1. Market Outlook
India Research
September 28, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The benchmark indices eked out small gains to attain their highest closing levels BSE Sensex 0.4% 72.2 20,117
in more than 32 months, as firm global stocks and the recent strong foreign Nifty 0.3% 17.3 6,036
fund inflows underpinned sentiment. Realty, capital goods, metal and consumer MID CAP 0.3% 27.1 8,142
durables stocks rose, while FMCG stocks declined. IT stocks, too, fell on a firm SMALL CAP 0.1% 13.2 10,281
rupee. However, profit booking pulled the market off its intraday highs in BSE HC 0.6% 37.5 6,013
afternoon trade. Stocks further trimmed gains in late trade. The market pared BSE PSU 0.8% 84.1 10,397
gains after hitting a 32-month high at the onset of the trading session. The BANKEX -0.0% (1.6) 13,912
Sensex and Nifty closed up by 0.4% and 0.3%, respectively. BSE mid-cap and AUTO 0.5% 46.0 9,554
small-cap indices gained 0.3% and 0.1%, respectively. Among the front liners,
METAL 2.1% 357.6 17,009
Hindalco, Sterlite Ind., Tata Steel, NTPC and Sun Pharma gained 1–3%, while
OIL & GAS 0.9% 90.8 10,737
HDFC Bank, HUL, HDFC, Infosys and TCS lost 0–2%. Among mid caps, JM
BSE IT -0.5% (28.4) 5,945
Financial, Man Infra, Puravankara Project, MVL Ltd. and ARSS Infra projects
Global Indices Chg (%) (Pts) (Close)
gained 6–17%, while AstraZeneca Pharma, Graphite India, Usha Martin,
Texmaco and Mahindra & Mahindra finance lost 4–9%. Dow Jones -0.4% (48.2) 10,812
NASDAQ -0.5% (11.4) 2,370
Markets Today FTSE 0.0% - 5,573
The trend deciding level for the day is 20156 / 6042 levels. If NIFTY trades Nikkei 1.4% 131.5 9,603
above this level during the first half-an-hour of trade then we may witness a Hang Seng 1.0% 221.4 22,341
further rally up to 20229 – 20342 / 6067 – 6098 levels. However, if NIFTY Straits Times 0.7% 20.8 3,113
trades below 20156 / 6042 levels for the first half-an-hour of trade then it may Shanghai Com 1.4% 36.4 2,628
correct up to 20044 – 19970 / 6011 - 5987 levels.
Indices S2 S1 R1 R2 Indian ADRs Chg (%) (Pts) (Close)
SENSEX 19,970 20,044 20,229 20,342 Infosys -1.1% (0.8) $66.1
NIFTY 5,987 6,011 6,067 6,098 Wipro -1.6% (0.2) $14.4
Satyam -4.5% (0.2) $4.5
News Analysis ICICI Bank -0.8% (0.4) $48.9
Cement prices may rise from October 1 HDFC Bank -2.0% (3.6) $180.5
L&T bags Rs1,610cr order
M&M to raise vehicle prices from October 1, 2010 Advances / Declines BSE NSE
Refer detailed news analysis on the following page.
Advances 1,510 626
Net Inflows (September 24, 2010) Declines 1,506 721
Rs cr Purch Sales Net MTD YTD Unchanged 84 55
FII, 4,287 2,948 1,339 22,238 81,364
MFs 396 674 (278) (4,128) (19,920)
Volumes (Rs cr)
FII Derivatives (September 27, 2010) BSE 4,948
Open NSE 15,387
Rs cr Purch Sales Net
Interest
Index Futures 6,152 5,883 268 22,307
Stock Futures 6,658 6,920 (262) 42,569
Gainers / Losers
Gainers Losers
Price chg Price chg
Company Company
(Rs) (%) (Rs) (%)
India Info 117 4.8 Nagarjuna Cont. 165 (2.7)
Videocon Ind. 273 4.1 PTC India 119 (2.5)
Balrampur Chini 92 4.0 Godrej Consumer 401 (2.4)
Hind Zinc 1,126 3.8 HDFC Bank 2,439 (2.1)
Oriental Bank 458 3.8 IRB Infra 275 (2.1)
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Market Outlook | India Research
Cement prices may rise from October 1
Media reports suggest that cement manufacturers are set to hike prices by around Rs20
per 50kg bag from October 1 in Gujarat, while a similar hike is being contemplated for
Maharashtra, including the key market of Mumbai, to cash in on the spurt in demand
following the monsoons. Companies including UltraTech Cement, Ambuja Cements,
Sanghi Industries, Gujarat Siddhi Cement, Saurashtra Cement, Binani Cement, JK Lakshmi
Cement and Jaiprakash Associates will raise the prices of the commodity.
