A PRIZE CATCH by hedongchenchen

VIEWS: 40 PAGES: 60

									For Pr ivate Circulation   Volume 1 Issue 42    07th D ec ’10




            A
            Prize
            Catch
             With the merger of ENAM’s boutique
             business, Axis now matches up to the
             might of its rivals in the security broking
             business and this will catapult the bank
             into the big league
                                                      &




                                 Beyond
                                            Present




          LEARN THE ART OF
        COMMODITY INVESTING



Nirmal Bang in association with Zee Business invites you to be a part of Beyond       , the
one-of-its-kind commodity camp, where market mavens like Anjani Sinha, MD & CEO,
National Spot Exchange and Kunal Shah, Head – Commodity Research, Nirmal Bang
Commodities Pvt Ltd will discuss the opportunities in the commodity markets with Amish
Devgan, Commodity Editor and Anchor, Zee Business.

                                                                        Exchange Partner




                                                                   *Registration Compulsory
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                                            AMIT BAKLIWAL: +91 80030 93723
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                                                    DB Corner – Page 5


                                                    A Pleasant Surprise
                                                    A stronger-than-expected GDP growth number brings a positive breather – Page 6

                                                    A Double-edged Sword
                                                    Experts are of the opinion that the second round of quantitative easing by the US could further weaken the
                                                    dollar, increase inflation as well as oil and commodity prices in the emerging economies – Page 7

                                                    Everybody’s Invited
                                                    Financial inclusion can integrate the unbanked portion of rural India into the mainstream economy to boost
                                                    household incomes and have a multiplier effect on the demand of goods and services – Page 9

                                                    A Prize Catch
                                                    With the merger of ENAM’s boutique business, Axis now matches up to the might of its rivals in the security
                                                    broking business and this will catapult the bank into the big league – Page 12

                                                    IPO: Simple Yet Powerful
                                                    Investing in IPOs is a suitable method for those investors who want to follow a simple strategy of ‘invest and
                                                    exit’ on the listing date during a bull run on the bourses – Page 15

                                                    Cautious Optimism
                                                    The banking sector always has its evens and odds, and like always, it does not seem to be at peace – Page 18

                                                    Health Is Wealth
                                                    Private healthcare players have realized the tremendous potential this sector offers and are leaving no stone
                                                    unturned to meet the growing needs of the people while earning profits – Page 20
Volume 1        Issue: 42, 07th Dec ’10
                                                    Watt Next…
                                                    While India works towards generating enough electricity to meet its ever-growing needs, companies involved
                                                    in the transmission and distribution of power, especially Power Grid, will play an even important role in the
  Editor-in-Chief & Publisher: Rakesh Bhandari
                                                    coming years – Page 24
  Editor: Tushita Nigam
  Senior Sub-Editor: Kiran V Uchil                  Specialty Chemicals: The Next Big Thing
                                                    Certainty of potentially huge markets coupled with easy availability of skilled manpower, is expected to make
                                                    India and China a name to reckon with in the specialty chemical industry – Page 27
  Art Director: Sachin Kamble
  Junior Designer: Sagar Padwal                     Soul Searching In Seoul
                                                    It was a moment of self introspection for the global leaders that are still coming to terms with the after-effects
  Marketing & Operations:                           of the financial meltdown. While they all agreed to iron out their differences, key issues, except few, still remain
                                                    unanswered – Page 31
  Dwiti Bhuta, Savio Pashana
                                                    MIPs: Rising To The Occasion
  Research Team:                                    Both conservative and aggressive investors can opt for MIPs if they are seeking stable and higher returns over
  Kunal Shah, Michael Pillai,                       other forms of investment – Page 33
  Hussain Nagarwala, Vikash Bairoliya,
  Ashish Khetan                                     Bharti Airtel: Sweet Sound Of Success
                                                    Expansion of business plans, apart from the introduction of 3G services and number portability, is expected to
  HEAD OFFICE                                       benefit Bharti Airtel in the coming months – Page 36
  38-B/39, Khatau Bldg, 2nd Floor,
  Alkesh Dinesh Mody Marg, Fort, Mumbai - 400 001
                                                    Fortnightly Outlook For Commodities – Page 39
  Tel: 022 - 22641234, 30272000 / 2222

  CORPORATE OFFICE                                  Fortnightly Outlook For Currencies – Page 40
  B-2, 301/302, Marathon Innova,
  Off Ganpatrao Kadam Marg,
  Lower Parel (W), Mumbai - 400 013                 Important Statistics For The Fortnight Gone By – Page 41
  Tel: 022 - 30272300;
  Web: www.nirmalbang.com
                                                    N Rangachary: A Man Of Principles
  We, at Beyond Market welcome your views,          Seventy-two-year-old N Rangachary is a man of actions who lets his work speak for himself. And his
                                                    appointments to various positions in public and private organizations bear testimony to his immense
  comments, inputs and feedback.
                                                    contribution to the insurance and financial services sector – Page 50
  Do help us to grow better as per your liking.
  This is our attempt to reach you better while
  crossing horizons...                              Knowing Is Half The Battle Won
                                                    Half knowledge is always dangerous. More so, if you are in for the long run. Answers to the most frequently
  beyondmarket@nirmalbang.com                       occurring questions will surely help you understand the markets better and also help you play well on the
  Tel No: 022 - 30278232                            bourses – Page 52



  Beyond Market 07th Dec ’10                                                                                                      It’s simplified...
                                                                                                                                                                  3
                                                             A
                                                      ONE-STOP
                                                          SHOP
                                 India’s fourth largest bank in terms of market capitalization acquired the investment banking and
                                 broking arms of ENAM Securities Pvt Ltd recently. With the acquisition of ENAM’s boutique business,
                                 Axis now matches up to the might of its rivals in the security broking business and this will catapult
                                 the bank into the big league. This merger will make the bank strong in corporate finance and invest-
                                 ment banking.

                                 The main objective behind the deal is to create a complete bouquet of financial products and
                                 services for corporate, institutional and individual clients of Axis Bank. Although the deal weighs
                                 heavily in favour of Axis Bank, it is not a raw deal for ENAM.

                                 Due to the competition among smaller players arising out of the entry of new players, it is getting
                                 tougher to survive in the industry. Experts believe that it is a win-win situation for both Axis Bank
                                 and ENAM. However, only time will tell how successful the deal has been and how it will impact the
                                 financial services sector. Due to the enormous importance of the Axis-ENAM deal, we have featured
                                 it as our cover story.

                                 Other important articles include the impact of quantitative easing by the US government, financial
                                 inclusion in India to take banking facilities to the large unbanked population of the country and the
                                 benefits of the better-than-expected GDP number. Sectorally speaking, there are articles on
                                 banking, private healthcare , power transmission and distribution and specialty chemical sectors in
                                 the country.

                                 Further, we have featured telecom major Bharti Airtel in our Beyond Analysis section as the
                                 company has a positive long-term outlook due to the wide range of services it offers and its strong
                                 customer base. The company also merits a mention because it is one of the few companies that are
                                 not involved in the 2G scam. And finally, the Beyond Learning section carries important facts in an
                                 interesting question and answer format that is aimed to inform and educate our readers while
                                 simplifying complex datA.


                                                                                                                 Tushita Nigam
                                                                                                                    Editor


4
    Beyond Market 07th Dec ’10                                                                                It’s simplified...
The markets look good
 above the 6,080 level.




    T
             he Indian stock markets have seen a bounce           be looked at with trading and investment perspectives.
             back owing to the reduced intensity of global
             issues. The markets have moved up on the back        Traders and investors can look at stocks like Tata Motors
    of strong economic data like a better-than-expected GDP       Ltd (LTP: `1,323.10), Bharat Forge Ltd (LTP: `392.80),
    figure, credit growth at 23% and good results for the         Whirlpool of India Ltd (LTP: `290) and Bilcare Ltd
    second quarter 2010-11.                                       (LTP: `657) too for trading and investment purposes.

    Even Foreign Institutional Investors (FIIs) have helped       In the coming fortnight, issues in China and Europe could
    maintain momentum in the markets. Though their partici-       be a cause of volatility in the markets. The probable hike
    pation has been low world over, the FIIs were not major       in interest rates by China to keep inflation under check
    sellers at the time of correction, in the Indian markets.     and the sovereign debt crisis in the Euro region that
                                                                  comprises countries like Spain, Ireland, Italy and Greece,
    The Nifty has support at the 5,910 level. Traders and         may force market participants to remain cautiouS.
    investors are advised to buy at declines at given support
    levels due to the expected volatility in the markets. Nifty
    has resistance at the 6,075 level. However, the markets
    look good above the level of 6,080. If the Nifty crosses
    this level, then the Nifty futures will have support at the
    5,980 level, thereafter.
                                                                  Nifty: 6002.95
    The software and pharma sectors look attractive. Among        Sensex: 19,987.57
                                                                  (As on 3rd Dec ’10)
    software stocks, Infosys Technologies Ltd (LTP: `3,120)
                                                                  Disclaimer
    and Tata Consultancy Services Ltd (LTP: `1,093.05)            It is safe to assume that my clients and I may have an investment interest in
    look good, while Cipla Ltd (LTP: `370.15), Lupin Ltd          the stocks/sectors discussed. Investors are required to take an independent
                                                                  decision before investing. Investment in equity is subject to market risk. Our
    (LTP: `497) Aurobindo Pharma Ltd (LTP: `1,291) and            research should not be considered as an advertisement or advice, professional
    Orchid Chemical & Pharmaceuticals Ltd (LTP: `292)             or otherwise. The investor is requested to take into consideration all the risk
                                                                  factors including their financial condition, suitability to risk return profile and
    appear attractive in the pharma space. These stocks can       the like and take professional advice before investing.


    Beyond Market 07th Dec ’10                                                                                               It’s simplified...         5
                                                                consumption. This is particularly impressive in the wake
                                                                of the 9% average monthly WPI inflation recorded
                                                                during this period.

                                                                Meanwhile, on a y-o-y basis, the government consump-
                                                                tion expanded by a strong 9.19%. Most importantly,
                                                                year-on-year investments increased by a sound 11.08%
                                                                in the latest quarter. “Investment demand, on the other
                                                                hand, enters a critical phase amidst renewed uncertainties
                                                                in the global economy, a squeeze in liquidity in the
                                                                domestic economy and a rising interest rate scenario,”
                                                                the Barclays Capital report states.

                                                                So how does this better-than-expected GDP number
                                                                change the domestic macro picture of the economy?



    E
           ight point nine percent. That is indeed the latest   Despite an average growth of 8.9% in the first half of the
           year-on-year (y-o-y) gross domestic product          current fiscal, economists largely expect the GDP to
           (GDP) growth reported by the Central Statistical     grow at about 8.5% for the full financial year ending
           Organization (CSO) for the quarter ended             March ’11. The reason is that the favourable base will
    September ’10.                                              fade in the coming quarters. But, the good news is that
                                                                the economists are expecting the Reserve Bank of India
    The boom was in full swing and we saw the Sensex            to maintain a pause on policy rate hikes as the manufac-
    breaching the 21,000-mark in early November. But then       turing sector has shown moderation in growth.
    global uncertainties and concerns right from Europe to
    China resurfaced, resulting in the Sensex trading in the    At 8.9%, in the quarter ended September ’10, the year-
    19,300-19,500 zone.                                         on-year industrial sector growth was marginally higher
                                                                than the 8.4% growth in the corresponding quarter of the
    The surprise is a welcome one not just for inching closer   previous year. But it was lower than the 11.3% year-on-
    to almost 9% growth in the second quarter of 2010-11,       year growth in the previous quarter ended June ’10. The
    but because the revised GDP for FY09, after incorporat-     uneven pattern of IIP numbers have depicted the sequen-
    ing changes in the Wholesale Price Index (WPI) and          tial slowdown. Market observers partly attribute this to
    Index of Industrial Production (IIP), has seen a 10 basis   the wearing off of the low base of the previous year.
    point (hundred basis points make a percent) increase in     Going ahead, industry growth is likely to slow down
    the GDP from 8.8% to 8.9% for quarter ended June ’10.       further on the back of a higher base, says an economist.

    In the latest quarter, while the market estimated the GDP   The Reserve Bank of India (RBI), which raised both the
    to be around 8.2%, the services sector largely stayed       repo and reverse repo rates by 25 basis points in its
    strong, while agriculture recorded a turnaround as          mid-term policy review earlier this month, taking the
    expected. Manufacturing on the other hand shed a large      repo and reverse repo rates to 6.25% and 5.25%, respec-
    cyclical uptick and started settling towards a more         tively, made it fairly clear that it would prefer to keep
    sustainable level, points out a Barclays Capital report.    rates on hold at least for the next three months.

    Siddhartha Sanyal and Rahul Bajoria, economists with        “We also expect the central bank to stay on hold for the
    Barclays Capital, in a report say that while the GDP        remaining months of the fiscal year,” states the Barclays
    figure can soften to some extent in the next couple of      Capital report. The September IIP number of 4.4%
    quarters on lower IIP numbers and subdued export            (year-on-year) was a significant downside surprise.
    demand, they believe FY11 GDP growth is set to cross        “While the current GDP print had been a surprisingly
    the 8.5% mark, surpassing the forecasts of the govern-      strong one, we do not expect that to meaningfully alter
    ment and the RBI.                                           the stance of the central bank,” the report adds.

    Rising income (including rural income) and steady           For the markets, global macroeconomic weaknesses and
    consumer confidence that consumption will continue to       their contagion effects and impact on risk appetite will
    stay strong are likely to remain the primary source of      prove to be the main headwind. “Barring inflation
    growth. The numbers push themselves to make one             situation, the Indian economy is good to go,” says Sunan-
    believe that consumption grew by a strong 9.27% on an       dan Chaudhuri, Economist at global investment bank
    annual basis, led by a 9.28% annual growth in private       Execution Noble. Of course, things look good for noW.

6
    Beyond Market 07th Dec ’10                                                                           It’s simplified...
                                   E
                                             arly in November, the United States Federal
                                             Reserve (Fed) announced its much awaited
                                             second round of quantitative easing (QE2) of
                                             $600 billion to stimulate the economy and cut
                                   its high unemployment rate.

                                   The Fed has said that it will buy long-term treasury
                                   bonds until the end of June ’11 to increase money supply
                                   in the system. This increase in money supply is expected
                                   to keep interest rates low and stimulate borrowing and
                                   spending activities in the US economy.

                                   Quantitative easing is an extreme type of monetary
                                   policy used to stimulate an economy when normal
                                   methods to control money supply have failed.

                                   The US economy has come out of the 2008-09 recession
                                   but problems like slow growth, high unemployment and
                                   disinflation persist. Economists feel that if this situation
                                   continues, it might lead to another recession, which could
                                   be longer than the recent one. This explains the Fed’s
                                   efforts to stimulate growth by infusing liquidity.

                                   The problem is that quantitative easing has not delivered
                                   the desired results. Instead of improving the US




      A Double-Edged Sword
     Experts are of the opinion
                                   economy, the excess liquidity has found its way into
     that the second round of      emerging economies, which have higher interest rates
     quantitative easing by the    that give higher returns.

