1. Market Outlook
India Research
June 25, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The market edged higher in early trade, tracking firm Asian stocks. The market BSE Sensex -0.1% (25.7) 17,730
pared gains after hitting a fresh intraday high in early afternoon trade and Nifty -0.0% (2.5) 5,321
slipped into the red in afternoon trade as European stocks declined. Immense MID CAP 0.1% 8.4 7,132
volatility was witnessed in the last one hour of trade as traders rolled over SMALL CAP 0.2% 15.3 9,038
positions in the derivatives segment as the near-month June 2010 derivatives BSE HC 0.3% 17.2 5,758
contracts expired on June 24, 2010. US Federal Reserve's more downbeat BSE PSU -0.1% (9.0) 9,248
language on US economic growth weighed on investor sentiments globally. The BANKEX -0.6% (62.1) 10,994
Sensex and Nifty closed down by 0.1% each. However, BSE mid-cap and small- AUTO 0.1% 6.3 8,284
cap indices closed up by 0.1% and 0.2%, respectively. Among the front-liners, METAL -0.5% (75.7) 15,163
HUL, L&T, Hero Honda, ITC and HDFC were up by 1–2%, while Reliance OIL & GAS -0.7% (69.0) 10,307
Infrastructure, ICICI Bank, Maruti Suzuki, TCS and Sterlite Industries were down BSE IT -0.1% (7.5) 5,401
by 1–2%. Among mid-caps, REI Six Ten, Hindustan Oil, TVS Motor, Godrej
Properties and Godrej Industries were up by 7–12%, while MVL, Kwality Dairy,
Global Indices Chg (%) (Pts) (Close)
BGR Energy, Honeywell Auto and Patni Computer declined by 3–6%.
Dow Jones -1.4% (145.6) 10,153
Markets Today NASDAQ -1.6% (36.8) 2,217
The trend deciding level for the day is 17736 / 5318 levels. If NIFTY trades FTSE -0.1% (3.1) 5,100
above this level during the first half-an-hour of trade then we may witness a Nikkei 0.0% 4.6 9,928
further rally up to 17840 – 17949 / 5351 – 5382 levels. However, if NIFTY Hang Seng -0.6% (123.1) 20,733
trades below 17736 / 5318 levels for the first half-an-hour of trade then it may Straits Times -0.8% (23.4) 2,848
correct up to 17627–17523 / 5287–5254 levels. Shanghai Com -0.1% (3.1) 2,567
Indices S2 S1 R1 R2
Indian ADRs Chg (%) (Pts) (Close)
SENSEX 17,523 17,627 17,840 17,949
Infosys -1.1% (0.7) $61.5
NIFTY 5,254 5,287 5,351 5,382
Wipro -2.0% (0.3) $12.6
News Analysis Satyam -2.5% (0.1) $5.0
ICICI Bank -2.9% (1.1) $37.5
RIL to pay US $1.3bn for stake in Pioneer's Shale gas HDFC Bank -2.6% (3.9) $145.7
McNally Bharat wins order from NTPC
Refer detailed news analysis on the following page. Advances / Declines BSE NSE
Net Inflows (June 23, 2010) Advances 1,572 715
Rs cr Purch Sales Net MTD YTD Declines 1,321 605
FII 1,868 1,499 370 8,049 28,585 Unchanged 92 43
MFs 298 529 (232) 309 (6,821)
Volumes (Rs cr)
FII Derivatives (June 24, 2010) BSE 5,049
Open
Rs cr Purch Sales Net NSE 16,951
Interest
Index Futures 6,090 5,868 222 17,241
Stock Futures 4,762 5,715 (953) 26,938
Gainers / Losers
Gainers Losers
Price Price
Company Chg (%) Company Chg (%)
(Rs) (Rs)
Hind Oil Exp. 223 10.4 HCL Tech. 359 (3.9)
Godrej Ind. 171 6.8 Bharat Elect. 1,728 (2.9)
Punj Lloyd 130 3.2 Bank of Baroda 691 (2.8)
Indian hotels 105 3.1 Patni Comp. 507 (2.8)
Rolta India 170 3.0 Kotak Bank 762 (2.7)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 0109965391

2. Market Outlook | India Research
RIL to pay US $1.3bn for stake in Pioneer's Shale gas
Reliance Industries (RIL) has agreed to pay US $1.3bn for a stake in the shale gas assets of
Texas-based Pioneer Natural Resources Co., as RIL expands its upstream business in North
America. RIL will pay US $1.15bn to Pioneer and buy out a stake of Pioneer's current JV
partner, Newpek LLC, for US $210mn in a deal expected to close within five business days.
This transaction will be routed through RIL’s subsidiary, Reliance Eagleford Upstream LP,
which will pay US $263mn upfront for a 45% stake in Pioneer's Eagle Ford shale acreage
in South Texas, representing 118,000 acres of the 263,000-acre field, which according to
RIL’s management holds about 10TCF (trillion cubic feet) of gas equivalent. RIL's share of
the Pioneer shale acreage adds net 4.5TCF of gas to the company's reserves base. It is the
second such deal this year for RIL as it chases resources and expertise in promising
unconventional gas reserves in North America. In April, RIL had agreed to pay US $1.7bn
for a 40% stake in Atlas Energy's Marcellus shale acreage in West Virginia, Pennsylvania
and New York States, wherein 343,000 acres hold an estimated 13TCF of gas.
We believe the deal with Pioneer is at a reasonable price, especially given the absence of
exploration risk and the potential for RIL to gain shale gas expertise it could apply
elsewhere, including India. As part of the Pioneer deal, RIL will get hands-on experience
operating up to four rigs and will fund 75% of Pioneer's drilling costs up to US $879mn.
RIL will also pay an additional amount of US $46mn for a 49.9% stake in a separate
midstream processing JV with Pioneer. Pioneer is also targeting additional acreage in six
South Texas counties and RIL will have the option to buy a 45% share of Pioneer's new
acreage. It is said that the cash influx will enable the JV to ramp up production from Eagle
Ford to as much as 41,000boepd by 2013, from a 2010 average of 2,000bpd. We
maintain a Buy on RIL with a target price of Rs1,260.
McNally Bharat wins order from NTPC
McNally Bharat Engineering has bagged an order worth Rs41.4cr from NTPC for the Ash
Water Recirculation and Treatment package. The company’s current order book position
stands at Rs4,350cr, which is 2x FY2010E consolidated revenue. At the current price, the
stock is trading at 10x and 8x its estimated earnings of FY2011E and FY2012E. We
maintain our Buy rating on the stock with a target price of Rs486.
June 25, 2010 2

3. Market Outlook | India Research
Economic and Political News
RBI permits zero-coupon NCDs
Top US senator to visit India to advance Indo-US ties
Oil extends losses on demand concerns
Govt. to release less sugar in open market during July
Corporate News
Petronet LNG may not buy spot LNG cargo till December
HCL Corp. has sold 2.5% stake in HCL Tech for Rs580cr
Alstom JV with BHEL, NPCIL to supply equipment for nuclear project
Shree Renuka Sugars to pay 25% less for Equipav
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Events for the day
Bharat Electronics Dividend, Results
HFCL Infotel Results
Natco Pharma Results
June 25, 2010 3

4. Market Outlook | India Research
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June 25, 2010 4