S&P BSE Sensex

HDFC HUL ITC SBI TCS
1,073.90 0.47 % 741.25 0.91 % 355.15 0.79 % 2460.45 V - 1.70 % 2524.60
+ 5.05 + 6.65 + 2.80 -42.55
S&P BSE SENSEX
1

For the premier Bombay Stock Exchange that pioneered the stock broking activity in India, 135
years of experience seems to be a proud milestone. A lot has changed since 1875 when 318
persons became members of what today is called The Stock Exchange, Mumbai by paying a
Princely amount of Re. 1.
Since then, the country's capital markets have passed through both good and bad periods. The
journey in the 20th century has not been an easy one. Till the decade of eighties, there was no
scale to measure the ups and downs in the Indian stock market. The Stock Exchange, Mumbai in
1986 came out with a stock index that subsequently became the barometer of the Indian stock
market.
Sensex is not only scientifically designed but also based on globally accepted construction and
review methodology. First compiled in 1986, Sensex is a basket of 30 constituent stocks
representing a sample of large, liquid and representative companies.
The base year of Sensex is 1978-79 and the base value is 100. The index is widely reported in both
domestic and international markets through print as well as electronic media.
The Index was initially calculated based on the "Full Market Capitalization" methodology but was
shifted to the free-float methodology with effect from September 1, 2003. The "Free-float Market
Capitalization" methodology of index construction is regarded as an industry best practice
globally. All major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-float
methodology.
Due to is wide acceptance amongst the Indian investors; Sensex is regarded to be the pulse of
the Indian stock market. As the oldest index in the country, it provides the time series data over
a fairly long period of time (From 1979 onwards). Small wonder, the Sensex has over the years
become one of the most prominent brands in the country.
The growth of equity markets in India has been phenomenal in the decade gone by. Right from
early nineties the stock market witnessed heightened activity in terms of various bull and bear
runs. The Sensex captured all these events in the most judicial manner.
S&P BSE Sensex
2

Sensex is calculated using the "Free-float Market Capitalization" methodology. As per this
methodology, the level of index at any point of time reflects the Free-float market value of 30
component stocks relative to a base period. The market capitalization of a company is determined
by multiplying the price of its stock by the number of shares issued by the company. This market
capitalization is further multiplied by the free-float factor to determine the free float market
capitalization.
The base period of Sensex is 1978-79 and the base value is 100 index points. This is often indicated
by the notation 1978-79=100. The calculation of Sensex involves dividing the Free-float market
capitalization of 30 companies in the Index by a number called the Index Divisor.
The Divisor is the only link to the original base period value of the Sensex. It keeps the Index
comparable over time and is the adjustment point for all Index adjustments arising out of
corporate actions, replacement of scrips etc. During market hours, prices of the index scrips, at
which latest trades are executed, are used by the trading system to calculate Sensex every 15
seconds and disseminated in real time.
Understanding Free Float Methodology
Free-float Methodology refers to an index construction methodology that takes into
consideration only the free-float market capitalisation of a company for the purpose of index
calculation and assigning weight to stocks in Index. Free-float market capitalization is defined as
that proportion of total shares issued by the company that are readily available for trading in the
market.
It generally excludes promoters' holding, government holding, strategic holding and other
locked-in shares that will not come to the market for trading in the normal course. In other words,
the market capitalization of each company in a Free-float index is reduced to the extent of its
readily available shares in the market.
In India, BSE pioneered the concept of Free-float by launching BSE TECk in July, 2001 and Bank Ex
in June, 2003. While BSE TECk Index is a TMT benchmark, BankEx is positioned as a benchmark
for the banking sector stocks. Sensex becomes the third index in India to be based on the globally
accepted Free-float Methodology.
Calculation of Sensex
03

Suppose the Index consists of only 2 stocks:
Stock A and Stock B.
Suppose company A has 1,000 shares in total, of which 200 are held by the promoters, so that
only 800 shares are available for trading to the general public. These 800 shares are the so-
called 'free-floating' shares.
Similarly, company B has 2,000 shares in total, of which 1,000 are held by the promoters and the
rest 1,000 are free-floating.
Now suppose the current market price of stock A is Rs.120. Thus, the 'total' market
capitalisation of company A is Rs.120,000 (1,000 x 120), but its free-float market capitalisation is
Rs.96,000 (800 x 120).
Similarly, suppose the current market price of stock B is Rs.200. The total market capitalisation of
company B will thus be Rs.400,000 (2,000 x 200), but its free-float market cap is only
Rs.200,000 (1,000 x 200).
So as of today the market capitalisation of the index (i.e. stocks A and B) is Rs.520,000 (Rs.120,000
+ Rs.400,000); while the free-float market capitalisation of the index is Rs.296,000. (Rs.96,000
+ Rs.200,000).
The year 1978-79 is considered the base year of the index with a value set to 100.
What this means is that suppose at that time the market capitalisation of the stocks
that comprised the index then was, say, 60,000 (remember at that time there may have been
some other stocks in the index, not A and B, but that does not matter), then we assume that an
index market cap of 60,000 is equal to an index-value of 100.
Thus the value of the index today is = 296,000 x 100/60,000 = 493.33
This is how the Sensex is calculated.
The factor 100/60000 is called index divisor.
Example
04

The Scrip Selection Criteria for S&P BSE SENSEX
The general guidelines for selection of constituents in S&P BSE SENSEX are as
follows:
Equities of companies listed on Bombay Stock Exchange Ltd. (excluding companies classified in Z
group, listed mutual funds, scrips suspended on the last day of the month prior to review date,
scrips objected by the Surveillance department of the Exchange and those that are traded under
permitted category) shall be considered eligible.
Listing History: The scrip should have a listing history of at least three months at BSE. An exception
may be granted to one month, if the average free-float market capitalization of a newly listed
company ranks in the top 10 of all companies listed at BSE. In the event that a company is listed
on account of a merger / demerger / amalgamation, a minimum listing history is not required.
The scrip should have been traded on each and every trading day in the last three months at BSE.
Exceptions can be made for extreme reasons like scrip suspension etc.
Companies that have reported revenue in the latest four quarters from its core activity are
considered eligible.
From the list of constituents selected through Steps 1-4, the top 75 companies based on free-
float market capitalisation (avg. 3 months) are selected as well as any additional companies that
are in the top 75 based on full market capitalization (avg. 3 months).
The filtered list of constituents selected through Step 5 (which can be greater than 75 companies)
is then ranked on absolute turnover (avg. 3 months).
Any company in the filtered, sorted list created in Step 6 that has Cumulative Turnover of >98%,
are excluded, so long as the remaining list has more than 30 scrips.
The filtered list calculated in Step 7 is then sorted by free float market capitalization. Any company
having a weight within this filtered constituent list of <0.50% shall be excluded.
All remaining companies will be sorted on sector and sub-sorted in the descending order of rank
on free-float market capitalization.
Industry/Sector Representation: Scrip selection will generally attempt to maintain index sectoral
weights that are broadly in-line with the overall market.
Track Record: In the opinion of the BSE Index Committee, all companies included within the S&P
BSE SENSEX should have an acceptable track record.
05

