The market indices gained 1% as European stocks rose. Key sectors like banking, metals and IT rose while realty and oil & gas declined slightly. NMDC plans to invest Rs. 3,000 crore to build an iron ore pipeline in Chhattisgarh. Bajaj, Renault and Nissan have decided against forming a joint venture for their planned low-cost car, though the project is still ongoing.

1. Market Outlook
India Research
July 7, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The market turned positive soon after opening lower, tracking Asian stocks. The BSE Sensex 1.0% 173.0 17,614
market extended gains in morning trade and continued the upward trend in Nifty 1.0% 53.2 5,289
mid-morning trade. However, the market was range bound in early afternoon MID CAP 0.8% 53.9 7,193
trade. Higher European stocks pushed the key benchmark indices to fresh SMALL CAP 0.6% 54.7 9,187
intraday highs in afternoon trade. The market extended gains in mid-afternoon BSE HC 0.5% 30.3 5,769
trade, but trimmed gains in late trade as index heavyweight Reliance Industries
BSE PSU 0.4% 39.7 9,450
gave away intraday gains. The Sensex and Nifty closed up, with gains of 1%
BANKEX 1.7% 184.7 10,883
each. All the sectoral indices on the BSE were in green. BSE mid-cap and
AUTO 0.8% 61.1 8,252
small-cap indices also closed with gains of 0.8% and 0.6%, respectively. Sun
METAL 1.9% 270.0 14,595
Pharma, M&M, TCS, HDFC Bank, Jindal Steel and ICICI Bank were up by
2–3%, while RCOM, Jaiprakash Associates, ACC, Hero Honda and Maruti OIL & GAS 0.4% 39.3 10,671
Suzuki declined by 0–2%. Among mid-caps, Hindustan Oil Exploration, BSE IT 1.7% 88.1 5,347
Mahindra Lifespace Developers, Bharat Forge, IOB and Gee Kay Finance were
up by 5–7%, while KGN Industries, Monnet Ispat, Andrew Yule, Kwality Dairy Global Indices Chg (%) (Pts) (Close)
and Mannapuram General Finance & Leasing were down by 2–3%. Dow Jones 0.6% 57.1 9,744
NASDAQ 0.1% 2.1 2,094
Markets Today
FTSE 0.7% 32.3 4,965
The trend deciding level for the day is 17551/5273 levels. If NIFTY trades Nikkei 0.8% 71.3 9,338
above this level during the first half-an-hour of trade then we may witness a Hang Seng 1.2% 241.9 20,084
further rally up to 17707–17799/ 5314–5339 levels. However, if NIFTY trades Straits Times 0.8% 24.0 2,868
below 17551/5273 levels for the first half-an-hour of trade then it may correct Shanghai Com 1.9% 45.5 2,409
up to 17459–17304/5248–5207 levels.
Indian ADRs Chg (%) (Pts) (Close)
Indices S2 S1 R1 R2 Infosys 0.9% 0.5 $59.4
SENSEX 17304 17459 17707 17799 Wipro 3.0% 0.4 $12.2
NIFTY Satyam -3.0% (0.2) $4.8
5207 5248 5314 5339
ICICI Bank 1.3% 0.4 $36.2
HDFC Bank 1.5% 2.1 $144.1
News Analysis
NMDC to invest Rs3,000cr to set iron ore pipeline Advances / Declines BSE NSE
Bajaj-Renault shelves JV for developing small cars
Advances 1,654 802
Refer detailed news analysis on the following page.
Declines 1,267 526
Net Inflows (July 05, 2010)
Unchanged 97 48
Rs cr Purch Sales Net MTD YTD
FII 881 1,097 (216) 89 30,372
Volumes (Rs cr)
MFs 540 661 (122) (122) (8,340)
BSE 3,830
FII Derivatives (July 06, 2010) NSE 10,069
Open
Rs cr Purch Sales Net
Interest
Index Futures 1,769 709 1,061 18,307
Stock Futures 645 792 (146) 29,450
Gainers / Losers
Gainers Losers
Price Price
Company Chg (%) Company Chg (%)
(Rs) (Rs)
Hindustan Oil 238 7.3 United Phos 177 (2.1)
Bharat Forge 308 5.5 Apollo Hosp 741 (1.8)
IOB 108 5.1 RCOM 182 (1.8)
Pantaloon 441 4.8 Reliance Power 179 (1.6)
JSW Steel 1,076 4.7 Mundra Port 721 (1.4)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 0109965391

2. Market Outlook | India Research
NMDC to invest Rs3,000cr to set iron ore pipeline
NMDC plans to invest Rs3,000cr to set up a 12mn tonne pipeline in Chhattisgarh, which
will supply iron ore to its domestic steel customers. The company is setting up a 424km
long pipeline between Bailadila mines and Vizag, having 12mn tonne of annual
production capacity. The pipeline is expected to be commissioned in the next two years.
Orders for the pipeline will be placed by October 2010E. Last year, a 274km long pipeline
supplying ~7mn–8mn tonnes of iron ore to Essar Steel was damaged by Maoists and is yet
to be repaired. Moreover, Bailadila-11/D mines are expected to be commissioned by end-
FY2011E. Despite the fact that the new pipeline will facilitate the smooth transportation of
material, we feel volume growth remains at risk in light of the recent terror attacks by the
Naxals in Dantewada, Chhattisgarh (where NMDC mines operates). We maintain a
Reduce recommendation on the stock with a target price of Rs247.
Bajaj-Renault shelves JV for developing small cars
Bajaj, Renault and Nissan, partners developing a low-cost car for Indian and world
markets, have decided against having a formal joint venture (JV) company for the project.
Renault-Nissan and Bajaj had announced the original venture plan in 2008 to a build
small car at the price of ~US $3,000 (~Rs1.4lakh), competitor to Tata Motor’s Nano.
According to the JV, Bajaj was to have a 50% stake, with Renault and Nissan having 25%
each. Bajaj had the sole responsibility of developing and manufacturing the car, while
Renault and Nissan had the responsibility of branding, marketing and sales of the car in
India and overseas. Bajaj Auto, however, has reassured that its low-cost car project with
Renault and Nissan is on track, but it may not form a JV to manufacture and market the
car. We maintain a Neutral rating on Bajaj Auto.
Economic and Political News
Industry Ministry favours opening up FDI in multi-branding retailing
NTPC signs production sharing contracts for exploration blocks with government
April–June direct taxes up 15.9% says Finance Minister
Corporate News
Istithmar sells 6.9% stake in Spice Jet for US $25.3mn
MMTC to raise Rs250cr through short-term debt
LIC hikes 5% stake in Bharti Airtel
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
July 7, 2010 2

3. Market Outlook | India Research
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