1. Market Outlook
India Research
September 16, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
Continuing with the momentum, the key benchmark indices hit their highest BSE Sensex 0.8% 155.2 19,502
level in 32 months in early trade on account of heavy buying by foreign funds. Nifty 1.1% 65.4 5,861
The markets extended gains in mid-morning trade as Asian stocks and US index MID CAP 0.1% 6.6 8,068
futures edged higher. However, markets pared gains in early afternoon trade. SMALL CAP -0.1% (9.2) 10,186
In late afternoon session, indices continued their northward journey due to BSE HC 0.2% 13.6 5,750
sustained capital inflow and healthy advance tax numbers. The key benchmark BSE PSU 0.3% 33.0 10,280
indices closed in the green for the seventh straight day, with the Sensex and BANKEX 0.3% 46.3 13,570
Nifty gaining 0.8% and 1.1%, respectively. BSE mid and small-cap indices were AUTO -0.2% (22.5) 9,256
virtually unchanged, with mid-cap closing up by 0.1% and small-cap closing METAL 1.0% 154.9 16,457
down by 0.1%. Among the front liners, Infosys, RIL, Wipro, TCS and HDFC Bank OIL & GAS 1.8% 193.3 10,655
gained 2–3%, while Tata Motors, SBI, ACC, JP Associates and Cipla lost 1–3%. BSE IT 2.5% 144.7 5,949
Among mid caps, Berger Paints, Sigrun Holdings, Patni Computers, Edelweiss
Global Indices Chg (%) (Pts) (Close)
Capital and LIC Housing Finance gained 4–16%, while MVL, Dishman Pharma,
Dow Jones 0.4% 46.2 10,573
Dewan Housing, Bayer Crop and Greaves Cotton lost 3–5%.
NASDAQ 0.5% 11.6 2,301
Markets Today FTSE -0.2% (10.3) 5,557
Nikkei 2.3% 217.3 9,517
The trend deciding level for the day is 19466/5841 levels. If NIFTY trades Hang Seng 0.1% 29.6 21,726
above this level during the first half-an-hour of trade then we may witness a Straits Times 0.7% 22.4 3,071
further rally up to 19591–19679/5890-5918 levels. However, if NIFTY trades
Shanghai Com -1.3% (36.0) 2,653
below 19466/5841 levels for the first half-an-hour of trade then it may correct
up to 19377–19252/5812-5764 levels.
Indices S2 S1 R1 R2 Indian ADRs Chg (%) (Pts) (Close)
Infosys -0.5% (0.3) $64.8
SENSEX 19,252 19,377 19,591 19,679
Wipro 0.5% 0.1 $13.8
NIFTY 5,764 5,812 5,890 5,918 Satyam 1.3% 0.1 $5.3
ICICI Bank 1.0% 0.5 $47.7
News Analysis HDFC Bank 1.0% 1.8 $178.1
Cairn’s Mangala field output can be raised to 1.5lakh bpd
Prakash Ind. explains media reports as baseless Advances / Declines BSE NSE
Tata Motors – Global sales grew 29% in August 2010 Advances 1,243 535
Refer detailed news analysis on the following page. Declines 1,749 824
Net Inflows (September 14, 2010) Unchanged 103 45
Rs cr Purch Sales Net MTD YTD
FII 4,098 2,375 1,723 8,401 67,527 Volumes (Rs cr)
MFs 578 1,241 (663) (857) (16,649) BSE 5,290
FII Derivatives (September 15, 2010) NSE 17,225
Open
Rs cr Purch Sales Net
Interest
Index Futures 2,552 2,489 63 21,654
Stock Futures 1,564 1,724 (160) 39,742
Gainers / Losers
Gainers Losers
Price chg Price chg
Company Company
(Rs) (%) (Rs) (%)
Oracle Fin. 2,243 5.3 Tata Motors 1,024 (2.9)
Patni Computers 463 4.7 Petronet LNG 107 (2.4)
LIC Housing Fin 1,275 4.1 Mcleod Russel 247 (2.3)
GAIL 483 4.1 Godrej Ind 232 (2.1)
Financial Tech. 1,420 4.1 Max India 162 (1.9) 1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Market Outlook | India Research
Cairn’s Mangala field output can be raised to 1.5lakh bpd
Cairn India Ltd. has said that the giant Mangala oilfield in Rajasthan can produce
150,000bpd, 20% more than the previously approved peak production. Mangala is the
first of the 25 oil and gas discoveries Cairn has made in the prolific Rajasthan block. The
largest oil find in the country in more than two decades has an approved plateau
production of 125,000bpd (6.25mn tonnes) and, together with the Bhagyam and
Aishwariya fields in the block, is slated to produce 175,000bpd (8.25mn tonnes).