What causes Stock prices to change?
Stock prices change every day as a result of market forces. This means that share prices change
because of supply and demand. If more people want to buy a stock (demand) than sell it (supply),
then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there
would be greater supply than demand, and the price would fall.
Understanding supply and demand is easy. What is difficult to comprehend is what makes people
like a particular stock and dislike another stock. This comes down to figuring out what news is
positive for a company and what news is negative. There are many answers to this problem and
just about any investor you ask has their own ideas and strategies.
The principal theory is that the price movement of a stock indicates what investors feel a company
is worth. The price of a stock doesn't only reflect a company's current value, it also reflects the
growth that investors expect in the future.
Earnings are what affect investors' valuation of a company, but there are other indicators that
investors use to predict stock price. Remember, it is investors' sentiments, attitudes and
expectations that ultimately affect stock prices.
The most important factor that affects the value of a company is its earnings. Earnings are the
profit a company makes, and in the long run no company can survive without them. If a company
never makes money, it isn't going to stay in business. Public companies are required to report
their earnings four times a year (once each quarter).
Investors & analyst watch with great attention at these times, which are referred to as earnings
seasons. The reason behind this is that analysts base their future value of a company on their
earnings projection. If a company's results surprise (are better than expected), the price jumps up.
If a company's results disappoint (are worse than expected), then the price will fall.
It's not just earnings that can change the sentiment towards a stock (which, in turn, changes its
price). During the dotcom bubble, for example, dozens of internet companies rose to have market
capitalizations in the billions of dollars without ever making even the smallest profit. As we all
know, these valuations did not hold, and most internet companies saw their values shrink to a
fraction of their highs. Still, the fact that prices did move that much demonstrates that there are
factors other than current earnings that influence stocks.
Investors have developed literally hundreds of these variables, ratios and indicators. Some you
may have already heard of, such as the price earnings ratio, while others are extremely
complicated and obscure with names like Chaikin Oscillator or Moving Average Convergence
Divergence.
06

The Bombay Stock Exchange developed the BSE SENSEX in 1986, giving the BSE a means to measure
overall performance of the exchange. In 2000, the BSE used this index to open its derivatives market,
trading SENSEX future contacts. The development of SENSEX option along with equity derivatives
followed in 2001 and 2002, expanding the BSE‟s trading platform. Historically an open-cry floor
trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995.
The growth of the equity market in India has been phenomenal in the present decade. Right from
early nineties, the stock market witnessed heightened activity in terms of various bull and bear runs.
In the late nineties, the Indian market witnessed a huge frenzy in the 'TMT' sectors. More recently,
real estate caught the fancy of the investors. S&P BSE SENSEX has captured all these happenings in
the most judicious manner. One can identify the booms and busts of the Indian equity market
through S&P BSE SENSEX. As the oldest index in the country, it provides the time series data over a
fairly long period of time (from 1979 onwards). Small wonder, the S&P BSE SENSEX has become one
of the most prominent brands in the country.
Here is a timeline on the rise of the SENSEX through Indian stock market history.
SENSEX TIMELINE
25/07/1990
SENSEX touched
1000 points for
the first time
15/01/1992
SENSEX touched
2000 points
29/02/1992
SENSEX touched
3000 points
30/03/1992
SENSEX touched
4000 points
11/10/1999
SENSEX
touched 5000
points
11/02/2000
SENSEX touched
6000 points
21/06/2005
SENSEX
touched
7000 points
08/09/2005
SENSEX
touched
8000 points
09/12/2005
SENSEX
touched
9000 points
07/02/2006
SENSEX
touched
10000
points
27/03/2006
SENSEX
touched
11000
points
20/04/2006
SENSEX touched
12000 points
30/10/2006
SENSEX
touched
13000 points
05/12/2006
SENSEX
touched 14000
06/07/2007
SENSEX touched
15000 points
19/09/2007
SENSEX touched
16000 points
26/09/2007
SENSEX touched
17000 points
09/10/2007
SENSEX touched
18000 points
History of S&P BSE Sensex

Biggest falls
15/10/2007
SENSEX
touched 19000
points
11/12/2007
SENSEX touched
20000 points
05/11/2010
SENSEX
touched
21000 points
24/03/2014
SENSEX
touched
22000
points
09/05/2014
SENSEX
touched
23000
points
13/05/2014
SENSEX
touched
24000
points
16/05/2014
SENSEX
touched
25000
points
07/07/2014
SENSEX
touched
26000
points
02/02/2014
SENSEX
touched
27000
points
21/01/2008
SENSEX fall
by 1408
points
24/10/2008
SENSEX fall
by 1070
points
17/03/2008
SENSEX fall
by 951
points
03/03/2008
SENSEX fall by
900 points
21/01/2008
SENSEX fall by
875 points
08

Sensex is represented by various sectors whose weight is based on free float market
capitalization. Sectors representing the Sensex keeps changing based on the performance of
the sector during an economic cycle and accordingly stocks are added and removed
changing sector weightings.
Over the years Sensex sector composition has changed and fewer sectors represent the
Sensex. In 1990 around 15 sectors represented the Sensex. Gradually this has reduced and
currently only 10 sectors make up the Sensex.
In 1990 around 15 sectors represented the Sensex. Gradually this has reduced and currently
only 10 sectors make up the Sensex. Sensex at any given time is generally dominated by the
top 3 sectors which have aggregate of around 50% weight based on free float market
capitalization.
Sector composition keeps changing; however there are 8 sectors namely Capital Goods,
FMCG, Healthcare, Metal-Metal Products & Mining, Oil & Gas, Capital Goods, Finance and IT
which have been part of the index since 1998 although their weightings have kept changing.
These 8 sectors at any given point have aggregate of more than 80% weightage in the
index.
Sectorial Weightage in
Sensex
Information
Technology, 19.03%,
Banking & Finance,
18.35%
Oil & Gas, 16.89%
Automotive, 10.09%,
Metals & Mining,
8.92%
FMCG, 6.20%
Healthcare, 5.99%
Capital Goods, 4.42%
Telecom, 3.53%
Consumer Durables,
3.50% Utilities, 3.04%SECTORAL WEIGHTAGE
Information Technology Banking & Finance Oil & Gas Automotive
Metals & Mining FMCG Healthcare Capital Goods
Telecom Consumer Durables Utilities
09

The weightage of a company in the Sensex or Nifty depends on its free-float m-cap. It is a
percentage of the total market capitalisation of the index. So, if the market capitalisation of a
company is Rs.1 crore, while that of the index if Rs.200 crore, its stock has a weightage of 0.5%.
For this reason, higher the free-float m-cap of a company, greater is its weightage on the
index. Also, the more the public-holding, the higher will be the free float market capitalisation.
Suppose, today the value of Sensex is 20,000 and a company like TCS holds a weightage of
10%, this means, TCS’s value as a portion of the Sensex is 2000. So, if TCS’ share price increases
by 5%, its value of 2000 will also rise by the same percentage to 2100. As a result, the Sensex
will also rise by 100 points.
Many investment firms also follow weightages of stocks and also allocate funds the same way.
So, for example, if the weightage of a company drops in the Sensex, the percentage of total
funds being allocated will also fall. (The values given in the following pie diagram are rounded off)
The Weightage of 30 SENSEX Constituent Companies
Sensex Composition
Axis Bank
1%
Bajaj Auto
2%
Bharti Airtel
2%
Bhel
1%
Cipla
1%
Coal India
1%
Dr. Reddy's Lab
2%
GAIL
1%
HDFC
7%
HDFC BANK
7%
HERO Motocorp
1%
HUL
3%
Hindalco
1%
ICICI Bank
7%
Infosys
9%ITC
11%
L&T
4%
M&M
2%
Maruti Suzuki
1%
NTPC
2%
ONGC
4%
RELIANCE IND.
9%
SBI
3%
SESA STERLITE
2%
SUN PHARMA
3%
TATA MOTORS
4%
TATA POWER
1%
TATA STEEL
1%
TCS
7%
WEIGHT
Axis Bank Bajaj Auto Bharti Airtel Bhel Cipla Coal India
Dr. Reddy's Lab GAIL HDFC HDFC BANK HERO Motocorp HUL
Hindalco ICICI Bank Infosys ITC L&T M&M
Maruti Suzuki NTPC ONGC RELIANCE IND. SBI SESA STERLITE
SUN PHARMA TATA MOTORS TATA POWER TATA STEEL TCS
10

