1. Market Outlook
India Research
August 27, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The benchmark indices opened in the green amidst positive trend across Asian BSE Sensex 0.3% 46.7 18,226
markets and overnight gains in US markets. The markets continued to trade in Nifty 0.3% 15.5 5,478
the positive zone in the morning trade, thereafter, as FMCG and banking stocks MID CAP -0.1% (6.9) 7,708
witnessed strong buying momentum. However, indices remained range bound SMALL CAP 0.1% 7.9 9,768
at the onset of the afternoon trade, but soon extended morning gains following BSE HC 0.0% (2.1) 5,579
firm opening of the European markets. A sharp slide was witnessed in late
BSE PSU 0.5% 50.7 9,726
afternoon trade as markets turned volatile and traded in the red ahead of the
BANKEX 0.5% 59.0 12,475
expiry of August futures. Finally, markets closed marginally higher with the
AUTO 0.2% 18.1 8,784
Sensex and Nifty closing up 0.3% each. BSE mid-cap ended lower by 0.1%,
METAL 0.0% (3.4) 14,991
while BSE small-cap was up 0.1%. Among the front liners, NTPC, DLF, ITC, SBI
and HDFC gained 1-3%, while RCOM, Sterlite, RIL, HUL and OIL & GAS -0.6% (61.5) 10,056
JP Associates lost 0-3%. Among mid caps, Eicher Motors, Essar Shipping, BSE IT 0.0% (1.2) 5,509
Indusind Bank, Astrazeneca Pharma and FDC gained 3-14%, while Global Indices Chg (%) (Pts) (Close)
State Bank of Mysore, State Bank of Travanacore, State Bank of Bikaner and Dow Jones -0.7% (74.3) 9,986
Jaipur, MVL and Wockhardt declined 4-10%. NASDAQ -1.1% (22.8) 2,119
FTSE 0.9% 46.4 5,156
Markets Today
Nikkei 0.7% 61.1 8,906
The trend deciding level for the day is 18216 / 5473 levels. If NIFTY trades Hang Seng -0.1% (22.9) 20,612
above this level during the first half-an-hour of trade then we may witness a
Straits Times 0.0% (0.7) 2,926
further rally up to 18272 – 18317 / 5491 - 5505 levels. However, if NIFTY
Shanghai Com 0.3% 6.9 2,603
trades below 18216 / 5473 levels for the first half-an-hour of trade then it may
correct up to 18170 – 18114 / 5460 - 5441 levels.
Indian ADRs Chg (%) (Pts) (Close)
Indices S2 S1 R1 R2 Infosys -0.7% (0.4) $58.3
SENSEX 18,114 18,170 18,272 18,317 Wipro -2.9% (0.4) $12.6
NIFTY 5,441 5,460 5,491 5,505 Satyam 0.2% 0.0 $4.5
ICICI Bank -0.3% (0.1) $41.4
News Analysis HDFC Bank -1.3% (2.1) $159.7
TVS Motor to invest Rs200cr on capacity expansion
RIL to ink a deal with DE Shaw to launch a US $700mn-800mn infra fund Advances / Declines BSE NSE
Refer detailed news analysis on the following page. Advances 1,328 577
Net Inflows (August 25, 2010) Declines 1,588 798
Rs cr Purch Sales Net MTD YTD Unchanged 118 55
FII 2,559 2,850 (290) 11,291 58,985
MFs 438 857 (419) (2,868) (15,813) Volumes (Rs cr)
FII Derivatives (August 26, 2010) BSE 4,863
Open NSE 16,539
Rs cr Purch Sales Net
Interest
Index Futures 3,925 4,163 (238) 15,764
Stock Futures 7,363 7,580 (217) 33,946
Gainers / Losers
Gainers Losers
Price chg Price chg
Company Company
(Rs) (%) (Rs) (%)
Crompton Gr. 305 5.8 Deccan Chron. 128 (4.0)
Essar Shipping 99 5.0 Amtek Auto 178 (3.3)
Indusind Bank 226 3.8 Tech Mahindra 673 (3.3)
Nestle 3,076 3.7 IB Real Estate 174 (3.1)
Power Grid 105 2.5 Adani Ent. 629 (3.0)
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Market Outlook | India Research
TVS Motor to invest Rs200cr on capacity expansion
TVS Motor plans to invest Rs200cr by April 2011 to increase its two-wheeler production
capacity to 28 lakh units from the present 21 lakh units. With the company operating at
high utilisation levels, capacity expansion is being carried out to meet the surge in demand
in the two-wheeler space. Moreover, demand for TVS Jive and TVS Wego continues to
remain robust, which has enabled the company to ramp up its production.
We expect overall two-wheeler demand to increase at a 12% CAGR over
FY2010-12E. We estimate TVS Motor to post a 23% CAGR in its top line and around 64%
CAGR in net profit over FY2010-12E, aided by around 16% CAGR in volume and
improving operating performance due to change in product mix and better operating
leverage. At the CMP of Rs141, TVS Motor is trading at 19.6x FY2011E and 14.4x
FY2012E earnings. We believe the recent run-up in stock price factors in the higher volume
and earnings growth expected over FY2010-12E. We continue to maintain our Neutral
rating on the stock.
RIL to ink a deal with DE Shaw to launch a US $700mn-800mn infra fund
After telecommunications, Mukesh Ambani is getting into another of his brother’s
territories— financial services. RIL is close to inking a deal with global hedge fund DE Shaw
to launch a US $700mn–$800mn infrastructure fund. Apart from a PE fund, the two
players are also looking at other areas such as carbon trading. No financial terms of the
tie-up were available, but it is said that officials from DE Shaw’s global headquarters met
Mukesh Ambani last week to work out the details. Interestingly, Mukesh Ambani is said to
be on the board of DE Shaw India. Recently, Mukesh Ambani and his younger brother
Anil Ambani scrapped a pact in May 2010 that had earlier prevented them from entering
each other’s businesses. As a result, sectors such as telecom, power and financial services
were open to Mukesh Ambani. We believe this is a step further towards exploring newer
avenues to deploy surplus cash. We maintain Buy on RIL with a Target Price of Rs1,260.
August 27, 2010 2

3. Market Outlook | India Research
Economic and Political News
Direct tax provisions cleared by Union Cabinet
Commerce Ministry turns down rubber import duty cut
Natural gas availability in India to increase by 52% by 2013-14
Investment in real estate to touch US $300bn in 2010
Food inflation eases to 10.05%
Monsoon rains 29% above normal in the past week
Government to soon notify fuel efficiency standards
Corporate News
Tata Motors to raise up to Rs4,700cr: CEO
ONGC to start gas production from KG Basin block in 2016-17
Sona Koyo plans Rs80cr expansion by January 2011
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Events for the day
C&C Construction Dividends, Results
Havells India Dividends, Results
HCL Infosystems Dividends, Results
Titagarh Wagons Issue of Warrants
August 27, 2010 3

4. Market Outlook | India Research
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