     US could further weaken       Net private capital flows to emerging Asian economies
                                   are expected to reach more than $270 billion in 2010 and
     the dollar, increase          the same in 2011, according to the Institute of Interna-
     in ation as well as oil and   tional Finance. The huge inflows have driven up
                                   inflation, oil and commodity prices. International
     commodity prices in the       agencies such as the World Bank and the International
     emerging economies            Monetary Fund (IMF) are worried. In April this year, the
                                   IMF warned that Asia is attracting capital inflows that
                                   may cause the region to overheat and lead to the forma-
                                   tion of asset bubbles.

                                   India, like many other emerging economies, is trying to
                                   cope with huge capital inflows that it is attracting from
                                   the US. Foreign institutional investors have put in over
                                   `1 trillion in Indian stock markets in the current year.
                                   The hot money has inflated the markets to all-time highs.

                                   In the last one year, since March ’09, when the US first
                                   injected $1 trillion into its economy through quantitative
                                   easing, the Indian benchmark index, the Sensex has risen

Beyond Market 07th Dec ’10                                                    It’s simplified...   7
    by 104.61% from 9,708.50 points in March ’09 to 19,930        situation. Liquidity left unsterilized will fuel inflation
    in November this year.                                        and if sterilized, it will put upward pressure on interest
                                                                  rates which will hurt the export sector and encourage
    In September, after a gap of two years, the Sensex            more inflows, Subbarao said.
    touched the 20,000 mark. The last time the index had
    reached this level was in December ’07, before the            Experts say that the second round of quantitative easing
    markets crashed in October ’08. The markets have again        could further weaken the dollar, increase inflation and oil
    picked up steam since March ’09, after the Fed                and commodity prices. Inflation rates are still high in
    announced its first round of quantitative easing.             emerging economies like India at 12% and 7% in Brazil.

    The doubling of the Sensex has raised concerns about a        A continued low interest regime in the US means that
    possible capital market bubble that could burst when          there is too much money chasing commodities, which is
    foreign institutional investors pull out of their invest-     pushing up commodity prices. India imports many
    ments. This could happen if investors get concerned over      commodities, which means that a further rise in
    India’s widening current and fiscal account deficit.          commodity prices will increase India’s import bill, which
                                                                  will, in turn, widen the current account deficit.
    The current account deficit widened to 2.9% in 2009-10
    from 2.4% of gross domestic product (GDP) in 2008-09.         In the recent G20 summit held in Seoul, emerging econo-
    In the June quarter, the current account deficit widened to   mies raised concerns over the spill-over effects of quanti-
    $13.7 billion, which was around 3.7% of India’s GDP.          tative easing. In fact, emerging economies have started
                                                                  using capital control as a tool to restrict the inflow of hot
    The problem is that India is using capital inflows rather     money. Capital control is the use of transaction tax or
    than Foreign Direct Investments (FDIs) to finance the         other limitations to regulate the flows into and out of the
    current account deficit. “Capital flows are largely financ-   nation’s capital account.
    ing the current account deficit,” the Minister of State for
    Finance, Namo Narain Meena, told Rajya Sabha in a             Countries like Brazil, China, Taiwan, Thailand, South
    written reply on 16th November this year.                     Korea and Indonesia are using capital controls to limit
                                                                  inflows. Thailand, for instance, introduced a tax on
    Goldman Sachs estimates the current account deficit will      foreign holdings of government bonds to restrict inflows.
    widen to 4% of GDP in the current fiscal year, from 2.9%      The problem with such controls is that investors often
    in the previous year and to 4.3% in 2011-12, its highest      find ways to evade them and the excess liquidity could
    level ever. “While we remain constructive on India’s          then find its way into other financial instruments.
    medium-term growth outlook, the deterioration in
    external balances represents the biggest risk, in our view,   The other solution could come from the US itself if it
    to the Indian growth story and one that investors should      starts regulating the outflow of capital. This is in fact a
    follow closely,” Goldman Sachs said in a note recently.       much preferred alternative because this would keep
                                                                  excess liquidity within the US, which could then be used
    The figure put out by Goldman Sachs is slightly more          for investment in the domestic economy.
    than government estimates. In October, India’s Planning
    Commission Deputy Chairman Montek Singh Ahluwalia             India has so far not considered capital control as an
    had said that the government expects the current account      option to regulate inflows. Recently, the Prime
    deficit for 2010-11 to be above 3% and that the economy       Minister’s Economic Advisory Council Chairman C
    can manage a deficit of 3-3.5% of GDP.                        Rangarajan had said the time for curbing capital inflows
                                                                  has not yet come since India has the capacity to absorb
    According to Goldman Sachs, a reversal of capital             $70 billion during the year.
    inflows, because of risk aversion by investors could lead
    to “a sharp sell-off in currency, bonds, equities and cause   The RBI has said it may intervene in the Forex market if
    a liquidity crunch resulting in a sharp decline in output.”   inflows become volatile. India is worried that capital
                                                                  controls could result in a flight of capital, which is why
    The other problem caused by capital inflows is rupee          the government is in a wait and watch mode.
    appreciation, which hurts the competitiveness of the
    export sector. The Indian rupee has appreciated by            Will India eventually resort to capital controls? The
    around 5% this year against the US dollar. In a recent        move, if it happens, is likely to have a big bearing on the
    speech, Reserve Bank of India Governor D Subbarao had         markets because if capital control is exercised, the
    said that intervention in the forex market, to prevent        current bull run led by foreign money could come to an
    currency appreciation, involves costs. It is a Catch-22       end. The investors should, therefore, tread cautiouslY.

8
    Beyond Market 07th Dec ’10                                                                                It’s simplified...
Everybody’s Invited
  Financial inclusion can integrate the unbanked portion of rural India into the
 mainstream economy to boost household incomes and have a multiplier effect
                      on the demand of goods and services




 F
           inancial inclusion is the availability of banking,   A large part of the financially under-served segment
           credit facilities and a whole gamut of financial     resides in rural India, which encompasses almost six lakh
           services at an affordable cost to people from        villages across the country. The integration of rural India
           low income groups and other vulnerable strata        into the economic mainstream will not only boost the
 of the society in an equitable manner.                         income of rural households but also have a multiplier
                                                                effect on the demand for goods and services, while
 Extending credit and banking services to the previously        promoting financial inclusion.
 unbanked population can improve productivity and
 self-sufficiency among people. Financial inclusion             Financial Inclusion – An Integral Part Of Banking
 encompasses the ability to reach out to remote areas
 where traditional banking networks are absent and              The broader process of achieving inclusive growth serves
 deliver the required products and services.                    the purpose of focusing on the poor and disadvantaged

 Beyond Market 07th Dec ’10                                                                               It’s simplified...   9
     population from priority sectors such as the small and        on the correspondents’ recommendations.
     medium enterprises and the farm sector that do not have
     formal financial institutional support in remote villages     Furthermore, the banks may also engage individuals like
     and towns. Hence, getting them out of the clutches of         retired bank and government employees, individual
     local moneylenders and other informal mediums of              Public Call Office (PCO) operators, agents of Small
     finances is important.                                        Savings Schemes of the government of India/insurance
                                                                   companies and authorized functionaries of well-run Self
     The exposure of the underprivileged section to high           Help Groups, which are linked to banks, among others.
     interest levying by informal credit sources does not leave    As many as 130 such correspondents that were appointed
     them with any scope for savings. Whatever little surplus      till last year opened 90 lakh accounts, according to the
     they generate cannot be put to secure savings and make        available data.
     their investments productive. However, through financial
     inclusion, the banks can provide customized credit            Recently, the RBI also allowed for-profit companies with
     products at affordable costs in a banking environment         large and widespread retail outlets to act as BCs to
     that will be suitable to them.                                deepen and broaden the financial inclusion mandate. A
                                                                   corporate is likely to continue as a BC for a longer period
     Apart from meeting the social objective, financial            than individuals, thus ensuring continuity of services.
     inclusion also provides a business opportunity to finan-
     cial institutions to expand business volumes and tap          The government is also seeking a larger role for
     newer avenues, at the bottom of the pyramid that needs to     non-banking financial companies (NBFCs). It wants
     be sustainable.                                               NBFCs to be allowed to function as Business Corespon-
                                                                   dents in urban areas to provide financial services to the
     Through Geographic Spread                                     urban poor. In its guidelines, issued in September, the
                                                                   central bank had barred banks from appointing NBFCs as
     The nationalization of major commercial banks in 1969         BCs, citing a possible conflict of interest with deposit-
     was an important landmark in the history of financial         taking entities.
     inclusion, which led to a significant expansion of bank
     branches to the under-banked areas. However, despite          Through ‘No-frill Accounts’
     focused expansion of branches in the rural and semi-
     urban areas, India has not been able to reach out to poor     To achieve the goal of financial inclusion, the govern-
     farm households to the desired extent.                        ment should work towards providing an environment
                                                                   where banks are free to undertake necessary innovations
     Considering the sheer size of the population and the          to reach low-income consumers and yet make profits. At
     geographic spread, neither the existing branch-based          the same time, new entrants in the banking sector should
     infrastructure nor the standard financial products are        be strong, well-capitalized to promote a cost-effective
     optimal to meet the financial needs of the rural populace     medium to drive sustainable economic growth.
     because of limited reach, inadequate technology and
     higher intermediation costs.                                  It is crucial to ideate schemes that incorporate the
                                                                   excluded weaker sections of the society for further
     The government aims to increase access to banking             accentuating the process of their access to financial
     services across geographies through information and           services that will ensure a better standard of living and a
     communication-based models and by adding new                  regular income.
     players. The government’s stated intention is to ensure
     that every village with a population of more than 2,000       The drive for financial access received a boost in 2005-
     individuals, as per 2001 consensus, be brought under the      06 when the RBI called upon Indian banks to design a
     banking fold by March ’12.                                    ‘no-frills account’ – a no precondition, low ‘minimum
                                                                   balance maintenance’ account with simplified KYC
     Through Business Correspondents                               (Know Your Customer) norms - to bring a large section
                                                                   of underprivileged people into the banking net.
     To further the reach of the banking community innova-
     tively, banks can also forge alliances and synergies with     Thus, a daily wage earner owning a deposit account in a
     specific microfinance institutions (MFIs) and organiza-       bank, who until now had no access to formal banking
     tions of Self Help Groups (SHGs) among other eligible         systems, can well be brought under the umbrella of credit
     intermediaries as Business Correspondents (BCs) where         and savings. While no-frill accounts have grown
     they undertake the promotional role of identifying the        phenomenally, the main issue before banks is to keep
     client base and then the bank finances the clients directly   these accounts operational.

10
     Beyond Market 07th Dec ’10                                                                              It’s simplified...
      Through Core Banking Solutions                                  must also include a plethora of banking services such as
                                                                      loans and insurance services, pension, payment and
      The use of technology in expanding the banking outreach         remittance facilities, besides normal banking services.
      has been an area of focus for the Reserve Bank of India.
      Banks and financial institutions rely on gathering,             Through Mobile Banking
      processing and analyzing information in order to
      improve their service and meet customer expectations.           The number of telecom subscribers in India stands at a
      Banks have been quick in realizing this and adopting            mind-boggling 650 million individuals. And mobile
      technology in a big way.                                        seems to have broken the social barrier in terms of
                                                                      outreach. It could thus prove to be an extremely effective
      A good portion of the banking system is now under the           alternative channel through which banking services can
      Core Banking Solution (CBS). Further, as per an RBI             be delivered to those who would otherwise have
      directive, all Regional Rural Banks (RRBs) have to              remained outside the purview of the financial system.
      migrate to CBS by September ’11. From software
      technology and delivery point of view, a hosted or              According to a McKinsey report of March ’10, in a
      software-as-a-service model keeps IT operations lean.           country where more than 65% of the population has
      Also, operational and capital expenditure required to set       limited or no access to a bank, one out of every two
      up its own infrastructure stays low.                            persons own a mobile phone or a TV. A secured mobile
                                                                      banking technology will provide flexibility to the bank’s
      The visible benefits of IT in day-to-day banking in the         agents in terms of mobility and assurance to the bank that
      country are quite well known. The ‘Anywhere Banking’            online transactions will get.
      through Core Banking Systems, ‘Anytime Banking’
      through ATMs and Net Banking are increasingly becom-            This coincides with the growing realization, globally, of
      ing an integral part of the services that are provided by       the need for developing countries to put mobile technol-
      the banking community.                                          ogy to optimum use to serve the underprivileged and
                                                                      unlock their savings and investment potentials. From the
      The use of IT reduces the cost of financial transactions,       bank’s perspective, a business opportunity worth $8
      improves allocation of financial resources and increases        billion on an annual basis in the form of direct and
      competitiveness and efficiency of financial institutions.       indirect revenues for financial services rendered when-
      Centralized technology applications will enable transac-        ever someone uses the mobile phone to make a purchase
      tions through hand-held front-end devices by seamlessly         or P2P payment, needs to be tapped.
      integrating it with the main server of the concerned bank.
                                                                      In a nutshell, inclusive financial sector development will
      Through Different Channels Of Savings                           alleviate poverty, provide affordable services and foster
                                                                      economic growth. Moreover, it will inculcate the habit of
      The RBI soon realized that having a savings account to          mobilizing savings and lead to the growth of productive
      not enough to achieve the primary objective. It, therefore,     sectors in the country.
      broadened its scope of financial inclusion by shifting its
      focus beyond extending institutional credit.                    Co-operatives and RRBs need to actively participate as
                                                                      local level institutions through which financial inclusion
      The under-served must also have access to products that         of the masses can be achieved. Financial inclusion can
      channelize their savings into growth-oriented schemes.          address concerns of growth with equity and also ensure
      Thus, the portfolio of the product offerings by banks           the growth of the pooR.




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      Beyond Market 07th Dec ’10                                                                                                        It’s simplified...                11
     A
     Prize
     Catch
     With the merger of ENAM’s boutique
     business, Axis now matches up to the
     might of its rivals in the security broking
     business and this will catapult the bank
     into the big league




                                                   O
                                                                n 17th November this year, Axis Bank
                                                                announced the merger of the investment
                                                                banking and equities business of domestic
                                                                financial major ENAM Securities with itself,
                                                   in an all-stock share-swap deal.

                                                   Axis Bank will issue 13,782,600 shares (3.3% of
                                                   enlarged share capital of Axis Bank) in exchange for
                                                   ENAM’s 2,418,000 shares, resulting in a share ratio of
                                                   5.7 shares of Axis Bank for every one share of ENAM.
                                                   The stipulated ratio values ENAM at `8,379 per share,
                                                   valuing the total deal at approximately `2,027 crore, at
                                                   Axis Bank’s current market price of `1,469 per share.