Cement prices had cracked to around Rs150 in August from its peak of Rs225 in mid-May,
owing to sluggish construction activity in the monsoons and scarcity of sand and, with the
proposed hike, prices of the commodity will be around Rs180 per 50kg bag in
Ahmedabad. In Mumbai, the hike is being considered and may be implemented in a
different way by withdrawing a discount of at least Rs10 per bag that is being offered to
dealers, said a city-based large cement stockist. The southern region, which witnessed two
rounds of price hike in September, despite low demand and over capacity is also set to
witness another round of price hike. In Hyderabad, prices may be hiked by Rs30 per bag,
pushing cement prices to around Rs240; while Chennai prices may be hiked by as much
as Rs40. Stockists and dealers in the central and northern regions have not been intimated
about any hike in these regions yet. However, cement companies may announce some
hikes in these regions depending on the response to the hikes in southern and western
India.
We maintain Buy on India Cements with a Target Price of Rs139, Madras Cements with a
Target Price of Rs139 and JK Lakshmi Cement with a Target Price of Rs92, due to their
attractive valuations. We recommend Accumulate on Ultratech with a Target Price of
Rs1,087.
L&T bags Rs1,610cr order
Larsen & Toubro (L&T) has bagged an order worth Rs1,610cr from Visa Steel and Power
Company for executing Balance of Plant (BOP) package for a 2x600MW power plant,
coming up at Raigarh-Chhattisgarh. The expected period of execution is between 29–32
months. This order from VISA Power Ltd. follows a recent order for Rs6,500cr received last
month from Jaiprakash Power Ventures Ltd., a Jaiprakash Group Power Company for a
3x660MW supercritical Boiler–Steam Turbine Generator Package Karchana power project.
L&T is one of the few companies to bag consistent orders in recent times, especially from
the power segment. This is very much reflected in the sharp run up in the stock price as
well. At Rs2,026, stock is trading at P/E of 29.5x and P/BV of 4.9x to its FY2012E on
standalone basis. We believe most of the positives are factored in and, hence, maintain
our Neutral rating on the stock. However, since we believe the near-term catalysts are in
place for the stock, we recommend investors to remain equal weight despite rich
valuations.
September 28, 2010 2

3. Market Outlook | India Research
M&M to raise vehicle prices from October 1, 2010
M&M plans to raise prices of its passenger and commercial vehicle products, effective from
October 1, 2010. The price increase would be in the range of Rs3,000 to Rs8,000,
depending on the model. The increase in prices comes on expected lines, as the company
intends to protect its margins in the wake of increased cost due to introduction of new
emission norms (Bharat Stage III), effective from October 2010, and the recent hike in raw-
material prices. Because of the recent positive movement in the stock price, we recommend
Accumulate on the stock with an SOTP Target Price of Rs771.
Economic and Political News
Govt. neutralises tax impact of 1st year of DTC regime
Govt. imposes anti-dumping duty on chemical from China
Steel prices may go up by Rs1,500 a tonne next month
Industry ad budget up 30–40% in 2010–11
Foreigners to fund up to 30% of Indian roads
Corporate News
PFC to issue infra bonds of Rs1,000cr by December-end
IndusInd Bank raises US $253mn through QIP
IDFC launches first tax-free infra bonds to raise Rs3,400cr
IRB Infra to raise Rs750cr debt for Karrnataka road project
AstraZeneca’s plan to delist rejected
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
September 28, 2010 3

4. Market Outlook | India Research
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