While ITC’s cigarette division continues to clock healthy
growth, its improving profitability in the non-cigarette
businesses is driving earnings. Despite a hike in excise duty
of cigarettes it has witnessed volume growth.
ITC is planning to enter the lucrative dairy market much of
which is unorganised. The move is part of ITC’s diversification
strategy. Before this, the companies’ last move was to venture
into the consumer goods business, which has successfully
paved off.
Business Segments
ITC remains one of the high conviction buys, given the strong resilience in its
core cigarette business.
ITC is set to foray into the dairy segment with value-added products like ghee
and milk powder being the preliminary offerings. The launch of ghee would be
pan-India but powdered milk would be initially used in house by the company
for its other FMCG products. The company plans to set up six plants across the
country for its dairy business. ITC's constant extension into new FMCG
segments over the years has been led by the company's intention to reduce
its dependence on cigarettes (facing extensive tax and government regulations
hampering volume growth in cigarettes).Though profitability from the FMCG
segment would be gradual, the company's strong distribution and sourcing network would aid in
building a strong presence across the segments in which it enters.
ITC BUY
₹ 359
Cigarettes & Cigars
Packaging & Printing
Education & Stationary
Hotels
Personal Care
Foods
Broker Reports
BUY 10
HOLD 4
SELL 2
SENSEX WEIGHT
10.75%
The price & data
indicated is as on date
19/09/2014
INDIVIDUAL STOCK ANALYSIS OF 30 SENSEX CONSTITUENT COMPANIES
11

After his sensational return to the company he co-founded,
N R Narayana Murthy has displayed typical zeal in setting the
house in order along with newly appointed CEO Vikas Sikka.
To improve employee morale, Infosys has announced salary
increments. A return to the company’s earlier PSPD model
(predictability, sustainability, profitability & de-risking) is
expected as the company strives to improve operational
performance.
While the problem of crisis of leadership may have been
solved, it will be some time before the management changes
are reflected in numbers.
Business Segments
Infosys has been volatile largely because of the changes in management. It
has strengthened its relationship with BP by extending its agreement with
the global oil major by another five years, in particular application support
and development. It has to redevelop a new growth strategy and execute.
One thing that you might want to consider is that the IT sector remains a
sector where though the growth is slower than what it used to be in the past
but it is still growing. It will still have the tailwinds of the rupee behind it and
of course they remained cash surplus. So in a market which may suddenly
due to global pressure may turn negative, stocks like Infosys will remain
stable.
Infosys HOLD
₹3,702
Business Services
Technology Services
Outsourcing Services
Broker Reports
BUY 5
HOLD 4
SELL 3
SENSEX WEIGHT
9.16 %
The price & data indicated
is as on date 19/09/2014
12

Though there is a risk of timing, Reliance Industries is going
to be the biggest beneficiary of the recent natural gas price
reform. The Indian rupee’s depreciation & improving refining
margins are going to be the other drivers of its earnings.
Analysts have already started upgrading their earnings
estimates for the financial year 2015-16. The upgrades are in
the range of 15-16%.
Business Segments
Reliance Industries is considering investing about $13 billion to build new
projects, including a 400,000 barrels per day refinery at its Jamnagar complex
to boost profit by processing cheap, heavy grades.
RIL will save about $450 million annually by importing 1.5 million tonnes of
ethane from US for its petrochemical plant, according to a report. Imported
ethane will substitute its current propane imports and a portion of naphtha
used for ethylene production. It is set to start selling diesel from over 1,400
petrol pumps across India from October this year.
RIL has planned to invest $2 billion (around Rs.12,000 crore) in its three shale
assets in the US, betting big on the potential of extracting natural gas and oil
from the sedimentary rock formations. RIL has also made an investment of
USD 70 million in a wholly owned subsidiary (WOS) in the UAE.
RIL BUY
₹ 995
Oil & Gas Exploration &
Production
Petroleum Refining &
Marketing
Petrochemicals
Textile
Retail
Broker Reports
BUY 20
HOLD 6
SELL 2
SENSEX WEIGHT
9.13%
The price & data
19/09/2014
13

The June marked the 58th
consecutive quarter of over 20%
year on year growth in net profit for HDFC Bank. Yet, its stock
had been languishing perhaps because of its high valuation
and the prolonged economic slowdown until last year. This
despite the fact that the bank remains best in class in terms
of core parameters like earnings, growth, asset quality, high
NIM, high CASA & high return ratios.
However, anlysts are of the view that most of the positives
are already factored into the stock’s price, which leaves little
room for an upside. The opinion can certainly change if the
merger with HDFC comes to picture.
Business Segments
Personal Banking
Private Banking
Corporate Banking
SME Banking
Wholesale Banking
DEMAT Services
HDFC Bank, India's second-largest private sector lender by revenue, is
planning a renewed push into the country's vast rural hinterland, and expects
its non-urban operations to become profitable by 2016.
The fortunes are closely watched by international fund managers given its
reputation for asset quality and technological innovation, and their
investments have made the bank India's largest by market capitalisation.
The retail loans accelerated at the fastest pace of 14.5% year on year during
the period, while loans to industry expanded 10%. The loans to services
increased 12% to during the same period and farm loans expanded 7.6%.
HDFC Bank's deteriorating asset quality continues to pose a major
challenge. As the company, aiming at rapid expansion, stretches to meet
growth targets and takes on new loans that are better to avoid, it often
leads to asset quality deterioration. With the bank further expanding its
reach, we believe that this trend will likely persist going forward.
HDFC BANK
₹ 855
Broker Reports
BUY 8
SELL 3
BUY
SENSEX WEIGHT
7.22%
14

HDFC continues to be the disputed leader among the
housing finance companies. The other factors that attract
long term investors to this counter include its operational
excellence demonstrated over several decades, sustainable
revenue & net profit growth & high asset quality. Despite its
big size, HDFC’s base is expected to grow by more than 20%
in the coming years as well.
Though spreads within the sector may get squeezed in the
medium term due to the problems faced by the housing
sector, HDFC is well positioned to defend its margins due tto
its wider reaach & size. However, there is not much upside in
the medium term in this counter as the valuation is high. For
long term perspective, it is a definite buy.
Business Segments
The easing of lending & reserve regulations by The Reserve Bank of India
has been beneficial for HDFC. Investors are wagering that HDFC Bank Ltd
and Housing Development Finance Corp. Ltd (HDFC) will pursue a
megamerger that would deliver returns unmatched by any peer. A merger
would allow HDFC Bank to offer financial services to 4.8 million home-loan
customers gained from the combination, while deposits at its 3,500
branches could help fund rising demand for mortgages. The new entity
would boast the largest capital buffer of any major bank. It will be a bank
with high capitalization and very high return-on-equity.
HDFC
₹1,066
Property Lending
Mortgages
General Insurance
Life Insurance
Mutual Funds
Broker Reports
BUY 9
SELL 2
SENSEX WEIGHT
7.19%
BUY
15

Despite the likely impact of the anticipated US Immigration
Bill, the Indian IT’s strongest player is expected to continue
to do well in the future as well. Since the bill will have
significant impact if passed in the current form, TCS has
already started concentrating on newer opportunities (under
penetrated geographies & new technologies).
Tata Consultancy Services being the biggest Indian IT
player, TCS is benefiting from from the ongoing US ecnomic
revival. It is also expected to benefit in a big way from the
rupees depreciation. With TCS being the market’s favourite,
its valuation is a little stretched at the current levels.
Business Segments
Despite rising revenues from India, TCS remains cautious on the domestic
segment saying it is waiting for "more broad-based confidence" to come
back.
However, in certain states like Telangana, TCS is in an expansion mode and
plans to add another 28,000 jobs to the existing 26,000 soon.
Technology budgets of large American corporations are expected to
increase in 2015, with the proportion of outsourcing spends set to grow
even faster as the world's largest economy stabilises, the US is the largest
market for the company, fetching over 50% of its sales.
TCS in an expansion move has opened Saudi Arabia's first all-female BPO
centre, which will provide employment to up to 3,000 women in three years.
TCS HOLD
₹ 2,715
Application Development & Maintenance
Asset Leverage Solution
Assurance Services
Business Process Management/Outsourcing
Consulting
IT infrastructure services
Enterprise Data Management & Integration Services
Technological Engineering & Industrial Services
Broker Reports
BUY 6
HOLD 5
SELL 1
SENSEX WEIGHT
6.85%
16

