1. Market Outlook
India Research
June 11, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The key benchmark indices opened positive defying global weakness as US BSE Sensex 1.6% 264.2 16,922
markets had closed in red, while Asia traded weak at the opening of the Indian Nifty 1.8% 91.5 5,079
market. Markets managed to sustain gains for most half of the session, trading
MID CAP 1.1% 75.0 6,866
in a tight range until the afternoon session. Strong buying ensued as European
SMALL CAP 1.3% 107.4 8,600
markets pared opening losses. Markets continued to gain, closing the session at
BSE HC 1.6% 90.2 5,620
the day’s high. All sectoral indices on BSE ended in green, while NSE Nifty
BSE PSU 0.6% 52.1 9,048
closed above the 5,050 level. The Sensex and Nifty gained by 1.6% and 1.3%,
respectively. Mid-cap and small-cap indices also closed higher by 1.1% and BANKEX 1.1% 111.1 10,637
1.3%, respectively. Among the front-liners, Reliance Infra, Bharti Airtel, Tata AUTO 3.0% 230.1 7,940
Motors, Hero Honda and Hindalco were up by 4–5%, while ONGC was the METAL 2.1% 298.3 14,400
sole losing stock, down by 0.3%. In the mid-cap segment, Pipavav Shipyard, OIL & GAS 0.6% 61.9 10,005
Pantaloon Retail, Bombay Rayon, Patel Engineering and Dish TV were up by 5– BSE IT 1.1% 55.8 5,157
7%, while Shree Global, Bajaj Holding, Akzo India, Alfa Laval and Anant Raj
were down by 2–3%. Global Indices Chg (%) (Pts) (Close)
Markets Today Dow Jones 2.8% 273.3 10,173
NASDAQ 2.8% 59.9 2,219
The trend deciding level for the day is 16845 / 5054 levels. If NIFTY trades
FTSE 0.9% 46.6 5,133
above this level during the first half-an-hour of trade then we may witness a
further rally up to 17020 – 17118 / 5110 – 5141 levels. However, if NIFTY Nikkei 1.1% 103.5 9,543
trades below 16845 / 5054 levels for the first half-an-hour of trade then it may Hang Seng 0.1% 11.5 19,633
correct up to 16746 – 16571 / 5022 – 4966 levels. Straits Times 1.2% 33.8 2,780
Shanghai Com -0.8% (21.3) 2,563
Indices S2 S1 R1 R2
SENSEX 16,571 16,746 17,020 17,118 Indian ADRs Chg (%) (Pts) (Close)
NIFTY 4,966 5,022 5,110 5,141 Infosys 3.0% 1.7 59
Wipro 4.5% 0.9 21
News Analysis Satyam 2.1% 0.1 5
HCC divests 74% stake in 247Park valued at Rs775cr ICICI Bank 3.3% 1.1 36
HDIL benefits from government’s proposal to increase FSI to 1.33 HDFC Bank 5.0% 6.8 144
Nagarjuna Construction Company secures new orders
Advances / Declines BSE NSE
Orchid Chemicals gains front-end presence in US
Advances 1,878 968
RIL may pick up 40% in Pioneer's shale gas assets
Declines 901 337
Refer detailed news analysis on the following page.
Unchanged 135 48
Net Inflows (June 9, 2010)
Rs cr Purch Sales Net MTD YTD Volumes (Rs cr)
FII 2,190 2,192 (2) 387 20,923 BSE 3,602
MFs 649 418 231 448 (6,682) NSE 11,617
FII Derivatives (June 10, 2010)
Open
Rs cr Purch Sales Net
Interest
Index Futures 1,754 1,511 243 14,167
Stock Futures 1,096 690 406 27,351
Gainers / Losers
Gainers Losers
Price Price
Company Chg (%) Company Chg (%)
(Rs) (Rs)
Pantaloon 410 6.9 Bajaj Holdings 712 (2.5)
Patel Engg 394 6.1 Anant Raj 104 (2.2)
Sun TV 416 5.8 Apollo Hospital 765 (1.6)
Reliance Infr 1,123 5.0 Petronet LNG 82 (1.5)
Castrol India 420 5.0 GCPL 354 (1.4)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 0109965391

