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Market Outlook


  • pg 1
									                                                                                                                               Market Outlook
                                                                                                                                              India Research
                                                                                                                                             February 23, 2012

 Dealer’s Diary                                                                                                     Domestic Indices      Chg (%)       (Pts)   (Close)
 Indian markets are expected to open in the red tracking negative cues worldwide.                                   BSE Sensex              (1.5) (283.4) 18,145
 The Asian stocks have opened in the red following uninspired economic and                                          Nifty                   (1.8) (101.8)       5,505
 corporate earnings news which added to the cautious sentiments.                                                    MID CAP                 (3.5) (228.7)       6,376
 European stocks closed lower on Wednesday, as worse than expected German                                           SMALL CAP               (3.2) (233.1)       6,969
 service and manufacturing data combined with additional Greek rating cuts                                          BSE HC                  (0.8)     (50.7)    6,328
 weighed on equities. Fitch has downgraded Greece's credit rating to 'C' from 'CCC'                                 BSE PSU                 (2.7) (216.2)       7,753
 following Eurozone agreement on a second bailout for the country. Also Fitch                                       BANKEX                  (3.8) (490.0) 12,349
 mentioned that chances of a default are highly likely in the near term. The                                        AUTO                    (1.6) (159.8) 10,171
 weakness on Wall Street was partly due to the release of a report showing a                                        METAL                   (4.3) (543.4) 12,115
 contraction in private sector activity in the eurozone, which added to recent                                      OIL & GAS               (0.8)     (69.2)    8,773
 concerns about a recession. However another report showing a notable increase in                                   BSE IT                    0.5      28.1     6,285
 existing home sales in the month of January provided support to the markets.                                       Global Indices        Chg (%)       (Pts)   (Close)

 Meanwhile, investors are likely to keep a close eye on the US Labor Department's                                   Dow Jones               (0.2)     (27.0) 12,939
 report on weekly jobless claims which is expected to edge up to 355,000 in the                                     NASDAQ                  (0.5)     (15.4)    2,933
 week ended February 18th from the previous week's 348,000.                                                         FTSE                    (0.2)     (11.7)    5,917
                                                                                                                    Nikkei                    1.0      91.0     9,554
 Markets Today
                                                                                                                    Hang Seng                 0.3      70.6 21,549
 The trend deciding level for the day is 18,255/5,542 levels. If NIFTY trades above
                                                                                                                    Straits Times           (1.0)     (29.5)    2,996
 this level during the first half-an-hour of trade then we may witness a further rally
                                                                                                                    Shanghai Com              0.9      22.2     2,404
 up to 18,414 – 18,683/5,593 – 5,681 levels. However, if NIFTY trades below
 18,255/5,542 levels for the first half-an-hour of trade then it may correct up to
 17,986 – 17,827/5,454 – 5,404 levels.                                                                              Indian ADRs           Chg (%)       (Pts)   (Close)
                                                                                                                    Infosys                   0.9       0.6     $60.1
 Indices                     S2                 S1            PIVOT                R1                   R2
                                                                                                                    Wipro                     1.3       0.1     $11.3
 SENSEX                   17,827               17,986         18,255            18,414              18,683
                                                                                                                    ICICI Bank              (3.0)      (1.2)    $38.6
 NIFTY                     5,404               5,454          5,542              5,593              5,681
                                                                                                                    HDFC Bank               (3.1)      (1.1)    $34.6
 News Analysis
        IOB to receive `1,978cr form GOI, LIC                                                                      Advances / Declines               BSE          NSE
        Result Preview: Ranbaxy Labs, ABB, Aventis Pharmaceuticals - 4QCY2011
                                                                                                                    Advances                         769          242
         Refer detailed news analysis on the following page
                                                                                                                    Declines                        2,208       1,293
 Net Inflows (February 21, 2012)                                                                                    Unchanged                        106            37
   ` cr                           Purch              Sales             Net              MTD                  YTD
   FII                            4,094            2,599          1,495            15,311            26,392
                                                                                                                    Volumes (` cr)
   MFs                             634                972          (338)           (1,683)           (3,537)
                                                                                                                    BSE                                          3,853
 FII Derivatives (February 22, 2012)                                                                                NSE                                         18,502
   ` cr                                              Purch        Sales          Net           Open Interest
   Index Futures                                     6,881       7,228          (347)                22,165
   Stock Futures                                     9,859     10,555           (696)                32,720

