1. Market Outlook
India Research
April 09, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The key benchmark indices slumped as weak global stocks and worries about BSE Sensex -1.4% (255.6) 17,714
the economic health of Greece triggered profit taking after the recent sharp Nifty -1.3% (70.2) 5,304
surge in share prices. A spike in food price inflation also rekindled fears of a MID CAP -0.4% (28.4) 7,021
hike in key policy rates when the Reserve Bank of India (RBI) reviews its SMALL CAP -0.4% (34.4) 8,950
monetary policy on April 20, 2010. The market breadth, indicating the overall BSE HC -0.8% (42.2) 5,345
health of the market, turned weak in contrast to a strong breadth earlier in the BSE PSU -1.4% (130.1) 9,104
day. Metal stocks fell as metal prices fell on the LME. Rate sensitive auto and
BANKEX -1.7% (179.8) 10,745
banking stocks also fell. Capital goods stocks also declined. The Sensex and
AUTO -1.4% (105.6) 7,718
Nifty were down by 1.4% and 1.3%, respectively, while the BSE Mid-cap and
METAL -1.9% (348.0) 18,227
Small-cap indices were also down by 0.4% each. Among the front-liners,
OIL & GAS -1.9% (197.3) 10,305
Infosys, DLF, Wipro and TCS were up by 0.1-0.5%, while Hindalco, HDFC,
ICICI Bank, Tata Motors and Bharti Airtel were down by 2-4%. In the mid-cap BSE IT 0.3% 18.0 5,317
segment, Blue Star, Phoenix Mills, Lakshmi Machine, Jai Corp and Bayer
Cropscience were up by 4-8%, while Welspun Gujarat, Usha Martin, Apollo Global Indices Chg (%) (Pts) (Close)
Tyres, IRB Infra and Prakash Industries were down by 3-5%. Dow Jones 0.3% 29.6 10,927
NASDAQ 0.2% 5.7 2,437
Markets Today FTSE -0.9% (49.4) 5,713
The trend deciding level for the day is 17785/ 5326 levels. NIFTY trades above Nikkei -1.1% (124.6) 11,168
this level during the first half-an-hour of trade then we may witness a further Hang Seng -0.3% (61.7) 21,867
rally up to 17890 – 18066/ 5362 – 5420 levels. However, if NIFTY trades Straits Times -0.8% (24.9) 2,963
below 17785/ 5326 levels for the first half-an-hour of trade then it may correct Shanghai Com -0.9% (29.5) 3,119
up to 17609 – 17503/ 5269 – 5233 levels.
Indian ADRs Chg (%) (Pts) (Close)
Indices S2 S1 R1 R2 Infosys 0.8% 0.5 $60.3
SENSEX 17,503 17,609 17,890 18,066 Wipro -0.3% (0.1) $23.4
NIFTY 5,233 5,269 5,362 5,420 Satyam -1.8% (0.1) $5.5
ICICI Bank -1.1% (0.5) $44.1
News Analysis HDFC Bank 0.1% 0.1 $144.4
Government approves SAIL divestment
Mphasis to acquire Fortify Infrastructure Services Advances / Declines BSE NSE
Refer detailed news analysis on the following page. Advances 1,168 451
Declines 1,711 862
Unchanged 84 41
Net Inflows (Apr 07, 2010)
Rs cr Purch Sales Net MTD YTD Volumes (Rs cr)
FII 3,427 3,010 418 3,463 23,273 BSE 4,809
MFs 695 842 (148) (274) (6,093) NSE 14,268
FII Derivatives (Apr 08, 2010)
Open
Rs cr Purch Sales Net
Interest
Index Futures 1,206 2,614 (1,408) 13,419
Stock Futures 766 1,404 (638) 29,063
Gainers / Losers
Gainers Losers
Company Price (Rs) Chg (%) Company Price (Rs) Chg (%)
Jai Corp 283 5.3 SAIL 237 -7.2
Lanco Infra 57 5.2 Welspun Gujarat 280 -4.6
Essar Oil 150 3.2 Hindalco Inds 176 -4.3
IFCI 53 3.1 IRB Infra 280 -3.9
Mphasis 651 2.7 Bank of India 359 -3.3
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Market Outlook | India Research
Government approves SAIL divestment
As per media reports, the government has approved to offload 10% of its stake in Steel
Authority of India Ltd (SAIL), besides allowing the company to go for a follow-on public
offer (FPO) of 10% fresh equity. The ministry is understood to have proposed that in the
first tranche, 5% of the Government stake would be divested and another 5% by way of
fresh equity. The government currently holds an 86% stake in SAIL. By divesting its 10%
stake, the government is aiming to mobilise around Rs8000-10,000cr. The company will
use the FPO proceeds to part-finance its expansion projects that are estimated at
~Rs70,000cr. We maintain a Neutral on the stock.
Mphasis to acquire Fortify Infrastructure Services
Mphasis has signed a definitive agreement to acquire the Pune-based company, Fortify
Infrastructure Services, a global provider of Remote IT Operation and Management (ROM)
Services. Fortify has a revenue run rate of US $20mn annually and has been valued at US
$15.5mn in an all cash deal. Over and above this base deal amount, Mphasis would also
share earn outs till FY2012E if it manages to surpass the pre-decided financial milestones.
Fortify is serving over 50+ active clients, primarily in the BFSI, Healthcare and Hospitality
verticals. We believe that the current acquisition would provide a fillip to Mphasis’
Infrastructure business and also enhance its client portfolio. The deal is expected to
complete in the next six weeks and the revenue contribution would accrue from 3QFY2010
(year ending October, 2010) onwards. We believe that the acquisition will be EPS accretive
for the company, as it would bring in efficiency and increased scale to Fortify’s current
operations. Thus, we reiterate our Buy rating on the stock, with a Target Price of Rs872.
Economic and Political News
Govt. clears Rs4,355cr highway projects
Govt. stubs out foreign investment in tobacco
Food Inflation rose 17.7% for the week ended Mar 27, 2010
Corporate News
IOC raises Rs1,350cr through sale of oil bonds in secondary market
Cipla makes cancer drug cheaper—rolls out Bayer’s cancer drug
Suzlon bags Italian firm's order for 18 wind turbines
GSPC inks pact with Egypt for oil & gas exploration
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Events for the day
Supreme Industries Results
Lancor Holdings Results
April 09, 2010 2

3. Market Outlook | India Research
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