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Market Outlook

India Research
February 21, 2012

Dealer’s Diary
The domestic markets are expected to open flat or marginally in green following higher closing across most of the western markets. Asian stock markets are trading flat as investors remain cautions and wait for European finance ministers in Brussels to approve a crucial second bailout for Greece. The US markets traded choppily on Friday (closed on Monday) as the economic data releases painted a mixed picture with a report from the Conference Board showing that its index of leading economic indicators increased for the fourth consecutive month in January, while another report from the Labor Department showing only a modest increase in consumer prices in the month of January. Although investors seemed reluctant to make any significant moves going into the long weekend, optimism that European finance ministers will approve a new bailout package for Greece helped to keep traders from doing much profit taking. Meanwhile Indian shares rebounded on Friday after some consolidation the day before, with firm global cues supporting the liquidity-driven rally.

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 (%)



0.8 0.8 (0.1) (0.2) (0.1) 0.9 1.4 (0.5) (0.1) 0.4 1.4
Chg (%)

135.4 18,289 42.4 (3.5) (15.2) (6.1) 69.2 5,564 6,545 7,116 6,375 7,909

176.7 12,736 (54.5) 10,319 (13.3) 12,572 31.2 87.8

8,645 6,267

0.4 (0.3) 0.7
1.1 (0.3) 0.7 0.3

45.8 12,950 (8.1) 40.2
100.9 20.8 6.4

Markets Today
The trend deciding level for the day is 18,315/5,572 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,397 – 18,504/5,599 – 5,634 levels. However, if NIFTY trades below 18,315/5,572 levels for the first half-an-hour of trade then it may correct up to 18,208 – 18,126/5,537 – 5,511 levels.
Indices SENSEX NIFTY S2 18,126 5,511 S1 18,208 5,537 PIVOT 18,315 5,572 R1 18,397 5,599 R2 18,504 5,634

2,952 5,945
9,485 3,021 2,364

(66.8) 21,425

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank

Chg (%)



0.3 0.2 1.6 2.1

0.2 0.0 0.6 0.7

$59.6 $11.3 $39.7 $35.6

News Analysis
Cement companies raise prices NMDC cuts ore prices; lowers volume guidance Result Review : CRISIL – 4QCY2011
Refer detailed news analysis on the following page

Advances / Declines Advances Declines Unchanged

Net Inflows (February 16, 2012)
` cr FII MFs Purch 2,972 536 Sales 1,825 484 Net 1,147 52 MTD 11,037 (1,113) YTD 22,117 (2,968)

1,394 1,583 119

693 816 58

Volumes (` cr) BSE

FII Derivatives (February 17, 2012)
` cr
Index Futures Stock Futures

4,432 20,704

Purch 3,532 6,293

Sales 2,732 5,847

Net 800 446

Open Interest 17,252 32,911


Gainers / Losers
Gainers Company
Lanco Infratech JSW Energy Titan Industries Thermax BHEL

Losers Company
Dish TV United Phosphorus Jet Airways CRISIL Hero MotoCorp

Price (`)
23 73 233 538 303

chg (%)
11.6 8.3 7.9 7.0 6.5

Price (`)
67 159 329 945 2,110

chg (%)
(4.9) (4.9) (4.6) (4.0) (3.6)

Please refer to important disclosures at the end of this report

Sebi Registration No: INB 010996539


Market Outlook | India Research

Cement companies raise prices
Cement companies have raised prices in the northern and western regions in the range of `7 to `10 per bag with effect from February 17, 2011. The price hike follows the correction in the region during January due to the severe winter season, which affected construction activities. We believe the recent price hike is an effort by cement manufacturers to pass on the hike in operating costs. We are currently Neutral on the cement sector, as we believe valuations are significantly ahead of the cycle, but we maintain our Buy recommendation on JK Lakshmi Cement due to its attractive valuations, with a target price of `79.

NMDC cuts ore prices; lowers volume guidance
NMDC has cut prices of iron ore fines and lumps by 20% and for 4QFY2012 on the back of the decline in global iron prices, appreciation and increased export duty on iron ore. The price higher than our expectations given the shortage of iron ore markets. 3%, respectively, the recent rupee cut by NMDC is in the domestic

NMDC has also lowered its sales volume guidance for FY2012 and FY2013. The company now expects sales volumes of 27mn tonnes and 30mn tonnes (earlier 30 mn tonnes and 33mn tonnes) for FY2012 and FY2013, respectively. Although the company has ~5mn tonnes of iron ore inventory at its mine pit-heads, however it faces logistical constraints to increase off take due to breakdown in slurry pipeline, lower availability of railway rakes and stricter regulations in transportation of iron ore in Karnataka. Considering the company’s revised sales volumes guidance, we lower our 4QFY2012 and FY2013 realization and sales volume estimates. Although NMDC has a strong balance sheet, presence in sellers market (iron ore), low cost of production, high-grade mines and long mine life, we now expect sales volumes to witness a CAGR of only 5.2% over FY2011-2013. On account of lower volume growth and lower realization, NMDC’s bottom line is expected to grow by only 4.0% yoy during FY2013. Further, given the 23% rise in the stock price since January 1, 2012, we recommend Neutral on the stock.

Result Review – 4QCY2011
CRISIL announced its 4QCY2011 numbers. Net sales increased by 26.6% yoy to `225cr (`177cr) led by strong growth in the research segment. Research segments revenue increased by 34.0% yoy while the rating segment and advisory segments revenue increased by 14.1% and 7.0% respectively. EBITDA increased by 15.2% yoy to `80cr (`69cr) due to higher revenue. EBITDA margin declined by 352bps yoy to 35.6% (39.1%). PAT increased by 10.4% yoy to `56cr (`51cr) while margin declined by 366bps yoy to 24.8% (28.5%) almost in line with EBITDA margin contraction. We will be coming out with a detailed report post management interaction. We continue to maintain an Neutral rating on the stock.

February 21, 2012


Market Outlook | India Research

Economic and Political News
Government may let foreign individuals directly buy corporate debt Railways stares at a `2lakh cr crunch Bankers agree to subscribe to Air India’s `7,400cr bond issue

Corporate News
Ashok Leyland's Optare eyes small bus market Frozen bank accounts led to disruptions: Kingfisher Essar Oil plans to raise `3,000cr in next 15 months

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

Results Calendar
23/02/2012 Ranbaxy, ABB, Gujarat Gas, Aventis

February 21, 2012


Market Outlook | India Research

Research Team Tel: 022 - 39357800



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February 21, 2012