12
     Beyond Market 07th Dec ’10                                                  It’s simplified...
With this deal, Vallabh Bhansali co-founder and                 transaction worth as much as `2,300 crore.
chairman, ENAM Group and Shikha Sharma, chief
executive and managing director of Axis Bank, the third         HDFC Bank bought regional lender Centurion Bank of
largest private sector bank in the country, created a flutter   Punjab in July ’08 for `7,120 crore in India’s biggest
in the financial world.                                         banking acquisition. With this acquisition of ENAM’s
                                                                boutique business Axis now matches up to the might of
After having built a formidable domestic investment             its rivals in the security broking business and will
bank over the past two decades and recently lead                catapult the bank into the big league.
managed the successful `15,000-crore Coal India IPO,
Bhansali chose to hang up his boots in the investment           ENAM ranks third among equity-underwriters in India in
banking business.                                               mergers and acquisitions. It is ranked ninth among advis-
                                                                ers, while Axis isn’t in the top 20. ENAM, on the other
Shikha Sharma, whose appointment for the top job at             hand, gets access to the bank’s large franchise.
Axis Bank was looked down upon by her predecessor
barely a couple of years ago, silenced her critics and took     With minimum overlapping of business, the synergies
competition by surprise.                                        will be accretive in the long run. Analysts point out that
                                                                with ENAM Securities coming under the fold of Axis
After having used her time at the bank to strengthen the        Bank, it will now give the much needed shot in the arm to
balance sheet and raise capital, she spearheaded a strate-      the fee-based income of the bank.
gic move by lapping up the boutique business of ENAM.
ENAM which means prize in some Indian languages,                PREMIUM JUSTIFIED
occupies a sizeable share in the equity capital market
business, a space in which Axis hasn’t been able to make        The low component of the fee-based income of the bank
much of a dent.                                                 has been the reason why Axis Bank has been trading in
                                                                the 2.8-2.9 times price to book value (P/B )as compared
WINNING SYNERGIES                                               to even smaller private banks like Kotak Mahindra Bank
                                                                that is trading at 4 times P/B.
The proposed merger means that ENAM’s broking,
investment banking, financial products distribution and         With the distribution reach of ENAM and its expertise in
advisory business will now be a part of Axis Bank’s             the securities broking business, the fee income pie of
wholly-owned subsidiary, Axis Securities and Sales Ltd.         Axis Bank is expected to increase and see the gap in P/B
As many as 400 employees of ENAM will also move on              with peers narrowing down. At first glance, the deal
to this entity as part of this deal.                            appears to be expensive.

The bank on its part will demerge its I-banking unit and        On an annualized basis, the profits work out to a big sum,
merge it with this wholly-owned subsidiary. The merged          implying that the valuations are a little lower over 20x
entity will be headed by Manish Chokhani, the erstwhile         FY11E earnings.
director of ENAM, while two other founder members,
Vallabh Bhansali and Jagdish Master will join the Axis          This is at a 25% premium to comparables like other listed
Bank board as independent directors.                            brokerages such as Motilal Oswal. However, analysts
                                                                point out that this should be seen in the context that such
The two entities have also entered into a non-compete           deals are usually executed at a large premium (of at least
agreement for the sell side business for a period of five       10-20%) on account of the synergies involved.
years. Besides, the senior executives of ENAM have a
binding to stay on with Axis Bank for at least the next         Also, the acquisition size is just 3.3% of the market
two years to develop the investment banking business.           capitalization of Axis Bank and is unlikely to materially
                                                                impact the bank valuations either way. Besides, it needs
However, the buy side business of ENAM that includes            to be kept in mind that since the deal is a share-swap deal
asset management and portfolio management services              where no cash changes hands and the promoters of
remains separate and does not form a part of this deal.         ENAM have a restriction of holding on to the stocks of
                                                                Axis Bank for at least a year.
With this deal, Axis comes at par with its other private
sector peers such as ICICI Bank and HDFC Bank. Axis’s           While analysts seem to be giving a thumbs up to the deal
rivals have made acquisitions in recent years to add            as of now, there are a few risk factors, as well. Firstly, the
clients and outlets. ICICI Bank bought smaller rival            success of the deal is contingent upon the retention of the
Bank of Rajasthan, in August through a share-swap in a          key personnel of ENAM’s sell side team.

Beyond Market 07th Dec ’10                                                                                   It’s simplified...   13
     While the senior management of ENAM has agreed to                conservative company, primarily a profit and loss
     stay on for at least two years, any loss of talent will result   account company.”
     in lower-than-anticipated performance. A lot will depend
     on the Axis Bank business and HR policies that ought to          THE INDUSTRY IMPACT
     ensure that the integration goes on smoothly.
                                                                      The Axis Bank-ENAM deal has also fuelled murmurs of
     The other and more palpable worry is in the wake of              possible consolidation in the industry. The industry
     declining margins in the broking business. It will be            positioning of both banks and brokerages is such that
     difficult to sustain the robust historical performance of        more marriages between them would be essential if they
     ENAM’s broking and I-Banking business.                           need to grow at a speed their shareholders would be
                                                                      happy with.
     I-Banking business is facing severe competition with
     commission and fees dipping to miniscule levels as was           The ENAM deal could lead to a second round of transfor-
     evident during the recent PSU disinvestment programme            mation in the financial services industry in about two
     and FPOs. However, given Axis Bank’s strong expertise            decades. In the first round, Kothari set the trend by
     in corporate banking, the merger with ENAM will enable           selling a partial stake to Merrill Lynch. Uday Kotak
     the bank to offer a complete bouquet of financial                partnered with Goldman Sachs, Nimesh Kampani of JM
     products and services.                                           Financial with Morgan Stanley and Murarka of Batlivala
                                                                      & Karani with HSBC. SBI Capital Markers flirted with
     Calling the deal a “fantastic strategic fit”, Sharma             Lehman Brothers and later CLSA.
     explained that after project finance, infrastructure and
     debt capital markets, which the bank is sure footed in,          None of the marriages survived. Successful brokerages
     ENAM gives the bank the much needed share of equities.           may be seen as candidates ripe for takeover by banks as
                                                                      these would have better reach when backed by funds that
     Gaurav Gupta, managing director and head Macquarie               are plenty with banks.
     Capital Advisors, India, the investment bank which
     advised Axis Bank in clinching the deal said, “As Indian         Currently, while the number of pan-India brokerages
     banking moves towards the universal banking model,               (medium to large players) is over 25, there are many
     ENAM fills the gap in Axis Bank’s portfolio and offers           standalone players. There are quite a few triggers that
     significant synergies.”                                          could lead to consolidation (mergers and acquisitions) in
                                                                      the industry.
     Bhansali, on his part, is clear that he is not “cashing out”.
     Rather he considers Axis Bank a “fabulous investment”            Among key reasons is the intensifying competition and
     and is looking forward to creating greater synergies. A          rising costs, which are putting pressure on the margins.
     fellow investment banker who has been in the business            Despite fairly healthy revenue growth, profitability of
     for more than three decades and has had the chance to see        brokerages has been under stress for several quarters.
     Bhansali up close, points out that unlike the famed ego of       Margins have contracted on a quarter-on-quarter (q-o-q)
     bankers, Bhansali has always been known for his                  and year-on-year (y-o-y) basis.
     pragmatic approach.
                                                                      Industry experts feel consolidation is surely on the cards
     “It was not like he had to swallow his pride to sell off         and expect the standalone players to have a tough time
     what he had built over the years. He has done what was           surviving in this low profitability business amidst
     best to take things forward for both his customers and his       intensifying competition as the bigger players aggres-
     employees,” points out a senior banker who did not wish          sively want to expand their reach.
     to be identified.
                                                                      According to experts, the next deal in this space could
     ENAM had almost everything needed to transform itself            possibly be some foreign player buying out an Indian
     into a top-rung investment bank. It had an army of               brokerage for its distribution skills. Overall, it is being
     experienced, loyal bankers, a decent client list and had         estimated that in the next 5 to 10 years, the industry will
     just raised `2.7 trillion in six days as part of the             shrink to around 10 large players and some region-
     government’s asset sale programme.                               specific small brokers.

     “We had two options - either get a banking licence or be         While the consolidation would pan out over the medium
     a part of the bank,” says Bhansali. The lack of a balance        to long-term, the near-term prospects of brokerage firms
     sheet was what persuaded him. “I look at what regulators         are not very bright, suggesting that their stocks would, at
     say (rather) than my rivals,” says Bhansali. “We are a           best, move in line with the broader marketS.

14
     Beyond Market 07th Dec ’10                                                                                 It’s simplified...
    IPO:
  SIMPLE
    YET
POWERFUL
     Investing in IPOs is a suitable method for those investors who
      want to follow a simple strategy of ‘invest and exit’ on the
              listing date during a bull run on the bourses




T
         he Indian equity markets witnessed a strong        deposits are also attractive.
         growth momentum up till the past few weeks,
         in the last one year. While some sectors outper-   The rising interest rate environment has provided oppor-
         formed the benchmark indices, others under-        tunities to investors with products like SBI bonds, L&T
performed at the same time. The performance varied          infrastructure bonds offering attractive yields. And by
depending on the size of the companies – large, mid or      any measure, these are relatively safer investments.
small-cap stocks.                                           Hence, if investors expect to earn superior returns from
                                                            the equity markets, they need to follow a suitable
Although many investors are believed to have made a         strategy, which is best suited in a bull market, depending
killing during the rally, there may be others whose         on their risk appetite.
portfolio may not have moved anywhere.
                                                            Out of the several options available, IPOs (initial public
For instance, telecom stocks have largely underper-         offerings), including FPOs (follow-on public offerings),
formed the market in the last one year. What this means     are an option that investors can consider.
is that by simply remaining invested in the equity
markets may not ensure good returns even during a bull      An analysis of all the IPOs (which also include FPOs)
run. It becomes more important at a time when the           that have come to the market during this year reveals that
returns from alternative instruments like bonds and fixed   investors had the chance to double their money by churn

Beyond Market 07th Dec ’10                                                                           It’s simplified...   15
     ing money continuously in all the IPOs. Not to forget,         Return Distribu on Of IPOs
     this return could have been far superior by taking some
                                                                                    25
     additional amount of risk. Such returns could have                             20
     outperformed many leading benchmark indices and this




                                                                     No Of Issues
                                                                                    15
     is a superior return by any measure.                                           10
                                                                                    5

     For instance, if a person had mimicked the portfolio                           0
                                                                                         Less then 0%   0% to 5%         5% to 10%       More than 10%
     exactly as any benchmark index like Nifty50 or Sensex,                                                  Lis ng Premium
     then the return would not have been more than 20%. And         Source: NSE
     as far as diversification is considered, both strategies
     provide almost a similar level of diversification.             Simply put, an investor with a starting amount of
                                                                    `50,000 in the beginning of the year would have ended
     However, what makes the IPO strategy more attractive is        with close to `1.1 lakh, almost double his money. While
     that it is simple yet very powerful. The retail investors      making this calculation, it was considered that investors
     with very little knowledge about companies’ business           would take roughly 20-30 days time period to realize
     performance, or little time to track markets regularly and     their money.
     are not quite conversant with financial gimmicks, can
     follow this simple rule and can make decent amount of          It means that on an average, there will be a 20-30 days
     money. Just like any other investment in the equity            gap between the issue closing date and the listing date.
     markets, this strategy does not guarantee similar kind of      And there were roughly 4-5 issues in a month. The inves-
     returns all the time.                                          tor could have divided his initial investment amount of
                                                                    `50,000 in five compartments, each containing `10,000.
     For instance, if the equity markets start moving down-         The first `10,000 could have been invested in the first
     wards in the coming months, then the returns would also        issue, the second `10,000 in the second issue and so on.
     be lower. However, in such a scenario, investors would
     also benefit little by investing in equity markets. It means   It was also assumed that the allocation for each issue is in
     those investors who are keen to put their money in the         the ratio of 1:2 only. In this way, one can churn the
     equity markets, may find this strategy more useful.            money and invest in almost all the IPOs. One should also
                                                                    remember that this is for illustration purpose only and
     As many as 53 issues have been analyzed here. Out of           exact factors may vary from what is assumed above.
     these 53 issues, only 8 have given negative returns on
     listing. This means that there is an 85% chance that an        If investors want to maximize their returns further from
     investor would earn a positive return in a bull market by      the IPO strategy, then there is a way out too. But to
     investing in an IPO. The amount of return, however, can        execute this strategy, investors have to track the stock
     vary by a great deal.                                          price closely and exit at a suitable point of time.

     A little more than one-third of the total issue has given a    Let’s look at what could happen if investors do not exit
     return of 0 to 5%, whereas another one-third gave more         immediately after listing and rather wait for some more
     than a 10% return on the listing date.                         time, anticipating stock prices to move up further.

     Though these numbers in themselves look small, a return        In this sample analysis, it was found that barring four
     of 5-10% every month means a compounded return of              issues, in all the other cases, the stock price reached a
     more than 200% per year, which is way above the                level which was higher than the listing price. It means
     average expected return of 20-25% in the emerging              that if investors had waited for some more time, there
     equity markets.                                                was more than 90% probability that they would have
                                                                    made more money than listing premium.
     In addition, investors may come across issues where the
     listing gain could be close to around 40-50% or in some        In more than one-third cases, the investors could have
     cases, even in triple digits. Though the number of such        made more than 50% returns. And in almost half the
     issues may be less, they give a significant push to the        cases, the returns could have been more than 20%.
     overall return.
                                                                    For instance, stocks like Bedmutha Industries, BS Trans-
     For instance, issues like NMDC (National Mineral               comm, Microsec Financial Services, Prakash Steelage,
     Development Corporation), ARSS Infrastructure                  Aster Silicates, Mandhana Industries, Talwalkars Better
     Projects and Career Point Info Systems offered returns of      Value Fitness, United Bank of India and NMDC either
     roughly 45% on listing date.                                   doubled or tripled within days of listing. Since the down

16
     Beyond Market 07th Dec ’10                                                                                                      It’s simplified...
      side in a bull market is limited, the returns could have                                                                                                                                      exponential. Almost half the stocks nosedived by more
      grown exponentially by exiting at these prices.                                                                                                                                               than 20%. This means that investors need to be careful
                                                                                                                                                                                                    and patient if they are planning to hold stocks beyond the
      Maximum Possible Gain                                                                                                                                                                         listing date.
                        18
                        16
                                                                                                                                                                                                       Worst Case Scenario
                        14
                        12                                                                                                                                                                                             16
         No Of Issues




                        10                                                                                                                                                                                             14
                         8                                                                                                                                                                                             12




                                                                                                                                                                                                        No Of Issues
                         6                                                                                                                                                                                             10
                         4                                                                                                                                                                                                8
                         2                                                                                                                                                                                                6
                         0
                                                                                                                                                                                                                          4
                                0% to 10%                   10% to 20%                    20% to 30%                   50% to 100%                More than 100%                                                          2
                                                                                       Maximum Gain                                                                                                                       0
                                                                                                                                                                                                                                            More than 0%                                             0% to -10%                                           -10% to -20%                                           -20% to -50%                                            Less than -50%
      Source: NSE
                                                                                                                                                                                                                                                                                                                                                         Maximum Loss

       While the upside potential looks very lucrative, one also                                                                                                                                       Source: NSE

       needs to check the downside risk while timing the                                                                                                                                             Investors should note that this analysis is to demonstrate
       market. The prices of many of these stocks slipped down                                                                                                                                       how IPOs can be a suitable method for those investors
       and reached the red territory. Nearly 29 out of 53 stocks                                                                                                                                     who want to follow a very simple strategy of ‘invest and
       gave negative returns at their lowest price level after the                                                                                                                                   exit’ on listing date. In a bull market, this could generate
       listing date.                                                                                                                                                                                 decent returns. But there are also opportunities where
                                                                                                                                                                                                     investors can earn higher profits but they need to take
       Like the positive returns, the negative returns were also                                                                                                                                     additional risk since it entails higher risK.




