Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539 1 Market Outlook India Research November 23, 2011 Dealer’s DiaryIndian markets are poised for a lower opening following weakness across Asian markets following overnight reactions from the Wall Street. The domestic indices snapped an eight-session losing streak yesterday as bargain hunting emerged after a recent steep slide in share prices. A rally in European stocks aided recovery on the domestic bourses, with Sensex regaining the psychological 16,000 mark. Global cues; however, continued to remain weak. The European markets declined after an early rally, driven by dismal Spanish bond auction indicting persisting debt crises. Major US indices too ended on a negative note, reacting to disappointing third quarter GDP data. The domestic bourses are expected to remain volatile on the back of global issues as well as concerns on the domestic macro-environment. With first dayof the parliament’s winter session adjourned due to disruptions, the policymaking efforts could go into a tailspin. The markets will quietly take cues from political developments, in addition to commentary from Euro-zone which will remain as an overhang. Markets TodayThe trend deciding level for the day is 16,083/ 4,816 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,196 – 16,326 / 4,850 – 4,888 levels. However, if NIFTY trades below 16,083/ 4,816 levels for the first half-an-hour of trade then it maycorrect up to 15,953 – 15,840 / 4,779 – 4,745 levels. Indices S2 S1 R1 R2 SENSEX 15,840 15,953 16,196 16,326 NIFTY 4,745 4,779 4,850 4,888 News Analysis Political update- winter session of parliament Spain yields surge Government rejects RIL’s claims of six D6 blocks Ashok Leyland John Deere JV launches their first product in India Refer detailed news analysis on the following pageNet Inflows (November 21, 2011) ` cr Purch Sales Net MTD YTD FII 1,894 2,495 (601) (481) 34 MFs 606 393 213 (254) 4,881 FII Derivatives (November 22, 2011) ` cr Purch Sales Net Open Interest Index Futures 5,062 4,953 109 19,200 Stock Futures 7,248 6,861 387 29,411 Gainers / Losers Gainers Losers Company Price ( ` ) chg (%) Company Price ( ` ) chg (%) Amtek Auto 121 19.2 Titan Inds 185 (6.5) Pantaloon Retl 188 8.4 United Spirits 760 (3.4) Tata Motors 173 6.9 Manappuram Fin. 55 (3.3) Aurobindo Phar 89 6.8 Siemens 701 (2.9) Jet Air India 251 5.4 Bombay Rayon 276 ( 2.9) Domestic Indices Chg (%) (Pts) (Close) BSE Sensex 0.8 119.3 16,065 Nifty0.7 34.0 4,812 MID CAP 0.3 19.0 5,629 SMALL CAP 0.0 1.9 6,081 BSE HC 1.0 57.2 5,912 BSE PSU 0.6 38.8 6,715 BANKEX 0.6 54.4 9,886 AUTO 1.1 89.6 8,399 METAL 1.5 155.5 10,228 OIL & GAS 0.9 71.7 8,152 BSE IT 2.0 107.1 5,585 Global Indices Chg (%) (Pts) (Close) Dow Jones (0.5) (53.6) 11,494 NASDAQ (0.1) (1.9) 2,521 FTSE (0.3) (15.8) 5,207 Nikkei (0.4) (33.5) 8,315 Hang Seng 0.1 25.7 18,252 Straits Times 0.7 19.2 2,717 Shanghai Com (0.1) (2.5) 2,413 Indian ADRs Chg (%) (Pts) (Close) Infosys 0.0 0.0 $51.0 Wipro 1.9 0.2 $9.4 ICICI Bank (0.2) (0.1) $28.4 HDFC Bank (1.4) (0.4) $26.2 Advances / Declines BSE NSE Advances 1,350 76 Declines 1,406 719 Unchanged 133 62 Volumes ( ` cr) BSE 1,974 NSE 10,200
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539 1
Market OutlookIndia Research
November 23, 2011
Dealer’s Diary Indian markets are poised for a lower opening following weakness across
Asian markets following overnight reactions from the Wall Street. Thedomestic indices snapped an eight-session losing streak yesterday as bargainhunting emerged after a recent steep slide in share prices. A rally inEuropean stocks aided recovery on the domestic bourses, with Sensexregaining the psychological 16,000 mark.
Global cues; however, continued to remain weak. The European marketsdeclined after an early rally, driven by dismal Spanish bond auction indictingpersisting debt crises. Major US indices too ended on a negative note,reacting to disappointing third quarter GDP data.
The domestic bourses are expected to remain volatile on the back of globalissues as well as concerns on the domestic macro-environment. With first day
of the parliament’s winter session adjourned due to disruptions, the policy making efforts could go into a tailspin. The markets will quietly take cuesfrom political developments, in addition to commentary from Euro-zonewhich will remain as an overhang.
