price chg Price chg
Company Company
(Rs) (%) (Rs) (%)
HDFC 730 3.3 Patni Computer 416 (5.0)
Renuka Sugar 88 3.3 Tech Mahindra 756 (4.7)
Sterlite Ind. 167 3.3 Ambuja Cement 141 (4.3)
Hindalco 197 2.6 GSPL 110 (3.6)
ITC Ltd 178 2.5 IOC 419 (2.9)
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Market Outlook | India Research
CEBBCO IPO Note: Avoid
Commercial Engineers & Body Builders Company (CEBBCO) currently operates in two key
segments, CV body building and wagon refurbishment business. With the help of the IPO
money, the company plans to enter wagon manufacturing business. We understand CV
body building business faces high competition from the unorganised sector, hence the
company’s ability to manage margin at the current level would be a big challenge. While
the market for wagon manufacturing and supply to Indian Railway (IR) is highly competitive
with 13 players (PSU + Private). Additionally, CEBBCO is a relatively new entrant in the
business and is yet to demonstrate its capabilities in winning the tender, successfully
executing the same and generating profitability at par with existing players.
At the upper price band of Rs127, the company would have a market cap of ~Rs680cr.
Under the best case scenario, we expect the company’s existing business to generate PAT
of Rs27cr in FY2012, a P/E of 25x at the higher band. To justify the implied market capital,
the company’s wagon manufacturing plant needs to operate at 100% utilisation rate and
generate profitability in line with existing players, which at the current juncture looks
stretched. Thus, we would like to wait and, hence, recommend Avoid to the IPO.
Gateway Distriparks wins tender for 2.58 hectare plot in Vallarpadam
Gateway Distriparks Ltd. (GDL) has announced that its 60% subsidiary, Gateway
Distriparks (Kerala) Ltd. (GDKL), has won a tender floated by Cochin Port Trust for a 2.58
hectare plot in Vallarpadam on a 30-year lease. It was a closely fought tender with six
bidders for this prime site opposite the International Container Transhipment Terminal
(ICTT). The Rs2,118cr (US $442mn) ICTT project is India's first trans-shipment hub and
would reduce India’s dependence on ports like Colombo, Dubai, Singapore and Salalah,
besides drawing incremental container traffic to India. The project includes an LNG
terminal, port-based SEZ and petrochemical complex, among other infrastructure.
GDKL already owns an eight-hectare freehold property at Kalamasserry, which, together
with this leasehold land of 2.58 hectares, will enable GDKL to create adequate capacities
to handle containers, in sync with the capacities and throughput of the ICTT. GDKL's total
investment in Vallarpadam and Kalamasserry will exceed Rs50cr. We maintain a Buy
rating on GDL with a Target Price of Rs123.
October 1, 2010 2

3. Market Outlook | India Research
Economic and Political News
Fiscal deficit falls 17% to Rs1.5lakh-cr during April-August
Current account deficit grows to US $13.7bn
Food inflation at 16.44%; fear of rate hike looms
Govt. crops loan interest subsidy by 50bp
Sugar futures ban lifted on upbeat outlook
Corporate News
Larsen & Toubro bags Rs700cr order
Ahluwalia Contracts wins Rs4.76bn orders
Sterlite moves Supreme Court against High Court order
Rel. Globalcom bags contracts worth US $100mn in over 3 months
IVR Prime raises Rs250cr from IFCI
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
October 1, 2010 3

4. Market Outlook | India Research
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October 1, 2010 4