Market Outlook

India Research
January 16, 2012

Dealers Diary
Indian markets are expected to edge lower following weak opening of most of the Asian bourses. The market closed on an upbeat note on Friday following renewed buying by FIIs which lifted Indian shares notably higher. With the rupee firming up and concerns easing over inflation and growth, FIIs have been stepping up buying in recent sessions. Global cues turned fragile after S&P downgraded France, Austria among seven others. European stocks trimmed their weekly gains on Friday and ended on a negative note. US bourses also ended with losses following renewed concerns about the financial situation in Europe. A negative reaction to quarterly results from JP Morgan also exacerbated some selling pressure, with the financial giant reporting a drop in fourth quarter earnings on weaker than expected revenues. With mixed cues, the markets are likely to struggle for direction. With the onset of corporate earnings season, the expectations of weak earnings are likely to weigh on the markets. Investors will also closely watch the inflation data after Dr. Rangarajan, asserted that the RBI's decision on CRR cut will depend largely on the extent of decline in December inflation numbers.

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 (%) 0.7 0.7 1.1 1.4 0.0 1.6 0.5 0.0 3.2 (0.4) (0.0) Chg (%) (0.4) (0.5) (0.5) 1.4 0.6 1.8 (1.3)

(Pts) 34.8 62.8 87.5 1.8 107.8 50.9 2.2 (29.8) (2.0) (Pts) (49.0) (14.0) (25.8) 114.4 47.9 (30.4)

(Close) 4,866 5,582 6,172 6,128 7,083 10,300 8,466 7,822 5,482 (Close) 12,422 2,711 5,637 8,500 2,792 2,245

117.1 16,155

334.3 10,756

Markets Today

The trend deciding level for the day is 16,154 / 4,866 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,258 16,361 / 4,899 4,931 levels. However, if NIFTY trades below 16,154 / 4,866 levels for the first half-an-hour of trade then it may correct up to 16,050 15,946 / 4,834 4,802 levels.
Indices SENSEX NIFTY S2
15,946 4,802

109.0 19,204

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank

Chg (%) (1.5) (0.9) 2.2 (0.8)

(Pts) (0.8) (0.1) 0.7 (0.2)

(Close) $51.1 $9.9 $30.6 $27.9

S1
16,050 4,834

R1
16,154 4,866

R2
16,258 4,899

News Analysis
S&P downgrades nine Eurozone countries Coal India agrees for wage hike of 25% LICHF to raise `500cr through preference shares to LIC 3QFY2012 Result Review Sintex 3QFY2012 Result Preview South Indian Bank
Refer detailed news analysis on the following page

Advances / Declines Advances Declines Unchanged

BSE 1,897 903 96

NSE 1048 468 46

Net Inflows (January 12, 2012)

` cr FII MFs ` cr Index Futures Stock Futures Purch
2,527 522

Sales
2,001 943

Net
526 (421)

MTD
2,559 (572)

YTD
2,559 (572)

Volumes (` cr) BSE NSE 2,792 12,075

FII Derivatives (January 13, 2012)

Purch
1,672 2,736

Sales
1,276 2,407

Net
396 328

Open Interest
12,217 26,764

Gainers / Losers
Gainers Company
JSW Ispat JPPOWER Lanco Infra Suzlon Energy Motherson Sumi

Losers Company
Indraprastha Gas United Brew Petronet LNG Gail India Sun TV Network

Price (`)
12 39 15 22 155

chg (%)
12.5 10.9 9.8 8.7 8.3

Price (`)
349 445 157 373 288

chg (%)
(8.1) (5.8) (5.0) (3.2) (3.2)

Please refer to important disclosures at the end of this report

Sebi Registration No: INB 010996539

Market Outlook | India Research

S&P downgrades nine Eurozone countries

Credit rating agency Standard & Poors (S&P) in its review on Friday downgraded Frances and Austrias credit rating from AAA to AA+. The agency also downgraded Italy to BBB+ from A, Spain to A from AA- and Portugal by two notches to BB. While Germany, Netherlands, Finland and Luxembourg held their AAA rating. The review received a backlash from several political parties in the Eurozone. The downgrade followed the assessment of policy initiatives taken by policymakers in recent weeks, which in their view may be insufficient to fully tackle the ongoing systemic stresses in the Eurozone. However, the downgrade will further aggravate European debt crisis by making borrowing more expensive for Eurozone countries.