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      Beyond Market 07th Dec ’10                                                                                                                                                                                                                                                                                                                                                                                                        It’s simplified...                                                                                  17
           The banking sector always has its evens and odds,
            and like always, it does not seem to be at peace



     W
                     hen interest cycles turn, a banker is happy      As for the sectoral deployment of gross bank credit, there
                     and sad, both. A borrower, on the other          has been a significant improvement in credit flow to
                     hand, wishes that the rate remains low so        industry, services and personal loans during the current
                     that he will have to shell out less for more.    financial year, while credit to the agricultural sector has
                                                                      seen a decline.
     Similarly, a depositor wishes that the rate remains high
     so that he will get more for less. Thus, life for a banker,      According to the Reserve Bank of India (RBI), a look at
     who is in the business of taking money from one and              the disaggregated data, however, suggests that the credit
     giving to another, with an eye on profit, is not easy.           flow to the industry is not yet broad-based as the growth
                                                                      is mainly driven by flow of credit to the infrastructure
     For the banking sector and the investors therein, there          sub-sector, iron and steel, chemicals and chemical
     have been reasons to cheer and be cautious about. The            products, other metal and metal products as well as
     improving macro economic sentiments reflected in the             engineering industries.
     momentum of credit growth across all bank groups, with
     private banks showing the highest growth rate at the             On the lending side, the aggregate y-y-o bank credit
     beginning of the third quarter of 2010-11. On the other          growth of 21.6% as of 2nd Jul ’10 was mainly on account
     hand, public sector banks accounted for 74% of                   of large borrowings for 3G spectrum and broadband
     incremental credit offtake on a year-on-year (y-o-y) basis       wireless access auctions.
     at the beginning of October ’10.
                                                                      “Credit growth is expected to be about 20% for 2010-11
     For the six months ended September ’10, the banking              as high capacity utilisation levels will require capital
     sector recorded robust growth in core income led by an           investments and increase in infrastructure credit
     increase in margins. But despite a sharp increase in the         disbursements for projects where sanctions have been
     net interest income, or NII as it is better called, the profit   received,” says a Crisil research report.
     growth was slightly subdued due to an increase in non
     performing assets (NPA) provisions and a decline in              “Also, given the festive and agricultural harvest seasons
     treasury income.                                                 in the second half of the year, credit growth is expected
                                                                      to remain stable,” the report adds. As per latest data
     While provisioning has shot up due to concerns of                released by the RBI, the aggregate bank credit grew by
     delinquencies and also because of no further extension of        22%, y-o-y, up to 5th Nov ’10.
     loan restructuring that was introduced in the aftermath of
     the global financial crisis, higher interest rates are the       On the deposit side, despite an average hike in deposit
     reason for treasury income showing an across-the-board           rates by 50 basis points (hundred basis points make a
     decline in the banking sector.                                   percent) in the first half of the current fiscal year, the

18
     Beyond Market 07th Dec ’10                                                                                 It’s simplified...
deposit growth rate has been around 14-15% till October       loans, the central bank has proposed an increase in the
this year.                                                    standard asset provisioning by commercial banks for all
                                                              such loans to 2%, which was just 0.4% earlier.
The annual deposit growth that stood at 15.3% as on 5th
Nov ’10 is much lower than 18.7% growth clocked a year        While asset quality has been under pressure for some
ago. “This is primarily because investors are preferring to   time, which has led to higher provisioning, the newer
channelize their savings to other avenues on account of       provisioning requirements would just add to the burden
negative real interest rates on bank deposits,” says the      on the banks’ net interest margin (NIM).
Crisil research report.
                                                              So far, the hikes in lending rates and implementation of
Given higher inflation and, hence, negative real interest     base rates have cemented the increasing trend in net
rates on deposits, depositors have been induced to both,      interest margins on the lending side.
hold currency and invest in non-financial assets, includ-
ing gold and real estate, whose prices have shown signifi-    And on the deposit front, the near-stable current account
cant increases over the course of the current year.           - savings account (CASA) ratios coupled with re-pricing
                                                              of deposits aided the margin growth of banks. However,
As part of its prudential measures, in the latest policy      tight liquidity conditions in the current quarter and a
review, the Reserve Bank of India tweaked a few norms         possible increase in the deposit rates, the banks’ margins
pertaining to housing loans, which will make the              could shrink by about 15-20 basis points over the next
environment more challenging for the sector. So far,          two quarters.
there were no regulatory ceilings on the loan to value
(LTV) ratio in respect of banks’ housing loan exposures.      Outside these challenges, add the negative news about
                                                              the microfinance sector, which has a lot of banks’
In order to prevent excessive leveraging, the RBI has         exposure lined up to it. And the recent newsbreak of the
decided that the LTV ratio in respect to housing loans        Central Bureau of Investigation’s announcement of the
should not exceed 80%. The banks, as part of prudential       arrest of eight individuals, including executive officials
norms, are required to make proactive provisioning for        at Bank of India (General Manager) and Punjab National
the loans extended by them.                                   Bank (Deputy General Manager) apart from a
                                                              non-executive, independent director at Central Bank of
So far, the risk weight for provisioning on residential       India, in a bribery scam.
housing loans up to `30 lakh with LTV ratio up to 75%
was 50% and 75% for loans above `30 lakh.                     While not many expect this to spiral into a sizeable
                                                              balance sheet risk, the credibility risk is definitely higher
For loans where the LTV ratio is more than 75%, the risk      and is likely to take a toll.
weight of all housing loans, irrespective of the amount of
loan, is 100%. In the recent policy, the Reserve Bank of      A Fair Comparison
India increased the risk weight for residential housing
loans of `75 lakh and above, irrespective of the LTV
ratio, to 125%.                                                                                                                                                                                                                                                                                      13477.92



And that’s not the end of the proactive measures of the
central bank. Ever since the interest rates started inching
                                                                                                                                                                                                                                                                                                     19459.85
                                                                        17558.73


up, a lot of banks were following the practice of sanction-
                                                              10108.2


ing housing loans at ‘teaser rates’, wherein the loans
carry a comparatively lower rate of interest in the first
                                                                              18 Jan10




                                                                                                                                                                                                    21 Jun10


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few years, after which rates are reset at higher rates.
                                                                                                                                   BSE Bankex                                                                                 BSE Sensex


“This practice raises concern as some borrowers may
                                                              Source: BSE

find it difficult to service the loans once the normal        Over the past few months, the banking stocks have been
interest rate, which is higher than the rate applicable in    outperforming the market. A comparison of the BSE
the initial years, becomes effective,” the RBI believes.      Bankex Index and the Sensex does validate the same.
                                                              But, going ahead, things may not be the same because a
Also, the Reserve Bank observes that many banks at the        lot of possible positives are factored in the stock prices
time of initial loan appraisal do not take into account the   and the challenges, as and when they unfold, keep testing
repaying capacity of the borrower at normal lending           the strength of the sector. Things are really on the swing
rates. In view of the higher risk associated with such        for noW.

Beyond Market 07th Dec ’10                                                                                                                                                                                                                                It’s simplified...                                                         19
     HEALTH IS
      WEALTH
                                  Private healthcare
                                  players have
                                  realized the
                                  tremendous
                                  potential this
                                  sector offers and
                                  are leaving no
                                  stone unturned to
                                  meet the growing
                                  needs of the
                                  people while
                                  earning profits



20
     Beyond Market 07th Dec ’10        It’s simplified...
L
         ittle did people know that the healthcare sector     demographics and rising income levels. The private
         would be the toast of corporate players in an        healthcare sector would not only be the biggest contribu-
         age when fixed deposits, life insurance and          tor but also the beneficiary in the process.
         mutual funds were considered indispensable
investment avenues. But that was a couple of years ago,       However, despite its profitability, the tertiary sector is
until the liberalization of early 1990s when things           relatively complex due to high costs for private players.
changed for good.                                             The capital requirement for setting up a tertiary hospital
                                                              bed is `7-10 million in larger cities with real estate and
The opening up of the economy saw the entry of private        medical equipment accounting for 60-65% of the total
players in major sectors, including the healthcare sector.    project cost. This leads to long gestation periods, right
Although investments in healthcare were few and far           from conceptualization to execution. Besides this, it
between, the situation is no longer the same today. In        takes another 2-3 years to break-even.
fact, the private players have realized the tremendous
opportunity this sector offers and hence, healthcare is one   Analysts believe that tertiary hospitals can potentially
of the fastest-growing sectors in India. Add to the fact      generate more than 25% operating margins from the fifth
that government spending on healthcare has been               year of their operations with margins stabilizing at
dismally low, to say the least.                               30-35% in a matured state. Industry experts believe that
                                                              players adopt varied business models to scale up their
In 2009, the national healthcare spending was around          margins from around 30-35% that a normal private sector
5.5% of the gross domestic product (GDP), with hospi-         player would continue to record in the absence of the
tals forming 50% of this spending. This is in sharp           need to grow organically.
contrast to the global healthcare spending. Another
reason is that the government’s healthcare allocation is      BUSINESS MODELS
not in tune with the demand. Private healthcare players
continue to dominate the sector’s tertiary and secondary      Single-Specialty
care segments in India.
                                                              Single-specialty tertiary hospital chains offer ‘best in
According to an estimate by Crisil, there is a need for       class’ treatment in defined therapy areas. Being special-
nearly one million beds in the country. However, there is     ists in certain therapies, these hospitals have the best of
no single big player that can meet this requirement on a      specialists and patient volumes overriding geographical
pan-India basis. Apollo Hospitals, the largest healthcare     constraints. These hospital chains are effective only for
chain in India, has only 8,000 beds under management,         select therapy segments like ophthalmology and oncol-
including those owned by itself and associates as well as     ogy. Some of the hospital chains that have adopted this
managed beds.                                                 model include HCG (Healthcare Global), which is
                                                              focused on oncology and Shankar Netralaya and Arvind
This mismatch in demand and supply highlights the need        Eye Hospital that cater to ophthalmology cases.
for private players to ramp up their capacities, especially
in the tertiary care segment because this segment needs       Secondary/ Primary Care In Tier II/ III Cities
sufficient spending in terms of infrastructure, technology
and specialization.                                           It has been observed that the hospital industry which is
                                                              largely unorganized, services only 30% of the country’s
Moreover, with the mushrooming of primary care units,         population. One prime reason for this is that bed
thanks to government spending and economic sense in           additions are largely skewed towards metros. It is
having primary care units, there is a dearth of tertiary      estimated that 80% of healthcare facilities are still
hospitals where patients are treated for major and            available in metros only.
specialized cases.
                                                              This has presented opportunities for private players to tap
Hence, it is important for private hospitals like Apollo,     rural areas to meet their requirements relating to second-
Fortis Healthcare (Fortis), Manipal Hospitals and Max         ary and primary care. Private players like Vaatsalya are
Healthcare to improve capacities and widen their reach.       working on innovative models to tap the unmet health-
                                                              care needs of majority of the population by setting up
The Indian healthcare sector is currently valued at $62       secondary care hospitals in Tier II/ III cities. These
billion and is estimated to be growing at the rate of 13%     models offer standardized secondary care with limited
per annum. At an estimated population growth of 2%            specialities including gynaecologists, obstetricians and
annually and a 10% annual increase in healthcare spend,       dermatologists. They operate on leased facilities, entail-
the sector is expected to grow on the back of changing        ing limited capital investments.

Beyond Market 07th Dec ’10                                                                              It’s simplified...   21
              Joint Ventures                                                                                                                                                      (new administrator), which has a certain equity stake in
                                                                                                                                                                                  the SPV, infuses capital and undertakes management
              Setting up hospital chains entail huge capital invest-                                                                                                              responsibility of marketing, finance, administration,
              ments, especially in tier-I cities where land prices have                                                                                                           operations, etc. In return, the corporate hospital receives
              shot through the roof. This is the primary reason why                                                                                                               a share of profits.
              bigger hospital chains are looking at making their
              presence felt in Tier I cities by opting for joint ventures                                                                                                         These are three business models that private sector hospi-
              (JVs) through collaborations with trust hospitals.                                                                                                                  tal players have adopted to maximise their revenues.
                                                                                                                                                                                  Considering huge land costs involved in setting up hospi-
              Trusts hospitals have land banks at nominal lease rentals.                                                                                                          tals, identifying either of these three business models
              These hospitals have failed to match private sector                                                                                                                 serves good for private sector players.
              players considering their lack of professional manage-
              ment and adequate technology. Of late, some trust hospi-                                                                                                            Among the listed companies, Fortis Healthcare and
              tals have formed JVs with leading corporate hospital                                                                                                                Apollo Hospitals are placed well considering their
              chains like Apollo and Fortis.                                                                                                                                      sizeable assets, significant geographical footprint and
                                                                                                                                                                                  strong brand identities. These companies would continue
              Under a JV agreement, a trust hospital leases out the                                                                                                               to dominate the market and command significant
                                                            newly
              entire building and medical equipment to the newly-                                                                                                                 premium given the fact that early entry and established
              formed SPV or company. The corporate hospital chain                                                                                                                 names, will work in their favouR.




