1. Market Outlook
India Research
June 15, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The key benchmark indices logged gains for the fourth running day after Fitch BSE Sensex 1.6% 273.2 17,338
Ratings, a global rating agency, raised India's local currency rating outlook to Nifty 1.5% 78.4 5,198
stable from negative. The market opened on a firm note tracking gains in Asian MID CAP 0.9% 62.8 6,948
stocks. The Sensex hit a fresh intraday high in morning trade. The market pared SMALL CAP 1.3% 112.2 8,750
gains in afternoon trade on profit booking. Stocks regained strength in mid- BSE HC -0.3% (15.8) 5,574
afternoon trade and spurted in late trade to finally close in green. The Sensex BSE PSU 0.8% 72.4 9,118
and Nifty gained 1.6% and 1.5%, respectively. BSE mid-cap and small-cap BANKEX 1.0% 106.2 10,854
indices also closed higher by 0.9% and 1.3%, respectively. Among the front- AUTO 0.1% 8.1 8,026
liners, Infosys, Reliance Infra., Wipro, Reliance Communications and TCS were METAL 1.7% 248.5 14,680
up by 3–4%, while Bharti Airtel, Tata Motors, BHEL, Hero Honda and Maruti OIL & GAS 1.9% 190.7 10,363
Suzuki were down by 0–2%. In the mid-cap segment, Jai Corp., Prakash BSE IT 3.7% 190.5 5,352
Industries, Kwality Dairy, Sintex Industries and IDBI Bank were up by 5–17%,
while Eicher Motors, Tulip Telecom, REI Agro, Oriental Bank and GCPL were
Global Indices Chg (%) (Pts) (Close)
down by 2%.
Dow Jones -0.2% (20.2) 10,191
Markets Today NASDAQ 0.0% 0.4 2,244
FTSE 0.7% 38.5 5,202
The trend deciding level for the day is 17269/5173 levels. If NIFTY trades Nikkei 1.8% 174.6 9,880
above this level during the first half-an-hour of trade then we may witness a Hang Seng 0.9% 179.5 20,052
further rally up to 17420 – 17502 / 5226 – 5254 levels. However, if NIFTY Straits Times 0.8% 22.0 2,818
trades below 17269/5173 levels for the first half-an-hour of trade then it may Shanghai Com 0.3% 7.4 2,570
correct up to 17188 – 17037/5145 - 5092 levels.
Indices S2 S1 R1 R2 Indian ADRs Chg (%) (Pts) (Close)
Infosys 2.8% 1.7 61
SENSEX 17,037 17,188 17,420 17,502
Wipro 3.8% 0.8 21
NIFTY 5,092 5,145 5,226 5,254
Satyam -0.6% (0.0) 5
News Analysis ICICI Bank 0.0% 0.0 37
HDFC Bank 0.7% 1.0 146
RCOM plans to demerge its tower business
Mahindra Navistar trucks roll out of Chakan Plant
Advances / Declines BSE NSE
SpiceJet to change face
Advances 1,882 958
Refer detailed news analysis on the following page.
Declines 1,001 364
Net Inflows (June 11, 2010) Unchanged 90 41
Rs cr Purch Sales Net MTD YTD
FII 3,298 2,402 896 1,671 22,207
Volumes (Rs cr)
MFs 757 547 210 658 (6,473)
BSE 3,713
FII Derivatives (June 14, 2010) NSE 11,289
Open
Rs cr Purch Sales Net
Interest
Index Futures 2,811 1,495 1,316 14,063
Stock Futures 1,905 1,924 (19) 28,487
Gainers / Losers
Gainers Losers
Price Price
Company Chg (%) Company Chg (%)
(Rs) (Rs)
Jai Corp 262 17.4 Dr Reddys Lab 1,410 (3.6)
RNRL 61 17.0 Areva T&D 293 (3.3)
Reliance Cap 723 6.0 Bharti Airtel 270 (1.7)
Reliance Power 168 5.5 Oriental Bank 331 (1.7)
Sintex Inds 299 5.0 GCPL 345 (1.6)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 0109965391

2. Market Outlook | India Research
RCOM plans to demerge its tower business
Reliance Communication's (RCOM) board has approved the transformational proposal to
restructure Reliance Infratel with an objective to create the world's largest independent
telecom infrastructure company. The company would sell substantial portion of its existing
holding of 95%, resulting in an independent functioning of the company ensuring
enhanced independence and neutrality to attract new 2G, 3G and BWA players. RCOM
would utilise the cash infusion to reduce its consolidated debt and would receive partial
consideration in stock enabling continued participation in future prospects of the high-
growth telecom infrastructure sector. The company would enter necessary contractual
arrangements to maintain its confirmed tenancy. The valuations are expected in the range
of Rs45lakh–55lakh per tower, valuing Reliance Infratel at about Rs25,000cr or a per
share value of Rs111. The company is in the advanced stage of discussions, with several
domestic and international strategic and financial players to finalise the proposal. We
believe the event, if happens, is positive for the company. However, we have not
incorporated any expectancy of any such event in our numbers and continue to maintain
our Reduce recommendation on the stock with a Target Price of Rs155.
Mahindra Navistar trucks roll out of Chakan Plant
After unveiling its entire range of high-performance trucks at the Auto Expo 2010 earlier
this year, Mahindra Navistar Automotives announced the start of production and the price
of its first truck offering named MN25 priced at Rs14.99lakhs (ex-showroom Pune). This
plant will also help drive synergies for Mahindra Navistar with the upcoming vendor park,
common utilities and a reduction in capex. M&M will be soon launching the rest of its HCV
range. The launch of the MN25 truck is a major step in the direction of making the
company a full range commercial vehicle (CV) player and the first step in materialising the
company’s vision to become the most trusted CV brand in India. We maintain Buy on the
stock with a Target Price of Rs705.
SpiceJet to change face
Sun TV promoter Kalanithi Maran has announced buying 37.75% stake in SpiceJet from
the company’s promoter Bhupendra Kansagra (Royal Holdings Services) and investor
Wilbur Ross. The deal has been struck at a price of Rs47.3 per share, which is at a 16.7%
discount to the current market price. Currently, the Kansagra family holds nearly 3.11cr
shares or 7.7% stake in the company post 100% conversion of the FCCBs. Wilbur Ross
holds close to 12.5cr shares or 31% stake in the company post conversion of the FCCBs.
Kalanithi Maran will make an open offer at an expected price of Rs58 per share for
additional 20% stake in the company. Prior to the stake sale announcement, Goldman
Sachs Securities (3.8% stake) converted close to 1.5cr shares held by way of warrants and
Istithmar World (5.5% stake) converted 100% of its FCCBs worth US $12mn to 2.2cr
shares, respectively. We maintain an Accumulate rating on the stock with a Target Price of
Rs65, valuing the stock at 9x FY2012E earnings of Rs7.2.
June 15, 2010 2

3. Market Outlook | India Research
Economic and Political News
Banks see base rate hovering around 8–9%
Oil ministry approves 10% disinvestment in Engineers India Ltd.
Fitch revises India’s outlook to stable from negative, forecasts growth of 8.5%
Corporate News
HCL Tech bags IT Infra deal from Singapore Exchange
Sun, Ranbaxy hit by US patent counter suits
ADAG firms hike stake in Fame India to 15.34%
VC, PE firms line up US $1bn for Green energy
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
June 15, 2010 3

4. Market Outlook | India Research
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June 15, 2010 4