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									                                                                                                                                Market Outlook
                                                                                                                                               India Research
                                                                                                                                                March 19, 2012
 Dealer’s Diary
                                                                                                                     Domestic Indices      Chg (%)       (Pts)   (Close)
 The Indian markets are expected to open flat with a positive bias tracking                                          BSE Sensex              (1.2) (209.7) 17,466
 marginally positive opening across most of the Asian bourses.
                                                                                                                     Nifty                   (1.2)     (62.6)    5,318
 Globally, US markets on Friday ended nearly flat as stocks showed a lack of                                         MID CAP                 (0.7)     (43.8)    6,362
 direction throughout the trading session. The lackluster performance came after                                     SMALL CAP               (1.1)     (76.0)    6,704
 mixed reaction to the latest batch of economic data which cautioned traders                                         BSE HC                  (2.0) (130.9)       6,354
 against making any significant moves following the recent rally. A preliminary                                      BSE PSU                 (2.6) (202.2)       7,482
 report released by Reuters and the University of Michigan showed that Consumer                                      BANKEX                  (1.9) (233.8) 11,970
 sentiment index for the month of March fell to 74.3 from 75.3 in February as
                                                                                                                     AUTO                      0.2      22.0 10,154
 against economists’ expectation of 76.0. The European markets closed higher
                                                                                                                     METAL                   (2.2) (261.6) 11,515
 again on Friday, capping off a week of substantial gains.
                                                                                                                     OIL & GAS               (3.3) (282.8)       8,241
 On Friday, Indian markets erased early gains, reacting to the Union Budget 2012-                                    BSE IT                  (0.2)     (11.9)    6,069
 13 announcements and ended the day in red as budget proposed much                                                   Global Indices        Chg (%)       (Pts)   (Close)
 anticipated increase in excise and service rates and increase in services tax net. The
                                                                                                                     Dow Jones               (0.2)     (20.1) 13,233
 decline was higher in most Oil and gas stocks which reacted sharply to the budget
                                                                                                                     NASDAQ                  (0.0)      (1.1)    3,055
 proposal of increase in cess on crude oil. Currently holding strong breadth,
                                                                                                                     FTSE                      0.4      24.9     5,966
 markets will now closely track domestic as well as global developments.
                                                                                                                     Nikkei                    0.1       6.6 10,130
 Markets Today                                                                                                       Hang Seng               (0.2)     (35.7) 21,318
 The trend deciding level for the day is 17,588/ 5,356 levels. If NIFTY trades above
                                                                                                                     Straits Times           (0.5)     (15.2)    3,011
 this level during the first half-an-hour of trade then we may witness a further rally
                                                                                                                     Shanghai Com              1.3      31.0     2,405
 up to 17,749 – 18,032 / 5,407 – 5,497 levels. However, if NIFTY trades below
 17,588 / 5,356 levels for the first half-an-hour of trade then it may correct up to
 17,305 – 17,144 / 5,267 – 5,216 levels.                                                                             Indian ADRs           Chg (%)       (Pts)   (Close)
                                                                                                                     INFY                    (0.5)      (0.3)    $58.8
 Indices                   S2                   S1           PIVOT                R1                     R2
                                                                                                                     WIT                     (1.4)      (0.2)    $11.0
 SENSEX                 17,144               17,305          17,588            17,749                18,032
                                                                                                                     IBN                     (0.8)      (0.3)    $37.3
 NIFTY                   5,216               5,267           5,356              5,407                5,497
                                                                                                                     HDB                     (1.3)      (0.5)    $33.7
 News Analysis
        Union Budget 2012-2013 – A Pragmatic Budget                                                                 Advances / Declines               BSE          NSE
        Cement makers announces price hikes                                                                         Advances                        1,044         693
 detailed news analysis on the following page
                                                                                                                     Declines                        1,801         819
 Net Inflows (March 15, 2012)                                                                                        Unchanged                        120            58
   ` cr                         Purch                Sales          Net                MTD                    YTD
   FII                          2,388            2,205              183            6,515              42,813         Volumes (` cr)
   MFs                           640             1,113            (473)                (767)          (4,794)
                                                                                                                     BSE                                          3,581
 FII Derivatives (March 16, 2012)                                                                                    NSE                                         20,704
   ` cr                                              Purch       Sales          Net             Open Interest
   Index Futures                                     3,634      3,293           342                   15,531
   Stock Futures                                     2,739      2,968          (229)                  30,382