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                        While India works towards
                   generating enough electricity to
                      meet its ever-growing needs,
                         companies involved in the
                   transmission and distribution of
                     power, especially Power Grid,
                   will play an even important role




Watt
                                in the coming years




Next…
Next…
24
     Beyond Market 07th Dec ’10                       It’s simplified...
I
     ndia’s demand for electricity is growing with each       leasing out its existing tower infrastructure to telecom-
     passing day and there is a huge power shortage. To       munication companies. It currently has about 20,730-km
     deal with the electricity demand-supply imbalance in     of telecom network, which is leased to some of the
     the country, India wants to build about 62,000 MW        leading telecom companies like Bharti Airtel, BSNL and
of additional power generation capacity by 2012 and           Tata Communication.
another 1,00,000 MW by 2017. This will require massive
investments of nearly `8,00,000 crore in power genera-        Besides, it is leveraging its knowledge and expertise in
tion capacities.                                              the power and transmission sector to provide consultancy
                                                              services for similar projects in transmission. The
But power generation alone will not solve the problem.        company is currently involved in 12 international consul-
In fact, the real challenge for the power sector in the       tancy projects in countries like Afghanistan, Bangladesh,
country lies in how effectively and efficiently the           Nigeria, Bhutan, UAE, Sri Lanka and Nepal.
transmission and distribution (T&D) sector is managed.
Moreover, the government will have to urgently attend to      Though these segments are not contributing much
the ageing infrastructure and issues pertaining to technol-   currently, they are indeed fast growing segments and
ogy to ensure uninterrupted supply of electricity to the      should help the company with better margins and returns
consumers, comprising households and industries, thus         on investments.
offering tremendous opportunities to companies in the
transmission and distribution space.                          Although utility companies are known for their consis-
                                                              tency, those like Power Grid not only offer consistency,
The transmission of electricity typically defined as the      but also growth, as incremental investments in the
bulk transfer of power over a long distance at high           company are huge. Looking at the projects in the
voltage, is generally 132 KV and above. And the govern-       pipeline, the company’s earnings and revenue could
ment expects the inter-regional transmission capacity to      easily grow at about 20-25% over the next five years,
grow to 27,950 MW by this year. However, this, accord-        which is considerable for an enormous company like
ing to the Central Electricity Authority (CEA), will have     Power Grid.
to be increased further to 57,000 MW by 2015 and
75,000 MW by the end of the Twelfth Five Year Plan. It,       The company had earlier raised funds through an IPO
therefore, calls for huge investments in this sector.         and is now doing so through FPOs. It has plans to invest
                                                              `1,00,000 crore over the next six to seven years, which is
All this points to the tremendous potential the power         significant compared to historical investments.
transmission and distribution sector holds and companies
in this space will be the key beneficiaries. And Power        The company also plans to explore and double its
Grid Corporation of India Ltd (PGCIL), considered to be       transmission network from the current 80,000 km to
the third largest transmission company in the world with      about 1,60,000 km. This is possible given the huge power
a market share of over 50% in the domestic market,            capacity coming in the future.
would be the obvious gainer.
                                                              The company has capex plans of `55,000 crore in the
Power Grid currently owns and operates 79,556 circuit         current Five-Year Plan, ending 2012. During this period,
km of transmission network and 132 sub-stations. These        the company will expand its inter-regional grid capacity
transmission lines and substations are used by the power      to 37,000 MW compared to 14,000 MW it had in the
generation and distribution companies to distribute           Tenth Five-Year plan. This investment is still small
power to different regions and in turn, generate fixed and    compared to its plans of investing another `1,00,000
consistent revenues in the form of lease or rents. This is    crore over the next few years.
also the reason why the company’s revenues are stable,
thus ensuring the company a decent return on equity           Companies in the private and public sector, along with
invested in these projects.                                   Power Grid, will invest huge amounts of money in build-
                                                              ing transmission lines in the country. Inter-regional
Not only this, the company is leveraging its assets and       transmission networks are required in India because
knowledge in the sector to improve its margins and            power generation sources are unevenly distributed and
returns, which could also give handsome returns in the        power needs to be carried over large distances from areas
long run.                                                     where power is generated to areas where load centres and
                                                              demand exist.
For instance, the company is using its existing tower
infrastructure spread across the country to tap opportuni-    Its ripple effect will also be seen on firms that actually do
ties in the telecommunication segment. It has started         the ground work and build transmission lines for compa

Beyond Market 07th Dec ’10                                                                                It’s simplified...   25
     nies like Power Grid. Leading players like KEC Interna-     capacity transmission corridors, which will be useful in
     tional, Kalpataru Power & Transmission and Jyoti Struc-     evacuating high voltage power.
     tures, who have the expertise, needed to do the engineer-
     ing and procurement work, will be the key gainers.          Larger players like Crompton Greaves, ABB and Areva
                                                                 T&D, known for their superior capabilities and diversi-
     There is also a growing need for high-capacity transmis-    fied portfolio of technology and products will stand to
     sion lines currently, which can carry high voltage power    gain in this space. These companies supply transmission
     generated by the independent power producers and            equipment, distribution equipment like transformers,
     power generated from the ultra mega power projects,         switch gears, capacitors and power substations too.
     ranging between 1,000 MW and 4,000 MW.
                                                                 In fact, the distribution segment is expected to grow
     Considering these needs and to build a nationwide           faster, given the huge replacement demand along with
     network, Power Grid is expected to invest in nine high--    the demand for new projects and better technologieS.




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                              Contact: Hiral Parekh - +91 77383 80020/ 022-3027 4557/58/59
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                           SMS ‘BANG COM’ to 54646; e-mail: commodity@nirmalbang.com




26
     Beyond Market 07th Dec ’10                                                                           It’s simplified...
                                          Specialty Chemicals:
                                           The Next Big Thing

                                                                                         Certainty of potentially
                                                                                         huge markets coupled with
                                                                                         easy availability of skilled
                                                                                         manpower, is expected to
                                                                                         make India and China a
                                                                                         name to reckon with in the
                                                                                         specialty chemical industry




T
          he Indian pharma sector has an estimated      GDP. It has the potential to grow to around US $100
          market value of about US $8 billion and is    billion by 2010 in India, an annual growth rate of 15.5%,
          growing at an average rate of 7.2%. It is     according to industry analysts’ survey.
          expected to grow to US $12 billion by 2010.
Sales of the Indian pharma industry would be worth US   The chemical industry includes a wide variety of
$43 billion within the next decade.                     products - from commodity chemicals to research-driven
                                                        specialized products. The characteristics of these
The chemical industry is an integral component of the   products differ across the industry supply chain, from
economy and contributes around 6.7% of the Indian       sourcing bases to their target markets.

Beyond Market 07th Dec ’10                                                                       It’s simplified...     27
     End Use Market Growth (CAGR-FY07/FY12)
                                                                            Evolving Customer Needs

           Tex le


      Construc on


            Glass


            Auto


           Paints


           Paper


          Pharma

                    0%          5%         10%   15%        20%       25%
     Source: KPMG Reports, Cygnus Report

     According to the Global Industry Classification Standard     ity are improved and supplemented by domestic and
     (GICS), specialty chemical companies are those that          foreign investments. Several foreign companies have
     primarily involved in the manufacture of high value-         made significant commitments and investments in India
     added chemicals useful in the manufacture of products,       and China and plan to continue investing over the long
     including, but not limited to, fine chemicals, additives,    term. India and China are the key players in the specialty
     advanced polymers, adhesives, sealant and specialty          chemical markets.
     paints, pigments and coatings.
                                                                  A major part of investments in specialty markets will be
     The user industries for specialty chemicals comprise of      done in these two countries not only because of easy
     textile, construction, paint, pharma and auto, among         availability of skilled and cheap labour, but also because
     others. The growth of each category within the specialty     of the certainty of potentially huge markets.
     chemical domain depends on the type of industry it
     serves and the growth rate of the industry.                  To give better thrust to both, the Indian and the Chinese
                                                                  pharma industry, the Indian Drug Manufacturers’
     As per the Cygnus report, personal care, API and             Association (IDMA) and China Pharmaceutical Industry
     automobile chemicals are growing faster than textiles,       Association (CPIA) have jointly agreed to sign a memo-
     leather and paper, as the growth of specialty chemicals is   randum of understanding (MoU) by early next year
     directly related to the growth of the end user industry.     during API China 2010.

     Presently, an ample number of SMEs along with some           The three-year MoU will ensure provision of information
     big names are engaged in the manufacture of specialty        data and guidance to each other’s members and also
     chemicals. The domestic specialty chemical market is         facilitate imports, distribution, marketing and adminis-
     captured by APCL, Amines & Plasticizers, Ciba                tration of drugs and medicines, including information
     Specialty Chemicals, United Phosphorous, Pidilite, RIL,      about the statutory regulations and requirements in their
     Syngenta. Similarly, Lubrizol, BASF, Dow Chemicals,          respective countries.
     Bayer, Sumitomo, Degusa, Clariant are some of the
     international players involved in this segment.              The global financial crisis had a negative impact on the
                                                                  global and Chinese specialty chemical markets. The
     Big Indian pharma companies like Ranbaxy, Shasun,            Chinese market had a comparatively higher growth rate
     Cipla, Dr Reddy’s, Cheminor, Lupin, Ipca Laboratories,       due to the huge potential offered by domestic demand.
     Sun Pharma, Cadila, Wockhardt, Aurobindo and Kopran,         According to the Chinese Chemical Industry Yearbook,
     among others, are also involved in the manufacture of        sales revenue for the specialty chemical market was US
     specialty chemicals.                                         $124.5 billion in 2008, which amounted to 12.9% of the
                                                                  total chemical market.
     India and China continue to be the key suppliers of
     finished dosages to the global pharma market. The huge       Till the year 2012, the Chinese specialty chemical market
     domestic middle-class markets and the huge supply of         is likely to grow at a compound annual growth rate
     labour are the principal drivers of economies like India     (CAGR) of 12.9%, which is higher than 10.7%, the
     and China. The countries’ industry structure and capabil-    average growth rate of the Chinese chemical market.

28
     Beyond Market 07th Dec ’10                                                                            It’s simplified...
Different Segments
   Segment                                 Characteristics                                   Constituent industries




With this high growth, China is likely to acquire more        The FICCI-E&Y study says that high-value drugs from
market share in the world specialty chemical market in        MNCs could produce up to US $8 billion in sales by
the coming times.                                             2015. The population in India’s highest income class is
                                                              expected to grow to 25 million in 2015 from 10 million
The country contributed about 12% to the world                today. Hence, more people will be able to afford high-
specialty chemical market in 2006. This share is expected     value patented drugs. “MNCs are increasingly restructur-
to reach 20.1% in 2012. China is on its way to becoming       ing their operations with global parent companies
a major hub of specialty chemical manufacturers world-        increasing their equity stakes in their Indian affiliates,”
wide. The Chinese chemical industry parks have their          the report says.
respective advantages in attracting foreign investments.
At the provincial or national level, there are about 350      Global specialty companies are increasingly establishing
chemical industry parks in China.                             base in high-growth Asian economies to participate in
                                                              their growth and to meet the exact needs of the local
Globally, pharma companies are shifting their outsourc-       customers while leveraging their low-cost advantage.
ing activities to Asian markets and India is emerging as      Much of this investment till now has been in China due
one of the most attractive destinations. India is a           to the large talent pool, manpower and cost efficiency.
fast-growing custom manufacturing outsourcing destina-
tion with a growth rate of 43%, three times the global        India, now, is establishing itself as a major hub for manu-
market rate.                                                  facturing and R&D of specialty chemicals. The interest
                                                              of MNCs in India is only increasing and the advantages
India ranks the highest in terms of cost-efficiency attrac-   that China had to offer are slowly fading in light of the
tiveness among six destinations including China, Eastern      various add-ons that India provides as a chemical hub.
Europe, Puerto Rico, Singapore and Ireland. India’s cost      These add-ons include a more standardized regulatory
efficiency is driven by its low manufacturing cost, which     system and a validated IP regime amongst other factors
is only 35% to 40% of the cost of manufacturing in the        like cost and skilled manpower.
United States, supported by its low installation and
manpower cost.                                                India provides a robust legal and regulatory framework
                                                              for research-based development in the specialty chemi-
In drug discovery and development services, India is          cals segment. India became a signatory to TRIPS in the
emerging as a hot spot, growing at around 65%. India          year 1995 and several companies are getting their
offers significant cost arbitrage in end-to-end R&D with      products patented in India. All these factors have contrib-
potential savings of 61% as compared to the United            uted to India evolving into an attractive investment
States. India enjoys significant cost arbitrage in the        destination in comparison with China where IP protec-
conduct of clinical trials, which includes infrastructure,    tion and manufacturing guidelines are still haphazard and
patient recruitment, manpower, data management and            need improvement.
processing costs.
                                                              Globally, R&D is the fundamental driver of success for
The cost of these activities in India is typically 40% to     the pharmaceutical industry. Companies depend on
60% lower than in developed countries and around 10%          developing premium therapies to open up entirely new
to 20% lower than in other emerging economies. Thus,          markets and sustain growth. Globally, R&D spend has
MNCs have yet another reason to eye India.                    been on the rise in the last few years and currently the

Beyond Market 07th Dec ’10                                                                              It’s simplified...   29
     average stands at 18.5% of net sales. This is partly led by    for players wishing to enter new markets.
     an increase in drug development costs. The average cost
     of introducing a new drug to the market has risen from         However, knowledge chemicals are definitely growing at
     US $550 million to US $820 million with most of the            a rate faster than specialty chemicals and basic chemi-
     cost increases being in the testing phase.                     cals. Knowledge chemicals’ growth has risen to around
                                                                    12%, specialty around 7.5% and basic chemicals around
     There is also an increasing trend of migrating R&D             1.8%, nationally.
     centres to India to access low-cost skilled manpower and
     cut down overall product development costs. R&D is             Specialty and knowledge chemical companies use R&D
     increasingly assuming importance for the entire industry       for new product development. Companies in this
     but its focus varies across industry segments. Basic           segment have adopted R&D, both as a means to achieve
     chemicals use R&D for making manufacturing process             product leadership as well as to orchestrate process
     improvements to reduce costs and application develop-          innovations and realize savings in manufacturing costs.
     ment to boost demand.
                                                                    R&D levels in leading companies within this segment are
     Vitamins, antibiotics, antibacterials, cardiovascular and      between 5-15% of sales. Application development
     other essential drugs account for nearly 37% of the total      strategy is also adopted effectively by knowledge chemi-
     specialty market. Other therapeutic areas that are show-       cal companies. This includes techniques like evergreen-
     ing significant potential are medications used to treat        ing, which involves finding new applications and
     lifestyle-related disorders like anti-diabetic, anti-obesity   delivery systems for existing drugs as a means for
     drugs, anti-cancer medications and vitamin supplements.        extending patent protection and hence revenue genera-
                                                                    tion. The Indian patent regime has encouraged research
     The specialty chemical industry relies extensively on          in the area of processes and reverse engineering.
     R&D for new products. Most of the R&D is capital-
     intensive and the scale of operations is important to          Going forward, India will have to focus on new chemical
     provide the financial strength and access to global            entities (NCEs) and new drug delivery systems (NDDS).
     markets. Patents and the presence of appropriate regula-       The R&D spend in Indian companies is, therefore,
     tions to protect intellectual capital is a key consideration   expected to see a risE.




     Your financial success is our concern. At Nirmal Bang, it’s a relationship beyond broking...




30
     Beyond Market 07th Dec ’10                                                                             It’s simplified...
Soul Searching
   In Seoul
                        It was a moment of self introspection for the global
                        leaders that are still coming to terms with the
                        after-effects of the financial meltdown. While they all
                        agreed to iron out their differences, key issues, except
                                       few, still remain unanswered




W
                orld leaders met at the G20 Summit in      Germany, Japan and Canada), 4 Asian countries (India,
                Seoul last month at a crucial time when    China, South Korea and Indonesia), 3 Latin American
                the world economy is fraught with          countries (Brazil, Argentina and Mexico), 4 European
                multiple problems requiring nations to     countries (Russia, Australia, Turkey and the European
come out with a coordinated response to grapple with the   Union), South Africa and Saudi Arabia.
financial crisis which started in the United States. The
countries that attended the G20 summit included G7         This is the second G20 summit with the first one being
(United States of America, France, United Kingdom,         held in Toronto in June this year.

Beyond Market 07th Dec ’10                                                                       It’s simplified...   31
     Before the commencement of this summit, tension was          taking centre stage and there was no focus on long-term
     building among nations because of the fear of currency       issues such as development.
     wars and re-emergence of a protectionist policy. These
     issues were expected to be touched upon and optimists        Under the label of the ‘Seoul Development Consensus
     believed that a consensus would be arrived at. While         for Shared Growth,’ the G20 endorsed a strategy based
     consensus was achieved on some important parameters,         on resilient growth. The summit defined new principles
     issues such as trade imbalances and currency movements       and an action plan. The G20 proposed a new focus on
     continue to remain an area of contention.                    development by the World Bank and a new high-level
                                                                  panel to recommend ways to speed things up.
     The key factors that were responsible for the difference
     in opinion were the QE2 effort by the US Federal             Some of the disappointments include lack of consensus
     Reserve that came out in the run up to the summit and the    on the following:
     lack of a pressing need by most nations who seem to have
     recovered from the crisis. So, not everyone was in as           Global Imbalances: Nations were unable to agree on
     much hurry as the US.                                        numerical targets for current account deficits and
                                                                  surplus, but each of the G20 leaders instructed their
     While most would not be appeased by the outcome of           finance ministers to come up with an indicative guideline
     this summit, one cannot deny that there were a few           to measure large current account imbalances in consulta-
     positive takeaways. These include:                           tion with the IMF.

