1. Market Outlook
India Research
October 5, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
Indian markets opened on a bullish note on the back of positive global cues. BSE Sensex 0.2% 30.7 20,476
Further, the indices inched higher with Nifty hitting the 6,200 levels, led by Nifty 0.3% 16.1 6,159
strong buying across the auto and realty sectors. The trading momentum MID CAP 0.7% 56.4 8,270
continued to be strong; however, profit booking emerged at higher levels SMALL CAP 0.3% 34.4 10,438
paring initial gains. Further, the sentiment turned negative as European indices BSE HC 1.7% 103.3 6,211
opened on a weak note. Finally, the benchmark indices managed to close in
BSE PSU 0.5% 54.5 10,526
the positive zone with the Sensex and Nifty ending up 0.2% and 03%,
BANKEX 0.8% 113.2 14,365
respectively. BSE mid-cap and small-cap indices outperformed the Sensex,
AUTO 0.6% 61.8 9,819
gaining 0.7% and 0.3%, respectively. Among the front liners, M&M, RCOM,
METAL 0.6% 106.9 17,624
HDFC, JP Associates and ICICI Bank gained 2–3%, while ITC, Sterlite Ind., Hero
Honda, Bharti Airtel and L&T were down 1–2%. Among mid caps, Bhushan OIL & GAS 0.5% 57.9 10,661
Steel, UCO bank, Mannapuram General, OnMobile Global and Tulip Telecom BSE IT -0.4% (22.8) 6,077
gained 6–17%, while Pipavav Shipyard, Motilal Oswal, Indraprastha Gas, Global Indices Chg (%) (Pts) (Close)
Gujarat Fluro and Parsvanath Developers lost 3–8%. Dow Jones -0.7% (78.4) 10,751
NASDAQ -1.1% (26.2) 2,345
Markets Today
FTSE -0.7% 36.9 5,556
The trend deciding level for the day is 20540/6175 levels. If NIFTY trades Nikkei -0.2% (23.2) 9,381
above this level during the first half-an-hour of trade then we may witness a Hang Seng 1.2% 260.5 22,619
further rally up to 20643 – 20809/6206 – 6253 levels. However, if NIFTY
Straits Times 0.8% 26.5 3,157
trades below 20540/6175 levels for the first half-an-hour of trade then it may
Shanghai Com 1.7% 45.0 2,656
correct up to 20373 - 20271/ 6129 - 6098 levels.
Indices S2 S1 R1 R2 Indian ADRs Chg (%) (Pts) (Close)
SENSEX 20,271 20,373 20,643 20,809 Infosys -2.4% (1.7) $68.8
NIFTY 6,098 6,129 6,206 6,253 Wipro -1.5% (0.2) $15.4
Satyam -1.0% (0.0) $3.9
News Analysis ICICI Bank 0.2% 0.1 $51.0
HDFC Bank -0.4% (0.7) $187.0
Cement despatches – September 2010
Tata Motors increases QIP issue size to US $750mn
Advances / Declines BSE NSE
IVRCL bags orders worth Rs1,120cr
Refer detailed news analysis on the following page. Advances 1,429 634
Net Inflows (October 01, 2010) Declines 1,541 758
Rs cr Purch Sales Net MTD YTD Unchanged 124 52
FII 4,565 2,600 1,964 6,720 91,080
MFs 985 1,004 (19) (19) (23,369) Volumes (Rs cr)
BSE 5,442
FII Derivatives (October 04, 2010)
Open NSE 17,735
Rs cr Purch Sales Net
Interest
Index Futures 1,577 2,469 (892) 16,072
Stock Futures 1,816 2,287 (470) 40,339
Gainers / Losers
Gainers Losers
Price chg Price chg
Company Company
(Rs) (%) (Rs) (%)
Bhushan Steel 507 16.8 Godrej Cons. 396 (3.2)
UCO Bank 129 10.6 Amtek Auto 164 (2.6)
Suzlon Energy 58 7.3 Jubilant Org. 326 (2.3)
Vijaya Bank 88 5.7 Bajaj Holdings 816 (2.1)
Tata Comm. 326 5.7 IRB Infra 261 (2.0)
1
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2. Market Outlook | India Research
Cement despatches – September 2010
Cement despatches in September 2010 were affected by monsoons and low
off-take from major consumer segments such as housing and irrigation. However, JP
Associates continued to perform well and reported the highest growth among the top four
players. The company’s despatches grew by strong 61% yoy to 1.17mmt, aided by huge
capacity additions by the company. Ambuja reported a 9% yoy increase in despatches to
1.48mmt. UltraTech reported a meager 2.7% yoy increase in despatches to 2.85mmt.
