1. Market Outlook
India Research
May 13, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The key benchmark indices ended the trading session flat amid high volatility. BSE Sensex 0.3% 54.3 17,196
The market opened firm, but slipped into the red in afternoon trade, weighed by Nifty 0.4% 20.5 5,157
data showing lower-than-expected growth in industrial production in March, MID CAP 0.1% 4.8 6,933
2010. Gains from Reliance Industries and positive cues from the European
SMALL CAP -0.3% (23.8) 8,849
indices pulled the market into the green in mid-afternoon trade. However, a fall
BSE HC 1.6% 84.0 5,301
in US index futures saw the market pare its gains in the closing session of trade.
BSE PSU 0.4% 33.9 8,997
The Sensex and Nifty ended the session almost flat, up by a marginal 0.3% and
BANKEX 1.0% 103.5 10,988
0.4%, respectively. The BSE Mid-cap index was up by 0.1%, while the Small-cap
index was down by 0.3%. Among the front-liners, ITC, Wipro, SBI, Tata Power AUTO -0.1% (5.5) 7,727
and RIL were up by 1-2%, while Bharti Airtel, M&M, JP Associates, BHEL and METAL 0.3% 43.9 16,538
ACC were the down by 1-8%. In the Mid-cap segment, Bajaj Finserv, Zuari OIL & GAS 0.9% 88.6 10,102
Industries, Jubilant Organosys, Blue Star and Berger Paints were up by 4-8%, BSE IT 0.7% 36.3 5,264
while Gee Kay Finance, Onmobile Global, Gammon India, Hindusthan Natural
Glass and Gujarat NRE Coke were down by 4-6%. Global Indices Chg (%) (Pts) (Close)
Dow Jones 1.4% 148.7 10,897
Markets Today NASDAQ 2.1% 49.7 2,425
The trend deciding level for the day is 17159/5143 levels. If NIFTY trades FTSE 0.9% 49.2 5,383
above this level during the first half-an-hour of trade then we may witness a Nikkei -0.2% (17.1) 10,394
further rally up to 17290 – 17383/ 5187 – 5217 levels. However, if NIFTY Hang Seng 0.3% 66.0 20,212
trades below 17159/ 5143 levels for the first half-an-hour of trade then it may Straits Times 0.8% 22.7 2,880
correct up to 17065 – 16934/ 5113 – 5069 levels. Shanghai Com 0.3% 8.1 2,656
Indices S2 S1 R1 R2
SENSEX 16,934 17,065 17,290 17,383 Indian ADRs Chg (%) (Pts) (Close)
NIFTY Infosys 0.8% 0.5 $59.5
5,069 5,113 5,187 5,217
Wipro 1.3% 0.3 $22.3
News Analysis Satyam 1.9% 0.1 $5.2
ICICI Bank 0.7% 0.3 $41.1
Industrial Output grows by 13.5% HDFC Bank 2.5% 3.7 $151.8
Punj Lloyd secures order worth Rs2,056cr in JV
Results Reviews: Blue Star, Thermax Advances / Declines BSE NSE
Results Previews: Crompton Greaves Advances 1,194 517
Refer detailed news analysis on the following page. Declines 1,698 788
Unchanged 74 45
Net Inflows (May 11, 2010)
Rs cr Purch Sales Net MTD YTD
Volumes (Rs cr)
FII 2,548 2,400 148 (2,729) 26,982
BSE 3,830
MFs 439 636 (197) (730) (7,959)
NSE 12,995
FII Derivatives (May 12, 2010)
Open
Rs cr Purch Sales Net
Interest
Index Futures 2,827 2,322 505 13,493
Stock Futures 1,490 1,428 63 29,535
Gainers / Losers
Gainers Losers
Company Price (Rs) Chg (%) Company Price (Rs) Chg (%)
Bajaj Finserv 469 7.7 Bharti Airtel 262 (8.3)
Jubilant Org. 364 6.1 Idea Cellular 55 (8.2)
DRL 1,261 5.5 Guj. NRE Coke 75 (4.0)
REC 272 3.7 Piramal Health 490 (3.8)
Tech Mh. 734 3.6 Tata Tele 21 (3.2)
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539
2. Market Outlook | India Research
Industrial Output grows by 13.5%
India's factory output maintained its robust pace in March, growing by 13.5% despite
monetary tightening and a partial roll back of stimulus measures, driven largely by growth
in Electricity and Mining industry. Industrial output, as measured by the Index of Industrial
Production (IIP) for the financial year 2009-10, stood at 10.4% (2.8% in 2008-09). On
