The key Indian indices gained around 1.8-1.9% boosted by positive global cues and sustained buying by foreign institutional investors. Auto and capital goods stocks witnessed strong buying, while mid and small cap indices also rose about 1.1% each. The market closed at one-week highs led by gains in Bharti Airtel, Hindalco, ITC and L&T.

1. Market Outlook
India Research
July 8, 2011
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The key benchmark indices started on a firm note buoyed by positive global BSE Sensex 1.9% 351.3 19,078
cues. Sustained buying by FIIs over the past few days also boosted the Nifty 1.8% 103.5 5,729
sentiment. Strong momentum was witnessed in auto stocks, triggered by MID CAP 1.1% 78.0 7,040
expectations that sales will see an uptick in 2HFY2012. With market breadth SMALL CAP 1.1% 90.3 8,448
remaining strong, the firmness continued until early afternoon trade, with the BSE HC 1.6% 102.1 6,490
indices hovering near one-week high. Increased buying was witnessed in capital BSE PSU 1.3% 110.4 8,706
goods, reality and FMCG stocks. Slight volatility was witnessed, which drifted BANKEX 1.2% 150.4 13,066
the indices marginally. However, the market regained strength in mid-afternoon AUTO 1.6% 139.4 9,113
trade after paring gains from intraday highs earlier. The market closed on a METAL 1.6% 240.9 15,424
strong note with the Sensex and Nifty posting gains of 1.9% and 1.8%,
OIL & GAS 1.7% 152.3 9,123
respectively. The mid-cap and small-cap indices also gained around 1.1 each.
BSE IT 1.4% 83.3 6,258
Among the front-runners, Bharti Airtel, Hindalco, ITC, L&T and NTPC gained
Global Indices Chg (%) (Pts) (Close)
3–4%. Among mid caps, SKS Microfinance, Tata Teleservices, DB Realty, Godrej
Inds. and Sterling Biochemicals Ltd. gained 8–20%, while KGN Inds., Tecpro Dow Jones 0.7% 93.5 12,720
Systems, Kirloskar Oil Engines, Sunteck Realty and Persistent Systems lost 2–5%. NASDAQ 1.4% 38.6 2,873
FTSE 0.9% 51.6 6,055
Markets Today
Nikkei -0.1% (11.3) 10,071
The trend deciding level for the day is 18981 / 5700 levels. If NIFTY trades
above this level during the first half-an-hour of trade then we may witness a Hang Seng 0.1% 12.6 22,530
further rally up to 19195 – 19312 / 5766 - 5804 levels. However, if NIFTY Straits Times 0.4% 11.2 3,126
trades below 18981 / 5700 levels for the first half-an-hour of trade then it may Shanghai Com -0.6% (16.2) 2,794
correct up to 18864 – 18651 / 5662 - 5595 levels.
Indices S2 S1 R1 R2 Indian ADRs Chg (%) (Pts) (Close)
Infosys 2.7% 1.8 $68.3
SENSEX 18,651 18,864 19,195 19,312
Wipro 2.9% 0.4 $13.7
NIFTY 5,595 5,662 5,766 5,804 ICICI Bank 2.3% 1.1 $49.3
HDFC Bank 1.4% 2.5 $182.6
News Analysis
Group of Ministers approves draft mining bill
SBI hikes lending and deposit rates Advances / Declines BSE NSE
Refer detailed news analysis on the following page
Advances 1,897 986
Net Inflows (July 06, 2011) Declines 988 420
` cr Purch Sales Net MTD YTD Unchanged 117 77
FII 2,116 1,835 281 5,004 6,326
MFs 440 345 95 79 3,204 Volumes (` cr)
BSE 3,494
FII Derivatives (July 07, 2011)
NSE 12,024
Open
` cr Purch Sales Net
Interest
Index Futures 2,221 1,620 601 12,684
Stock Futures 1,215 1,231 (17) 31,151
Gainers / Losers
Gainers Losers
Company Price (`) chg (%) Company Price (`) chg (%)
Tata Teleservices 21 9.1 Sun TV Network 324 (2.6)
Godrej Ind. 223 8.5 Gujarat NRE Coke 46 (1.9)
Marico 162 6.9 GTL 94 (1.6)
Anant Raj Ind. 75 6.9 Indusind Bank 285 (1.4)
Divis Lab. 827 4.8 Dena Bank 88 (1.4)
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Market Outlook | India Research
Group of Ministers approves draft mining bill
As reported by media, a panel of ministers has approved the new bill where coal miners
are required to share 26% of their profits with local communities. According to the reports,
the draft bill will now go to the Cabinet for approval; the proposal also calls for other
miners to give to local communities an amount equivalent to royalties. The bill requires
parliamentary approval after passing by the Cabinet to become a law. We await for
further clarity; however, if implemented, the new law is likely to have a negative impact on
mining companies.
SBI hikes lending and deposit rates
State Bank of India (SBI) has hiked its base rate and Benchmark Prime Lending Rate (BPLR)
by 25bp each to 9.50% and 14.25%, respectively. The hike will be effective from July 11,
2011. With the latest increase, the base rate of the bank has increased by 125bp in the
last three months, which we believe will help the bank in mitigating, to an extent, the
pressures from rise in cost of funds. The bank has also hiked deposit rates, especially in the
longer term maturities (over three years), by up to 100bp. However, the peak retail FD rate
in the 1–3 year maturity bucket remains at 9.25%.
At the CMP, the stock is trading at 1.6x FY2013E ABV (after adjusting for value of
subsidiaries). Post the recent run-up in the stock, we recommend Accumulate with a target
price of `2,832.
Economic and Political News
Food inflation at seven-week low of 7.6%
Direct tax collection drops 17% to `57,268cr
Textiles Minister Dayanidhi Maran resigns from Union Cabinet
Government approves FM phase-III auctions: I&B Ministry
Corporate News
Reliance seeks adequate time to respond to CAG report
Bharti Airtel to re-structure operations in India and South Asia
L&T Finance Holdings places pre-IPO equity
Birla Pacific Medspa surges by 48% in debut trade
Tech Mahindra bags IT contract from Microsoft
Dr. Reddy's launches hypertension capsules in the US market
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
July 8, 2011 2

3. Market Outlook | India Research
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