Market Outlook

India Research
August 24, 2011

Dealers Diary
The key benchmark indices lost ground soon after a firm start. A bout of volatility was witnessed as the market dropped to fresh intraday lows in morning trade but came off lows in mid-morning trade as most Asian shares rose. The market moved into positive zone in early afternoon trade as US index futures surged and extended gains in afternoon trade as European shares opened on a firm note. The market touched fresh intraday highs by extending gains in mid-afternoon trade. A sudden fall pulled the market off the day's high later but the market soon regained strength aided by firm global stocks with Sensex and Nifty closing up by 1.0% each. The mid-cap and small cap indices closed with gains of 1.0% and 1.2%, respectively. Among the front runners, TCS, Bajaj Auto, Infosys, BHEL and Bharti Airtel gained 2-7% while, ONGC, Cipla, NTPC, Tata Motors and Maruti Suzuki lost 1-3%. Among mid-caps, GTL Infra, Gujarat Mineral Development Corporation, Rashtriya Chemicals, A2Z Maintenance and Engineering and Hexaware Technologies gained 7-11% while, KGN Industries, SKS Microfinance, Shree Global Tradefin, TV18 Broadcast and MVL lost 4-5%.

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 (%) 1.0 1.0 1.0 1.2 0.1 (0.0) 0.8 0.2 0.6 0.2 3.9 Chg (%) 3.0 4.3 0.7 1.2 2.0 1.2 1.5

(Pts) 50.1 58.8 82.7 2.8 (1.9) 12.3 12.4 185.4 (Pts) 100.7 34.1 104.9 33.3 38.2

(Close) 4,949 6,262 7,195 5,904 7,810 8,311 8,370 4,896 (Close) 2,446 5,129 8,733 2,765 2,554

156.8 16,498

86.8 10,835 72.4 12,064

322.1 11,177

Markets Today
The trend deciding level for the day is 16,420/4,926 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,62716,756/4,9895,028 levels. However, if NIFTY trades below 16,420/4,926 levels for the first half-an-hour of trade then it may correct up to 16,29116,084/4,8874,824 levels.
Indices SENSEX NIFTY S2 16,084 4,824 S1 16,291 4,887 R1 16,627 4,989 R2 16,756 5,028

388.7 19,876

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank Advances / Declines Advances Declines Unchanged Volumes (` cr) BSE NSE

Chg (%) 3.7 2.8 2.9 2.9

(Pts) 1.8 0.3 1.1 0.9 BSE 1,824 988 106

(Close) $49.9 $9.8 $37.9 $31.9 NSE 1,007 404 77

News Analysis
ITC opens first premium cigar retail store 'Cigar Republic' in Delhi Persistent develops a solution accelerator for rapid Skype video integration Result preview Mphasis (3QFY2011)
Refer detailed news analysis on the following page

Net Inflows (August 22, 2011) ` cr Purch FII MFs 1,471 612

Sales 2,237 475

Net (766) 137

MTD (8,285) 1,763

YTD 448 5,540

2,247 10,149

FII Derivatives (August 23, 2011) ` cr Index Futures Stock Futures Gainers / Losers Gainers Company TCS Adani Power Jain Irrigation Apollo Tyres Aurobindo Pharma Price (`) 980 90 176 58 132 chg (%) 6.7 6.0 5.7 5.5 5.2 Company ONGC Cipla Godrej Cons NCC NTPC 279 283 426 56 171 Losers Price (`) chg (%) (2.7) (2.6) (2.3) (2.1) (2.0) Purch 6,540 8,191 Sales 6,051 8,043 Net 488 148 Open Interest 13,903 30,694

Please refer to important disclosures at the end of this report

Sebi Registration No: INB 010996539

Market Outlook | India Research

ITC opens first premium cigar retail store 'Cigar Republic' in Delhi
ITC opened its first retail store selling premium cigar brand 'Armenteros' in New Delhi on August 23, 2011. The company launched the brand of hand rolled cigars in Delhi, Mumbai and Kolkata last year. The store located at ITC Maurya Hotel, will also showcase literature on cigars and related objects of interest for cigar connoisseurs. The company in future also plans to launch the luxury store in other metros too. 'Armenteros' cigars are manufactured at La Aurora in Dominican Republic, one of the oldest cigar companies in the world. The cigars are priced at `3,000 to `10,000 per pack depending on the sizes (Churchill, Torpedo, Corona, Petit Corona and Robusto). At the CMP the stock is trading at 22x FY2013E EPS of `8.9. We maintain our Neutral rating on the stock.

Persistent develops a solution accelerator for rapid Skype video integration

Outsourced software product development services provider Persistent Systems (Persistent) announced the availability of a solution accelerator for rapid integration of Skype video calling on embedded devices, such as connected TVs, IP set top boxes, mobile internet devices, media phones and more. The solution accelerator, developed by the company's multimedia technology group, is based on Skype's SkypeKit SDK, and addresses complex challenges of enabling Skype video calling on a wide variety of embedded devices with diverse use cases. The solution accelerator has been successfully ported on several Tier-1 OEM chip-sets running on Android and Linux operating systems, for IP-STB, connected TV, and internet multi-media device applications. The company said that with the proliferation of 3G/4G networks and broadband internet, it is estimated that the VoIP user base would exceed 100mn by 2012, with Skype commanding a sizeable market shares. With this solution accelerator, OEM's can now rapidly integrate Skype into their solution, while complying with Skype's stringent performance requirements. We maintain Buy rating on the stock with a target price of `424.

Result preview Mphasis 3QFY2011

Mphasis is slated to announce its 3QFY2011 results today. We expect the company to record revenues of US$293mn with 4.0% qoq growth. In rupee terms, the revenue growth will stand lower at 3.7% qoq to `1,303cr. The Application services business is expected to lead the growth at 5.6% qoq whereas growth in ITO business is expected to be at 4.4% qoq. The EBITDA margin is expected to decrease by 371bp qoq to 15.4% due to wage hikes given in the quarter. The PAT is expected to be at `156cr, negatively impacted by wage hikes and higher tax rates. We continue to maintain Buy rating on the stock with a target price of `482.

August 24, 2011

Market Outlook | India Research

Economic and Political News

Global steel output in July rises 12% Government calls all-party meet to discuss Lok Pal bill S&P replaces president with a senior Citibank executive after US downgrade

Corporate News
Accept all government conditions: Cairn Energy to Cairn India Infosys BPO forecasts 15-20% yoy revenue growth in FY2012 IT sector to grow by 18% yoy in FY2012 says Nasscom No talks with TPG on stake sale says SpiceJet
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

August 24, 2011

Market Outlook | India Research

Research Team Tel: 022-3935 7800 E-mail: research@angelbroking.com Website: www.angelbroking.com

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August 24, 2011