1. Market Outlook
India Research
May 18, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
Volatility ruled the roost as the key benchmark indices extended losses after a BSE Sensex -0.9% (159.0) 16,836
weak opening triggered by lower Asian stocks. Intermittent recovery was Nifty -0.7% (33.6) 5,060
witnessed after a steep intraday slide. The market staged a strong intraday MID CAP -0.2% (14.7) 6,927
rebound in afternoon trade as European stocks recovered from initial fall. The
SMALL CAP -0.7% (60.2) 8,750
recovery gathered steam in late trade, however the stocks weakened again at
BSE HC 0.5% 28.5 5,395
the fag end of the trading session. The Sensex and Nifty closed down 0.9% and
BSE PSU -0.3% (27.6) 8,907
0.7%, respectively. The BSE Mid-cap and the Small-cap indices closed lower by
BANKEX -0.5% (54.2) 10,791
0.2% and 0.7%, respectively. Among the front-liners, L&T, HUL, SBI, Bharti Airtel
and Cipla were up by 0-5%, while DLF, ACC, Wipro, Tata Motors and AUTO -1.3% (99.3) 7,693
Jaiprakash Associates were down by 3-4%. In the mid-cap segment, Whirlpool, METAL -0.2% (24.3) 15,868
Piramal Health, Dena Bank, Karnataka Bank and Bayer Corp. were up by 5- OIL & GAS -1.8% (182.2) 9,689
20%, while Prakash Industries, Gee Kay Finance, Aban Offshore, Punj Loyd and BSE IT -1.8% (94.7) 5,152
Jubilant Foodworks were down by 4-8%.
Global Indices Chg (%) (Pts) (Close)
Markets Today Dow Jones 0.1% 5.7 10,626
NASDAQ 0.3% 7.4 2,354
The trend deciding level for the day is 16783 / 5040 levels. If NIFTY trades
above this level during the first half-an-hour of trade then we may witness a FTSE -0.0% (0.3) 5,263
further rally up to 17015 – 17194 / 5114 – 5169 levels. However, if NIFTY Nikkei -2.2% (226.8) 10,236
trades below 16783 / 5040 levels for the first half-an-hour of trade then it Hang Seng -2.1% (430.2) 19,715
may correct up to 16604 – 16372 / 4986 – 4912 levels. Straits Times -0.8% (21.5) 2,834
Shanghai Com -5.1% (136.7) 2,560
Indices S2 S1 R1 R2
Indian ADRs Chg (%) (Pts) (Close)
SENSEX 16,372 16,604 17,015 17,194
Infosys 0.0% 0.0 $57.9
NIFTY 4,912 4,986 5,114 5,169
Wipro -1.7% (0.4) $21.2
Satyam 0.4% 0.0 $5.2
News Analysis ICICI Bank 0.7% 0.3 $39.5
ABB offers to increase stake in the India subsidiary HDFC Bank -1.7% (2.5) $143.9
Results Reviews: GAIL, Larsen and Toubro, NTPC, Rcom
Refer detailed news analysis on the following page. Advances / Declines BSE NSE
Advances 1,016 387
Net Inflows (May 14, 2010) Declines 1,828 935
Rs cr Purch Sales Net MTD YTD Unchanged 57 26
FII 2,263 2,468 (205) (3,014) 26,697
MFs 592 798 (206) (887) (8,115) Volumes (Rs cr)
FII Derivatives (May 17, 2010) BSE 3,988
Open NSE 12,998
Rs cr Purch Sales Net
Interest
Index Futures 2,567 3,839 (1,272) 15,206
Stock Futures 1,987 2,172 (185) 29,554
Gainers / Losers
Gainers Losers
Company Price (Rs) Chg (%) Company Price (Rs) Chg (%)
ABB 831 23.4 Engineers India 401 (4.7)
Piramal Health 537 6.8 Aban Offshore 793 (4.6)
Dena Bank 94 5.8 Punj Lloyd 138 (4.4)
Siemens 696 5.3 Bhushan Steel 1,494 (4.3)
L&T 1,606 5.0 IVRCL Infra 163 (4.3)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 0109965391