Markets Today The trend deciding level for the day is 16,083/ 4,816 levels. If NIFTY trades
above this level during the first half-an-hour of trade then we may witness a
further rally up to 16,196 – 16,326 / 4,850 – 4,888 levels. However, if NIFTY
trades below 16,083/ 4,816 levels for the first half-an-hour of trade then it may
correct up to 15,953 – 15,840 / 4,779 – 4,745 levels.
Indices S2 S1 R1 R2
SENSEX 15,840 15,953 16,196 16,326
NIFTY 4,745 4,779 4,850 4,888
News Analysis Political update- winter session of parliament
Spain yields surge
Government rejects RIL’s claims of six D6 blocks
Ashok Leyland John Deere JV launches their first product in India
Refer detailed news analysis on the following page
The winter session of the parliament is set for a fresh start today, as yesterday’s
opening session ended up in troubled waters, driven by disruptions led by various
political parties. The winter session is of prime importance as far as market
sentiments are concerned, as policy making initiatives will weigh on certain key
sectors of the economy. Thirty-one bills are lined up for approval, some of which
can have hot-n-sour effects to the economy.
Key bills for consideration and passage include:
Pension Fund Regulatory and Development Authority Bill, 2011
The bill aims to establish a statutory Pension Fund Regulatory and Development
Authority (PFRDA) to promote old age income security by establishing, developingand regulating pension funds and to protect the interests of subscribers to schemes
of pension funds. The union cabinet recently allowed 26% FDI in pension fund.
National Food Security Bill, 2011
The UPA-II legislation of UPA-II seeks to cover up to 75% of the rural population
and 50% of urban households, proposing a right to seven kilograms of food grain
per person, at ` 3 per kg for rice, ` 2 per kg for wheat and ` 1 per kg for coarse
grain to priority beneficiaries. It also aims at revamping the public distribution
system, which provides subsidized ration to the beneficiaries. The bill also
incorporates provision for free meals, besides a monthly allowance of ` 1,000 for
six months to all pregnant women and lactating mothers. However, the move
could add to the government’s burden on finances, as the implementation of the
proposed law would lead to a rise in the Food Subsidy Bill to over ` 100,000cr
from the current ` 60,000cr.
The Mines and Minerals (Development and Regulation) Bill, 2011
This bill is to be introduced which proposes to set up a benefit sharing regime for
mining companies. The bill makes it mandatory for coal miners to share 26% of
their profit after tax with project-affected people. Furthermore, the draft billproposes that companies mining other resources (such as limestone, iron ore,
copper and bauxite) should pay amount equivalent to 100% of the royalty on their
production to the local population of the project site.
On the policy front, a crucial cabinet meeting to consider FDI in multi-brand retail
will also be on the investor’s radar. The proposal before the government to allow
FDI in the multi-brand retail sector has swayed the political opinion – many
opposition parties including BJP are strongly opposing it. Opposition parties firmly
foresee fatal effects, including huge unemployment and wiping of small and
mid-scale retailers.
Markets will closely track the developments on the economic policies and look for
positives cues from the parliamentary round-tables.
According to management, the backhoe loader market in India is growing at 35-
45% per annum and expects total industry sales of around 28,000 units in
FY2012E. Major players in the industry include JCB, Caterpillar and BEML. Given
the rapid potential for infrastructure development in India, we believe constructionequipment business is likely to grow at a rapid pace over the next few years, which
should benefit the Ashok Leyland John Deere JV. At ` 25, Ashok Leyland is trading
at 9.1x FY2013E earnings. We maintain our Buy rating on the stock with a target
price of `32.
Economic and Political News
Finance Ministry says it is awaiting parliamentary panel report on DTC Bill
Govt. to notify new royalty rates on coal and lignite by early next year
India to tighten controls on mfg. of precursor chemicals, says Finance Ministry
India to launch shale gas exploration bid during XII Plan
Corporate News
Adani, GSPC may foil Gail's aim to buy BG Group stake in GGCL
CIL open to release ` 15,000cr from cash reserves if needed, says Chairman
CIL appoints PFC to select partner for its 1,600MW Orissa power project
Getting environmental clearances for projects is an issue, says CIL chairman
Force Motors to invest ` 1,000cr in two years for developing new models
Oil Ministry undecided on allowing oil PSUs to buy ADB stake in Petronet LNG
GSPC in talks with Singapore's GIC for raising funds Source: Economic Times, Business Standard, Business Line, Financial Express, Mint, PRS Legislative Research, ZEEnews
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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