        Strengthening Of The Financial System: In order to        The details are to be discussed in the first half of next
     increase the quantity and enhance the quality of bank        year. India too spoke against putting a cap on the current
     capital, the G20 leaders signed the Basel III agreement.     account balance proposed by the US at 4% of the GDP
     The Financial Stability Board’s proposals to tighten         saying that on account of structural differences across
     supervision of the over-the-counter derivatives market,      countries it is not easy to arrive at a threshold.
     regulate banks that were judged as too big to fail and
     reduce reliance on credit rating agencies, were endorsed.       Decontrolling Currency Movements: There was no
                                                                  formal agreement on currency imbalances at the summit.
         Recognition Of A Shift In Economic Power:                G20 leaders repeated a commitment to move towards
     Reforms were introduced in the IMF to reflect the shift in                                                 competi
                                                                  market-determined exchange rates and to shun competi-
     the balance of economic power. Under the deal, more          tive devaluations.
     than 6% of voting shares at IMF will shift to developing
     countries like China, which will become the third-biggest    G20 also stressed on the fact that emerging economies,
     member of the 187-strong Washington-based lender.            having overvalued exchange rates, face a burden of
                                                                  adjustment, which requires carefully designed macro-
     Also, the composition of the Board will be changed to        prudential measures. As is the case with previous G20
     reduce the European representation. This reform was          summits, leaders did not single out China for keeping its
     overdue and is an important step in the direction of         currency undervalued.
     giving developing nations a greater influence in the
     organization. Developing countries will now grant IMF        This summit can be easily termed a ‘failure’ as a consen-
     the role of managing the global macro economy.               sus on some important issues was not achieved. But a
                                                                  two-day summit cannot be expected to overcome differ-
     India would be putting in an additional `14,000-15,000       ences in opinion over grave issues as each nation has a
     crore to subscribe to an additional IMF quota. Prime         unique economic background that can sometimes prove
     Minister Dr Manmohan Singh welcomed the decision to          to be a hindrance.
     comprehensively review the quota formula by 2013 to
     reflect the growing economic weight of the emerging          Let us take the positives in our stride, especially an
     market countries. He said that this should be fully          important aspect like the one that gives developing
     reflected in the next quota review.                          nations greater influence. This is an indication that the
                                                                  global order is changing and there will be greater democ-
        Trade: G20 leaders pledged not to pursue protection-
                                                 protection       racy in global policy making.
     ist policies and to work towards concluding the long
     stalled Doha round of trade liberalization.                  At least nations are willing to come together, voice their
                                                                  opinions and talk it out. Maybe over a period of time,
        Development: South Korea and India stressed on this       things will change, differences in opinion will be erased
     issue at the summit as the global economic crisis was        and there will be greater international co-operatioN.

32
     Beyond Market 07th Dec ’10                                                                            It’s simplified...
MIPs
                        Rising To The Occasion

                                                     I
                                                          f you are worried that your hard-earned money
                                Both conservative
                                                          might get washed away in the stock markets, then
                                   and aggressive         Monthly Income Plans (MIPs) are for you. A mix of
                             investors can opt for        equity and debt, MIPs give investors more or less
                                  MIPs if they are   consistent returns and are also less risky, as compared to
                                                     the equity markets.
                                seeking stable and
                               higher returns over   One of the many aims of investors is to have a regular
                                    other forms of   rate of return on a portion of their investments. MIPs
                                       investment    fulfill this need as there is an element of safety associated
                                                     with them and they also provide a regular cash flow to
                                                     meet various expenses.

                                                     With the current level of market volatility, MIPs can be a
                                                     good option, considering their exposure to debt instru-
                                                     ments. These help investors to maintain a low-risk
                                                     portfolio and generate regular and stable returns. Stabil-
                                                     ity, rather than quick and high returns, should be the
                                                     priority for a typical MIP investor.

                                                     If a regular investor is apprehensive about investing in
                                                     turbulent times like we are seeing currently, he may
                                                     consider post office savings as against other available
                                                     options, since it offers him safety as well as moderate
                                                     returns ranging anywhere between 7% and 8.5%, along
                                                     with some bonus at the time of maturity.

                                                     Thus, an investor seeking a steady return on his invest-
                                                     ments without any disturbance will, therefore, opt for the
                                                     post office plan over others.

                                                     For risk-averse individuals, fixed deposits (FDs) might
                                                     appear as a good investment option, but they must bear in
                                                     mind the fact that FDs are taxable as ‘income from other

Beyond Market 07th Dec ’10                                                                       It’s simplified...   33
     sources’, depending upon the tax bracket they fall into.     equity, based on the various schemes available in the
     Further, if the interest income is more than `5,000 in a     market, this concern is taken care of.
     given financial year, then TDS is applicable. On the other
     hand, MIPs are more tax-efficient than fixed deposits        A bigger portion of the portfolio is invested in debt
     (FDs), as dividends declared under these type of mutual      instruments and this is the part that provides stability to
     funds are tax-free.                                          the fund. The equity part is expected to provide the
                                                                  kicker, in terms of returns, when the equity markets are
     But if an investor also wants to take advantage of the       robust, but this is unreliable.
     upswing in the stock markets, he may consider monthly
     income plans that are offered by various mutual fund         Based on the risk appetite of the investors, the proportion
     houses as these provide decent returns, although they        of equity in the funds may qualify them as conservative
     may not be consistent, owing to the volatility in the        or aggressive.
     equity markets.
                                                                  While conservative funds restrict their equity holdings to
     And even if an investor is conservative with his invest-     5-10%, this proportion is anywhere between 20-25% in
     ments, he can still earn marginally better returns through   the case of aggressive funds. This change in holdings
     MIPs, than a debt-only portfolio, as MIPs typically invest   makes a significant impact on investment risk and
     the bulk of their asset under management (AUM) in debt,      returns. When the markets are bullish, the funds will
     while maintaining a small exposure to equity.                perform better-than-expected in case of the funds that
                                                                  have higher equity exposure.
     MIPs mainly come in two options, that is, growth and
     dividend. Investors have the option to choose the one that   Hence, Monthly Income Plans like various other mutual
     suits their needs. While dividends are by and large issued   fund products do not provide the security of regular
     either monthly, quarterly, half-yearly or annually, the      dividends as they are governed by the volatility of the
     growth option reinvests the entire return back into the      markets. In such instances, there is a quick fix route
     investor’s fund.                                             called Systematic Withdrawal Plan or SWP that can be
                                                                  opted for by the investor.
     Though many mutual fund houses declare monthly
     dividends, they have no obligation to pay them. MIPs         If an investor is looking for regular income, he can
     further differ from income funds, in the sense that the      choose the Systematic Withdrawal Plan rather than the
     latter are launched in the markets with the objective of     Dividend Payout Option. But the investor must exercise
     posting regular returns.                                     this option only after one year of the investment.

     The ‘growth’ option of an MIP fits neatly into the           Monthly income plans are considered good for conser-
     risk-return profile between a pure income fund and a         vative investors, people nearing retirement and even
     balanced fund and is favoured by investors like HNIs and     retirees seeking better returns over traditional options
     institutions as these investors typically do not require a   like post office savings schemes and bank fixed deposits.
     regular monthly dividend inflow.                             These people want their investment product to provide
                                                                  them with a steady flow of income at a higher real rate of
     In the past one year, the total industry AUM was close to    interest to meet their regular expenses while offering
     `4,000 crore, which is now approximately `24,500 crore.      capital appreciation.
     The last few months have seen corpuses of MIP schemes
     rising a great deal. During this period, equity funds AUM    While all this sounds quite promising, investors should,
     have gone down.                                              however, bear in mind that there is an exit load of 1% on
                                                                  most MIPs, if they withdraw before one year and in some
     Unlike other funds, the returns on MIPs are market-          cases even one-and-a-half years. There is no guarantee
     driven. In the past one year alone, several MIPs have        about the payout of dividend too. Large fluctuations in
     given 10% to 14% returns. This has led to an influx of       the equity markets can further make the entire net asset
     investors in MIPs, who have taken the advantage of           value of the fund quite volatile.
     reinvesting the dividend returns from MIPs in pure
     equity funds and reaping excellent returns over FDs,         Given its wide-ranging appeal to conservative and
     while enjoying tax efficiency.                               aggressive investors, MIPs have the potential to be very
                                                                  much there to cater to these segments. Further, MIPs not
     Investors may also want to know whether there is any         only offer stable returns but also provide an additional
     risk associated with the earnings from the fund. But since   incentive of higher returns, provided the equity portion in
     MIPs invest a major part of the corpus in debt vis-à-vis     the MIP fund does welL.

34
     Beyond Market 07th Dec ’10                                                                             It’s simplified...
                                                  Bharti Airtel:
                                                  Sweet Sound
                                                  Of Success
                                                  B
                                                          harti Airtel is one of world’s leading providers
                                                          of telecommunication services with presence in
                                                          all the 22 licensed jurisdictions (also known as
                                                          telecom circles) in India and operations in Sri
               Expansion of business plans,       Lanka, Bangladesh and Africa.

                apart from the introduction       The company has more than 194.8 million customers as
                                                  of 30th Sept ’10, making it one of the largest wireless
                  of 3G services and number       service providers in India. The company offers an
                                                  integrated suite of telecom solutions to its enterprise
                                                  customers, in addition to providing long distance connec-
                    portability, is expected to   tivity, both nationally and internationally.
                   bene t Bharti Airtel in the    The company also offers Digital TV and IPTV Services.
                                                  All these services are rendered under a unified brand
                                  coming months   ‘Airtel’. The company also deploys, owns and manages
                                                  passive infrastructure pertaining to telecom operations
                                                  under its subsidiary, Bharti Infratel Ltd. Bharti Infratel
                                                  owns 42% of Indus Towers Ltd. Bharti Infratel and Indus
                                                  Towers are among the top providers of passive
                                                  infrastructure services in India.

36
     Beyond Market 07th Dec ’10                                                            It’s simplified...
Business Units                                                                     million customers continues to add 1 in every 4 new
                                                                                   customers joining the DTH platform. The company also
                                                                                   offers Airtel Digital TV recorder and High Definition
                                                           Mobile Ser (Zain)
                                                                                   (HD) set top boxes delivering superior experience to is
                                             Africa
                                                             Africa Others
                                                                                   customers in this segment.

       Business Units                                                              Passive Infra
                                                            Mobile Services
                                     India & South Asia
                                                                                   Bharti Infratel provides passive infrastructure services on
                                                          Telemedia Services       a non-discriminatory basis to all telecom operators in
                                                                                   India. Bharti Infratel deploys, owns and manages passive
                                                           Enterprise Services     infrastructure in 11 circles of India.

                                                           Digital TV Services     Infratel also holds 42% share in Indus Towers (a joint
                                                                                   venture between Bharti Infratel, Vodafone and Idea
                                                          Passive Infra Services   Cellular). Indus operates in 15 circles (4 circles common
                                                                                   with Infratel and 11 circles on exclusive basis).
Source: Company Data, Nirmal Bang Research
             BUSINESS UNITS IN INDIA & SOUTH ASIA                                  Bharti Infratel has 31,831 towers in 11 circles, excluding
                                                                                   the 35,254 towers in 11 circles for which the right of use
             Mobile Services                                                       has been assigned to Indus with effect from 1st Jan ’09.
                                                                                   Indus Towers has a portfolio of 1,06,438 towers, includ-
             Bharti Airtel offers mobile services using GSM technol-               ing the towers under right of use.
             ogy in India, Sri Lanka and Bangladesh. It serves over
             147 million customers across these geographies. Bharti                BUSINESS UNITS IN AFRICA
             Airtel has the largest customer base in India in the
             wireless segment. The company had 143.3 million                       Mobile Services
             mobile customers in India, with a customer market share
             (CMS) of 20.8%, as on 30th Sept ’10.                                  Bharti Airtel acquired the Africa operations of Kuwait-
                                                                                   based telecom major Zain Group on 8th Jun ’10, exclud-
             Telemedia Services                                                    ing the Sudanese and Moroccan operations for a total
                                                                                   enterprise value of US $10.7 billion. Bharti Airtel also
             Bharti provides broadband (DSL), data and telephone                   acquired 100% stake in Telecom Seychelles Ltd on 27th
             services (fixed line) in 88 cities with a growing focus on            Aug ’10.
             various data solutions for the Small & Medium Business
             (SMB) segment. Of its 3.2 million customers, 42.8%                    Others
             subscribe to broadband/internet services, as on 30th Sept
             ’10. Bharti’s product offerings in this segment include               It comprises of investment-holding companies for Africa
             fixed-line telephones providing local, national and                   mobile operations.
             international long distance voice connectivity and broad-
             band internet access through DSL.                                     Mobile Services (including Africa) contributes around
                                                                                   75% of the company’s total revenues (revenues before
             Enterprise Services                                                   inter-segment eliminations)
                                                                                   Segment-Wise Revenues (Q2 FY11)
             Bharti delivers end-to-end telecom solutions to India’s
                                                                                                                     1%
             large corporates by serving as the single point of contact
                                                                                                           12%
             for all telecom needs by providing a full suite of commu-
             nication services across data, voice, network integration                               6%
             and managed services. It owns a state-of-the-art national                             5%
             and international long distance network infrastructure,
             enabling it to provide connectivity services, both within
                                                                                                                                75%
             India and connecting India to the world.

