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Market Outlook 270712

Market Outlook 270712

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Published by Angel Broking

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Published by: Angel Broking on Jul 27, 2012
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Market Outlook 
 
July 27, 2012
 
 www.angelbroking.com
 
Market Outlook 
 
July 27, 2012
Dealer’s Diary 
The Indian markets are expected to open in green taking cues from positiveopening in the Asia markets, matching sharp gains on Wall Street overnight asinvestors cheered an apparent pledge from the ECB to keep the euro zone intact.US markets closed mostly higher on Thursday lifting the Dow Jones Industrial Average to its best day of the month and into positive terrain for the week, after theECB signaled its intention to preserve the euro. The ECB leader suggested thatpolicy makers could step into bond markets as rising yields in Spain and Italy threatened to unravel the 17-nation euro zone. Relatively upbeat U.S. economicdata also generated some buying interest as weekly jobless claims came in at353,000 from 388,000 earlier and durable goods order for June rose by 1.6%from 1.1% earlier.Meanwhile, Indian shares fell sharply in the yesterday’s trading session, asconcerns prevailed regarding deficient monsoon rains and apprehensions that thegovernment will hold off on fuel subsidy and retail reforms.
Markets Today 
The trend deciding level for the day is 16,713 / 5,067 levels. If NIFTY trades abovethis level during the first half-an-hour of trade then we may witness a further rally up to 16,827 – 17,014 / 5,102 – 5,161 levels. However, if NIFTY trades below16,713 / 5,067 levels for the first half-an-hour of trade then it may correct up to16,526 – 16,411 / 5,008 – 4,973 levels.
Indices S2 S1 PIVOT R1 R2
SENSEX 16,411 16,526 16,713 16,827 17,014NIFTY 4,973 5,008 5,067 5,102 5,161
News Analysis
 
Supreme Court cancels 5 companies’ mining leases in Jharkhand
 
Gujarat high court directs all existing and new four-wheelers in state to beconverted to CNG
 
Reliance, BP lower capex guidance for MA oilfield
 
SBI successfully raises US$1.25bn
 
 Ashok Leyland wins Bangladesh order to supply buses
 
Bosch to temporarily suspend manufacturing operations at its plants
 
1QFY2013 Result Reviews – ITC, BHEL, Sterlite Industries, Ambuja Cements, ACC, JSW Steel, Thermax, MCX, Gujarat Gas, Jagran, Bajaj Electricals, JK Lakshmi Cement 
 
1QFY2013 Result Previews – NTPC, ICICI Bank, Nestle, MSIL, PNB, Bank ofIndia, Union Bank, Central Bank, Dena Bank, IRB Infra, CESC, TVS Motor,HCC 
Refer detailed news analysis on the following page
 
Net Inflows (July 25, 2012)
`
cr Purch Sales Net MTD YTD
FII 1,771 2,020 (249) 5,465 51,459MFs 485 453 31 (2,194) (8,039)
FII Derivatives (July 26, 2012)
`
cr Purch Sales Net Open Interest
Index Futures
3,958 4,400 (442) 11,112
Stock Futures
6,432 6,511 (79) 22,428
Gainers / Losers
Gainers LosersCompany Price (
`
)
chg (%)
Company Price (
`
)
chg (%)
Sun TV Network 297
 4.1
Pipavav Defence 62
(20.0)
Jet Air India 339
3.7
IOB 72
(10.8)
IVRCL Ltd 44
3.4
Reliance Power 89
(6.4)
 Ambuja Cements 179
3.1
JSW Energy 49
(6.4)
Sun Pharma 624
 2.3
Pantaloon Retail 157
(6.3)
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex
(1.2)
(206.2) 16,640Nifty 
(1.3)
(66.6) 5,043MID CAP
(2.1)
(125.4) 5,941SMALL CAP
(2.1)
(135.8) 6,420BSE HC
(0.2)
(12.3) 6,983BSE PSU
(1.7)
(120.0) 6,968BANKEX 
(1.7)
(197.4) 11,587 AUTO
(0.9)
(82.2) 8,792METAL
(1.5)
(146.4) 9,985OIL & GAS
(1.5)
(117.2) 7,852BSE IT
(1.5)
(79.1) 5,158
Global Indices
Chg (%)
(Pts) (Close)
Dow Jones
1.7
211.9 12,888NASDAQ
1.4
39.0 2,893FTSE
1.4
74.8 5,573Nikkei
0.9
77.2 8,443Hang Seng
0.1
15.5 18,893Straits Times
0.5
13.7 3,005Shanghai Com
(0.5)
(10.2) 2,126
Indian ADRs
Chg (%)
(Pts) (Close)
INFY
1.3
0.5 $38.7 WIT
(0.3)
(0.0) $7.7IBN
3.1
1.0 $33.9HDB
1.2
0.4 $33.5
Advances / Declines BSE NSE
 Advances 774 288Declines 2,010 114Unchanged 112 4
Volumes (
`
cr)
BSE 2,175NSE 13,041
 
