Market Outlook

India Research
November 18, 2011
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 (%) (1.9) (1.9) (1.3) (1.2) (1.4) (2.1) (1.5) (1.8) (2.5) (3.4) (0.7) Chg (%) (1.1) (2.0) (1.6) 0.2 (0.8) (1.0) (0.2) (Pts) (314.2) (95.7) (76.0) (73.1) (83.5) (150.2) (152.3) (156.6) (269.1) (291.3) (42.3) (Pts) (134.9) (51.6) (85.9) 16.5 (29.2) (3.9) (Close) 16,462 4,935 5,776 6,302 5,907 6,906 10,250 8,642 10,571 8,298 5,654 (Close) 11,771 2,588 5,423 8,480 2,778 2,463

Dealers Diary
Indian markets are expected to have weak opening taking cues from gap down opening in all the Asian markets and negative closing in global markets on Thursday. The Indian markets continued to fall for sixth consecutive session yesterday, with selling accelerating in the afternoon session, as lingering concerns over Europe's debt crisis, the falling rupee and a worsening domestic economy kept investors on the sidelines. Global markets fell in the yesterdays trading session, even when jobless claims data showed unexpected reduction by 5,000, because Fitch Ratings signaled trouble for U.S. banks if the debt contagion continues to spread beyond the stressed European markets such as Portugal, Ireland, Italy, Greece and Spain. Globally investors sold equities as well as assets to raise capital. Negative sentiments were also generated by indications that the Congressional super committee continues to struggle to reach an agreement on reducing the deficit a week before the deadline. Meanwhile, today investors will watch out for industrial sales numbers for Italy for the month of September 2011.

Markets Today
The trend deciding level for the day is 16,559/4,964 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,71016,958/5,0085,081 levels. However, if NIFTY trades below 16,559/4,964 levels for the first half-an-hour of trade then it may correct up to 16,31116,160/4,8914,846 levels.
Indices SENSEX NIFTY S2 16,160 4,846 S1 16,311 4,891 R1 16,710 5,008 R2 16,958 5,081

(143.4) 18,818

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank

Chg (%) (1.8) (3.3) (4.1) (5.5)

(Pts) (1.0) (0.3) (1.3) (1.6)

(Close) $53.4 $9.5 $29.8 $27.9

News Analysis
Lupin to acquire a Japanese company BGR Energy bags order worth `1,689cr PTC India - Discontinuing coverage
Refer detailed news analysis on the following page

Advances / Declines Advances Declines Unchanged

BSE 897 1,927 127

NSE 385 1065 41

Net Inflows (November 16, 2011)

` cr FII MFs Purch 1,737 614 Sales 2,199 555 Net (371) 59 MTD 1,036 (571) YTD 1,551 4,564

Volumes (` cr) BSE NSE 2,207 9,689

FII Derivatives (November 17, 2011)

` cr Index Futures Stock Futures Purch 3,204 3,690 Sales 4,280 3,490 Net (1,076) 200 Open Interest 15,998 28,658

Gainers / Losers
Gainers Company Price (`) chg (%) Company Losers Price (`) chg (%)

Patni Computer Pantaloon Retail IVRCL Ltd Mphasis Nestle India

429 183 36 299 4,470

10.3 8.1 4.2 3.7 1.1

Pipavav Defence Suzlon Energy India Infoline Adani Enter Alstom Projects

69 26 58 351 450

(13.3) (12.5) (11.3) (9.3) (9.2) Sebi Registration No: INB 010996539

Please refer to important disclosures at the end of this report

Market Outlook | India Research

Lupin to acquire a Japanese company

Lupin will acquire 100% stake in Irom Pharmaceutical Co. Ltd. (IP) for an undisclosed amount through its Japanese subsidiary, Kyowa Pharmaceutical Industry Co. Ltd. We believe this acquisition will strengthen Lupins presence in Japan. Based in Tokyo, IP produces injection-based medicines and is a unit of integrated healthcare provider Irom Holdings Co. Ltd. IP posted sales revenue of Yen5.4bn in the year ended March 2011. This is Lupins second acquisition in Japan after it bought Kyowa in 2007 for US$100mn. IPs strong presence in the diagnosis procedure combination (DPC) hospital segment in Japan, through its line of injectable products, is an ideal fit with Lupins existing oral business portfolio in Japan. We believe this acquisition would provide prove to be beneficial for Lupin, given the immense opportunity in the Japanese generic market. Further, the acquisition would scale up the companys sales in Japan, which already is a major component of Lupins overall sales. Lupin has low D/E, thus it can easily raise funds for this deal. We continue to maintain our estimates until further clarity on the deal. At the CMP, the stock is trading at 20x FY2012E and 15.1x FY2013E earnings. Hence, we maintain our Buy view on the stock with a target price of `593.

BGR Energy bags order worth `1,689cr

BGR Energy (BGR) has secured an EPC contract from TRN Energy Pvt. Ltd. to set up 2X300MW coal-based thermal projects. Valued at `1,689cr, the order contains a foreign exchange component of US$188mn at an exchange rate of `44.7. The project is to be executed over a period of 29 months for the first unit and 32 months for the second unit. The projects have procured fuel linkage and have obtained environmental clearance. The company expects an EBITDA margin of 1011% for this order. With this order, the order book now stands at ~`9,000cr. During the earnings conference call held recently, management had guided for an order intake of ~`5,000cr (including the NTPC bulk tender) for FY2012E. This contract takes the order intake tally ahead of management's guidance (~`5,900cr till date), which also exceeds our estimate of `5,000cr. Management also indicated execution of these orders from FY2013E, which builds an additional reservoir of revenue of `675cr (rough estimate), which in our view is an extremely positive development for the company. Further, EPC order win from RRVUNL (~`6,000cr) remains a key upside risk. We are in the process of detailed evaluation of this order. Meanwhile, the stock is under review.

PTC India - Discontinuing coverage

We are discontinuing coverage on PTC India.

November 18, 2011

Market Outlook | India Research

Economic and Political News

Food inflation eases to 10.63% Government to raise overseas debt limits if needed says FinMin Sugar exports decision to be taken on November 21

Corporate News
Bajaj Auto launches Boxer 150 motorcycle in Egypt No bailout for Kingfisher Airlines says Vayalar Ravi Mahindra, Telephonics ink defence gear JV
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

November 18, 2011

Market Outlook | India Research

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E-mail: research@angelbroking.com

Website: www.angelbroking.com

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November 18, 2011