                                                                                        Mobile Services                          Telemedia Services
             Digital TV                                                                 Enterprises Services - Carriers          Passive Infrastructure Services
                                                                                        Others
             Airtel Digital TV Services, with a base of over 3.8                   Source: Company Data, Nirmal Bang Research



             Beyond Market 07th Dec ’10                                                                                                     It’s simplified...     37
     INVESTMENT POSITIVES                                         According to the company management, “3G services
                                                                  has the potential to transform the lives of millions of
     Expansion In Africa A Big Boost                              Indians by taking a variety of life-enhancing services on
                                                                  high-speed broadband to the remotest corners and bridge
     The Zain acquisition is in line with Bharti’s strategy of    the digital divide. In addition, 3G services will have a
     expanding in the emerging markets across the globe.          strong multiplier effect on economic growth and also
     Africa’s population stands at one billion today and is       enhance efficiencies.” This will aid the company top-line
     projected to grow at an annual average rate of 2.3%, with    growth and improve its profitability in the long run.
     a GDP growth rate of 3.1%.
                                                                  Stability In ARPM
     The population in 16 countries where it operates is
     around 459 million, with a mobile customer base of 185       The pricing has remained stable in Q2 FY11 after the
     million, representing a penetration of 40%. This offers      tariff war of 2009 and early 2010. 2QFY11 was the first
     tremendous growth opportunity to the company. The            quarter of flat q-o-q ARPM for most wireless operators
     company has started the restructuring process of its         in 6-7 quarters. Going forward, we expect ARPM to
     African business. We believe Bharti can implement its        remain stable as the operators are struggling to maintain
     low-cost model in Africa, which will provide a big boost     margins after taking massive loans for 3G spectrum.
     to the company’s margins.
                                                                  The number portability will start soon, which may
     3G Launch To Aid Top-Line Growth                             increase competition. However, in the long term, we may
                                                                  also see some consolidation in the industry, which would
     Bharti plans to launch 3G services in four cities            be beneficial in maintaining or increasing ARPM,
     (including Delhi and Mumbai) by December ’10 -               thereby positively impacting margins.
     January ’11 and scale up to 50 cities by March ’11.          Perfomance Indicators
     Airtel successfully bid for 3G spectrum in 13 telecom
     circles across India and is rolling out state-of-the-art       600                                                             0.80
                                                                    500
     networks in these geographies.                                                                                                 0.60
                                                                    400
                                                                    300                                                             0.40
     These 13 telecom circles also constitute 68% of Airtel’s       200
                                                                                                                                    0.20
     revenue market share. This includes key metros like            100
     Delhi, Mumbai, Bengaluru, Chennai and Hyderabad, that            0                                                             0.00

     account for 21% of all data traffic in the country and are           Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11
                                                                                            ARPU          MOU     ARPM
     expected to have the strongest uptake of 3G services.
                                                                  Source: Company Data, Nirmal Bang Research




     VALUATIONS
     Annual Financials
        Year        Net Sales Growth              EBITDA Margin     PAT               EPS               PE        EV/         ROE
                     ` in Cr    %                  ` in Cr  %      ` in Cr             `                        EBIDTA         %
      FY07A            18420             57.9%     7264   39.4%      4110            10.71              33.6      26.7        30.3%
      FY08A            27012             46.6%    11151   41.3%      6495            17.10              21.1      17.4        29.9%
      FY09A            37352             38.3%    14973   40.1%      8044            20.70              17.4      12.9        26.5%
      FY10A            41829             12.0%    16572   39.6%      9362            24.13              14.9      11.7        22.6%
     Source: Company Data, Nirmal Bang Research



     These initiatives are likely to improve the company’s top-line and margins going forward, enabling Bharti Airtel to
     increase its subscriber base by offering competitive tariffs. Bharti Airtel is one of the very few companies which is out
     of the 2G scam. This is a positive factor for the company. Moreover, the start of 3G will further augment the
     company’s top-line going forward. Therefore, our long-term outlook is positive for Bharti AirteL.




38
     Beyond Market 07th Dec ’10                                                                                      It’s simplified...
Fortnightly Outlook For Commodities

C
          ommodities witnessed a much-needed correc-          way for its peers. Copper moved up after testing `378/kg
          tion in the previous fortnight. While base          – `399/kg, the biggest gain in four weeks, on the back of
          metals took a severe beating, crude oil saw a       factory output expansion in China and the strike in Colla-
          correction in prices. Precious metals remained      huasi, the fourth biggest copper mine in the world, which
firm. So did agricultural commodities. However, natural       has raised supply concerns. Add to this, the shortage of
gas was the best performer in the energy basket, moving       3,50,000 tonnes that the global copper market is facing.
up by 10% during this period.                                 All these factors have supported copper prices. Despite
                                                              the European crisis, the downside in base metals was
The correction in metals and oil began on 19th Nov ’10.       capped except zinc and lead, which have high invento-
The People’s Bank of China raised banks’ required             ries. Currently, QE2 seems to be playing its part in rising
reserve ratios to 18.5% this year. Europe’s debt crisis       base metal prices.
was also one of the reasons for metals and oil prices
correcting in the last fortnight. The cost of insuring        We may see a further upside in base metals, especially
Portuguese, Spanish and Italian bonds rose to record          copper, nickel and aluminium, which are fundamentally
highs, as investors bet that the EU’s 750 billion euro        stronger than other metals.
financial lifeline may not be enough to ward off defaults,
undermining confidence in the euro-denominated debt.          Energies
                                                              Crude oil prices were seen dropping from $88/barrel to
Ireland’s decision on 28th November to accept an 85           $81/barrel in the previous fortnight. But we have seen a
billion-euro bailout ($111 billion) failed to end the         gradual recovery since then. According to the annual
spread of the European debt crisis, fuelling investor         winter outlook of the National Oceanic and Atmospheric
concerns about the willingness and ability of Europe’s        Administration (NOAA), the Pacific Northwest region
stronger nations to foot the price of future rescues.         should brace itself for a colder and wetter-than-average
                                                              winter, while the South and Southeast region can expect
Despite the bailout package, euro had hit an 11-week          a warmer and drier than average weather through Febru-
low. On the other hand, there have been encouraging           ary ’11. Severe winter will result in good demand for
economic reports from the US such as better-than-             heating oil and natural gas. We expect inventories of
expected GDP, drop in jobless claims, increased produc-       natural gas to deplete in the next two month, pushing
tivity and better-than-expected manufacturing activity.       natural gas prices further by 10%-15%. Crude oil, on the
This did provide support to the falling commodity prices,     other hand, may offer stiff resistance at $90/barrel but
though. The Purchasing Managers Index (PMI) of                people are advised to buy at dips.
China’s manufacturing sector, rose to 55.2% in Novem-
ber, up 0.5 percentage points from October, was seen          Agri Commodities
lending support to commodities.                               Agri commodities remained buoyant in the previous
                                                              fortnight. A good upside was visible in edible oil. There
Precious Metals                                               was an upside of more than 10% in the guar complex.
Escalating geopolitical tensions over the exchange of         However, spices remained range-bound during this
artillery fire between North and South Korea and grow-        period. We expect the bull run in the spices complex to
ing concern that the debt crisis in Ireland could spread to   intensify in the coming fortnight. Pepper prices may
other parts of the Euro zone, were the main reasons for       move up by more than 10% in the next fortnight as stocks
the rally in precious metals in the previous fortnight. We    are already low, both globally and domestically. Besides,
believe the major focus would be on whether Europe’s          unseasonal rains may delay the harvesting of pepper by
economic system would be able to survive the debt crisis,     more than 20 to 25 days. Black pepper may trade at
whether the European Central Bank (ECB) would                 `24,000/quintal in the next fortnight.
expand its purchases of government debt, which could
calm fears of debt crisis. We believe people must remain      Jeera may test the level of `15,200/kg as only 50%
invested in precious metals amidst so much uncertainty.       sowing has been carried out so far and carry forward
Gold may test the levels of $1,425/ounce - $1,430/ounce       stocks are at a five-year low. In the oilseeds complex, we
in the coming fortnight                                       are bullish on soyoil and soybean as the dry weather in
                                                              Argentina and Brazil will support the ongoing momen-
Base Metals                                                   tum in this complex. Soyoil may test `610/10 kg and
Following the correction in base metals, copper led the       soybean may test `2,400/quintal in the next fortnighT.

Beyond Market 07th Dec ’10                                                                              It’s simplified...   39
          Fortnightly Outlook For Currencies

     T
                he reigning European debt concerns lent the         focus now shifts to ECB rate decision in the coming
                broader theme to the Forex markets in the           fortnight. We may witness a further weakness in the euro
                fortnight gone by. Most high-yield currencies       if the markets remain unconvinced with the ECB’s
                witnessed sell-offs on the backdrop of deterio-     efforts to rein the prevailing debt crisis in. We expect the
     rating debt situation in Europe, giving a boost to the US      euro to test 1.27-1.28 against the dollar on the downside.
     dollar as it appeals as a safe-haven asset.
                                                                    Sterling was not an exception to the sell-off and fell in
     However, better-than-expected manufacturing PMI from           line with other major currencies. The UK exposure to the
     China gave some respite to the emerging markets as well        crisis in Ireland sank the sterling.
     as other major currencies like the euro, the sterling and
     the Australian dollar towards the end of the fortnight.        Meanwhile, British fundamentals have remained quite
                                                                    firm, which fuelled sterling support as the outlook for
     The Chinese Manufacturing Purchasing Managers Index            yields improved. The manufacturing PMI came in at a
     (PMI) was reported to be 55.2 in November, up from the         16-year high. This development diminishes the expecta-
     54.7 reading in October and better than the 54.8 consen-       tions of any expansion in Asset Purchase Program by the
     sus estimate. This was the best reading since April and        Bank of England.
     up notably from the levels of July, when the PMI fell to
     a recent low of 51.2.                                          Therefore, the downside potential seems to be very
                                                                    limited in the sterling and we could see the pound regain-
     The US dollar was highly bid on two accounts in the            ing its footing if broader concerns wane, allowing for a
     fortnight gone by. First, investors turned to this currency    retracement. We see 1.55 as a strong support for the
     on the back of overall risk aversion seen in the financial     pound against the US dollar and also see this level as a
     markets. Second, strong economic numbers from the US           decent buying opportunity.
     made the dollar even more attractive for the investors.
                                                                    Asian currencies also fell prey to the developments in
     Surprisingly, employment numbers, manufacturing and            Europe. Moreover, North Korean encounter with South
     confidence numbers came out better than the estimates.         Korea added to the sober mood in Asia, triggering a
     The recent data by Commodity Futures Trading                   further decline in the Asian currencies. The South
     Commission shows that investors have trimmed dollar            Korean won declined to the tune of 4% on the outbreak
     short positions to 9 odd billion dollars, from the previous    of this news before recovering some ground towards the
     15 odd billion dollars.                                        end of the fortnight.

     The dollar index, a broad performance of the US dollar         The Australian dollar too fell after the government
     against major currencies, briefly touched the mark of          reported that the economy expanded at a slower-than-
     81.50. However, it pared some gains against the                expected pace in the third quarter. GDP in the period rose
     backdrop of robust Chinese PMI, which triggered some           0.2% quarter-over-quarter, below 0.4% that was
     profit-taking in the US dollar. Going forward, a hike in       expected and significantly slower than the 1.1% growth
     policy rates and persistent debt worries seem likely and       in the previous quarter.
     the dollar index may continue its run up to the 82 mark.
                                                                    The rupee came under extensive selling pressure,
     The euro was the worst hit among major currencies,             tracking the overall strength in the dollar overseas and
     victimized by the prevailing debt concerns in the euro         the fall in domestic share markets. Moreover, the market
     zone. It fell broadly in line with rising debt yields of the   positioning was essentially long in the USDINR pair,
     peripheral countries in the euro zone. The euro                which pushed this pair to a high of 46.10 in spot.
     nosedived to 1.29 against the US dollar. However, the
     pair regained some footing as strong Chinese PMI and           However, fundamentals came into play with robust GDP
     comments from European Central Bank President,                 and trade numbers for second quarter, which lent tremen-
     sparked some short covering in the euro.                       dous support to the rupee. Investors also took comfort on
                                                                    the broad weakness in the US dollar and thereby
     Jean-Claude Trichet, president of the European Central         supported the rupee further. We expect the rupee to trade
     Bank, stated that the markets were underestimating             in the range of 45.10-46.00 in the coming fortnight with
     policy maker’s determination to end the debt crisis. The       a bias on the upsidE.

40
     Beyond Market 07th Dec ’10                                                                                It’s simplified...
Quarterly Results of Nifty 50 Companies (For quarter ended September ’10)
         Co. Name       Year    Equity   Net Sale    Open       T.Inc.     T.Exp.    PBIDT       Int.      Dep.      Tax     D.Tax     Rep.       Ex. Item      Adj.     EPS
                                                    Interest                                                                           PAT                      PAT
 ACC                  200909     187.9    2077.38    52.30      2129.68   1423.23     706.45     13.55      87.65   189.83      0.0    415.51         0.00     415.51    22.1
 ACC                  200912     187.9    2049.95    82.19      2132.14   1613.29     518.85     18.05     114.47   108.24      0.0    278.08         0.00     278.08    14.8
 ACC                  201003     187.9    2240.38    61.92      2302.30   1621.02     681.28     13.63     103.08   171.67      0.0    392.88         0.00     392.88    20.9
 ACC                  201006     187.9    2166.89    61.00      2227.89   1615.86     612.03     14.16     104.68   143.72      0.0    349.47         0.00     349.47    18.6
 ACC                  201009     187.9    1759.18    81.82      1841.00   1594.33     246.67     16.42     100.24    43.74      0.0     86.31         0.00      86.31     4.6

 Ambuja Cem.           200909    304.6    1610.95     89.44     1700.39    1180.94    519.45       5.21     71.92   123.84      0.0    318.48         0.00     318.48     2.1
 Ambuja Cem.           200912    304.7    1772.88     55.63     1828.51    1338.52    489.99       6.78     85.99   156.03      0.0    241.19         0.00     241.19     1.6
 Ambuja Cem.           201003    304.7    1990.16    127.21     2117.37    1420.06    697.31      10.78     76.72   147.62      0.0    462.19        15.22     446.97     3.0
 Ambuja Cem.           201006    304.9    2047.56     66.74     2114.30    1444.38    669.92       8.10    100.07   170.54      0.0    391.21         0.00     391.21     2.6
 Ambuja Cem.           201009    305.1    1564.02     49.54     1613.56    1280.86    332.70       8.94    101.80    69.87      0.0    152.09         0.00     152.09     1.0

 Axis Bank             200909    402.0    2860.36   1065.58     3925.94    1408.40   2517.54    1710.68      0.00   275.22      0.0    531.64         0.00     531.64    13.2
 Axis Bank             200912    403.6    2883.65    988.09     3871.74    1335.71   2536.03    1534.54      0.00   345.51      0.0    655.98         0.00     655.98    16.3
 Axis Bank             201003    405.2    2988.45    933.54     3921.99    1211.67   2710.32    1528.38      0.00   417.07      0.0    764.87         0.00     764.87    18.9
 Axis Bank             201006    407.4    3325.59   1000.78     4326.37    1397.50   2928.87    1811.82      0.00   375.17      0.0    741.88         0.00     741.88    18.3
 Axis Bank             201009    408.8    3624.25   1033.24     4657.49    1540.75   3116.74    2009.15      0.00   372.45      0.0    735.14         0.00     735.14    18.0

 BHEL                  200909    489.5    6625.21    297.81     6923.02 5495.68      1427.34       4.52     93.41   471.53      0.0    857.88         0.00     857.88    17.5
 BHEL                  200912    489.5    7100.34    322.17     7422.51 5667.53      1754.98       6.90    103.81   571.68      0.0   1072.59         0.00    1072.59    21.9
 BHEL                  201003    489.5   13559.10    593.53    14152.63 11071.84     3080.79      17.80    164.69   988.72      0.0   1909.58         0.00    1909.58    39.0
 BHEL                  201006    489.5    6479.69    284.80     6764.49 5636.02      1128.47       3.83    126.89   330.10      0.0    667.65         0.00     667.65    13.6
 BHEL                  201009    489.5    8328.41    324.23     8652.64 6858.26      1794.38       5.93    134.10   512.07      0.0   1142.28         0.00    1142.28    23.3

