1. Market Outlook
India Research
June 30, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The market opened marginally in red after taking cues from weak Asian indices. BSE Sensex -1.4% (240.2) 17,534
The market continued to slide throughout the session, with expectations of a Nifty -1.5% (77.4) 5,256
slowdown in Chinese economic growth. The market slipped further in afternoon MID CAP -0.7% (46.8) 7,116
session, as weak opening by European indices added to the negative sentiment. SMALL CAP -0.6% (56.2) 9,032
However, the market found support at intraday low in the final session, as
BSE HC -1.0% (55.7) 5,733
investors engaged in value buying. Metal stocks tumbled after the Conference
BSE PSU -0.7% (66.4) 9,452
Board in China corrected down its April 2010 gauge for the outlook of China's
BANKEX -1.5% (159.5) 10,684
economy. The Sensex and Nifty closed with gains of 1.4% and 1.5%,
AUTO -0.8% (70.6) 8,235
respectively. However, BSE mid-cap and small-cap indices fared better as they
fell by just 0.7% and 0.6%, respectively. Among the front-liners, L&T, Bharti METAL -2.7% (411.6) 14,635
Airtel and ONGC were up by nearly 0.2%, while Hindalco, Reliance Comm., OIL & GAS -1.3% (146.2) 10,700
Tata Steel, Reliance Infra and Jindal Steel were down by 3–4%. Among mid- BSE IT -0.8% (40.6) 5,323
caps, Astrazeneca Pharma, TVS Motor, JM Financial, ING Vysya Bank and
IBN18 Broadband were up by 5–20%, while Hathway Cable, Max India, Global Indices Chg (%) (Pts) (Close)
Edelweiss Capital, EID Parry and Rajesh Exports declined by 4–8%. Dow Jones -2.6% (268.2) 9,870
NASDAQ -3.8% (85.5) 2,135
Markets Today FTSE -3.1% (157.5) 4,914
The trend deciding level for the day is 17593 / 5275 levels. If NIFTY trades Nikkei -1.3% (123.3) 9,571
above this level during the first half-an-hour of trade then we may witness a Hang Seng -2.3% (477.8) 20,249
further rally up to 17719 – 17905 / 5315 – 5374 levels. However, if NIFTY Straits Times -1.4% (39.6) 2,830
trades below 17593 / 5275 levels for the first half-an-hour of trade then it may Shanghai Com -4.3% (108.2) 2,427
correct up to 17407 – 17280 / 5217 – 5177 levels
Indian ADRs Chg (%) (Pts) (Close)
Indices S2 S1 R1 R2 Infosys -3.5% (2.2) $59.9
SENSEX 17,280 17,407 17,719 17,905 Wipro -4.5% (0.6) $12.1
NIFTY 5,177 5,217 5,315 5,374 Satyam 0.0% - $5.2
ICICI Bank -4.5% (1.7) $36.3
News Analysis HDFC Bank -3.5% (5.1) $142.4
Four PSU banks announce their base rates
Alembic demerges pharma business Advances / Declines BSE NSE
Refer detailed news analysis on the following page. Advances 1,109 391
Declines 1,804 939
Net Inflows (June 28, 2010)
Unchanged 88 39
Rs cr Purch Sales Net MTD YTD
FII 2,254 1,374 880 10,685 31,253
Volumes (Rs cr)
MFs 707 990 (283) (589) (8,021)
BSE 4,523
FII Derivatives (June 29, 2010) NSE 13,190
Open
Rs cr Purch Sales Net
Interest
Index Futures 1,329 2,788 (1,458) 17,348
Stock Futures 899 1,275 (376) 27,468
Gainers / Losers
Gainers Losers
Price Price
Company Chg (%) Company Chg (%)
(Rs) (Rs)
Aban Offshore 822 4.0 Max India 157 (5.0)
Bajaj Finserv 438 3.1 Aditya Birla 758 (4.8)
Oil India 1,431 2.8 Ultratech Cem 879 (4.8)
Indusind Bank 206 2.7 Hindalco 144 (4.4)
PFC 296 2.7 Balrampur Chini 83 (3.9)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 0109965391

2. Market Outlook | India Research
Four PSU banks announce their base rates
State Bank of India (SBI) has announced its base rate (the minimum lending rate) at 7.5%,
in line with the expected 7.5–8% range. Among other PSU banks, Punjab National Bank,
Bank of Baroda and Union Bank have set their base rate at 8% per year, with effect from
July 1, 2010. All banks are required to announce the base rate on or before July 1, 2010.
Banks with a higher CASA are expected to announce a base rate towards the lower end to
gain market share. There is some apprehension that the base rate system may raise the
effective cost of borrowings for corporates. However, this is unlikely because corporates
have access to multiple sources of funds and, hence, the effective borrowing rates will be
determined by market competition. The other point of note is that banks have been
allowed to change this base rate as required at any point of time over the next six months
till December 31, 2010. This indicates that the RBI has taken an experimental route,
allowing banks to tweak models and parameters over this period to determine the most-
efficient formula, which best responds to changes in the environment, including monetary
policy moves. This would be in line with the RBI’s stated underlying objective of ensuring
lending rates respond more efficiently and predictably to monetary policy changes through
the base rate mechanism compared to the earlier BPLR system. We maintain our positive
view on the sector and our top picks are ICICI Bank, HDFC Bank, Axis Bank, SBI among
large caps and Federal Bank, Dena Bank among midcap banks.
Alembic demerges pharma business
Alembic has announced the demerger of its pharma business into a separate subsidiary
company named Alembic Pharma. The company has proposed to demerge its domestic
formulation, international generic and API businesses, which reported a combined turnover
of Rs1,022cr (90% of total turnover) and PBT of Rs68cr (154% of total PBT) in FY2010, to
the subsidiary company Alembic Pharma. Alembic will retain its Vadodara manufacturing
facility (Penicillin G business—loss of Rs24cr in FY2010) along with the power
infrastructure (16MW used for internal consumption) and land assets at Vadodara (100
acres). Under the arrangement, shareholders of Alembic would receive one equity share of
Alembic Pharma in the ratio of 1:1. The company plans to list Alembic Pharma post the
demerger. The demerger is positive as it would allow the two companies to focus on their
respective core businesses, would insulate pharma business from the price volatility of
Penicillin G business, could attract a distinct set of investors for different businesses and
potentially unlock value of its land bank at Vadodara. The stock is under review.
June 30, 2010 2

3. Market Outlook | India Research
Economic and Political News
Rajasthan Electronics & Instruments Ltd., a JV of the Central and Rajasthan government,
received Rs300cr order to set up solar power packs in Rajasthan
Safeguard duty on soda ash imports extended
National Advisory Council meet likely to meet Food Security Bill
Corporate News
Uflex to invest Rs1,150cr in two years on capacity expansion
ONGC to sign 17 new oil and gas block contracts
Vascon Engg. to develop over 10mn sq. ft. in FY2011
Pantaloon Retail allots 1cr warrants to promoters
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Events for the day
Gateway Distriparks Dividend, Results
June 30, 2010 3

4. Market Outlook | India Research
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