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					                                                                                                                            Market Outlook
                                                                                                                                           India Research
                                                                                                                                                 April 18, 2012
 Dealer’s Diary
                                                                                                                 Domestic Indices      Chg (%)       (Pts)   (Close)
 The Indian markets are expected to open in green on the back of positive global                                 BSE Sensex               1.2      207.0 17,358
 cues. Asian stocks rose today, after the International Monetary Fund raised global
                                                                                                                 Nifty                    1.2       63.5     5,290
 economic forecasts and Spain sold more debt than targeted.
                                                                                                                 MID CAP                  0.7       46.3     6,435
 US markets reacted positively to news out of Europe as well as the latest batch of                              SMALL CAP                0.6       43.1     6,880
 quarterly results, stocks moved sharply higher during trading on Tuesday. The                                   BSE HC                   0.2       11.9     6,707
 markets largely shrugged off some disappointing US economic data. European                                      BSE PSU                  1.8      134.3     7,455
 markets also closed in green on Tuesday. The better than expected German                                        BANKEX                   0.8       95.2 12,124
 economic indicator helped the market to get off to a positive start. The relaxation in                          AUTO                     0.8       82.6 10,372
 the yields of Spanish government bonds also helped, as the return on ten-year                                   METAL                    2.0      220.1 11,179
 securities fell back below 6%.                                                                                  OIL & GAS                0.9       74.3     8,034

 Indian shares rallied on Tuesday, with rate-sensitive realty stocks leading the                                 BSE IT                   0.7       38.4     5,416

 gainers, after the RBI cut interest rates for the first time in three years. The central                        Global Indices        Chg (%)       (Pts)   (Close)

 bank slashed its repo rate by an unexpected sharp 50bp to ease the liquidity                                    Dow Jones                1.5      194.1 13,116
 crunch in the money markets and support faltering economic growth.                                              NASDAQ                   1.8       54.4     3,043
                                                                                                                 FTSE                     1.8      100.7     5,767
 Markets Today
                                                                                                                 Nikkei                  (0.1)      (5.9)    9,465
 The trend deciding level for the day is 17,281 / 5,265 levels. If NIFTY trades above                            Hang Seng               (0.2)     (48.3) 20,562
 this level during the first half-an-hour of trade then we may witness a further rally                           Straits Times           (0.2)      (5.5)    2,987
 up to 17,459 – 17,560 / 5,322 – 5,355 levels. However, if NIFTY trades below                                    Shanghai Com            (0.9)     (22.0)    2,335
 17,281 / 5,265 levels for the first half-an-hour of trade then it may correct up to
 17,180 – 17,003 / 5,233 – 5,176 levels.                                                                         Indian ADRs           Chg (%)       (Pts)   (Close)

 Indices                 S2                 S1            PIVOT               R1                     R2          INFY                     0.1        0.1     $47.5

 SENSEX                17,003              17,180         17,281            17,459               17,560          WIT                      1.5        0.2     $10.0

 NIFTY                 5,176               5,233          5,265             5,322                5,355           IBN                      3.3        1.1     $34.6
                                                                                                                 HDB                      5.1        1.7     $34.8
 News Analysis
         Monetary Policy Review                                                                                  Advances / Declines               BSE          NSE
         4QFY2012 Result Previews – HDFC Bank, HCL Tech, Infotech Enterprises                                    Advances                        1,620         864

 Refer detailed news analysis on the following page                                                              Declines                        1,214         566
                                                                                                                 Unchanged                        131            84
 Net Inflows (April 16, 2012)
   ` cr                       Purch              Sales            Net              MTD                    YTD
                                                                                                                 Volumes (` cr)
   FII                        1,343           1,894           (552)           (1,355)             43,971
   MFs                          677               415             262              (372)          (5,945)        BSE                                          2,714
                                                                                                                 NSE                                         12,765
 FII Derivatives (April 17, 2012)
   ` cr                                          Purch       Sales          Net             Open Interest
   Index Futures                                 3,229      2,725           503                   10,314
   Stock Futures                                 2,154      2,198           (44)                  23,662

 Gainers / Losers
                                      Gainers                                               Losers
   Company                     Price (`)      chg (%)     Company                   Price (`)     chg (%)
   Pantaloon Retl                   176             6.7   Manappuram Fin.                   32        (6.2)
   Reliance Infra                   585             6.0   Amtek Auto                       130        (2.1)
   Century Tex                      368             5.9   Allahabad Bank                   187        (1.9)
   Reliance Cap                     367             5.6   Lupin                            556        (1.8)
   Apollo Tyres                       91            5.5   Coromandel Intl                  291        (1.5)

