The document provides an analysis of the Indian stock market indices and various companies on June 3, 2010. It summarizes that the key benchmark indices ended up 1% as buying increased in blue chip stocks. ONGC held an analyst meeting where they expected a gas price hike to boost profits and planned increased oil and gas production. Tata Motors inaugurated an expanded new plant for Tata Nano in Gujarat. Sun Pharma rejected an offer to sell its stake in Taro Pharmaceuticals.

1. Market Outlook
India Research
June 3, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The key benchmark indices spurted to strike the day's high in late trade on BSE Sensex 1.0% 169.8 16,742
renewed buying in blue chips. The market edged higher in early trade, tracking Nifty 1.0% 49.7 5,020
gains in some Asian stocks. Soon after sharply cutting gains from the day's high
MID CAP 0.9% 57.1 6,801
in early afternoon trade, the market regained strength in afternoon trade.
SMALL CAP 0.8% 66.5 8,529
Buying frenzy in index pivotals propelled key benchmark indices to the day's
BSE HC 0.2% 12.6 5,502
highs at the fag end of the trading session as US index futures climbed. The
Sensex and Nifty closed up by 1% each. BSE mid-cap and small-cap indices BSE PSU 0.9% 85.0 9,066
also closed up by 0.9% and 0.8%, respectively. Among the front-liners, RCom, BANKEX 0.8% 84.0 10,478
Bharti Airtel, Reliance Infrastructure, ONGC and Hero Honda were up by 3- AUTO 1.7% 132.1 7,728
11%, while Tata Power, Wipro, Jindal Steel, Hindalco Industries and ITC were METAL 0.5% 66.9 14,630
down by 0.4-1%. In the mid-cap segment, Religare Enterprises, OnMobile OIL & GAS 0.7% 69.1 9,992
Global, Polaris Software, Pantaloon Retail and Patni Computer were up by 7- BSE IT 1.0% 49.6 5,161
9%, while JM Financial, REI Agro, Gee Kay Finance, Andrew Yule and Dishman
Pharma were down by 3-6%. Global Indices Chg (%) (Pts) (Close)
Dow Jones 2.3% 225.5 10,250
Markets Today
NASDAQ 2.6% 58.7 2,281
The trend deciding level for the day is 16696 / 5006 levels. If NIFTY trades FTSE -0.2% (12.0) 5,151
above this level during the first half-an-hour of trade then we may witness a
Nikkei -1.1% (108.6) 9,603
further rally up to 16820 – 16899 / 5045 -5070 levels. However, if NIFTY
Hang Seng -0.1% (25.2) 19,472
trades below 16696 / 5006 levels for the first half-an-hour of trade then it may
correct up to 16617 – 16493 / 4981 – 4942 levels. Straits Times 0.5% 12.1 2,728
Shanghai Com 0.1% 3.1 2,571
Indices S2 S1 R1 R2
Indian ADRs Chg (%) (Pts) (Close)
SENSEX 16,493 16,617 16,820 16,899
Infosys 3.4% 1.9 $58.5
NIFTY 4,942 4,981 5,045 5,070 Wipro 2.6% 0.5 $21.2
News Analysis Satyam 2.8% 0.1 $5.1
ICICI Bank 3.7% 1.3 $36.8
 ONGC Analyst meet Extracts HDFC Bank 3.5% 4.8 $141.5
 New plant for Tata Nano at Sanand inaugurated
 Sun Pharma rejects offer on Taro Advances / Declines BSE NSE
Refer detailed news analysis on the following page. Advances 1,665 844
Declines 1,128 449
Net Inflows (June 1, 2010)
Unchanged 107 55
Rs cr Purch Sales Net MTD YTD
FII 1,822 2,295 (473) (473) 20,063
Volumes (Rs cr)
MFs 566 580 (13) (13) (7,143)
BSE 3,728
FII Derivatives (June 2, 2010)
NSE 12,482
Open
Rs cr Purch Sales Net
Interest
Index Futures 1,803 1,978 (175) 13,114
Stock Futures 1,292 902 5 25,602
Gainers / Losers
Gainers Losers
Price Price
Company Chg (%) Company Chg (%)
(Rs) (Rs)
RCom 155 11.0 Cadila Health. 598 (3.1)
Idea Cellular 53 9.0 Punj Lloyd 116 (2.7)
Pantaloon Ret. 416 6.8 Indian Hotels 100 (2.6)
Patni 578 6.5 CESC 370 (2.5)
Colgate 801 6.5 Suzlon Energy 54 (2.4)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 0109965391