Currently, the Mangala field in Rajasthan produces 125,000bopd. Mr. Gammell, Chief
Executive of UK’s Cairn Energy Plc, said that the production from Mangala field can be
quickly ramped up to 150,000bpd (7.5mn tonnes). He further said that the results from the
ongoing development drilling campaign in Mangala field confirm the excellent reservoir
quality of the Fatehgarh Formation to support an increase in the production potential to
150,000bpd, subject to Government of India’s approval. The company’s estimate of the
resource base in Rajasthan provides a basis to produce at least 240,000bpd (12mn tonnes
a year) from the block, subject to regulatory approvals and additional investments. The
output would be equivalent to what ONGC’s prime Mumbai high field in the western
offshore produces. We believe this is a positive development and reaffirms the good
reservoir quality of the Rajasthan block. We have already built the same in our estimates
from FY2012 onwards, thus there are no upsides from the announcement. Currently, we
maintain a Neutral on the stock.
Prakash Ind. explains media reports as baseless
In a conference call held yesterday (September 15, 2010), the management of Prakash
Ind. (PIL) clarified that the allegation of illegal coal mining published in the Times of India
(TOI) is completely false and baseless. On September 8, 2010, TOI had reported that PIL
was involved in black marketing of coal.
According to the management, the extraction of coal, its quantity, grade and usage are
verified every year by the Office of the Coal Controller, Government of India, State Mining
Department and other government agencies from time to time. Management stated that
the allegation was made at the behest of a rival company, following a dispute over a mine
(Vijay central coal block) allocation. The dispute has been going for more than a year. It
further stated that the government has approved PIL’s application to use coal from Chotia
coal mine for increasing its sponge iron capacity by up to 0.8mn tonnes. Thereafter, the
company had surrendered its coal linkages. The government had also allotted Madanpur
coal mine to PIL for meeting its increased coal requirement due to the ongoing expansion
of its sponge iron capacity.
Management reiterated that the mined coal was being used for producing sponge iron,
and middlings and fines were being used for power production. Further, the company
currently purchases 35000–40000 tonnes of coal per month through linkages and e-
auction.
We await for further clarity on the quantum of sponge iron production, coal mined and
coal purchases for FY2008 and FY2009. The coal ministry has stated that it will decide on
the issue post the completion of the CBI inquiry. Mining operations at Chotia coal mine
remain unaffected. We maintain our Buy rating on the stock with a Target Price of Rs232.
However, we believe that the stock price could remain volatile in the short to medium-term
as news flow emerges on the pending CBI enquiry.
September 16, 2010 2

3. Market Outlook | India Research
Tata Motors – Global sales grew 29% in August 2010
Tata Motors reported its global sales numbers for August 2010, which increased 29% yoy
to 85,114 units; however, the numbers came in marginally below our estimates. While
sales of commercial vehicles grew 25% yoy, sales of passenger vehicles grew by 33% yoy
in August 2010. Jaguar and Land Rover (JLR) continued to maintain sales momentum,
posting 29% yoy growth to 16,220 units. Jaguar sales stood at 3,788 units, higher by 33%
yoy; while Land Rover sales stood at 12,432 units, higher by 28% yoy. JLR continues to
benefit from strong growth in the UK, the US, China and Russia. Going ahead, we expect
Tata Motors to post healthy volume growth. We maintain Buy on the stock with an SOTP
Target Price of Rs1,214.
Economic and Political News
Exports grow by 22.5% to US $16.64bn in August 2010
August 2010 trade deficit widens to 23-month high
Advance tax mop-up falls short of target
Corporate News
Bharti Airtel gets RBI’s approval for mobile money services
RIL seeks hike in price of KG basin gas
Ispat arm to set up Rs300cr plant in Chattisgarh
LT Foods to invest Rs100cr in green energy project
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
September 16, 2010 3

4. Market Outlook | India Research
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