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

                 Monetary Policy Review

                 Key highlights
                     Reduces repo rate by 50bp to 8.0% (Repo 8.0%, Reverse Repo 7.0% and MSF

                     Keeps SLR and CRR unchanged at 24.0% and 4.75%, respectively

                 Rate cuts justified; RBI’s move mirrors improved macroeconomic
                 environment conditions

                 The Reserve bank of India (RBI) reduced repo rates by 50bp as against the market
                 expectations of 25bp, citing slowdown in growth and headroom provided by
                 moderating core inflation as the primary motivators behind the larger than
                 expected reduction in policy rates. Inflation pressures have abated considerably
                 over the past six months (fall of ~300bp in WPI levels in 2HFY2012) and even the
                 average inflation levels for FY2013 are expected to be down by 150bps
                 compared to the levels prevailing during most of FY2011 and FY2012. The
                 significant moderation in inflation levels, in our view, was clearly creating
                 headroom for interest rates to come down and we believe RBI’s move to reduce
                 policy rates by 50bp mirrors these macro conditions. We expect broader lending
                 and deposit rates to inch down by 50bps in the coming months, as lower inflation
                 enables higher financial savings and improved liquidity conditions for banks.

                 Although further scope for rate cuts limited, FY13 estimated to
                 be healthier than FY12

                 The RBI has appropriately also kept inflation within its radar in order to keep
                 inflation expectations anchored; pointing out that potential GDP growth is likely to
                 be closer to 7.5%. Hence, we expect that the overall headroom for interest rates
                 to come down is likely to be a moderate 75-100bps over the course of the year.
                 Having said that, declining inflation levels (150bp decline further expected during
                 FY2013) and consequent reduction in interest rates and improvement in financial
                 savings should lead to relatively healthier macro-economic environment in
                 FY2013 compared to FY2012, which is expected to be positive for the overall
                 corporate earnings growth outlook, especially for rate sensitives such as banks
                 and infrastructure.

                 Banks set to benefit from lower interest rates

                 The 50bp reduction in repo rate cuts is expected to translate into similar lending
                 rate cuts by banks in the coming months. The reduction in deposit rates could lag
                 the reduction in lending rates, which could create some pressures on margins for
                 the banks in the immediate next few months. However, on back of expected pick
                 up in deposit accretion and improving liquidity, we expect cost of funds for the
                 banks to also head lower with a slight lag, leading to an overall stable outlook for
                 margins for FY2013. Also, lower interest servicing costs for borrowers should
                 eventually aid in reducing the asset quality headwinds being currently faced by
                 the sector, leading to improved earnings outlook for the sector in FY2013.

April 18, 2012                                                                                      2
                                                          Market Outlook | India Research

                 Result Previews

                 HDFC Bank

                 HDFC Bank is expected to announce a healthy set of results for 4QFY2012.
                 We expect the bank to report reasonable NII growth of 14.7% yoy to `3,257cr on
                 the back of sequentially stable NIM. Non-interest income is expected to register
                 growth of 17.1% yoy, leading to operating income growth of 15.4% yoy. Due to
                 relatively slower rise in operating expenses, pre-provision profit is expected to
                 grow by relatively high 17.7% yoy. Provisioning expenses are expected to decline
                 by 21.8% yoy, leading to healthy net profit growth of 30.2% yoy to `1,451cr.
                 At the CMP, the stock is trading at attractive valuations of 3.0x FY2014E P/ABV,
                 in our view. We maintain our Accumulate recommendation on the stock with a
                 target price of `567.

                 HCL Technologies - 3QFY2012

                 HCL Technologies is slated to announce its 3QFY2012 numbers. We expect the
                 company to post revenue of US$1,052mn, registering 3.0% qoq growth. In INR
                 terms, revenue is expected to grow by 0.8% qoq to `5,288cr. EBITDA margin is
                 expected to expand by 30bp qoq to 18.8%. PAT is expected to come in at `616cr.
                 The company is one of our preferred picks in the IT sector. We maintain our Buy
                 rating on the stock with a target price of `562.

                 Infotech Enterprises

                 Infotech Enterprises is slated to announce its 4QFY2012 results. We expect the
                 company to post revenue of US$82.6mn, up 1.4% qoq, majorly led by volume
                 growth. In INR terms, revenue is expected to come in at `419.3cr, up 12.5% qoq.
                 EBITDA margin is expected to expand by 128bp qoq to 17.0%. PAT is expected to
                 come in at `35cr. We maintain our Neutral view on the stock.