month on month basis, however, the output in March was lower as the boost from fiscal
stimulus and inventory adjustment has begun to wane in recent months, weighing on
manufacturing production. While, manufacturing and mining production has decelerated
significantly since January, electricity production has picked up, signifying a growth in the
broader economy. Manufacturing (constitute ~80% of the IIP) grew by 14.3% in March as
against a negative growth of 0.3% in the year-ago period. Electricity and mining output
grew at a rate of 11% and 7.7%, respectively, as compared with 1.9% and 6.3%. In the use
based category, basic goods grew at a rate 10.6%, while capital goods and intermediate
goods grew at 27.4% and 12.7%, respectively. Consumer goods posted 10.6% rise, while
consumer non-durables grew by 32%.
Punj Lloyd secures order worth Rs2,056cr in JV
Punj Lloyd (Punj) is a globally diversified infrastructure conglomerate providing
engineering, procurement and construction services in Oil and Gas, Petrochemical and
Infrastructure sectors. Punj has bagged an order EPC contract amounting to Rs2,056cr in
consortium with Technicas Reunidas of Spain, from the Abu Dhabi Gas development
company, for the Shah Gas Development project in Abu Dhabi. With the accretion of this
work order, the outstanding order book stands at around Rs27,000cr, or 2.2x FY2010E
revenues. We maintain a Buy on the stock, with a Target Price of Rs261.
Result Reviews
Blue Star
Blue Star declared its 4QFY2010 results. The Top-line was above our estimates, growing
by 23% yoy to Rs875cr (Rs714cr), mainly because of strong Sales growth of 25% yoy to
Rs613cr (Rs492cr) in the Electro-Mechanical Projects and Packaged Air-Conditioning
Division. However, the OPMs of the Company declined by 90bp to 12.8% (13.7%). In
terms of Earnings, the company reported a Net Profit of Rs79cr (Rs67cr). The current Order
Book stands at Rs1,733cr, compared to Rs1,339cr at the same time last year. Currently we
have a Neutral rating on the stock. However, we would revise our estimates and rating
after the earnings call.
Thermax
Thermax came out with its 4QFY2010 performance, which was slightly better than our
estimates. The company posted a top-line growth of 28.6% yoy to Rs1,219cr (Rs948cr) for
4QFY2010. On the operating front, the company reported operating margins at 12.0%.
The Adjusted net profit for the quarter grew 6.7% yoy to Rs99cr (Rs93cr). We will revisit our
estimates after the conference call.
May 13, 2010 2
3. Market Outlook | India Research
Result Previews
Crompton Greaves
Crompton Greaves is scheduled to announce its 4QFY2010 results today. The top-line of
the company is expected to grow at 15.7% yoy to Rs2,846cr. On the operating front, we
expect the company to register healthy margins at 12.6%. Consequently, the net profit is
expected to increase at 10.2% yoy to Rs214r. We maintain a Buy recommendation on the
stock with a Target Price of Rs307.
Economic and Political News
FM pegs 2010-11 GDP growth at 8.4%
Capital flows pose risk, RBI says all options open
Steel consumption up 9.6% in April
Corporate News
Cadila Healthcare gets nod for H1N1 vaccine in India
Educomp bags Rs50cr order from Bihar
R power may build gas-fired plant in AP
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Events for the day
Amrutanjan Healthcare Results
Crompton Greaves Results
Educomp Solutions Results
Gammon India Results, ESOP
Graphite India Dividend, Results
Koutons Retail Results
MTNL Results
Tata Coffee Results
May 13, 2010 3
4. Market Outlook | India Research
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