 
 www.angelbroking.com
Market Outlook 
July 27, 2012
Supreme Court cancels 5 companies’ mining leases inJharkhand
Media reports suggests that Supreme Court has cancelled iron ore mining leasesgranted to Monnet Ispat, JSW Ispat, Jharkhand Ispat, Prakash Ispat, Adhunik Alloys and Abhijeet Infrastructure in Jharkhand. Earlier, these five companies’ hadchallenged an order of Jharkhand High Court that had canceled the allotment ofiron ore mines in Ghatkuri hills. In 1969, the federal government had reserved2,590 hectares of Ghatkuri Hills (having iron ore repository), for government-owned steel manufacturers. Subsequently, in CY2006, the state government hadallotted the mines to private companies’. However, state government had canceledthese leases later. As per our information with us (also confirmed by Monnet Ispat),Monnet Ispat does not own any mining leases in Jharkhand. Hence, we do notchange our estimates for Monnet Ispat and
maintain our Buy rating on the stockwith a target price of
`
447.
 For JSW Steel/JSW Ispat, the mining leases are in very preliminary stages and assuch we had not factored any output from those mines. Hence, we do not changeour estimates for JSW Steel.
Gujarat high court directs all existing and new four- wheelers in state to be converted to CNG
The Gujarat High Court has directed the state government to ensure that all four-wheelers in the state run on CNG within a time frame of one year. The court hasalso directed the petroleum companies operating in the state to comply with thisorder by setting up more CNG dispensing outlets across the state. As per the courtdirective, all cars and four-wheelers registered in the state along with newregistrations have to mandatorily run on CNG. There is no clarity yet if the order isalso applicable to the light and heavy commercial vehicles in the goods segment.The main motivation behind the Gujarat High Court’s order is to improve the airquality in the state. We believe that the court’s order to convert all four-wheelers into CNG is a hugetask as the necessary infrastructure i.e. CNG availability across the state iscurrently not available. Further as per reports, putting together such a largeinfrastructure in 12 months is a difficult task. Also, the existing four-wheelerengines, not designed for CNG, might wear down faster once converted.Maruti Suzuki offers five CNG models which is the largest number of modelsoffered by any manufacturer currently. The models include
 Alto, Estilo, Wagon R,Eeco
and
 SX4
. Hyundai has entry level cars
Eon
and
 Santro
which runs on LPG.The company’s
i10
model runs on CNG; however, it is available only in Delhi andMumbai. Presently, Tata Motors and Mahindra and Mahindra do not offer any CNG variants. We believe that if the order is accepted and implemented by the state government,the four-wheeler owners in the state will lose the freedom to choose the type of fueltheir vehicle runs on. We wait for more details and further clarity on the order.
 
 
 www.angelbroking.com
Market Outlook 
July 27, 2012
Reliance, BP lower capex guidance for MA oilfield
Reliance Industries (RIL) and it's partner BP have lowered capex guidance for MA field from US$2,234mn to US$1,960mn. During CY2006, RIL had proposed toinvest US$2,234mn to develop MA oilfield. We do not expect significant impact ofthis on RIL's financials. Hence,
we retain our estimates and maintain our Neutralview on the stock.
SBI successfully raises US$1.25bn
State Bank of India (SBI) has successfully raised US $1.25bn from a five yearoverseas bond sale at a spread of 375bp over the US treasury. The issue wasoversubscribed by 5.2times, aiding the bank to limit the spread over US treasuriesto just 375bp, 25bp lower than its earlier estimate of 400bp. As per lead bankersto the bond sale, effective coupon rate works out at 4.125% payable half yearly,thereby making the issue - cheapest five-year offering by a domestic company tilldate. The bank has a board mandate to raise US $10bn from overseas over thenext few years.
At the CMP, the stock is trading at 1.1x FY2014E ABV (afteradjusting for value of subsidiaries). We recommend a Buy rating on the stock witha target price of
`
2,443.
 Ashok Leyland wins Bangladesh order to supply buses
 Ashok Leyland has won an order to supply 88 AC buses to Bangladesh RoadTransport Corporation (BRTC). According to the company, the order is worthUS$6.5mn and is likely to be completed in FY2013. Earlier, Ashok Leyland hadwon an order to supply 50 Vestibule buses to BRTC which is also scheduled to bedelivered in FY2013. The company saw its exports volume jump by 25% inFY2012 backed by strong demand for its products in Asia (markets likeBangladesh and Sri Lanka), Middle East and Africa. Ashok Leyland is targetingexport volume growth of 15-18% in FY2013. At the CMP of
 ` 
21, the stock istrading at attractive levels of 7.8x FY2014 earnings.
We maintain Buy rating o thestock with target price of
`
30
.
Bosch to temporarily suspend manufacturing operations atits plants
In a view to avoid unnecessary buildup of inventory at its plants and align theproduction as per the market demand, Bosch (BOS) has announced that it willsuspend the manufacturing operations at the Bangalore (July 27 to July 30, 2012)and Nashik plant (July 30 to July 31, 2012). The domestic automobile industry which is the primary driver of company’s revenue, have witnessed a slowdown indemand recently due to sluggish economic growth, increasing fuel prices andweak consumer sentiments. The company had earlier announced temporary shutdown at its Jaipur (from June 28 to June 30, 2012 and July 25 to August 4,2012) and Bangalore (from June 29 to June 30, 2012 and from July 13 to July 14, 2012) plants, citing similar reasons. At the CMP of
 ` 
8,660, the stock is tradingat 18.8x CY2013E earnings.
We maintain our Accumulate rating on the stock witha target price of
`
9,206.
 

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