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					                                                                                                                           Market Outlook
                                                                                                                                          India Research
                                                                                                                                                April 12, 2012
 Dealer’s Diary
                                                                                                                Domestic Indices      Chg (%)       (Pts)   (Close)
 The Indian markets are expected to open flat with positive bias tracking mixed
                                                                                                                BSE Sensex              (0.3)     (44.4) 17,199
 opening in the Asian markets and positive closing in the U.S. markets yesterday.
                                                                                                                Nifty                   (0.3)     (16.8)    5,227
 Asian markets fell broadly yesterday, extending recent steep losses, as fiscal
                                                                                                                MID CAP                 (0.6)     (40.1)    6,330
 concerns in peripheral European countries as well as fresh fears over dwindling
 global growth kept investors cautious.                                                                         SMALL CAP               (0.3)     (18.3)    6,774
                                                                                                                BSE HC                   0.6       37.9     6,626
 The US markets gained yesterday, rebounding from an extended losing run after
                                                                                                                BSE PSU                 (0.1)      (9.0)    7,258
 Spanish and Italian bond yields fell which renewed hopes about a solution to the
                                                                                                                BANKEX                   0.2       22.8 11,789
 eurozone economic crisis and aluminum maker Alcoa Inc. reported a surprising
 profit. Statements made by Benoît Coeuré, a Board Member of the European                                       AUTO                    (0.5)     (50.3)    9,986
 Central Bank, also seemed to ease concerns over Spain.                                                         METAL                   (1.3) (146.1) 10,721
                                                                                                                OIL & GAS               (0.9)     (68.9)    7,900
 The Indian benchmark indices ended slightly lower yesterday mirroring negative
                                                                                                                BSE IT                   0.2       11.2     5,992
 sentiment on Wall Street overnight and caution prevailed ahead of industrial output
 and inflation data. The markets will now closely watch out for IIP data for February                           Global Indices        Chg (%)       (Pts)   (Close)

 2012 (Bloomberg estimate – 6.7%) due to be released today. Also, initial jobless                               Dow Jones                0.7       89.5 12,805
 claims data for the week ended April 4 for the U.S. economy will be on radar.                                  NASDAQ                   0.8       25.2     3,016

 Markets Today                                                                                                  FTSE                     0.7       39.2     5,635
                                                                                                                Nikkei                  (0.8)     (79.3)    9,459
 The trend deciding level for the day is 17,198 / 5,227 levels. If NIFTY trades above
                                                                                                                Hang Seng               (1.1) (215.6) 20,141
 this level during the first half-an-hour of trade then we may witness a further rally
                                                                                                                Straits Times           (1.2)     (36.0)    2,946
 up to 17,320 – 17,441 / 5,263 – 5,300 levels. However, if NIFTY trades below
 17,198 / 5,227 levels for the first half-an-hour of trade then it may correct up to                            Shanghai Com             0.1        3.1     2,309
 17,077 – 16,955 / 5,191 – 5,154 levels.
                                                                                                                Indian ADRs           Chg (%)       (Pts)   (Close)
 Indices                 S2                 S1            PIVOT              R1                     R2
                                                                                                                INFY                     0.4        0.2     $56.5
 SENSEX                16,955              17,077         17,198          17,320                17,441
                                                                                                                WIT                      0.8        0.1     $10.7
 NIFTY                 5,154               5,191          5,227            5,263                5,300
                                                                                                                IBN                      2.3        0.8     $34.2
 News Analysis                                                                                                  HDB                      0.9        0.3     $33.4
         Cement growth unlikely to sustain at double-digit levels
         Idea Cellular and ESPNcricinfo tie up to launch Dream Fields                                           Advances / Declines               BSE          NSE
 Refer detailed news analysis on the following page                                                             Advances                        1,211         544
 Net Inflows (April 10, 2012)                                                                                   Declines                        1,578         885
   ` cr                       Purch              Sales           Net              MTD                    YTD    Unchanged                        121            74
   FII                        1,903           2,942          (1039)               (788)          44,539
   MFs                          194               401           (207)             (234)          (5,807)        Volumes (` cr)
                                                                                                                BSE                                          2,383
 FII Derivatives (April 11, 2012)                                                                               NSE                                         11,065
   ` cr                                          Purch       Sales         Net             Open Interest
   Index Futures                                 1,450      1,762         (311)                     9,249
   Stock Futures                                 1,424      1,280          144                   22,452

 Gainers / Losers
                                      Gainers                                              Losers
   Company                     Price (`)      chg (%)     Company                  Price (`)     chg (%)
   Financial Tech                   747             5.8   India Cements                    97        (7.7)
   Jet Air India                    359             5.3   Century Tex                     345        (6.2)
   Max India                        188             3.6   Reliance Cap                    361        (5.5)
   Kotak Mah Bank                   560             2.7   ACC                        1,237           (4.9)
   Crisil                        1,072              2.6   United Brew                     513        (4.7)

