Market Outlook 

September 25, 2012

Dealer’s Diary
Indian markets are expected to open flat tracking marginally positive opening trades in most of the Asian bourses and the SGX Nifty.
Globally, US markets ended the Monday’s trading session mostly lower, as traders continued to express concerns about the global economic outlook despite recent announcements of further monetary stimulus. However, selling pressure remained somewhat subdued, limiting the downside for the markets. Most of the European bourses too ended the trading session in negative territory. A number of issues contributed to the weakness today, but most stemmed from concerns over global growth. Meanwhile, Indian markets fell modestly on Monday, as investors indulged into profit booking following recent steep gains. After a slew of big ticket reforms announced by the UPA government over the last few days, investors are now anticipating concrete measures to fast track projects and kick start the investment cycle.

Domestic Indices

Chg (%)

(Pts)

(Close)

BSE Sensex Nifty MID CAP SMALL CAP BSE HC BSE PSU BANKEX AUTO METAL OIL & GAS BSE IT
Global Indices

(0.4) (0.4) 0.3 0.9 (0.3) (0.5) 0.5 0.8 0.3 (0.3)
Chg (%)

(79.5) 18,673 (21.6) 21.5 57.7 (23.4) (37.2) 5,670 6,454 6,867 7,334 7,446

63.5 13,101 80.0 10,350 30.0 10,708 8,727 5,967
(Close)

(1.4) (127.0) (16.3)
(Pts)

Dow Jones NASDAQ FTSE Nikkei Hang Seng Straits Times Shanghai Com
Indian ADRs

(0.2) (0.6) (0.2) (0.5) (0.2) (0.3) 0.3
Chg (%)

(20.6) 13,559 (19.2) (13.8) (40.7) (10.3) 6.5
(Pts)

Markets Today
The trend deciding level for the day is 18,712 / 5,681 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,773 – 18,872 / 5,699 – 5,728 levels. However, if NIFTY trades below 18,712 / 5,681 levels for the first half-an-hour of trade then it may correct up to 18,612 – 18,551 / 5,652 – 5,634 levels.
Indices SENSEX NIFTY S2 18,551 5,634 S1 18,612 5,652 PIVOT 18,712 5,681 R1 18,773 5,699 R2 18,872 5,728

3,161 5,839 9,069 3,068 2,033
(Close)

(40.2) 20,695

INFY WIT IBN HDB
Advances / Declines

(1.0) (1.0) 1.0 0.5

(0.5) (0.1) 0.4 0.2
BSE

$48.3 $8.9 $40.2 $37.0
NSE 873 578 85

News Analysis
No Roaming Charges from 2013 Maruti Suzuki to hike car prices within a week IVRCL bags orders worth `959cr Cravatex - FILA sub-license agreement extended for 30 years
Refer detailed news analysis on the following page

Advances Declines Unchanged
Volumes (` cr)

1,666 1,230 127

Net Inflows (September 21, 2012)
` cr FII MFs Purch 6,835 506 Sales 4,363 710 Net 2,472 (204) MTD 11,764 (1,761) YTD 74,775 (11,194)

FII Derivatives (September 24, 2012)
` cr Index Futures Stock Futures Purch 3,064 5,767 Sales 3,194 6,154 Net (130) (388) Open Interest 16,728 30,823

BSE NSE

2,868 16,081

Gainers / Losers
Gainers Company
Lanco Infra ADANI POWER Suzlon Energy Torrent Power BHEL

Losers Company
Apollo Tyres Exide Inds India Infoline Cadila Health Bharat Elect

Price (`)
15 51 18 168 247

chg (%)
9.6 7.9 7.0 6.8 6.4

Price (`)
93 143 59 830 1,185

chg (%)
(4.4) (4.1) (4.0) (3.5) (3.3)

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Market Outlook
September 25, 2012

No Roaming Charges from 2013
Telecom minister, Mr. Kapil Sibal announced yesterday that there will be no roaming charges from 2013. At present, mobile users pay ~ 60paise/minute in their home market while shelling out `1.25-`1.50/minute while roaming in another telecom circle. Although one can make calls at the same rate once roaming charges are dropped, telecom operators who would lose revenue may end up jacking up local call charges to recoup some of the losses. The move, however, might not go down well with service providers, who will face a hit of up to `13,500cr in revenues. We maintain our Neutral view on overall telecom sector.

Maruti Suzuki to hike car prices within a week
Maruti Suzuki (MSIL) is planning to increase the prices of its vehicles within a week to offset the impact of adverse foreign exchange movement and rising input cost pressures. While the company has not disclosed the quantum of the price increase, we believe it could be in the range of 1-2%. Considering the current environment wherein the demand for passenger cars in the petrol segment remains weak in spite of higher discounts; the move to hike prices may impact the demand for petrol cars. However, it is less likely to impact the consumer demand in the diesel car segment. At the current market price of `1,354 the stock is trading at 15.5x FY2014E earnings which is in-line with its historical average of 15x. We maintain our Neutral rating on the stock.

IVRCL bags orders worth `959cr
IVRCL has bagged orders worth `959cr in the in water, irrigation and power businesses. International orders include an order worth `471.5cr for the construction of a rehabilitation project from the National Irrigation Board, Kenya and construction of water tanks, infrastructure and related buildings from Kuwait worth `124.7cr. Domestically, IVRCL’s water division has been awarded orders worth `314.7cr. One contract is from PHED, Bharatpur, for the construction of a transmission main pipeline for 97 villages, which includes operation and maintenance. Another order is for a cluster distribution system for 71 villages from PHED, Jodhpur. In the power division, IVRCL has got an order worth `48.1cr for the construction of transmission lines in Bhopal Circle from the Madhya Pradesh Power Transmission Company. Owing to the recent surge in the stock price we recommend Accumulate with a SOTP target price of `51.

Cravatex - FILA sub-license agreement extended for 30 years
Cravatex represents FILA in India and distributes its products under the license agreement which has been further extended for 30 years starting from January 2013. The license permits the distribution of FILA products and use of its trademark in India, Bangladesh, Pakistan, Sri Lanka, Nepal and Bhutan. Further, the agreement requires Cravatex to invest 4-5% of the revenue on marketing activities. Cravatex has been currently distributing the FILA products largely in wholesale, shop-in-shop and retail formats but now plans to focus on own-stores formats. FILA aims to more than double its stores to 100 in the next two years and

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Market Outlook
September 25, 2012

thereby double its market share by 2015 from current 5%. We maintain our Buy recommendation on the stock with a target price of `682 based on target PE of 12x.

Economic and Political News
Inflows of $2bn/yr seen on borrowing tax cut: Barclays Capital S&P lowers India's GDP growth forecast to 5.5% No roaming charges from 2013: Government New tax accounting standards to reduce litigation soon

Corporate News
ONGC to start production in its KG basin block by 2016-17 Cairn Energy selling 8% stake in Cairn India Jindal Steel raises `660cr bridge loan for CIC buy ONGC-IOC-OIL bid $5 billion for ConocoPhillips' assets
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

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