 Gainers / Losers
                                          Gainers                                              Losers
   Company                         Price (`)      chg (%)     Company                   Price (`)    chg (%)
   Tata Comm.                           254             6.7   Lanco Infratech                  20       (16.8)
   Coromandel Int.                      276             3.2   United Spirits                  571       (14.3)
   Gitanjali Gems                       406             3.2   GMR Infra.                       29       (11.5)
   Sun TV Network                       331             2.8   IRB Infra.                      186       (10.8)
   Container Corp.                    1,015             2.6   Voltas                          103       (10.5)

Please refer to important disclosures at the end of this report                                                    Sebi Registration No: INB 010996539              1
                                                              Market Outlook | India Research

                    IOB to receive `1,978cr form GOI, LIC
                    Indian Overseas Bank (IOB) is expected to receive capital infusion worth `1,675cr
                    from Government of India (GOI) and `303cr from Life Insurance Company (LIC).
                    The bank will be issuing equity shares up to 171,232,876 to GOI and
                    30,937,467 to LIC against this capital infusion. The capital infusion will be at
                    fixed price of `97.82 per equity share (including premium of `87.82). The tier-I
                    ratio which stands at a low 6.7% (excluding 9M profits) as of 3QFY2012 is expect
                    to be propelled up on account of this capital infusion. We currently have a
                    Neutral recommendation on the stock.

                    Result Preview - 4QCY2011

                    Ranbaxy Laboratories

                    For the quarter, Ranbaxy is expected to report sales and profit of `2,900cr and
                    net profit of `589cr, respectively. OPM is expected to come in around 33.2%.
                    Results would be driven by Lipitor sales. We maintain our Neutral view on the

                    For 4QCY2011, we expect ABB India (ABB) to post strong top-line growth of
                    16.4% yoy to `2,412cr, driven by the company's balanced performance across all
                    segments. EBITDA margin is likely witness a sharp uptick of 352bp yoy to 5.1%
                    (4QCY2010 margins were suppressed by higher provisioning on account of rural
                    electrification projects). Also, on a qoq basis, we expect margins to improve by
                    ~120bp. Aided by strong revenue growth and an extremely low base of the
                    prior-year period, ABB's bottom line is expected to jump eight-fold to `61.9cr. At
                    CMP the stock trades at rich valuations of 48.1x CY2012E EPS. We maintain Sell
                    on the stock.

                    Aventis Pharmaceuticals

                    For the quarter, Aventis is expected to report sales and net profit growth of 15.7%
                    yoy and 39.7%, respectively. Thus, the company is expected to end the quarter
                    with net sales and profit of `332cr and `40.3cr, respectively. OPM is expected to
                    come in at 13.5%, an expansion of 640bp yoy. We maintain our Reduce rating
                    on the stock with a target of `1,937.

February 23, 2012                                                                                     2
                                                                                                          Market Outlook | India Research

                                                  Quarterly Bloomberg Brokers’ Consensus Estimates

                                                  Ranbaxy - Consolidated (23/02/2012)
                                                  Particulars (` cr)              4QCY11E           4QCY10          y-o-y (%)         3QCY11   q-o-q (%)
                                                  Net sales                         2,811             2,066             36            2,023       39
                                                  EBITDA                             597              (174)              -             174       243
                                                  EBITDA margin (%)                  21.2              -8.4                            8.6
                                                  Net profit                         285               (94)              -             (457)       -

                                                  Economic and Political News
                                                        OMO’s better tool to ease liquidity: PMEAC
                                                        Decontrol urea prices, raise excise duty: PMEAC
                                                        Government planning 63,000MW nuclear power capacity by 2032

                                                  Corporate News
                                                        Chinese banks to refinance `6,000cr RCOM debt
                                                        BPCL to up Saudi imports in FY2013, cut Iran volumes
                                                        Hero MotoCorp partners with US firm, Erik Buell Racing (EBR)
                                                        State Bank of India to bail out Kingfisher
                                                        US to import cancer drug from Sun Pharma
                                                  Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

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

February 23, 2012                                                                                                                                          3
                                                                                                 Market Outlook | India Research

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February 23, 2012                                                                                                                           4

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