For the past few quarters, ICICI Bank has been churning out
very good numbers despite a slowdown in the economy. It
has shown improvement in operating performance & a pick-
up in retail business growth.
In the future, net interest margin is expected to further
improve by almost 300 bps over financial years 2011-13 & is
expected to expand due to the healthy performance by
subsidiaries, mainly general insurance. The stock appears
attractively price at current levels & should give a reasonable
upside given the ongoing expansion.
Business Segments
ICICI Bank will take ahead its financial inclusion strategy, is planning to add
another 1.5 million bank accounts in this financial year. In the last financial year,
more than 75 percent of ICICI Bank's new branches were added in the rural and
semi-urban areas. And as on now, about 52 per cent of the bank's overall
branch network is in rural areas.
Apart from expanding the branch network, the bank has also been expanding
its ATM network in the hinterland and currently has over 2,200 ATMs in semi
urban and rural areas. As a result of these measures, in the last financial year,
bank's rural portfolio has grown by 50 per cent.
ICICI Bank, through its Dubai branch, has sold five-and-half year fixed rate
notes for an aggregate principal amount of $500 million (Rs.3000 crore).
ICICI BANK BUY
₹1,570
Personal Banking
Wealth Management
Corporate Banking
Privilege Banking
Business Services
Insurance
Broking, etc.
Broker Reports
BUY 14
HOLD 2
SELL 1
SENSEX WEIGHT
6.56%
The price & data
19/09/2014
17

While it is reasonable for the market to punish weak
counters from the infra sector, a strong player like L&T has
also taken a beating. Many infrastructure players face a cash
crunch. This is likely to help strong players like L&T expand
at the cost of weaker competitors. Lower commodity prices
will also help L&T improve its margins.
The company is expected to remain stable at current levels
& generate positive returns for investors once the revival in
capex takes place.
Business Segments
Larsen & Toubro (L&T) has bagged Rs.1885 crore contract from NTPC for
setting up steam generators for Tanda Thermal Power Plant in Uttar Pradesh.
The company secured an offshore contract worth Rs.1340 crore from ONGC.
In the onshore segment, L&T Hydrocarbon Engineering has secured a
contract of Rs.580 crore from a leading company engaged in hydrocarbon
downstream processing.
L&T, in a strategic move to strengthen its design base in the Infrastructure
space, has acquired 50% of the stake in L&T-Ramboll Consulting Engineers
Limited hitherto held by Ramboll Denmark AS. With this acquisition, LTR now
becomes a wholly owned subsidiary of L&T. The company will continue to
offer single point 'concept to commissioning' consultancy services for
infrastructure projects like airports, roads, bridges, ports and maritime
structure including environment, transport planning and other related
services.
Larsen & Tubro
₹1,535
Process Technology
Project Management
Construction
Detailed Engineering
Modular Fabrication
Commissioning
Procurement
Broker Reports
BUY 10
HOLD 2
SELL 3
SENSEX WEIGHT
4.34%
BUY
The price & data
19/09/2014.
18

IN the auto sector, the commercial vehicles segment is the
worst affected. Tata motors passenger vehicle segment is
also under pressure.
Due to these factors, the company’s consolidated numbers
may remain weak for a few more quarters despite Jaguar &
Land Rover (JLR) good performance. In addition to the
continued traction of the new Range Rover, JLR has a strong
range of products for the nexxt two to three years. Among
them, the launch of smaller segments, expected by the end
of 2014, is going to be the most significant because it is
expected to boost the sales.
Business Segments
Tata Motors reported 9.7 per cent decline in global sales at 73,524 units in
August, 2014. Sales of luxury brand Jaguar Land Rover rose 2.44 per cent to
31,650 units in August as compared to 30,895 units in the same month last
year. Sales of commercial vehicles declined 19.6 per cent in August to
30,536 units from 37,983 units a year ago. Jaguar Land Rover faced probes
from China’s antitrust regulator, due to alleged monopolistic practices of
inflating vehicle and spare parts prices. China probes possibly hurting
profits, coupled with tepid sales outlook in the politically troubled Eastern
Europe, weighed on automotive stocks, which performed weaker than
broader indices.
Moody's Investors Service has recently upgraded ratings of Tata Motors,
on account of Tata Sons' track record in providing timely support to the
company. The agency upgraded corporate family ratings of Tata Motors
to Ba2/Stable from Ba3/Stable.
TATA MOTORS
₹ 520
Broker Reports
BUY 6
HOLD 6
SELL 2
Car & Utility Vehicles
Trucks & Buses
Defence & Homeland Security Vehicles
Jaguar & Land Rover Luxury Cars
HOLD
SENSEX WEIGHT
4.03%
The price & data
19/09/2014
19

The recent reforms like reduction in under recoveries due to
regular increases in diesel price, and doubling of natural gas
sector price from April, 2014 are god for the oil & gas sector
as a whole. However, there are reports that ONGC may be
asked to bear the same subsidy burden during the April- June
period as well. Though, theoretically, ONGC will benefit from
the gas price hike, the government will take it back in the
form of higher oil subsidy share to bring down the fiscal
deficit.
Barring government interference, ONGC is a very good
investment for the long term, so existing investors should
hold on to it & others should buy it.
Business Segments
ONGC's significant oil discovery in Bay of Bengal will begin production in
2019, with a peak output of 4.5 million tonnes a year, 20 percent more than
previous estimates. The oil discovery in Krishna Godavari basin block KG-
DWN-98/2 or KG-D5 will be the first large oil production from the east
coast. The block also has 10 gas discoveries. Conservative estimates put the
production at 75,000-plus bpd. Also, USD 6-6.5 per unit gas price hike
for ONGC is expected from the centre. The company has invested Rs 81,890
crore in bringing on stream newer discoveries and arrest natural decline
that has set in its ageing fields. However, there is a bit of a concern, since
the cabinet has given nod to the sale of government’s stake in PSUs, this
might lead to fall in prices in the short term.
ONGC BUY
₹ 405
Crude Oil Exploration
Natural Gas Exploration
& Production
Methane Extraction
LPG & Naptha
C2- C3
Broker Reports
BUY 8
HOLD 1
SENSEX WEIGHT
3.43%
20

Sun Pharmaceuticals has grown by leaps & bounds from its
humble beginning in 1983. Even so, it is expected to grow by
around 20% in the next 1 year. To make its earnings stream
more predictable, the company recently settled its ongoing
litigation with Wyeth & Atland Pharma by making a lump
sum payment of $ 550 million. With the litigation out of the
way, the earnings growth will take centre stage in this
counter. Since most of its earnings are in dollars, any further
rupee depreciation will help the company.
However, its valuation has sky rocketed in the recent past.
Therefore, in the medium term, the stock doesn’t hold much
potential for upside gains from its current levels.
Business Segments
It entered into a licensing agreement with Merck for investigational
therapeutic antibody Tildrakizumab to be used for treatment of chronic
plaque psoriasis. Under terms of the agreement, Sun Pharma will acquire
worldwide rights to Tildrakizumab for use in all human indications from Merck
in exchange for an upfront payment of USD 80 million. Merck is eligible to
receive undisclosed payments associated with regulatory (including product
approval). On the other hand, the USFDA's has started surprise inspections
at Sun Pharma's Halol facility in USA.
SUN PHARMA
₹ 359
Capsules
Tablets
Syrups
Ampoules
Vails
Pouch
Inhaler
Tube
Broker Reports
BUY 10
HOLD 4
SELL 2
SENSEX WEIGHT
2.94%
The price & data
19/09/2014
HOLD
21

