market outlook 28th september 2011

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Market OutlookIndia Research

September 28, 2011

Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

Dealer’s Diary

The market opened on a firm note tracing a rally in Asian stocks stocks,triggered by reports that European policy makers are considering new plans to

support European countries struggling with debt. This bolstered the otherwiseweak sentiment that circled the markets for a while. In addition, reports aboutthe Finance Ministry’s consideration over some tax cuts on equities to lowertransaction costs and broaden participation in the market boosted thesentiment. The market breadth remained strong and increased buying waswitnessed in infrastructure, auto and metal stocks, which had witnessed steepslides. The indices held their firm ground and continued their gradual ascendin the afternoon session. The market closed on a strong note with the Sensexand the Nifty gaining 3.0% and 2.8%, respectively. The mid-cap and small-capindices also gained 1.6% and 1.4%, respectively. Among the front runners,DLF, JP Associates, Tata Motors, RIL and Hindalco gained 4-8%. There were nomajors losers in the Sensex. Among mid caps, Hathway Cable, Dewan

Housing, Sun Pharma Advanced Research Com., Rajesh Exports and HexawareTechnologies gained 7-17%, while Shree Global Tradefin, Pipav Shipyard,Jyothy Labs, Kirloskar Oil Engines and Manappuram Finance lost 2-10%.

Markets Today

The trend deciding level for the day is 16,453/4,953 levels. If NIFTY tradesabove this level during the first half-an-hour of trade then we may witness afurther rally up to 16,623 – 16,722/5,001 – 5,031 levels. However, if NIFTYtrades below 16,453/4,953 levels for the first half-an-hour of trade then it may correct up to 16,354 – 16,184/4,923 – 4,875 levels.

Indices S2 S1 R1 R2

SENSEX 16,184 16,354 16,623 16,722

NIFTY 4,875 4,923 5,001 5,031

News Analysis

Dabur Enters Sri Lanka; Sets up new beverage venture Areva T&D secures orders worth `40cr

Refer detailed news analysis on the following page

Net Inflows (September 26, 2011)

` cr Purch Sales Net MTD YTD

FII 1,250 2,257 (1,007) (1,176) (1,984)

MFs 457 420 37 (768) 5,506

FII Derivatives (September 27, 2011)

` cr Purch Sales NetOpen

Interest

Index Futures 7,437 6,181 1,256 17,355

Stock Futures 6,573 6,140 433 30,573

Gainers / Losers

Gainers Losers

Company Price (`) chg (%) Company Price (`) chg (%)

DLF 217 8.5 Pipavav Shipyard 78 (4.4)

Jaiprakash Asso 73 5.9 Sun TV 276 (2.8)

Tata Motors 156 5.9 Manappuram Fin. 52 (2.1)

IVRCL LTD 38 5.5 JSW Steel 611 (1.3)

IFCI 32 5.2 Glaxo. Consumer 2,290 (0.8)

Domestic Indices Chg (%) (Pts) (Close)

BSE Sensex 3.0 472.9 16,524

Nifty 2.8 135.9 4,971

MID CAP 1.6 98.4 6,230

SMALL CAP 1.4 93.9 7,017

BSE HC 0.7 37.9 5,885

BSE PSU 2.1 156.5 7,509

BANKEX 2.7 294.1 11,033

AUTO 2.7 225.4 8,55

METAL 2.6 286.7 11,470

OIL & GAS 3.5 282.4 8,417

BSE IT 3.6 178.1 5,184

Global Indices Chg (%) (Pts) (Close)

Dow Jones 1.3 146.8 11,191

NASDAQ 1.2 30.1 2,547

FTSE 4.0 204.7 5,294

Nikkei 2.8 235.8 8,610

Hang Seng 4.2 722.8 18,131

Straits Times 2.7 71.6 2,726

Shanghai Com 0.9 21.9 2,415

Indian ADRs Chg (%) (Pts) (Close)

Infosys 5.1 2.5 $51.2

Wipro 5.1 0.5 $9.8

ICICI Bank 2.4 0.9 $36.6

HDFC Bank 3.2 0.9 $30.1

Advances / Declines BSE NSE

Advances 1,873

Declines 952 316

Unchanged 108 55

Volumes (` cr)

BSE 2,387

NSE 9,780



September 28, 2011 2

Market Outlook | India Research

Dabur Enters Sri Lanka; Sets up new beverage venture

Dabur India has forayed into the beverages category in Sri Lanka by setting up of anoverseas subsidiary – Dabur Lanka (Pvt.) Ltd. The company has signed an agreement withthe Board of Investment of Sri Lanka to establish this venture.

About the venture: Dabur will invest ` 70cr to set up a new export-oriented manufacturingfacility for producing a range of fruit-based beverages in Gampaha, north of Colombo.

According to the management, the new manufacturing facility will have a productioncapacity of 2.8 lakh cases of fruit-based beverages every month and become operationalfrom August-September 2012. The company plans to set up the plant in over 50 acres ofland and will employ 75 personnel in the early stage and will take the strength to 200employees by 2013-14.

Dabur’s management indicated that its fruit-based juices and beverages under the Réal brand have been reporting strong growth and to support the underlying demand of itsproducts it is setting up this new facility. Dabur is the leader in the fruit juice category with52% market share in India.

In addition to the company’s presence in Nepal and Bangladesh, a facility in Sri Lankawould aid in heightened strength of the company in SAARC region. The company also hasoperations in Dubai, Ras-al-Khaimah, Nigeria, Egypt and Turkey.

We have not factored the venture in our revenue and earnings estimates and wait forfurther clarity. At the CMP, the stock is trading at 22.2x FY2013E EPS. We maintain ourAccumulate view on the stock with a target price of `115.

Areva secures orders worth `40cr

Areva T&D (Areva) has won a contract from Reliance Power for turnkey design and

construction of 220kV substation. The order valued at `

40cr is for the proposed 350MW Doorsar Solar Power Plant in Rajasthan. This plant is India’s largest solar power project.The turnkey contract involves design and construction of the substation, includingtransformers, control, protection, monitoring systems and civil works of the plant. Thisorder falls in the base-order category, and we expect the company to witness base/lowvalue orders as a bigger portion of order inflows for the current quarter. This willcategorically lead to a dip in order backlog growth, thereby raising concerns on futurevisibility. In addition, we believe the near-term outlook will be challenging – orderingactivity in the T&D space is likely to be muted given the overall malaise in the T&D space.The stock currently trades at rich valuations of 27.9x and 19.7x CY2011E and CY2012EEPS, respectively. Given fewer triggers, the stock seems to be fairly valued and upside fromthe current level seems limited. Hence, we continue to remain Neutral on the stock. Economic and Political News

RBI issue revised draft norms for securitization of loans

Core sector grows 3.5% in August

Cellphone shipments dip 3% qoq in Apr’11-Jun’11, up 6% yoy

Finance Ministry to monitor 10-15 large infrastructure project

Corporate News

JSW Steel to shut plant if iron ore supply does not improve

Reliance Communications in advanced talks to sell tower unit stake

Glenmark Pharma’s US arm gets US FDA nod for migraine tablets

GMR Infra bags ` 7,200cr highway project

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



September 28, 2011 3

Market Outlook | India Research

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market outlook 28th september 2011

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