Market Outlook

India Research
January 2, 2012

Dealers Diary
Indian markets are expected to open range-bound following mixed cues from the European and the US markets on Friday. Most major Asian markets are closed for trading today. Indian markets ended lower on Friday led by fall in oil & gas, metals, auto and banking stocks as traders were hesitant to build positions as they overlooked positive cues from the overnight gains on Wall Street. Meanwhile, China reported a slower manufacturing growth. HSBC's closely watched survey of Chinese manufacturing firms revealed that its PMI for December came in at 48.7 compared to the earlier 'flash' reading of 49.0. However, the reading was slightly better than the survey's 47.7 reading for November. Is the US, the trading throughout Friday was choppy and well below average volume, which was the case throughout the holiday-shortened week. The final trading day of the year was largely uneventful globally as there was no major news and a holiday atmosphere pervaded the market. Meanwhile, Indian markets would watch out for the external trade data which is scheduled to release today.

Domestic Indices BSE Sensex Nifty MID CAP SMALL CAP BSE HC BSE PSU BANKEX AUTO METAL OIL & GAS BSE IT Global Indices Dow Jones NASDAQ FTSE Nikkei Hang Seng Straits Times Shanghai Com

Chg (%) (0.6) (0.5) 0.3 0.1 0.5 1.0 (0.7) (0.3) (0.7) (1.5) 0.4 Chg (%) (0.6) (0.3) 0.1 0.7 0.2 (1.0) 1.2

(Pts) (89.0) (22.0) 16.1 5.2 26.2 62.0 (67.5) (26.7) (63.4) (112.7) 21.3 (Pts) (69.5) (8.6) 5.5 56.5 36.5 (26.4) 25.9

(Close) 15,455 4,624 5,135 5,550 5,871 6,365 9,153 8,144 9,293 7,529 5,752 (Close) 12,218 2,605 5,572 8,455 18,434 2,646 2,199

Markets Today
The trend deciding level for the day is 15,519/4,641 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 15,630 - 15,806/4,674 - 4,723 levels. However, if NIFTY trades below 15,519/4,641 levels for the first half-an-hour of trade then it may correct up to 15,343 - 15,232/4,592 - 4,560 levels.
Indices SENSEX NIFTY S2 15,232 4,560 S1 15,343 4,592 Pivot 15,519 4,641 R1 15,630 4,674 R2 15,806 4,723

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank

Chg (%) 0.1 0.8 0.7 1.6

(Pts) 0.1 0.1 0.2 0.4

(Close) $51.4 $10.2 $26.4 $26.3

News Analysis
Auto sales update - December 2011 Coal India to shift to new pricing mechanism from January 2012
Refer detailed news analysis on the following page

Advances / Declines Advances Declines Unchanged

BSE 1,327 1,451 134

NSE 705 750 80

Net Inflows (December 29, 2011)

` cr FII MFs Purchases
1,498 471

Sales
2,115 287

Net
(617) 184

MTD
(42) 580

YTD
(4,066) 6,525 Volumes (` cr) BSE NSE 1,491 6,685

FII Derivatives (December 30, 2011)

` cr Index Futures Stock Futures Purch
895 462

Sales
1,004 603

Net
(109) (142)

Open Interest
9,095 22,149

Gainers / Losers
Gainers Company
Hindustan Copper MMTC Power Finance Glenmark Pharma GMR Infra

Losers Company
IFCI Adani Enter Gujarat State Pet United Spirits Punj Lloyd

Price (`)
186 538 138 291 21

chg (%)
14.6 14.5 4.2 4.1 4.0

Price (`)
22 294 78 491 40

chg (%)
(8.2) (6.5) (4.5) (4.2) (3.9)

Please refer to important disclosures at the end of this report

Sebi Registration No: INB 010996539

Market Outlook | India Research

Auto sales update - December 2011

Mahindra & Mahindra (MM)

MM reported better-than-expected 25.5% yoy (5% mom) growth in its total auto sales to 42,761 units, supported by strong performance across all product segments. Domestic auto sales jumped by 22.6% yoy (4.5% mom), while export sales increased significantly by 89.3% yoy (12% mom). The passenger vehicle and four-wheeler pick-up segments continued their strong run, registering robust 24% (8.6% mom) and 35.4% (3% mom) yoy growth, respectively, during the month.
Tata Motors (TTMT)

TTMT registered a strong 22% yoy increase in its total sales to 82,278 units, led by impressive 47% yoy growth in the passenger vehicle segment. The passenger vehicle segment's performance continues to be benefitted by strong demand for diesel vehicles, due to which Indica and the UV portfolio's sales jumped by 57% and 90% yoy, respectively. Indigo sales also recorded a strong bounce back during the month, witnessing 32% yoy growth. The commercial vehicle segment posted healthy 14% yoy growth, as light commercial vehicle sales grew by 20% yoy. MHCV sales, however, witnessed modest 5% yoy growth during the month.

Coal India to shift to new pricing mechanism from January 2012

Coal India is expected to shift to new pricing mechanism from January 2012. The company will price its non-coking coal based on internationally-accepted Gross Calorific Value (GCV). Currently, non-coking coal is priced based on various grades ranging from A to F. The new pricing system is based on the recommendations of the Integrated Energy Policy Committee and the Expert Committee on Road Map for coal sector reforms. The change is pricing mechanism is expected to be revenue-neutral for Coal India. Hence, we maintain our estimates and recommend Accumulate on the stock with a target price of `322.

Economic and Political News

WPI and CPI rises 9.11% and 9.34% yoy, respectively in November 2011 Aviation ministry to provide `33,000cr to Air India by 2017 Indias overseas investment increases to US$109.1bn during 2QFY2012 Growth in non-food credit off-take dips to 16.8% in November 2011

Corporate News
Bajaj Auto to roll out first KTM bike in India in January 2012 Asian paints suspends operations at Tamil Nadu plant due to cyclonic storm KPIT Cummins to realign its investments with focus on emerging markets
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint,

January 2, 2012

Market Outlook | India Research

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January 2, 2012