2. Market Outlook | India Research
HCC divests 74% stake in 247Park valued at Rs775cr
Hindustan Construction Company (HCC) has announced divestment of its 74% stake in its
Mumbai-based new-age business destination, 247Park, to IL&FS Milestone Fund. The fund
has valued 247Park at Rs775cr. Our talks with the management indicate that this is an all-
cash deal, and we believe that these cash proceeds will improve the company’s liquidity
position. Also, major part of the proceeds would be utilised for debt repayment, which is in
line with the company’s objective of reducing its interest costs. The stake sale to IL&FS
Milestone Fund has is close to our fair valuation estimates for 247Park. We continue to
maintain our Neutral view on the stock in the backdrop of its rich valuations. Any
announcements relating to fund-raising plans on the Lavasa front act as a risk to our call.
HDIL benefits from government’s proposal to increase FSI to 1.33
The Bombay High Court has set aside Maharashtra Government’s decision to increase the
FSI in suburbs to 1.33 from the current level of 1. This will boost TDR volumes, which
should benefit players like HDIL, Akruti and DB Realty. HDIL controls ~70% of TDR supply
in Mumbai. HDIL’s stock price has severely underperformed over the last three months due
to group-level issues, expectation of an increase in FSI and delays in the MIAL project.
Going forward we believe HDIL’s stock should outperform with FSI being maintained at 1
along with relocation of families for Phase-I of the MIAL project, which will be sorted out
over the next three months. Further around 4.7mn sq ft of residential projects launched
since FY2009 have been pre-sold to the extent of 75%, providing Rs2,600cr of revenue
visibility over FY2010-12E. The stock is trading at 45% discount to our one-year forward
NAV. We maintain our Buy recommendation on the stock, with a Target Price of Rs302.
Nagarjuna Construction Company secures new orders
Nagarjuna Construction Company (NCC) has secured new orders amounting to Rs791cr.
The orders are relating to the buildings and housing segment and are spread across New
Delhi, Mumbai, Lucknow, Bangalore and Chennai. Work orders are to be completed over
9–24months. The outstanding order book of NCC stands at around Rs16,000cr (or 3.3x
FY2010 revenue). We maintain our Neutral view on the stock.
Orchid Chemicals gains front-end presence in US
Orchid Chemicals’ management has announced that the company has entered into an
agreement to acquire Karalex Pharma, a US-based generic marketing and sales service
company, through an all cash deal. Karalex Pharma was formed in CY2007 and has
launched over 100 generic products with value in excess of US $1bn. The deal is expected
to add revenue of US $20mn in FY2011. Orchid Chemicals would launch 15-20 generic
products through Karalex Pharma in the next three years in the US market. Through this
deal Orchid Chemicals would establish its front-end presence in the US. The deal is likely
to be completed this month. The stock is under review.
June 11, 2010 2

3. Market Outlook | India Research
RIL may pick up 40% in Pioneer's shale gas assets
As per news reports, RIL is close to buying up to 40% stake in shale gas assets owned by
Texas-based Pioneer Natural Resources Co. Pioneer has about 3,10,000 acres in the Eagle
Ford Shale play in South Texas, US. If this transaction takes place, it is likely to be in line
with the one that RIL had done with Altas Energy, another shale gas asset company. In
April 2010, RIL had picked up 40% in Atlas' shale assets for a consideration of US $1.7bn.
It has committed to a capex of US $3.4bn over 10 years in Atlas. We believe inorganic
growth plans are likely to be on the forefront, given that the huge cash flow is likely to be
generated by the company, along with low debt-equity ratio. We maintain a Buy view on
RIL, with a Target Price of Rs1,260, translating into an upside of 24% from the current
level.
Economic and Political News
The food price index rose 16.7% yoy for the week ended May 29
FIPB clears 17 FDI proposals worth Rs569cr
Govt. okays over Rs2,500cr highway projects in five states
Corporate News
Ranbaxy launches Daiichi's heart disease drug in India
Orchid Chemicals to buy US-based Karalex Pharma
L&T Bags Rs747cr orders for metallurgical, material handling projects
NTPC-BHEL JV to make 5,000MW capacity equipment
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
June 11, 2010 3

4. Market Outlook | India Research
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June 11, 2010 4