HUL’s shares surged to a record high recently after the
company’s UK parent completed an open offer, raising its
stake in the Indian unit by almost 15%. Given the sharp rally,
most analyst fear a decline in its share piece in the near
future. Besides, weak consumer sentiment is likely to keep a
lid on volume growth. A weakening rupee also makes the
imported raw materials costlier, which will put pressure on
margins. However, a good monsoon would boost
consumption in rural areas, which would improve margins.
In what clearly highlights the hectic pace at which the Indian
consumer is evolving and the urgency with which marketers
are trying to decipher their needs and cater to them to stay
ahead of the curve, Hindustan Unilever has kicked off a new
operating framework which deals in distinct consumer
clusters that are expected to make the organization future
ready.
Business Segments
Food & Drink
Personal Care
Home Care
Water Purifiers
Packaging
Health & Hygiene
Hindustan Unilever, having a diversified portfolio performed better during
the last quarter. Their aggregate sales grew 16.5 per cent due to the price
hikes to cover the increased cost of raw materials. However, the net profit
grew at slower pace at 11.65 per cent, largely due to a 181 basis points
increase in the raw material costs over the previous year's level.
HUL intends to build a strong e-commerce platform & use its
retail distribution reach across the country to deliver products to consumers
at their doorsteps with the kirana stores playing a key role in the project.
HUL currently has a distribution reach of 3.2 million outlets across the
country.
HUL
₹ 737
Broker Reports
BUY 2
HOLD 2
SELL 3
SELL
SENSEX WEIGHT
2.39%
22

The State Bank of India is already going through a tough
period of margin compression & asset quality concerns.
These problems may continue for a few more quarters till the
economy recovers. Moreover, the finance minister is now
putting pressure on PSU banks to reduce lending rates, &
some banks have yielded. Since the competition won’t allow
banks to reduce their deposit rates simultaneously, margin
pressure is going to increase.
Hence, the SBI’s immediate outlook is weak. Since most of
these negatives have not affected the price much. Therefore,
the long term investors may hold on to the stock.
Business Segments
State Bank of India has revised interest rates on retail term deposits below
Rs.1 crore. The country's largest bank has cut the deposit rates for 1-3 years to
8.75 percent from 9 percent, while for the period of 180-210 days, it has hiked
the rates to 7.25 percent from 7 percent.
It also raised the deposit rate by 25 bps in the 180-210 days category to 7.25
per cent.
The credit rating agency Moody’s has recently given a downgrade rating to
SBI. However, the bank says that the downgrade would not affect their
expansion plans worldwide. The bank is set to open a branch in Saudi Arabia
and one in Qatar from where opportunity of remittances is high. On an
average 40-50 overseas branches shall be opened over next two years. On
large scale SBI’s new branches shall be opened in Nepal, besides Australia,
New Zealand, for which we have retail banking licenses.
SBI
₹ 2,568
Personal Banking
Agricultural/Rural Banking
Corporate Banking
International Banking
SME Finance
NRI Services
Broker Reports
BUY 3
HOLD 4
SELL 1
SENSEX WEIGHT
2.57%
The price & data
19/09/2014
HOLD
23

The telecom company’s African operations continue to be a
major drag on performance. Two years since it acquired the
African business, revenue growth & margins remain weak. In
the domestic market the company’s operations are growing,
with both voice & data traffics growing at a decent pace.
However, regulatory issues pose a threat. Last quarter, a
penalty of Rs.650cr. was slapped on the company for
violating the country’s roaming norms. The prospect of more
surcharges from the government, along with the upcoming
license renewals, make the stock’s prospectus uncertain.
Business Segments
Bharti Airtel and Eaton Towers today announced an agreement for the
divestment of over 3500 telecoms towers from Airtel to Eaton Towers.
However, the TRAI has objected to the structure of the Rs.700 crore Bharti
Airtel-Loop Mobile deal, throwing continuation of mobile services to more
than 3 million of the latter's subscribers into uncertainty with less than two
months left before its permit in Mumbai expires. With regards to expansion,
the company has launched its 3G service in African country Chad following recent
award of license for high speed Internet services by the Chadian government. Also,
it may have to spend Rs.436 crore for merging Airtel Broadband Services
with itself towards differential spectrum cost and migration fee.
BHARTI AIRTEL HOLD
₹ 415
Mobile Teleservices, Internet,
Landline, Digital TV, Airtel Money
Application tools for enterprise
Connectivity Solutions
ERP Solutions
VoIP Solutions
IT Infrastructure Services
Broker Reports
BUY 6
HOLD 3
SELL 1
SENSEX WEIGHT
2.38%
24

Though the passenger vehicles segment is going through a
difficult phase, Mahindra & Mahindra could compensate for
it with improved tractor sales. Against a 13 % fall in the
passenger vehicle segment in the June Quarter this year, on
year on year basis. M&M’s tractor sales in the same month
increased by 23 %.
Increased rural income & a good monsoon should help
increase the demand for the tractors. M&M has changed the
vehicles’ specifications to circumvent the additional tax
imposed on SUVs. It is planning to launch four new vehicles
in different vehicle segments by the end of this year.
Business Segments
The company will enter into a deal with the European automobile major —
PSA Peugeot Citroen, for a tie-up in the scooter space. The deal revolves
around sharing technology and a distribution tie-up across geographies, both
in Europe and India and other emerging markets.
The company has also tied up with Snapdeal for online pre-bookings of the
company's upcoming new version of SUV Scorpio, prior to its launch. The
analysts & the broker houses believe that M&M is a good choice considering
the estimates that show the automobile sector could likely see a turnaround
in FY15.
M&M BUY
₹1,375
Personal Vehicles
Commercial Vehicles
Spares
Customization Services
Vehicular Mobility Services
Design Services
Broker Reports
BUY 10
HOLD 2
SENSEX WEIGHT
2.31%
The price & data
19/09/2014
25

Though Wipro’s valuation is currently cheap compared with
that of its peers, this is reasonable because of its lower
growth rate & weaker margins. While Wipro is taking a
number of correct steps like revamping sales team to
increase the number of deals & moderating attrition by
increasing employee satisfaction, the impact of these
measures is not yet visible in revenue or net profit growth.
The guidance, given by Wipro’s management for the last
quarter is however positive. This means that there may be an
immediate trigger seen for this counter. Wipro’s expected
recovery may get delayed to 2014-15. Since the stock is
quoting at reasonable levels, existing investors should hold
on to the stock & new investors should take a buy action.
Business Segments
Wipro Arabia, a subsidiary of IT firm Wipro, has bagged a contract from Saudi-
based Saudi Electricity Company for implementing and rolling out plant
maintenance and project system functionality of SAP ERP application. Wipro
Arabia, a subsidiary of IT firm Wipro, has bagged a contract from Saudi-based
Saudi Electricity Company for implementing and rolling out plant
maintenance and project system functionality of SAP ERP application.
Wipro is enabling Muji, a leading retailer in Japan, to deliver a superior
shopping experience through real-time insights into the buying behavior of
its customers.
WIPRO
₹ 586
Analytics & Information
Management
Infrastructure Management
Services
Application & Cloud
Services
Consulting Services
Product Engineering
Solutions
Broker Reports
BUY 6
SENSEX WEIGHT
2.11 %
The price & data
BUY
26