Coal India agrees for wage hike of 25%

Media reports suggest that Coal India has agreed to hike the wages of its non-executive staff by 25%. This is in-line with our estimates and managements guidance. Coal Indias wage bill for its workers stood at `15,000cr in FY2011 (total staff costs `18,211cr). The hike is expected to increase Coal Indias wage costs to `18,750cr per year. The new wage agreement is also expected to provide a 3% hike annually for the coming five years. We maintain our total staff cost estimates at `22,085 and `23,899cr for FY2012 and FY2013, respectively. At current price levels, we recommend a Neutral rating on the stock.

LICHF to raise `500cr through preference shares to LIC

LIC Housing Finance (LICHF) is planning to raise up to `500cr through preferential issue of shares to LIC and qualified institutional placement. The capital raising is expected to support business growth over FY2013, while also beefing up tier-I of the company, which currently stands at 8.6% (as of 3QFY2012) to 10-12%. Capital adequacy requirements currently are relatively less strict for HFCs (12% CAR required with no specific requirement for tier-1 capital) as compared to NBFCs (15% CAR required, 10% minimum tier-1 in case of IFCs). At the CMP, the stock is trading at a P/ABV multiple of 1.8x FY2013E ABV. We remain Neutral on the stock.

January 16, 2012

Market Outlook | India Research

Result Review
Sintex
Sintex Industries announced its 3QFY2012 consolidated results. The companys net sales came in flat on a qoq basis but declined marginally by 2.1% yoy to `1,161cr. The plastic segments revenue witnessed a 2.3% yoy decline and a 0.3% qoq increase to `1,046cr. EBITDA declined by 17.1% yoy to `163cr (`197cr). EBITDA margin declined by 253bp yoy to 14.1% (16.6%), largely due to slower execution in the monolithic segment and lower utilization in the custom moulding segment. The company reported forex gain of `13cr during the quarter. PAT declined by 27.1% to `82cr on the back of EBITDA margin compression during the quarter. PAT margin also declined by 243bp to 7.1%. We continue to maintain our Buy rating on the stock.

Result Preview
South Indian Bank
South Indian Bank is scheduled to announce its 3QFY2012 results. The bank is expected to post strong 31.0% yoy growth in its net interest income. Non-interest income is expected to increase by muted 1.7% yoy (down 4.8% qoq); however, overall operating income growth is expected to be healthy at 25.3% yoy. A considerable expected decline in provisioning expenses (29.4% yoy) is likely to lead to healthy profit growth of 33.2% yoy to `100cr. At the CMP, the stock is trading at 1.1x FY2013E ABV. We maintain our Neutral rating on the stock.

Quarterly Bloomberg Brokers Consensus Estimates

TCS Ltd - Consolidated (17/01/2012)
Particulars (` cr) Net sales Net profit 3QFY12E 13,141 2,877 3QFY11 9,663 2,370 y-o-y (%) 36 21 2QFY12 11,633 2,439 q-o-q (%) 13 18

HCL Tech Ltd - Consolidated (17/01/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 3QFY12E 5,199 931 17.9 548 3QFY11 3,888 635 16.3 400 37 y-o-y (%) 34 47 2QFY12 4,651 795 17.1 497 10 q-o-q (%) 12 17

January 16, 2012

Market Outlook | India Research

Jindal Steel & Power Ltd - Consolidated (18/01/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 3QFY12E 4,305 1,804 41.9 1,015 3QFY11 y-o-y (%) 3,168 1,599 50.5 951 7 36 13 2QFY12 q-o-q (%) 4,407 1,704 38.7 875 16 (2) 6

Economic and Political News

India's forex reserves slump by $3.14 billion 400% rise in fake currency circulation: Finance Ministry RBI to allow FDI in LLPs

Corporate News
PM likely to meet chiefs of power firms on Jan 18 Government plans to raise prices of urea by steep 40% RIL plans to pick up 26% stake in leading cable operators DCB defers `150cr QIP plan to June Apollo Tyres fined `30cr in South Africa on cartelisation charge
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

Results Calendar
16/01/2012 South Indian Bank 17/01/2012 TCS, HCL Technologies, Automotive Axle 18/01/2012 MindTree, Infotech Enterprises, Jindal Steel 19/01/2012 HDFC Bank, Bajaj Auto, Hero Motocorp Reliance Industries, ITC, Wipro, Hind. Zinc, Axis Bank, JSW Steel , United Spirits, Exide Industries, Syndicate Bank, Rallis, HT 20/01/2012 Media, Bank of Maharashtra, Hind. Const., NIIT

January 16, 2012

Market Outlook | India Research

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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January 16, 2012