2. Market Outlook | India Research
ABB offers to increase stake in the India subsidiary
ABB group has announced an open offer for the shareholders of ABB India at Rs900 per
share in order to increase its stake in the Indian company from approximately 52 percent
to 75 percent. The parent company cited aim of the investment as to facilitate the long-
term development of ABB’s business in India. Subject to regulatory clearance, the offer is
expected to begin on July 8, 2010 and end on July 27, 2010. Payment for the shares is
expected to take place on August 10, 2010.
The management has indicated restricting its stake in the Indian outfit at 75% post the
open offer. Thus as per the existing shareholding pattern, the acceptance ratio works out to
be 47.8%. Given the lucrative price being offered by the ABB group and existing valuations
of the peer group in the country, we recommend investors to subscribe to the open offer.
4QFY2010 Result Reviews
GAIL
GAIL India (GAIL) delivered a good set of numbers for 4QFY2010, which was ahead of
our expectations. GAIL’s Net Sales increased 6.4% yoy, while the Net Profit increased by a
whopping 44.6% yoy. GAIL reported an increase in Net Sales to Rs6,522cr (Rs6,128cr),
primarily on the back of a good performance in the transmission segment, Petrochemical
segment and LPG and liquid hydrocarbon segments. The natural gas transmission
segment registered a top-line growth of 13.6%, while the operating profits in the segment
were up 15.7% yoy. Gas transmission volumes stood at 114.76mmscmd, and was
marginally higher our expectation, registering a growth of 39.1% yoy. Similarly, the
performance of the LPG and liquid hydrocarbon segment was also good during the
quarter. This was largely on account of a lower-than-anticipated provision towards the
subsidy burden. The LPG and liquid hydrocarbon segment registered a Top-line growth of
19.9% yoy, while the operating profits stood at Rs428cr as against a profit of Rs246cr
during 4QFY2009. The Petrochemical segment also witnessed a 32.3% increase in
operating profits on account of an increase in crude oil prices and increased product
deltas. Overall, Operating profit during the quarter increased by 37.5% to Rs1,317cr,
which was higher than our expectation, on account of a lower-than-anticipated subsidy
burden during the quarter, coupled with better-than-expected performance in the
petrochemical segment. The PAT during the quarter stood at Rs911cr (Rs630cr), registering
a growth of 44.6% yoy, which was higher than our expectation of Rs715cr. We maintain a
Buy rating on GAIL, with a Target Price of Rs553.
Larsen and Toubro
Larsen and Toubro (L&T) posted very good set of numbers for 4QFY2010, which were way
above our expectations. Top-line witnessed robust growth led by pick up in Building &
Factories, Railways, Power T&D and Process segments. Further, operating margins made
historical high, inspite of increase in manufacturing and construction opex, mainly on
account of reduction in sales, adm & other expenditure which were due to effective forex
hedging and expense control. Further, the margins were also aided due to favourable
product mix in E&E segment. On the order book front, L&T has an order backlog of
Rs100,239cr which was in line with the expectations. The order inflow for the year was at
69,572cr led by Oil & Gas and power segment. Against this backdrop, we maintain our
positive stance on the company and Accumulate rating on the stock and a Target Price of
Rs1,809 (Rs1,761earlier).
May 18, 2010 2

3. Market Outlook | India Research
NTPC
NTPC’s net sales grew by 7.9% yoy to Rs12,353cr aided by growth in volumes and
increase in tariffs. The growth in volumes was on account of capacity addition of 990MW
during the year at Dadri and Kahalgoan. The operating profit of the company grew by
1.9% yoy to Rs3,044cr. However, the company's net profit de-grew by 4.5% to Rs2,018cr
due to lower other income and higher tax expense. We maintain an Accumulate on the
stock with a Target Price of Rs230.
Rcom
Rcom recorded a Top-line de-growth of 12.2% yoy (de-growth of 4.1%yoy). The
subscribers grew by 8.6% qoq to 102.4 subscribers, however the ARPU was down by 6.7%
qoq. Total MoU grew by 5.1% qoq to 93.5bn minutes due to increased elasticity on
dropping call rates. RPM for the quarter was down 2.2% to Rs0.44/minute. EBIDTA
margins contracted by 268bps qoq (down by 403p yoy) largely on account of increase in
the network operating cost. Thus on account of lower margins and higher tax rate of
14.5%, the company reported 16.1% yoy decline (10.1% qoq growth) in Bottomline,
despite of higher net interest income of Rs 813cr up 99% qoq recorded during the quarter.
We recommend an Accumulate rating on the stock with a Target Price of Rs155.
May 18, 2010 3

4. Market Outlook | India Research
Economic and Political News
NHAI board clears Rs6,500cr road projects
Govt for 74% FDI in defence to overcome obsolescence
Number of credit card holders slips to 18.3 mn in March’2010
Bids for one all-India 3G licence hit US $3.54bn
Corporate News
SAIL talks to Tata on JV; progress on Posco
Mines ministry says no to Nalco divestment
Strides gets FDA approval for HIV drug
L&T Finance, L&T Infotech plan to tap capital market
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Events for the day
Chennai Petroleum Dividend, Results
ICRA Dividend, Results
JK Lakshmi Cements Dividend, Results
Man Ind. Dividend, Results
Mothersumi Dividend, Results
Polyplex Corp. Results
Sagar Cements Dividend, Results
May 18, 2010 4

5. Market Outlook | India Research
Research Team Tel: 022-4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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May 18, 2010 5