Bajaj Auto reported fair good sales numbers in the last
quarter. As the various segments of economy are recovering,
the muted demand for two wheelers has also increased. The
worker strikes at its chakan plant have also been resolved,
which caused the company production losses.
However, tough competitions in the two wheeler segment is
expected to keep margins low.
Better volumes numbers are definitely supportive for Bajaj
Auto, what is more important is to deliver on the margin front.
They have been successful with the scooter segment where the
volume has been on an extremely positive side. However, at the
margin front they have not been so successful compared to their
peers.
Business Segments
Two Wheelers
Three Wheelers
Quadra cycle
Commercial Vehicles
Spares
Bajaj Auto's total sales increased by 8 percent year-on-year (up 5.6 percent
month-on-month) to 3.37 lakh units. The company expects to see total sales
of 4 lakh units in next few months. New Discover sales will grow to 25,000-
30,000 units per month. We expect 3-wheeler sales of 55,000 units per month
going forward. The company’s total sales growth was pushed up by a 56% rise
in commercial vehicle sales. Total CV sales went up to 52,538 units, which the
company said was the highest sales for any month.
Discover brand sales went up by 16% to 93,000 units. The company is betting
on new Discover 150 to bring up the volumes and recover lost market share.
Exports, too, were highest for any month with 1.75 lakh units, which was a 21%
growth.
Bajaj Auto has also recently launched two sport motorcycles from Austrian
partner KTM.
BAJAJ AUTO
₹ 2,410
Broker Reports
BUY 6
HOLD 7
SELL 6
SENSEX WEIGHT
1.75%
The price & data
19/09/2014
HOLD
27

The pharma major’s US operations are showing an improved
traction, leading to a rally in stock price over the past few
months. A string of new product approvals from the USFDA
have led to significant product launches that are expected to
boost earnings this fiscal year.
In the last quarter, Dr. Reddy’s launched 28 new generic
products & filed 24 new product registrations. A weak rupee
also provides a fillip to its dollar revenues. Given the high
earnings visibility, most analyst are positive about it.
Business Segments
Dr Reddy's deal with GlaxoSmithKline Plc for generic formulations is under
review. However, it'll be a little premature to say that the deal will be
terminated. Dr Reddy's deal with GlaxoSmithKline for generic formulations
is under review. However, at the moment, it'll be a little premature to say
that the deal will be terminated.
Dr. Reddy’s with a robust product portfolio, filings and necessary
manufacturing infrastructure are well placed to capitalise on this
forthcoming opportunity. Dr Reddy's have been the most prolific filers for
Para-IVs. Analysts believe that the company will continue to do extremely
well on the back of generics, domestic consumption, new product
introductions and consolidation in the industry.
Dr.REDDY LABS BUY
₹3,222
Generic Formulations
Active Ingredients
Pharmaceutical Services
Bio- Similars
Proprietary Products
Broker Reports
BUY 8
HOLD 1
SENSEX WEIGHT
1.75%
28

NTPC’s problems may be ending. The country’s largest
power producer National Thermal Power Corporation will
benefit from the ongoing power sector reforms. CCEA’s new
coal price mechanism will help it import coal to mitigate the
shortfall from Coal India supplies.
The recent allocation of four more captive coal mines with
an aggregate reserve of 2 billion tonne will provide fuel
security. The company is also maintaining its pace of capacity
addition. It commissioned around 4000 megawatts in 2013-
14. At current valuations, it is the sector’s safest bet.
Business Segments
State-run NTPC is scouting for coal assets overseas and has invited proposals
form coal miners interested in offloading stake. The move is aimed at
ensuring a steady supply of imported coal which the power producer needs
for its plants.
NTPC, which generates 43,128 MW of power through its 38 power stations,
imports coal to meet its fuel requirement. The company plans to use 17
million ton of imported coal this fiscal. NTPC consumed about 148 million
tonne of domestic coal and 10.8 million tonne of the imported variety.
The Andhra Pradesh government has allotted 1,200 acres of land on lease
basis to National Thermal Power Corporation Ltd for setting up 4,000 mw
power project in Visakhapatnam, with an investment outlay of `20,000 crore.
NTPC, is running its plants at over 80% capacity compared to an average of
62% last year, leading to higher demand for coal.
NTPC BUY
₹ 138
Electricity Generation
Power plant Construction
Power Management
Renewable Energy
Production
Broker Reports
BUY 5
HOLD 1
SELL 1
SENSEX WEIGHT
1.71%
The price & data
29

Besides weak global commodity prices, Sesa Sterlite
Industries, India’s largest copper smelter, is currently facing
multiple problems. Though the Supreme Court has
temporarily allowed the company to operate its smelter,
despite its ongoing fight with the Tamil Nadu Pollution
control board on this issue continues.
Other concerns pertain to the merger between Sterlite &
Sesa Goa, which is a time taking process. Sterlite’s power
division also faces problems like transmission bottlenecks,
issues regarding coal quality, and so on. However, all these
negatives have already been factored into the price. Hence,
long term investors may continue to hold the stock till clarity
emerges on a few of these issues.
Business Segments
Flat Products
Long Products
Construction Products
Agricultural Implements
Bearings
Design & Automation
The Orissa government has granted Sesa Sterlite a prospecting license for
two laterite deposits, which would give the company some respite on the
raw material front for its 1 million ton per annum alumina refinery in
Lanjigarh.
Sesa Sterlite is currently facing losses on account of the high import and
transportation costs of bauxite ore from outside Orissa to feed the plant.
The need is also there for meeting fund requirements to repay existing debt
and for proposed capital expenditure of the group including subsidiary,
associate firms and its buy out of the balance stake of Hindustan Zinc and
Balco and for general corporate purposes.
Shareholders' approval has also been sought for issuing convertible
securities of up to Rs.6,000 crore and for private placement of non-
convertible debentures (NCDs) of up to Rs.4,000 crore.
SESA STERLITE
₹ 284
Broker Reports
BUY 3
HOLD 2
SELL 3
SELL
SENSEX WEIGHT
1.49%
30

In addition to the fall in steel prices triggered by global
commodity woes, Tata Steel also has to manage its high debt.
However, Tata Steel continues to be the strongest domestic
player in metals with access to key raw materials. The
ongoing restructuring in his overseas operations has also
started yielding fruit. There are also reports that the
company is planning to sell its stake in the other group
companies to reduce debt & fund its expansion plans.
Existing investors may continue to hold on to the stock.
Business Segments
Flat Products
Long Products
Construction Products
Agricultural Implements
Bearings
Design & Automation
The currency depreciation in both euro and GBP is broadly positive for Tata
Steel, as European steel prices inch up and, given the high local currency
fixed costs, margins would expand in local currency terms
As the festival season starts, local steel demand should improve in India,
driving steel prices higher locally. The much-awaited cyclical steel demand
recovery should also start over the coming months.
Tata Steel is setting up a 55,000 tonne per annum (TPA) Ferro chrome plant
at Gopalpur in Ganjam district of Odisha and its first unit is expected to start
operations by March 2015. The steel major has already got in-principle
approvals from the designated authorities to set up an industrial park at the
same location.
Tata Steel has boosted revenue and profit for its full-year result in Australia.
The expansion plans include, two new facilities are being built in Auckland,
with new plant and machinery to enhance processing capability and
efficiency, and another purpose-built facility in Palmerston North is
scheduled to open at the end of the year.
TATA STEEL
₹ 511
Broker Reports
BUY 8
SELL 3
BUY
SENSEX WEIGHT
1.29%
31

