Market Outlook

India Research
September 29, 2011

Dealers Diary
The markets opened on a firm note but immediately reversed directions. However, volatility was witnessed and the key benchmark indices cut losses after hitting fresh intraday lows in morning trade. The markets moved in a tight range and took a plunge by the mid-morning session over concerns on likely weak-to-muted 2QFY2012 corporate earnings. Heavy sell-off was witnessed in metal stocks on the recent weak economic data in China. The overall market breath remained negative. The market ascended for a brief period; however, it was not enough to enter the positive zone. Volatility perched during the midafternoon session and indices drifted as traders rolled over positions in the derivatives segment from the near-month September 2011 series to October 2011 series ahead of the expiry of September 2011 futures and options (F&O) contracts. The Sensex and Nifty lost 0.5% each. The mid-cap and small-cap indices also lost 0.9% and 1.0%, respectively. Among the front runners, DLF, ITC, NTPC, ONGC and Infosys gained 1-3%, while JP Associates, L&T, Maruti Suzuki, Tata Steel and Bharti Airtel lost 2-4%. Among mid caps, Hexaware Technologies, MVL, KGN Ind., Jain Irrigation and Godrej Properties gained 47%, while Shree Global Tradefin, Hathway Cable, Max India, Jet Air India and Rolta India lost 6-10%.

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 (%) (0.5) (0.5) (0.9) (1.0) 0.4 (0.1) (1.3) (1.2) (1.8) 0.1 0.9 Chg (%) (1.6) (2.2) (1.4) 0.1 (0.7) (0.9) (1.0)

(Pts) (25.4) (54.7) (67.8) 25.3 (10.9) (101.0) 8.6 48.0 (Pts) (55.3) (76.4) 5.7 (119.5) (24.7) (23.0)

(Close) 4,946 6,175 6,949 5,910 7,498 8,452 8,425 5,232 (Close) 2,492 5,218 8,616 18,011 2,701 2,392

(78.0) 16,446

(137.7) 10,895 (203.0) 11,267

(179.8) 11,011

Markets Today
The trend deciding level for the day is 16,491/ 4,957 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,618 16,791/ 4,995 5,044 levels. However, if NIFTY trades below 16,491/ 4,957 levels for the first half-an-hour of trade then it may correct up to 16,319 16,191/ 4,908 4,869 levels.
Indices SENSEX NIFTY S2 16,191 4,869 S1 16,319 4,908 R1 16,618 4,995 R2 16,791 5,044

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank Advances / Declines Advances Declines Unchanged

Chg (%) (0.7) (3.3) (2.6) (2.4)

(Pts) (0.4) (0.3) (1.0) (0.7) BSE 1,029 1,795 90

(Close) $50.8 $9.5 $35.6 $29.4 NSE 427 1,011 49

News Analysis
Punj Lloyd bags order worth `1,195cr GAIL acquires shale gas assets in the US
Refer detailed news analysis on the following page

Net Inflows (September 27, 2011) ` cr Purch Sales FII MFs 2,154 495 2,065 301

Net 89 195

MTD (1,086) (574)

YTD (1,895) 5,701

Volumes (` cr) BSE NSE 2,516 10,241

FII Derivatives (September 28, 2011) ` cr Index Futures Stock Futures Gainers / Losers Gainers Company Jain Irrigation Jindal Saw Coromandel Intl Gujarat State Pet HCL Tech Price (`) 154 135 315 103 406 chg (%) 3.8 3.4 3.4 3.4 3.4 Company Max India Reliance Cap JSW Steel Jet Air India IVRCL LTD Losers Price (`) 191 368 570 248 36 chg (%) (6.8) (6.7) (6.6) (6.2) (5.5) Sebi Registration No: INB 010996539
1

Purch 6,638 8,232

Sales 6,696 8,216

Net (58) 17

Open Interest 19,289 30,602

Please refer to important disclosures at the end of this report

Market Outlook | India Research

Punj Lloyd bags order worth `1,195cr

Punj Lloyd has bagged a balance of plant (BOP) contract for a thermal power plant worth `1,195cr from Haldia Energy Ltd., a wholly-owned subsidiary of CESC. The scope of work for the 2x300MW capacity plant entails BOP supply and services and BTG erection along with detailed engineering of BOP, mechanical, electrical and instrumentation packages. With this order, the total outstanding order book of the company stands at ~`25,133cr (3.2x FY2011 revenue). Owing to the uncertainty over receivable claims and overhangs on the stock because of lack of clarity on various issues (execution, margin and Libyan projects) and slowdown in order inflow, we maintain our Neutral view on the stock.

GAIL acquires shale gas assets in the US

GAIL has entered into a joint venture with US-based Carizzo Oil & Gas (Carizzo) to acquire a 20% interest in Carizzo Eagle Ford Shale, which owns shale gas assets. The joint venture will have 20,200 gross acres, out of which GAILs share will be 4,040 acres. The upfront payment is US$63.7mn; and there is a carryover amount of US$31.3mn, which will be linked to Carizzos future drilling and development costs. Over the next five years, the joint venture will invest ~US$300mn in the assets. Currently, the joint venture produces 2,350boe per day from 8 wells, while it is expected to drill another 139 wells in the acreage. We await further clarity on the timing of production from these assets. Meanwhile, we maintain our Buy rating on the stock with a target price of `516.

Economic and Political News

Supply response to food inflation weak: RBI PSUs may be asked to buy back government equity: Finance Ministry Government may allow QFIs to invest in stocks directly

Corporate News
Reliance Telecom Ltd. seeks discharge in 2G case by using Law Ministry report NMDC to e-auction two lakh tonne iron ore Kingfisher Red to shut operations
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

September 29, 2011

Market Outlook | India Research

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September 29, 2011