However, ACC’s despatches declined by 3% yoy to 1.58mmt. We continue to remain
Neutral on ACC, Ambuja and UltraTech as they are fairly priced.
Tata Motors increases QIP issue size to US $750mn
Tata Motors has raised the size of its qualified institutional placement (QIP) to
US $750mn from the earlier US $525mn owing to higher demand from institutional
investors. The share sale comprises US $550mn of ‘A’ ordinary shares with differential
voting rights and US $200mn of ordinary shares. The ordinary shares have been priced at
Rs1,074/share, whereas ‘A’ shares have been priced at Rs764/share. Tata Motors intends
to use the proceeds primarily to reduce its debt levels. The company also plans to fund its
capital expenditure and long-term working capital requirement through the fund-raising
program. The current fund-raising program will lead to around 7% dilution in equity.
We believe the fund-raising program is on expected lines as the company is committed
towards reducing its debt levels. Tata Motors has been steadily deleveraging its balance
sheet via sale of investments and various fund-raising initiatives. Further, the company has
benefited from improving operating cash flows and liquidity. Thus, the current initiative to
raise funds will strengthen the company’s capital structure, and we expect the Debt-Equity
ratio to reduce to below ~1.5x by FY2012E (compared to 4.3x in FY2010). We maintain
Accumulate on the stock with an SOTP Target Price of Rs1,214.
IVRCL bags orders worth Rs1,120cr
IVRCL Infrastructure has bagged orders worth Rs1,120cr for various construction projects.
The company’s water division has secured orders worth Rs451cr and the building division
has won projects worth Rs.440cr. Further, the company's transportation division got orders
worth Rs137cr and the power division has bagged projects worth Rs92cr.
We have valued IVRCL on an SOTP basis. The company’s core construction business is
valued at a P/E of 14x FY2012E EPS of Rs10.9 (Rs153/share), whereas its stake in
subsidiaries IVR Prime (Rs49/share) and Hindustan Dorr-Oliver (Rs14/share) has been
valued on an Mcap basis, post assigning a 30% holding company discount. At the CMP of
Rs165, the stock is trading at a P/E of 15.2x FY2012E EPS and 2.0x FY2012E P/BV on a
standalone basis and adjusting for its subsidiaries at P/E of 9.5x FY2012E EPS and 1.2x
FY2012E P/BV, which we believe is at attractive valuations. Therefore, on the back of the
company’s excellent execution track record, robust order book to sales ratio and attractive
valuations, we maintain a Buy rating on the stock with a Target Price of Rs216.
October 5, 2010 2

3. Market Outlook | India Research
Economic and Political News
No signs of overheating in economy: Montek Singh
India’s September gold imports down 17.9% yoy to 32.6tonnes from 39.7tonnes
Capital controls not needed for now: Finance Minister
Plan panel highlights need for 4% farm growth
Corporate News
Tata Motors acquires Italy's Trilix SRL for Euro1.85mn
Ashok Leyland's vehicle sales surge 90% in September 2010
Lupin’s US arm gets final USFDA nod for generic Hyzaar, Cozaar
Alstom Projects secures order worth Rs550mn from Lanco Infratech
Petron Engg. bags Rs1.64bn order from Adani Infra
Alfa Laval wins Rs380mn order from Tata Chemicals
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
October 5, 2010 3

4. Market Outlook | India Research
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