                 Quarterly Bloomberg Brokers’ Consensus Estimates

                 HCL Tech Ltd. - Consolidated (18/04/2012)
                 Particulars (` cr)   3Q FY12E      3Q FY11      y-o-y (%)   2Q FY12      q-o-q (%)
                 Net sales                5,292        4,138         27.9       5,245          0.9
                 EBITDA                     952         717          32.8        970          (1.9)
                 EBITDA margin (%)         18.0         17.3                     18.5
                 Net profit                 576         468          23.1        573           0.5

April 18, 2012                                                                                    3
                                                       Market Outlook | India Research

                 HDFC Bank Ltd. - (18/04/2012)
                 Particulars (` cr)   4Q FY12E   4Q FY11    y-o-y (%)   3Q FY12   q-o-q (%)
                 Net profit              1,456     1,115        30.6      1,430        1.8

                 ACC - (19/04/2012)
                 Particulars (` cr)   1Q CY12E   1Q CY11    y-o-y (%)   4Q CY11   q-o-q (%)
                 Net sales               2,923     2,398          22      2,503         17
                 EBITDA                    647        580         12        442         46
                 EBITDA margin (%)        22.1      24.2                   17.7
                 Net profit                398        351         13        470       (15)

                 Ambuja Cement - (19/04/2012)
                 Particulars (` cr)   1Q CY12E   1Q CY11    y-o-y (%)   4Q CY11   q-o-q (%)
                 Net Sales               2,696     2,207          22      2,329         16
                 Net Profit                447        407         10        302         48

                 Hindustan Zinc - (19/04/2012)
                 Particulars (` cr)   4Q FY12E   4Q FY11    y-o-y (%)   3Q FY12   q-o-q (%)
                 Net sales               2,987     3,197          (7)     2,747          9
                 EBITDA                  1,558     1,969        (21)      1,403         11
                 EBITDA margin (%)        52.2      61.6                   51.1
                 Net profit              1,414     1,771        (20)      1,274         11

                 Indus Ind Bank - (19/04/2012)
                 Particulars (` cr)   4Q FY12E   4Q FY11    y-o-y (%)   3Q FY12   q-o-q (%)
                 Net profit                215        172         25        206          4

                 Reliance Industries - (20/04/2012)
                 Particulars (` cr)   4Q FY12E   4Q FY11    y-o-y (%)   3Q FY12   q-o-q (%)
                 Net sales              86,497    72,674          19     85,135          2
                 EBITDA                  6,830     9,843        (31)      7,285         (6)
                 EBITDA margin (%)         7.9      13.5                    8.6
                 Net profit              4,232     5,376        (21)      4,440         (5)

                 Cairn India - (20/04/2012)
                 Particulars (` cr)   4Q FY12E   4Q FY11    y-o-y (%)   3Q FY12   q-o-q (%)
                 Net sales               3,583     3,654          (2)     3,096         16
                 EBITDA                  2,887     3,059          (6)     2,783          4
                 EBITDA margin (%)        80.6      83.7                   89.9
                 Net profit              2,376     2,458          (3)     2,262          5

April 18, 2012                                                                            4
                                                                                                    Market Outlook | India Research

                                            Economic and Political News
                                                 IMF sees India growth at 6.9% in 2012
                                                 New telecom policy to be in place by May: Sibal
                                                 RBI urges government to hike diesel, kerosene, LPG prices
                                                 Cabinet note moved on FDI in aviation

                                            Corporate News
                                                 CAG raps Maharashtra for opacity in selection of Lavasa project
                                                 CIL board okays fuel supply agreements
                                                 LIC increases stake in Pipavav to over 5%
                                                 SBI to cut interest rates on some loans
                                                 Essar Oil plans to raise `6,300cr more via debt
                                            Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

Results Calendar
 18/04/2012      HDFC Bank, HCL Tech, Infotech Enterprises
 19/04/2012      Hind Zinc, Ambuja Cements, ACC, IndusInd Bank
 20/04/2012      Reliance Industries, Cairn India, FAG Bearings
 21/04/2012      IDBI Bank
 23/04/2012      TCS, UltraTech Cement, Rallis
 24/04/2012      Sesa Goa, Petronet LNG
 25/04/2012      Wipro, Sterlite Inds, Nestle, LIC Housing Fin., Yes Bank, Alembic Pharma

April 18, 2012                                                                                                                   5
                                                                                                           Market Outlook | India Research

                                                   Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
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April 18, 2012                                                                                                                                     6

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