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

                 Cement growth unlikely to sustain at double-digit levels
                 Cement demand growth is anticipated by markets to remain buoyant going
                 ahead, in-line with ~10% growth witnessed in 2HFY2012, which has led to the
                 recent run-up in the prices of cement stocks (market cap of our coverage stocks
                 increased by ~18% YTD vs. Sensex registering an increase of only ~12% YTD).
                 However, we remain cautious on the sustenance of demand at double-digit levels
                 in FY2013E and expect yoy demand to decelerate to 8-9% levels, considering
                 moderate overall GDP growth. Moreover, while elections are in any case
                 scheduled in FY2013 in states accounting for only 9% of overall cement demand,
                 even in FY2014, though elections are scheduled in states accounting for 22%+ of
                 overall cement demand, we would not bank upon elections to be a major catalyst
                 for demand growth to improve unless the overall GDP cycle improves from
                 current levels.

                 This is because, contrary to the popular belief that elections can lead to a
                 significant surge in demand, our analysis of all-India cement demand growth,
                 overall GDP growth and elections – both centre and state over the last ~20 years
                 – has led us to conclude that it is the overall GDP growth that is a major
                 determinant of cement demand rather than the thrust provided by elections.

                 As per our analysis, the correlation coefficient between cement demand and
                 election comes at +0.02 (we have considered two years’ CAGR for cement
                 demand, as election-related activities usually pick-up in one-two years prior to the
                 elections) i.e., it does not indicate any correlation at all. In fact, even in years
                 when states accounting for 23%+ of overall cement consumption came up for
                 elections, on five such occasions cement growth (two years’ CAGR) was less than
                 8%, mainly on account of slowness in the overall GDP cycle. Similarly, on four
                 occasions, we found that cement growth was more than 8% on account of healthy
                 GDP cycle despite elections only being there in states accounting for less than
                 13% of overall cement consumption.

                 Also, in four of the seven times when general elections were held, cement growth
                 during the election year was not higher than that witnessed in the immediate
                 preceding year. Further, in case of state assemblies’ elections in major cement-
                 consuming states such as Maharashtra, Uttar Pradesh, Andhra Pradesh,
                 Karnataka and Tamil Nadu, it was observed that in greater number of occasions
                 cement growth in the election year was not higher than that registered in the
                 immediate preceding year.

                 Cement sector – Outlook and valuation

                 In our view, the cement sector's valuations in terms of EV/sales and EV/tonne
                 when compared to utilization levels are almost 39% more expensive than its
                 historical valuations during periods of similar utilization levels. However, healthy
                 pricing helped by production discipline among cement companies along with
                 sturdy demand growth in 2HFY2012 has led to high valuations currently.
                 Nevertheless, in our view, this is a thin investment thesis to rely on, as there is a
                 persistent risk of a breakdown in production discipline and deceleration of
                 demand growth to 8-9% levels in FY2013E. Hence, we remain Neutral on the
                 cement sector. That said, we maintain our Buy view on JK Lakshmi due to its
                 attractive valuations, as it is trading at EV/tonne of US$44 on FY2014E capacity.

April 12, 2012                                                                                       2
                                                                                                                            Market Outlook | India Research