The company has given a lower guidance for revenue &
margins over the next two years, citing rebuilding of product
pipeline in the United States. However, its outlook remains
positive due to the expected ramp up in key markets and
ongoing expansion plans.
Cipla is expected to complete its $ 488 million takeover of
South African Medpro this month. Its expansion in emerging
markets & increased spending on research & development
to build product pipeline provide comfort over the medium
to long term. However, the stock may remain range bound
due to its ongoing investment phase.
Business Segments
Global and Indian drug makers including Cipla have been hit in India by wide-
ranging government-imposed price reductions over the last year. Cipla is
among the companies that will be affected by the latest decision to cap the
prices of 36 drugs, including those used to treat infections and diabetes, in
the government’s latest move to make essential medicines more affordable.
Cipla has entered in to a commercial collaboration with UK-based S&D
Pharma in the Czech Republic and Slovakia region to focus on its core
therapy areas, while S&D Pharma will be the key partner for generics & to
distribute all products, including respiratory products; and this portfolio will increase over the next few
years.
CIPLA
₹ 627
Active Pharmaceutical-
Ingredients
Formulations
Veterinary
Therapy Endoscopy
Broker Reports
BUY 3
HOLD 6
SELL 2
SENSEX WEIGHT
1.22%
The price & data
HOLD
32

Hero Motocorp had been affected by the slowdown in the
two wheeler demand last year, but has turned itself towards
positive figures in the past two quarters, clocking a rise in
volume. However, it lost some market share to its erstwhile
partner Honda.
In the domestic market, the company has planned a capex
of Rs.25 billion over the next two years. Besides, its
operations in Africa & Latin America have also started,
displaying strong intent to gain a firm foothold in the other
emerging markets. However, weak competition & stagnant
demand in the domestic market is likely to keep the margins
under pressure.
Business Segments
Hero MotoCorp plans to invest Rs.2,200 crore to set up a manufacturing plant
in Andhra Pradesh. The new plant will provide employment to around 9,000
people. The proposed plant will have a capacity of 1.8 million units & will be
Hero MotoCorp's sixth facility and will take the company's overall annual
capacity to 12 million units. The company has appointed Markus Braunsperger,
a top automobile designer from Germany's BMW as the head of R&D division.
Analyst believe that if the real economy picks up then the four wheeler, two
wheeler and the commercial vehicle segments are absolutely best suited to
participate in the cyclical recovery.
HERO Motocorp
₹2,951
Two Wheelers
-Premium Bikes
-Off Road Bikes
-Scooters
-City Bikes
Broker Reports
BUY 4
SELL 3
SENSEX WEIGHT
1.18%
The price & data
HOLD
33

The entire auto sector is facing good times in the near future
due to the decrease in petrol & diesel prices. However, the
jump in cost of imported inputs due to rupee’s depreciation
is expected to create pressure on margins within the sector.
Since most of the Maruti’s imports are denominated in the
Japanese Yen, it will benefit from its higher depreciation.
Unlike other players, it will be able to report good margins
in the 2014-15 despite the weak topline growth. Since it is
the strongest automobile player in the maket, Maruti should
also be able to capitalise once the expected economic
recovery occurs. The response to the new launches has been
fairly positive for the company.
Business Segments
Hatchbacks
Sedans
Vans
SUVs
MUVs
Accessories
Parts
In a bid to make a mark in the big car segment, India's top car maker Maruti
Suzuki launched mid-sized sedan Ciaz. It is estimated that in the festival
season one can see growth of 20-25 percent over the non-festive season.
Analyst hope that the growth pattern this year will be similar to the past and
will be sustained.
The auto industry is seeing a gradual increase and even the cumulative
numbers are seeing improvements month-on-month, we can see a slow &
gradual turnaround happening.
Meanwhile, in August, 2014 Maruti's total sales rose 26.9 percent to 110,776
units as against 87,323 units in August last year. Domestic sales during the
month stood at 98,304 units, an increase of 29.3 percent from 76,018 units.
The boost in sales was mainly due to compact cars comprising Swift, Estilo,
Celerio, Ritz and Dzire, which were at 46,759 units in August as against
30,512 units in the year-ago month, up 53.2 percent.
MARUTI SUZUKI
₹ 3,084
Broker Reports
BUY 13
SELL 3
BUY
SENSEX WEIGHT
1.16%
34

The World’s largest coal producer has underperformed the
Sensex this year due to its inability to ramp up its production
& due to fall in the coal prices globally. Growth has been a
concern given the delays in environmental & production
approvals for mining projects.
However, sentiment is slowly turning positive for the stock
due to the recent government approval to setup an
independent coal regulator. This is expected to speed up
clearances, usher in more transparency in pricing, and
improve supply. Attractive valuations & receding policy risks
may keep the stock buoyant.
Business Segments
Boosted by environmental relaxation in mining, Coal India could meet the
production target of 507 MT for the current fiscal by ramping up its
production despite falling short till August. The company expects an
incremental production of at least 10 million tonnes to a maximum of 20
million tonnes from existing mines. The expansion limit for coal mines has
been increased without the mandatory public hearing. Increasing
production up to 6 MT for mining in case of mines having generating
capacity of more than 20 MT a year, will now not require any consent from
locals. It has cut the amount of the fuel it’s selling at competitive auctions to
bolster supplies to power stations to meet demand.
COAL INDIA BUY
₹ 345
Coking Coal
Semi Coking Coal
NLW Coking Coal
Beneficiated Coal
Middlings
Rejects
LTC Coke
Coal Fines
Tar/Heavy Oil
Light Oil/Soft Pitch
Broker Reports
BUY 8
HOLD 2
SELL 1
SENSEX WEIGHT
1.02%
35

After the recent gas price hike, gas transmission company
Gas Authority of India ltd. Could be adversely affected in the
near term. Its gas cost will increase substantially, but it will
not be able to pass this on to customers as the pricing of
both LPG & petrochemicals is based on import parity.
It expects a hit of $ 218 million annually on pre-tax profits
on account of higher costs. This, in addition to its subsidy
burden, will dent profitability. Gail, on its part, is trying to free
itself from the subsidy burden by changing focus from
transportation of gas to trading, thereby reducing its
dependence on the regulated business.
Business Segments
State-run gas utility GAIL has made available natural gas from alternate
sources to industries in Gujarat whose domestic fuel allocation was snapped
to give fuel for the CNG sector.
The Oil Ministry had directed Gail to cut domestic gas supplies - called APM
gas - to non-priority sector so that cheaper fuel can be made available for
supply as compressed natural gas (CNG) to automobiles and piped cooking
gas (PNG) to households in cities.
Considering the requirement of gas to other industries, Gail has offered to
supply equivalent amount of alternate gas, possibly imported LNG, so that
the production of such industries do not suffer.
The pipeline to be used to supply gas to Pakistan starting from western
Indian state of Gujarat would be built by Gail India.
GAIL
₹ 449
Natural Gas Supply
Liquid Hydrocarbon
Petrochemicals
LPG Transmission
City Gas Distribution
Gas Exploration
Broker Reports
SELL 5
HOLD 1
SENSEX WEIGHT
0.94%
SELL
36

The stock has corrected sharply this year in line with the
downturn in the metals sector. A global slowdown in demand
for commodities has taken its toll on the sector. These
conditions are likely to persist for a while.
For Hindalco, lack of approvals for captive coal mines for its
green field smelters & weak aluminium prices remain a
concern. While the near term positive triggers are not visible,
analysts are of the opinion that the negatives are already
priced in. Besides, Hindalco’s US based subsidiary, Novelis,
lends comfort with good earnings. Given the stock’s low
valuation, investors should hold on to it for the medium term.
Business Segments
Hindalco Industries Ltd., India’s second-largest aluminum maker,
postponed a share sale to institutional investors on uncertainty about its
access to cheap raw materials, people with knowledge of the matter said.
The company was seeking to raise as much as 50 billion rupees ($818
million) from the share sale. Hindalco’s Mahan smelter, tied with another
project as the company’s biggest aluminum plant with its 360,000-ton
capacity, would be affected by the cancellation of the mine permit. The
company claimed it has sufficient inventory of bauxite to run Muri and
Renukoot alumina refineries despite the recent closure of its six mines by
the Jharkhand state government. However, the fact that lack of bauxite
mineral forced the company to drop its alumina production in April-June
quarter gives another picture.
HINDALCO
₹ 164
Aluminium
Copper
Cargo Handling
Packaging
Fertilisers
Acids
Broker Reports
BUY 3
HOLD 3
SELL 2
SENSEX WEIGHT
0.89%
HOLD
37