 Gainers / Losers
                                        Gainers                                                 Losers
   Company                       Price (`)       chg (%)     Company                    Price (`)     chg (%)
   Amtek Auto                         142              4.6   NMDC                              158        (7.8)
   ITC                                216              3.7   Sun Pharma                        545        (7.1)
   IRB Infra                          198              3.5   Jain Irrigation                   103        (6.2)
   India Cements                      103              3.3   Cairn India                       346        (6.0)
   Voltas                             129              3.0   Zee Entert                        126        (5.8)

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

                 Union Budget 2012-13 – A Pragmatic Budget

                 The markets had broadly come to terms with the fact that the government is
                 shackled by political and fiscal considerations and is not in a position to deliver
                 major reformist budgets. In the backdrop of these modest expectations, the Union
                 Budget FY2012-13 comes across as a job reasonably done. Somewhere, if after
                 the UP elections there was some degree of concern that populism may hold sway,
                 this budget at least dismisses those concerns by increasing tax revenues
                 significantly and not indulging into any major populist expenditure increases.

                 Union Budget 2012-13 looks more credible in its estimates than last year’s
                 budget. First, the increase in excise and service tax rates as well as the increase in
                 the ambit of service tax was on expected lines and makes the budget’s revenue
                 estimates more believable. On the subsidy front, some degree of under-
                 estimation is nothing new – overall, there may be some slippage in the deficit
                 because of this, but provided the government delivers on its intent to increase
                 retail oil prices, the fiscal deficit is still likely to be about 40-50bp lower than that
                 in FY2012, which is a key positive for the economy. It will allow the RBI to reduce
                 rates faster and will be a positive for GDP growth and especially for interest-
                 sensitive sectors such as banking, infrastructure and real estate. Oil and gas was
                 amongst the key sectors that were negatively impacted (increase of cess on crude
                 oil for Cairn and ONGC).

                 Overall, having taken the budget in its stride, from here on the market is likely to
                 look at the progression of the monetary policy, inflation and interest rates , – the
                 decline in which is in our view an ongoing positive for the GDP outlook and
                 corporate earnings for FY2013. Going forward, markets will start looking beyond
                 the budget, wherein the global environment has changed materially for the better
                 in the last couple of months. With the ECB’s pragmatic and comprehensive LTRO
                 liquidity infusions of about Euro1trillion, the Euro crisis looks more or less behind
                 us. Moreover, lower global growth has led to lower commodity prices (other than
                 crude, which is likely to be range-bound), improving the outlook for emerging
                 markets such as India. As a result, we are seeing healthy investment inflows and
                 with the inflation and interest rate outlook becoming relatively benign, we remain
                 positive on the outlook for the markets going ahead.

                 Cement makers announces price hikes

                 Cement makers have raised cement prices by `7 to `10 per bag of 50kg w.e.f.
                 March 17, 2012, as an after-effect of the budget announcement affecting the
                 sector. The budget has altered the way excise duty is calculated on cement in
                 addition to the increase in excise and service tax rates by 200bp. The price hike
                 will be higher in regions where retail sale price (RSP) is higher as now excise duty
                 will be calculated on RSP methodology instead of invoice value methodology
                 earlier prevalent. This prices hike comes after the recent increase in cement prices
                 effected by the companies in the range of `12 to `25 in the wake of the increase
                 in railway freight charges and seasonal buoyancy in cement demand.

March 19, 2012                                                                                           2
                                                                         Market Outlook | India Research

                 Overall, we continue to remain Neutral on the sector considering the sectors’
                 ahead of the cycle valuations; however, we continue to maintain our Buy
                 recommendation on JK Lakshmi, considering its deep discount valuations, as it is
                 trading at EV/tonne of US$28 on FY2013E capacity.

                 Economic and Political News
                     Interest rates expected to fall in the coming months, says Pranab Mukherjee
                     Holding co. for PSU banks to meet growth needs: Finance Ministry
                     DTC likely to become effective from FY2014: Pranab Mukherjee
                     Making efforts to cut time lag in clearing projects: Pranab Mukherjee

                 Corporate News
                     NHAI to float `10,000cr bonds towards the end of FY2012-13
                     With no tax on diesel vehicles, auto makers mull expansion
                     Steel prices to rise by up to `1,000 on excise duty hike
                     CIL board may meet next week for new fuel supply pact
                     ONGC plans capex of `33,000cr for next fiscal
                 Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

March 19, 2012                                                                                        3
                                                                                                 Market Outlook | India Research

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March 19, 2012                                                                                                                              4

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