1. Market Outlook
India Research
June 8, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The benchmark indices witnessed a gap-down opening following cues from BSE Sensex -2.0% (336.6) 16,781
weak Asian and US markets last week. The markets traded in a narrow range Nifty -2.0% (101.5) 5,034
for most part of the morning session. However, mild recovery ensued in early MID CAP -1.4% (94.5) 6,796
afternoon trade on reports that monsoon has arrived after being stalled by a SMALL CAP -1.4% (125.0) 8,515
cyclone last week. The market extended gains led by banking stocks along with BSE HC -0.7% (39.9) 5,469
recovery in European stocks and positive US futures. The Sensex and Nifty BSE PSU -2.0% (179.2) 8,992
ended the day with losses of 2.0% each. Mid-cap and small-cap indices BANKEX -1.7% (185.9) 10,587
outperformed the Sensex and closed lower by 1.4% and 1.5%, respectively. AUTO -1.7% (136.5) 7,758
Among the front-liners, Reliance Communication, ACC and Hero Honda were METAL -4.0% (590.1) 14,200
up by 0–5%, while DLF, Hindalco, Tata Steel, Tata Motors and Sterlite were
OIL & GAS -1.9% (195.3) 9,955
down by 4–6%. In the mid-cap segment, REI Agro, Astrazeneca, BOC India,
BSE IT -1.7% (91.1) 5,205
Gillette and Alfa Laval were up by 6–15%, while Rajesh Exports, Mcleod Russel,
JM Financial, Whirlpool and Usha Martin were down by 5–6%.
Global Indices Chg (%) (Pts) (Close)
Dow Jones -1.2% (115.5) 9,816
Markets Today
NASDAQ -2.0% (45.3) 2,174
The trend deciding level for the day is 16846 / 5057 levels. If NIFTY trades FTSE -1.1% (56.9) 5,069
above this level during the first half-an-hour of trade then we may witness a Nikkei -3.8% (380.4) 9,521
further rally up to 17005 – 17229 / 5110 – 5186 levels. However, if NIFTY Hang Seng -2.0% (401.9) 19,378
trades below 16846 / 5057 levels for the first half-an-hour of trade then it may Straits Times -2.0% (54.6) 2,752
correct up to 16622 – 16463 / 4981 – 4928 levels. Shanghai Com -1.6% (41.9) 2,512
Indices S2 S1 R1 R2 Indian ADRs Chg (%) (Pts) (Close)
SENSEX 16,463 16,622 Infosys -2.2% (1.2) $56.6
17,005 17,229
Wipro -2.5% (0.5) $20.1
NIFTY 4,928 4,981 5,110 5,186
Satyam -1.6% (0.1) $4.9
ICICI Bank -3.1% (1.1) $35.2
News Analysis HDFC Bank -2.5% (3.5) $134.5
 EGoM defers decision on fuel price hike
Advances / Declines BSE NSE
 Sadbhav Engineering bags two orders
Advances 831 260
Refer detailed news analysis on the following page.
Declines 1,970 1,071
Net Inflows (June 4, 2010) Unchanged 70 22
Rs cr Purch Sales Net MTD YTD
FII 1,614 1,339 275 168 20,704 Volumes (Rs cr)
MFs 412 423 (11) 485 (6,645) BSE 2,934
FII Derivatives (June 7, 2010) NSE 10,651
Open
Rs cr Purch Sales Net
Interest
Index Futures 1,310 2,975 (1,665) 14,050
Stock Futures 798 1,059 (262) 26,257
Gainers / Losers
Gainers Losers
Price Price
Company Chg (%) Company Chg (%)
(Rs) (Rs)
Oracle Fin 2,213 6.6 DLF 264 (6.2)
Essar Ship Port 87 5.2 Mcleod Russel 172 (6.0)
Reliance Com 176 4.6 Sesa Goa 348 (5.6)
Apollo Hosp 774 2.6 Container Corp 1,231 (5.3)
Vijaya Bank 62 2.1 Hindalco Ind 140 (5.1)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 0109965391

2. Market Outlook | India Research
EGoM defers decision on fuel price hike
The much-awaited EGoM meeting for taking a decision on petrol and diesel price de-
regulation/hike proved to be a damp-squib as no decision was taken on the issue. The
probable reasons of cancellation of the decision could be traced to the absence of three
out of the seven EGoM members coupled with absence of the political consensus over the
issue. EGoM would be meeting again shortly for further discussions over the issue. The
exact date of the same is yet to be finalised; however, the news reports suggest that
meeting could take place over the next 15-20 days. Government could also form a
ministerial panel to evolve a political consensus over the issue. Also, the cabinet could also
discuss over the issue. We believe the delay points towards difficult times ahead in arriving
the political consensus over the issue, thus it could temper investor expectation regarding
the deregulation of diesel prices in particular.
Stock of oil marketing companies viz. HPCL, BPCL and IOC along with upstream stocks
viz. ONGC, OIL India and GAIL have rallied significantly during the past few days on
account of expectations of the fuel price hike. We believe the delay in decision-making
would temper investor sentiments and would result in profit booking in these stocks. We
maintain a Neutral rating on ONGC, and a Buy on GAIL with a Target price of Rs580.
Sadbhav Engineering bags two orders
Sadbhav Engineering (SEL) has secured two contracts aggregating to Rs92cr from the
Western Coal Fields Ltd. relating to excavation-related works. The company has got an
order book totaling to approximately Rs6,860cr, spread across verticals of roads (76.8%),
irrigation (9.5%) and mining excavation(13.7%). The order book continues to provide top-
line visibility; however, in the light of rich valuations that the stock is trading at we maintain
our Neutral view.
June 8, 2010 2

3. Market Outlook | India Research
Economic and Political News
 Govt. sets up Technical Advisory Group to reform tax structure
 GST bill to come up in monsoon session: Asim Dasgupta
 Govt. proposes windfall (bumper profits) tax on iron ore miners
Corporate News
 KSK Energy Ventures inks PPA With Gujarat Urja Vikas Nigam Ltd.
 IL&FS Transport JV achieves financial closure for Gurgaon metro
 Neyveli Lignite commissions lignite-based power plant at Rajasthan
 ARSS Infra bags Rs415.6mn order from Northeast Frontier Railway, Guwahati
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
June 8, 2010 3

4. Market Outlook | India Research
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