TATA Power continues to suffer due to issues like losses to
at Mundra UMPP and lower profitability at the Indonesian
coal mines due to weak coal prices. However, with the
government bringing in more reforms in the power sector,
Tata Power, the country’s most efficient power producer, is
expected to reap good dividends.
Though delayed, electricity tariffs have started going up.
The State Electricity Regulator has approved a tariff increase
for urban residential consumers. While Tata Power looks
forward to increase its capacity at the Mundra UMPP to 5600
megawatts, the stock will trade low till there is clarity about
the compensatory tariff.
Business Segments
Tata Power’s subsidiary Tata Solar has been ranked as India's largest
integrated solar player. Among the domestic module suppliers category
also, it is the leading player. The company has been particularly successful
at winning large, public sector projects which could be one of the key growth
drivers in the future.
In a bid to meet the ever-increasing demand of power for the Mumbai city,
Tata Power wants to convert unit 6 of the Trombay plant to run on coal so it
can permanently supply 500 mw. However, it has hurdles in its way ahead.
Tata Power's wholly-owned subsidiary Bhira Investments Ltd has redeemed
$450 million (approximately Rs.2,700 crore) worth of loans to replace them
with less costlier debt options.
TATA POWER
₹ 87
Electricity Generation
Transmission
Distribution
Trading
Power Services
Strategic Engineering
Solar Energy
Broker Reports
BUY 2
SELL 4
SENSEX WEIGHT
0.75%
SELL
38

Earnings Visibility remains a big concern for this capital
goods manufacturer. The prolonged slowdown & poor
investment climate are reflected in a falling order book &
slackening pace of order execution.
As the demand environment remains sluggish, fiscal year
2015- 16 is expected to be tough for the company. Its
revenue & profit margins are expected to decline. Given
these issues, there appears to be little scope for a turnaround
in the near term. Despite its attractive valuation, the stock
may appear to be an underperformer.
Business Segments
State-owned BHARAT HEAVY ELECTRICALS LTD., saw its net profit nearly
half to Rs.3,461 crore in the last fiscal, is also keen to tap opportunities in
the nuclear power segment and possible entry into core-nuclear area.
BHEL has mentioned that power sector is facing numerous constraints
related to fuel supply, financial health of the state distribution companies,
land acquisition, and regulatory clearances.
These factors have resulted in finalisation of fewer new projects and
slowdown in execution of some projects.
BHEL is also targeting countries like Russia, Kazakhstan, Belarus, and
Tajikistan that form a part of the Commonwealth of Independent States
(CIS) and also hold promising investment avenues.
BHEL has bagged an order worth over Rs.3,500 crore for setting up a
thermal power project in Gujarat. The contract has been awarded by the
GSECL.
BHEL
₹ 226
Power
Transmission
Transportation
Non- Conventional
Energy
Operation & Maintenance
Spares
Broker Reports
SELL 10
SENSEX WEIGHT
0.7%
SELL
39

As the investment cycle and money flow within the
economy improves, the bank can see a reasonable amount
of deflation in its stressed assets pool.
Axis Bank is among the best capitalised bank and is likely
to benefit from a recovery in the economy. An increase in
investment activity will boost its fee income and add to its
profitability. Considering high visibility of the earnings
growth and the healthy asset quality.
Business Segments
Axis Bank has managed to grow much faster than some of the other
domestic peers and now it is at a stage where it is almost as big as the
biggest of the lot.
Axis bank will be announcing festive season offers on its auto loans and
credit card offerings in the next few weeks. It has also announced the
launch of e-surveillance facility, a service that allows a 24x7, 365 days
centrally monitored automated security of ATMs.
On the other hand, Finance ministry will soon invite bids from merchant
bankers to advise the government on new ETF, so that it could reduce its
stake in the companies like Axis Bank. Analysts attribute the bank’s growth
to the gradual recovery in investor sentiment, amid hopes of a recovery in
the macro economy.
AXIS BANK
₹ 407
Personal Banking
Private Banking
Business Banking
NRI Banking
Agriculture Banking
Rural Banking
Broker Reports
BUY 7
SENSEX WEIGHT
0.7 %
BUY
40

There are no permanent Sensex Stocks
There is a constant churn in the composition of Sensex stocks
Jan, 2009
Sun Pharmaceuticals Satyam Computers
Jun, 2009
Ranbaxy LaboratoriesHero Honda Motors
May, 2010
Sun PharmaceuticalsCipla
Jindal Steel & PowerGrasim Industries
Dec, 2010
Bajaj Auto ACC
Aug, 2011
Coal India RIL
Sun Pharmaceuticals R.Com
Jan, 2012
GAIL DLF
Dr Reddy’s Laboratories Jaiprakash Ass.
Scrips Included Scrips Excluded

Most wanted by
Mutual funds
High MF holding shows the
counter’s attractiveness
L&T | 15.56%
ITC | 13.04%
ICICI | 11.53%
MS | 5.99%
Infosys | 5.76%
42

*Figures are percentage shares held by FIIs in the respective companies.
FII’s Favourites
FII holding shows stock’s
attractiveness, but
excessive holding can add
to risk if they start
withdrawing.
HDFC | 77.36 %
Tata Motors | 67.06 %
Axis Bank | 48.38 %
Infosys | 41.56 %
ICICI Bank | 40.03 %
43

#Figures in Rupees. # Data for past four quarters ending June, 2014.
*The above data indicates the Change in price of a stock in the past four quarters ending June.
*Figures in Rupees.
TATA Steel, 10
M&M, 10.4
HDFC, 14
Larsen & Tubro, 14.25
Coal India, 29
0 5 10 15 20 25 30 35
TATA Steel
M&M
HDFC
Larsen & Tubro
Coal India
Highest Dividend Payers
Sensex stocks that paid the highest dividend
10.5 Stocks that moved the Sensex in the past
year
Hero Motocorp, 668
Dr. Reddy's Lab, 713
L & T, 762
SBI, 936
Maruti Suzuki, 1610
0 200 400 600 800 1000 1200 1400 1600 1800
Hero Motocorp
Dr. Reddy's Lab
L & T
SBI
Maruti Suzuki
Top Gainers
44

Sensex returns for different tenures
Annualised returns from investment made in Sensex during the past 20 years. The chart shows the gain/loss
to any person who bought the Sensex in one year and sold it in 1 year later (holding period 1 year).
Performance depends on the entry point. Despite the recent rally, the annualised return average from the Sensex is
only 8.1% if you entered at the end of previous rally in August, 2008.
The chart shows the gain/loss to any person who bought the Sector in one year and sold it in 1 year later (holding
period 1 year). Annualised return for the previous 10 years.
-46.72
65.78
-13.71
11.85
-0.17
14.72
-3.92
33.73
-27.93
-3.75
-12.12
10.7
8.08
10.68
8.08
10.68
10.99
10.08
16.53
23.05
41.03
-60
-40
-20
0
20
40
60
80
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Leaders & Laggards keep changing
SUGAR 219
SUGAR
237
SUGAR
249
REALTY
307
POWER
116
-12
FMCG
METAL
207
CD
35
FMCG
25
FMCG
33
IT
45
FMCG
42
-7
OIL & GAS
OIL &
GAS
34
-63
SUGAR
-24
IT
-79
REALTY
TELECOM
1
-28
REALTY
-36
SUGAR
-26
METAL
-15
AUTO-100
-50
0
50
100
150
200
250
300
350
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Best Performing Sector Worst Performing Sector

S&P BSE Sensex

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