Cement demand growth vis-à-vis elections in India
                          Two years’                                                                                                                           Election states’ combined
Financial     Demand
                       demand CAGR States having elections                                                                                                       cement consumption as
year        growth (%)
                                 (%)                                                                                                                                         a % of total*
                                     U.P., T.N., Kerala, W.B., Haryana, Assam, Puducherry, Punjab + General
1992              9.6           8.6                                                                                                                                                               36.5
1993              0.9           5.2 H.P., Meghalaya, Tripura, Nagaland + General Election                                                                                                           1.6
1994              7.2            4.0 U.P., Rajasthan, M.P., NCT Delhi, Mizoram, Goa,                                                                                                              23.9
1995              7.6            7.4 Maharashtra, A.P., Karnataka, Manipur, Arunachal Pradesh, Sikkim                                                                                             29.0
1996             11.7            9.6 Gujarat, Odisha, Bihar                                                                                                                                       12.7
                                     U.P., T.N., Kerala, W.B., Haryana, Assam, Puducherry, Punjab, J&K +
1997              9.4           10.6                                                                                                                                                              37.1
                                     General Election
1998              9.1            9.3 H.P., Meghalaya, Tripura, Nagaland                                                                                                                             1.6
1999              5.7            7.4 Gujarat, Rajasthan, M.P., NCT Delhi, Mizoram, Goa + General Election                                                                                         20.7
                                     Maharashtra, A.P., Karnataka, Manipur, Arunachal Pradesh, Sikkim +
2000             14.3            9.9                                                                                                                                                              29.0
                                     General Election
2001             (0.3)           6.7 Haryana, Odisha, Bihar                                                                                                                                       10.0
                                     T.N., U.P., Kerala, Punjab, Uttarakhand, W.B., Assam, Puducherry, Goa,
2002              6.8            3.2                                                                                                                                                              34.1
2003              8.8            7.8 Gujarat, H.P., J&K, Meghalaya, Tripura, Nagaland                                                                                                               9.0
2004              6.1            7.5 Rajasthan, M.P., NCT Delhi, Chhattisgarh, Mizoram                                                                                                            15.9
                                     Maharashtra, A.P., Karnataka, Odisha, Jharkhand, Arunachal Pradesh,
2005              8.2            7.1                                                                                                                                                              33.8
                                     Sikkim + General Election
2006             10.7            9.4 Haryana, Bihar                                                                                                                                                 7.0
                                     T.N., U.P., Kerala, W.B., Punjab, Uttarakhand, Assam, Puducherry, Goa,
2007              9.4           10.0                                                                                                                                                              34.1
2008              7.8            8.6 Gujarat, H.P., Meghalaya, Tripura, Nagaland                                                                                                                    8.4
2009              7.6            7.7 Karnataka, Rajasthan, M.P., NCT Delhi, Chhattisgarh, J&K, Mizoram                                                                                            23.1
                                     Maharashtra, A.P., Haryana, Odisha, Jharkhand, Arunachal Pradesh,
2010              7.1            7.4                                                                                                                                                              31.3
                                     Sikkim + General Election
2011              5.0            6.0 Bihar                                                                                                                                                          2.9
                                     T.N., U.P., Kerala, W.B., Punjab, Uttarakhand, Assam, Puducherry, Goa,
2012              6.6            5.8                                                                                                                                                              34.1
2013                                 Gujarat, H.P., Meghalaya, Tripura, Nagaland                                                                                                                    8.4
2014                                   Karnataka, Rajasthan, M.P., NCT Delhi, Chhattisgarh, Mizoram                                                                                               22.5
Source: Election Commission of India, CMA, Company, Angel Research, Note: *Based on FY2009 data as latest data excludes dispatches of ACC and
Ambuja Cements

                                                   Cement demand growth vs. GDP growth correlation







                                                                           two years' demand CAGR (%)                                           two years' GDP CAGR (%)

                                                   Source: Company, Angel Research

April 12, 2012                                                                                                                                                                                           3
                                                                                                  Market Outlook | India Research

                                          Idea Cellular and ESPNcricinfo tie up to launch Dream
                                          Idea Cellular and ESPNcricinfo have formed a long term tie up spanning content
                                          and advertising in India to launch Idea Dream Fields. It is a dedicated editorial
                                          repository within the website, which explores the issue of
                                          lack of cricket spaces in cities in India.

                                          As part of this initiative, ESPNcricinfo will travel to the prominent cricket cities in
                                          the country, speak to fans, players, parents and local administrators, and visit
                                          cricket grounds to explore the issue. Idea Dream Fields will also feature content
                                          gathered from the public via social media. ESPN and Idea Cellular have an
                                          annual sponsorship deal, estimated by market experts to be in the range of
                                          US$1-1.5mn, which was initiated in August, 2011. The Dream Fields initiative is
                                          part of that deal. The initiative intends to engage the various stakeholders to
                                          present their concerns and issues regarding the cricket playing spaces in the cities
                                          in India and marks an attempt to raise this issue at a national level. The content
                                          line up for the initiative includes Maidan View, a series on popular cricket
                                          grounds; and Ground Reality, a video series exploring the state of cricket in major
                                          cities. We maintain our Neutral view on Idea Cellular.

                                          Quarterly Bloomberg Brokers’ Consensus Estimates
                                          Infosys Ltd – Consolidated (13/04/2012)
                                          Particulars (` cr)              4QFY12E               4QFY11 y-o-y (%)              3QFY12 q-o-q (%)
                                          Net sales                           9,204                7,250           27          9,298        -1
                                          Net profit                          2,314                1,818           27          2,372        -2

                                          Economic and Political News
                                               ADB projects moderate increase in GDP to 7% in 2012-13
                                               India, other emerging economies showing positive signs: OECD
                                               Tsunami alert in 28 nations as 8.9 quake hits Indonesia

                                          Corporate News
                                               M&M to consolidate R&D units, to roll out tractor soon
                                               Piramal Healthcare gets EU nod for orthopaedic product
                                               PSL bags `570cr order from IOC
                                               Strides Arcolab receives US FDA nod for vancomycin oral capsules
                                          Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

Results Calendar
 13/04/2012      Infosys
 16/04/2012      Crisil, MindTree
 18/04/2012      HDFC Bank, HCL Tech, Infotech Enterprises
 19/04/2012      Hind Zinc, Ambuja Cements, ACC, IndusInd Bank

April 12, 2012                                                                                                                               4
                                                                                                           Market Outlook | India Research

                                                   Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
  Research Team Tel: 022 - 39357800                    E-mail:                                Website:


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April 12, 2012                                                                                                                                     5

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