2. Market Outlook | India Research
ONGC Analyst meet Extracts
ONGC held an analyst meet yesterday. Following are the key excerpts of the same:
 Impact of the gas price hike: According to management, the gas price hike is positive for
the company as it adds Rs5,500cr to the topline and Rs3,500cr to the bottomline of the
company, translating into EPS boost of Rs17/share on a full year basis. As the gas price
hike order has been passed on June 1, 2010, the impact will be only for the period of
10months for FY2011E.
 Future policy reforms: Management reposed its confidence on the government to resolve
the subsidy issue associated with pricing policy of subsidised products. ONGC expects a
greater clarity over the subsidy sharing formula going ahead.
 Crude oil and natural gas production: ONGC hopes to maintain the current crude oil
production over the next couple of years. However, it plans to increase the crude oil
production (excluding JV) from the levels of 24.86MT (FY2010) to over 28.0MT (FY2013).
Bulk of the growth is likely to come from production various marginal fields such as cluster-
7, WO series, B-193, D-1 Additional and B-22. Similarly, it expects to increase the natural
gas production from the levels of 63mmscmd in FY2010 to over 72mmscmd in FY2013E
and further to 100mmsmcmd in FY2016E.
 Shale gas prospects in India: In order to asses the shale gas prospects in the country,
ONGC has launched a pilot project. It plans to analyse the prospects in Damodar Valley,
Cambay Basin and Cauvery Basin. According to the company, India does have good shale
quality, but the actual reserves and recoverability is too early to be determined.
 Break even prices of Carabobo Project in Venezuela: According to the company, the
Carabobo project, where OVL has recently acquired the stake will break even at the crude
oil price of US$60/bbls. The company expects the production from the same to start in
FY2013E.
 On BP Oil spill in USA: ONGC expects Macondo Accident at US Gulf of Mexico to be a
game changer event, which will adversely impact the prospects of the offshore drilling in
the global oil and gas industry.
At 10x FY2012E EPS of Rs123.3/share, we have arrived at a fair value of Rs1,233, which
provides an upside of 4.3% from the current level. On account of recent run-up in the
stock price, we downgrade the stock from Accumulate to Neutral.
New plant for Tata Nano at Sanand inaugurated
Tata Motors inaugurated a new plant for Tata Nano at Sanand, Ahmedabad. The capacity
of the plant, to begin with, will be 250,000 cars per year to be achieved in phases, which–
with some balancing–is expandable up to 350,000 cars per year. Further capacity
expansion has also been provided for in this location. Deliveries from the plant, including
BS4 Tata Nanos, will begin this month. The output, supplemented by the facility at
Pantnagar, Uttarakhand, will in the immediate phase complete pending orders from the
booking process of 2009. Built in a record time of 14 months starting November 2008,
the integrated facility comprises Tata Motors’ own plant, spread over 725 acres, and an
adjacent vendor park, spread over 375 acres, to house key component manufacturers for
Tata Nano. The plant has directly employed 2,400 individuals. As the capacity increases,
the project, along with the vendor park, is expected to generate close to 10,000 direct and
indirect jobs. At the vendor park, plots have already been allocated to 41 vendors. More
will be accommodated subsequently. Vendors, accounting for about 80% of the value of
components to be sourced from the park, have already begun construction. In the interim,
they will continue to supply to the plant from their existing facilities in the country.
June 3, 2010 2

3. Market Outlook | India Research
Our analysis suggests that Tata Nano will not be contributing significantly to the
company’s consolidated earnings in the next couple of years. However, being one of the
dream projects of Tata, the success of the product on road can add value to the company’s
brand image. We maintain Buy on the stock with a target price of Rs907.
Sun Pharma rejects offer on Taro
Sun Pharma has rejected an offer from Guggenheim Securities the Financial Services—
company that advises Taro Pharmaceuticals—to buy out the former’s stake in Taro Pharma
for nearly US $15/share or US $215mn. Sun Pharma is the largest shareholder in Taro
Pharma, holding 36% stake in the company. The acquisition of Taro Pharmaceutical
hinges upon the decision of the Israel Supreme court, which will make a decision on the
validity of the termination of the merger agreement by Taro. We remain Neutral on the
stock.
Economic and Political News
 Oil falls to US $72 as economy concerns drag on crude
 MF industry assets breach the Rs8lakh-cr mark in May 2010
 India's BT sector to become a US $5bn industry by CY2010
Corporate News
 NTPC to buy Australian coal mine
 RCom to give up strategic stake to fund 3G foray
 Renuka Sugars in talks for a 28% cut in Equipav buyout price
 ARSS Infra Projects bags order of Rs51cr
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
June 3, 2010 3

4. Market Outlook | India Research
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