 BPCL                  200909    361.5   27071.03    442.37    27513.40   27187.31     326.09    267.25    308.83   -91.22      0.0    -158.77        0.00     -158.77    0.0
 BPCL                  200912    361.5   32161.24    487.25    32648.49   31538.49    1110.00    251.28    381.63    98.00      0.0     379.09        0.00      379.09   10.5
 BPCL                  201003    361.5   37550.90    607.80    38158.70   36423.72    1734.98    205.87    320.78   505.15      0.0     703.18        0.00      703.18   19.5
 BPCL                  201006    361.5   34211.89    341.51    34553.40   35638.41   -1085.01    232.35    400.74     0.00      0.0   -1718.10        0.00    -1718.10    0.0
 BPCL                  201009    361.5   35416.19    552.17    35968.36   32948.27    3020.09    277.98    401.89   198.00      0.0    2142.22        0.00     2142.22   59.3

 Bajaj Auto            200909    144.7    2793.22    116.02     2909.24    2296.83    612.41       0.00     33.58   176.00      0.0    402.83        -31.89    434.72    30.0
 Bajaj Auto            200912    144.7    3165.84    164.84     3330.68    2617.84    712.84       0.02     35.68   202.00      0.0    475.14        -32.15    507.29    35.1
 Bajaj Auto            201003    144.7    3290.45    151.50     3441.95    2669.08    772.87      -0.01     34.11   207.50      2.6    528.65        -32.80    561.45    38.8
 Bajaj Auto            201006    144.7    3737.29    234.44     3971.73    3113.13    858.60       0.63     31.82   236.00      0.0    590.15          0.00    590.15    40.8
 Bajaj Auto            201009    289.4    4180.91    244.62     4425.53    3444.65    980.88       0.65     29.95   268.20      0.0    682.08          0.00    682.08    23.6

 Bharti Airtel        200909    1898.4   10378.50    19.00     10397.50 6078.70      4318.80     208.40   1524.40   509.20   -233.9   2263.00         0.00    2263.00     6.0
 Bharti Airtel        200912    1898.5   10304.95    22.62     10327.57 6261.23      4066.34    -131.88   1591.45   267.66     59.5   2236.90         0.00    2236.90     5.9
 Bharti Airtel        201003    1898.8   10739.41    43.21     10782.62 6766.67      4015.95    -174.67   1671.10   273.14    164.7   2024.11         0.00    2024.11     5.3
 Bharti Airtel        201006    1898.8   12230.80    54.80     12285.60 7847.20      4438.40     419.80   1946.70   540.90   -165.9   1681.60       -72.56    1754.16     4.4
 Bharti Airtel        201009    1898.8   15215.00    16.90     15231.90 10094.30     5137.60     331.90   2579.00   702.50   -134.7   1661.20         0.00    1661.20     4.4

 Cairn India          200909    1896.7     229.78   269.33       499.11    108.21     390.90      0.88      39.05    28.26   -129.3    469.51       150.53     318.98     1.7
 Cairn India          200912    1896.7     495.46    99.85       595.31    192.22     403.09     26.00      29.97    21.45     34.7    290.96         0.00     290.96     1.5
 Cairn India          201003    1897.0     692.83    87.91       780.74    446.90     333.84      1.88      38.16    20.84     27.8    245.19         0.00     245.19     1.3
 Cairn India          201006    1897.4     840.60    28.07       868.67    266.83     601.84     49.26     165.95    29.62     75.6    281.41         0.00     281.41     1.5
 Cairn India          201009    1897.5    2686.42    28.20      2714.62    578.03    2136.59    128.09     275.61   279.86   -132.1   1585.08         0.00    1585.08     8.4

 Cipla                 200909    160.6    1371.18     84.52     1455.70    1062.04    393.66       8.36     47.81    61.75      0.0    275.74         0.00     275.74     3.6
 Cipla                 200912    160.6    1344.16    112.18     1456.34    1058.62    397.72       4.37     45.67    52.65      6.0    289.03         0.00     289.03     3.6
 Cipla                 201003    160.6    1317.49    197.28     1514.77    1116.70    398.07       0.46     49.48    67.60      5.0    275.53        95.00     180.53     2.2
 Cipla                 201006    160.6    1427.38     69.13     1496.51    1129.16    367.35       0.11     54.82    51.25      3.8    257.42         0.00     257.42     3.2
 Cipla                 201009    160.6    1579.88     52.11     1631.99    1248.79    383.20       0.28     63.91    56.00      0.0    263.01         0.00     263.01     3.3

 DLF                  200909     339.4    1750.94    59.83      1810.77    841.81     968.96    248.61      76.55   236.37    -44.6    439.74         0.00     439.74     2.6
 DLF                  200912     339.5    2025.77   130.93      2156.70   1186.47     970.23    256.83      79.96   168.40      0.0    467.89         0.00     467.89     2.8
 DLF                  201003     339.5    1994.37   156.45      2150.82   1081.63    1069.19    314.70      94.71   236.19      0.0    426.38         0.00     426.38     2.5
 DLF                  201006     339.5    2028.53   140.72      2169.25   1048.95    1120.30    388.44     149.83   167.86      0.0    411.03         0.00     411.03     2.4
 DLF                  201009     339.5    2369.02   157.58      2526.60   1440.16    1086.44    433.76     153.97    73.41      0.0    418.38         0.00     418.38     2.5

 Dr Reddy's Labs      200909      84.4    1836.81    14.01      1850.82   1496.19     354.63     -20.85     98.70    59.51      0.0    217.27         0.00     217.27    12.9
 Dr Reddy's Labs      200912      84.4    1743.13    23.87      1767.00   1833.21     -66.21       8.23    111.78    46.85      0.0   -233.07      -411.43     178.36    10.6
 Dr Reddy's Labs      201003      84.4    1622.56    16.53      1639.09   1351.72     287.37       3.90     98.83    78.84      0.0    105.80         0.00     105.80     6.3
 Dr Reddy's Labs      201006      84.6    1683.13    19.11      1702.24   1341.62     360.62      17.74     97.60    35.73      0.0    209.55         0.00     209.55    12.4
 Dr Reddy's Labs      201009      84.6    1870.37    22.20      1892.57   1464.82     427.75       3.49    104.79    32.65      0.0    286.82         0.00     286.82    17.0

 GAIL (India)          200909   1268.5    6223.30    168.92     6392.22    5206.00   1186.22      17.85    141.62   309.40      4.1    713.23         0.00     713.23     5.6
 GAIL (India)          200912   1268.5    6187.84    143.77     6331.61    4918.22   1413.39      14.22    140.91   371.11     27.2    859.95         0.00     859.95     6.8
 GAIL (India)          201003   1268.5    6522.12    148.57     6670.69    5205.35   1465.34      20.01    138.88   354.67     41.0    910.82         0.00     910.82     7.2
 GAIL (India)          201006   1268.5    7095.95     67.55     7163.50    5661.16   1502.34      20.54    159.96   410.98     24.0    886.88         0.00     886.88     7.0
 GAIL (India)          201009   1268.5    8104.09    174.01     8278.10    6671.20   1606.90      11.74    162.59   321.53    187.5    923.55         0.00     923.55     7.3

 HDFC                  200909    284.9    2844.83      5.40     2850.23      96.32   2753.91    1836.51      4.46   249.00      0.0    663.94         0.00     663.94    23.3
 HDFC                  200912    285.9    2756.95      5.26     2762.21      96.24   2665.97    1704.23      4.49   286.00      0.0    671.25         0.00     671.25    23.5
 HDFC                  201003    287.1    2892.30      7.02     2899.32      68.62   2830.70    1559.54      5.28   339.50      0.0    926.38         0.00     926.38    32.2
 HDFC                  201006    291.0    2797.13      4.82     2801.95     111.76   2690.19    1719.59      4.01   272.00      0.0    694.59         0.00     694.59    24.0
 HDFC                  201009    292.0    2965.50      4.72     2970.22     114.72   2855.50    1717.55      4.41   326.00      0.0    807.54         0.00     807.54     5.5

Note: Quarterly Results (Consolidated in Bold)



              Beyond Market 07th Dec ’10                                                                                                         It’s simplified...             41
 Quarterly Results of Nifty 50 Companies (For quarter ended September ’10)
           Co. Name         Year    Equity   Net Sale    Open       T.Inc.    T.Exp.    PBIDT      Int.     Dep.      Tax     D.Tax     Rep.      Ex. Item     Adj.     EPS
                                                        Interest                                                                        PAT                    PAT
     HCL Technologies      200909    134.3    1247.32     47.87     1295.19    866.41    428.78     15.23    68.45    44.35      0.0    300.75         0.00    300.75    4.5
     HCL Technologies      200912    134.7    1213.71     45.51     1259.22    886.46    372.76     36.07    67.40    13.85      0.0    255.44         0.00    255.44    3.8
     HCL Technologies      201003    135.2    1287.11     34.06     1321.17    943.10    378.07     24.61    64.73    26.16      0.0    262.57         0.00    262.57    3.9
     HCL Technologies      201006    135.8    1330.61     35.61     1366.22   1017.64    348.58     25.45    73.43    11.88      0.0    237.82         0.00    237.82    3.5
     HCL Technologies      201009    136.0    1498.32     42.02     1540.34   1220.00    320.34     26.29    73.43    25.74      0.0    194.88         0.00    194.88    2.9

     HDFC Bank             200909    427.4    3991.89   1053.54     5045.43   2010.44   3034.99   2036.13     0.00   311.40      0.0    687.46         0.00    687.46   16.1
     HDFC Bank             200912    455.2    4034.81    853.01     4887.82   1900.94   2986.88   1810.90     0.00   357.48      0.0    818.50         0.00    818.50   18.7
     HDFC Bank             201003    457.7    4053.11    903.55     4956.66   2000.45   2956.21   1701.75     0.00   417.84      0.0    836.62         0.00    836.62   18.3
     HDFC Bank             201006    459.7    4420.15    939.88     5360.03   2147.33   3212.70   2019.01     0.00   381.98      0.0    811.71         0.00    811.71   17.7
     HDFC Bank             201009    462.6    4810.00    960.70     5770.70   2134.36   3636.34   2283.72     0.00   440.48      0.0    912.14         0.00    912.14   19.8

     Hero Honda Motor      200909     39.9    4040.10     98.21     4138.31   3325.43    812.88     -6.10    50.34   171.50      0.0    597.14         0.00    597.14   29.9
     Hero Honda Motor      200912     39.9    3814.42     67.56     3881.98   3166.11    715.87     -4.59    46.89   137.80      0.0    535.77         0.00    535.77   26.8
     Hero Honda Motor      201003     39.9    4092.61     99.20     4191.81   3410.58    781.23     -4.47    48.66   138.23      0.0    598.81         0.00    598.81   30.0
     Hero Honda Motor      201006     39.9    4264.61     85.42     4350.03   3694.07    655.96     -2.66    48.28   118.65      0.0    491.69         0.00    491.69   24.6
     Hero Honda Motor      201009     39.9    4511.29    119.01     4630.30   3944.01    686.29     -2.07    60.75   122.01      0.0    505.60         0.00    505.60   25.3

     Hind. Unilever        200909    218.1    4228.11    119.24     4347.35   3783.29    564.06      1.48    46.24    87.81      0.0    428.53      -112.19    540.72    2.5
     Hind. Unilever        200912    218.1    4504.26    159.57     4663.83   3792.97    870.86      0.19    45.01   176.55      0.0    649.11        34.97    614.14    2.8
     Hind. Unilever        201003    218.2    4315.75    294.93     4610.68   3791.29    819.39      0.14    50.29   187.76      0.0    581.20       160.49    420.71    1.9
     Hind. Unilever        201006    218.2    4793.89    147.35     4941.24   4199.67    741.57      0.08    53.50   154.78      0.0    533.21        14.34    518.87    2.4
     Hind. Unilever        201009    218.2    4680.87    206.48     4887.35   4123.20    764.15      0.07    55.37   142.59      0.0    566.12        32.30    533.82    2.6

     Hindalco Inds.        200909    170.1    4890.41     81.84     4972.25   4305.80    666.45     66.29   165.86    90.25      0.0    344.05         0.00    344.05    2.0
     Hindalco Inds.        200912    191.4    5286.10     78.76     5364.86   4567.69    797.17     72.94   167.61   129.52      0.0    427.10         0.00    427.10    2.4
     Hindalco Inds.        201003    191.4    5358.46    123.60     5482.06   4569.03    913.03     70.54   168.41    10.16      0.0    663.92         0.00    663.92    3.5
     Hindalco Inds.        201006    191.4    5145.51    101.66     5247.17   4345.79    901.38     59.33   169.09   138.56      0.0    534.40         0.00    534.40    2.8
     Hindalco Inds.        201009    191.4    5802.76    139.28     5942.04   5161.59    780.45     52.63   171.77   122.24      0.0    433.81         0.00    433.81    2.3

     IDFC                 200909    1295.5    1019.84     15.53    1035.37     124.06    911.31   512.07      9.85    97.55     0.0     291.84        0.00     291.84    2.3
     IDFC                 200912    1296.6     997.43      0.71     998.14     140.87    857.27   478.47     10.69    97.88     0.0     269.90        0.00     269.90    2.1
     IDFC                 201003    1300.6    1023.84     10.49    1034.33     285.96    748.37   436.18     10.50    73.81     0.0     228.11        0.00     228.11    1.8
     IDFC                 201006    1301.6    1091.39      6.12    1097.51     158.02    939.49   485.21      9.70   109.79     0.0     335.11        0.00     335.11    2.6
     IDFC                 201009    1460.0    1216.75      2.99    1219.74     165.02   1054.72   568.79     10.35   137.48     0.0     338.40        0.00     338.40    2.3

     ICICI Bank            200909   1113.6    6656.94   1823.79     8480.73   2495.83   5984.90   4620.87     0.00   402.29    -78.4   1040.13         0.00   1040.13    9.3
     ICICI Bank            200912   1114.2    6089.57   1673.14     7762.71   2364.55   5398.16   4031.48     0.00   463.13   -197.5   1101.06         0.00   1101.06    9.9
     ICICI Bank            201003   1114.9    5826.98   1890.84     7717.82   2516.64   5201.18   3792.04     0.00   342.31     61.3   1005.57         0.00   1005.57    9.0
     ICICI Bank            201006   1115.5    5812.54   1680.51     7493.05   2281.31   5211.74   3821.49     0.00   515.10   -150.8   1025.98         0.00   1025.98    9.2
     ICICI Bank            201009   1150.8    6309.10   1577.93     7887.03   2211.51   5675.52   4104.72     0.00   495.10   -160.6   1236.27         0.00   1236.27   10.7

     Infosys Tech.        200909     286.0    5585.00    239.00    5824.00    3892.00   1932.00     0.00      0.00   397.00     0.0    1535.00        0.00    1535.00   26.9
     Infosys Tech.        200912     286.0    5741.00    231.00    5972.00    3704.00   2268.00     0.00    231.00   455.00     0.0    1582.00        0.00    1582.00   27.8
     Infosys Tech.        201003     286.0    5944.00    256.00    6200.00    3922.00   2278.00     0.00    220.00   357.00    84.0    1617.00       48.00    1569.00   27.4
     Infosys Tech.        201006     286.0    6198.00    239.00    6437.00    4443.00   1994.00     0.00      0.00   506.00     0.0    1488.00        0.00    1488.00   26.1
     Infosys Tech.        201009     286.0    6947.00    267.00    7214.00    4849.00   2365.00     0.00      0.00   628.00     0.0    1737.00        0.00    1737.00   30.4

     ITC                   200909    378.0    4352.26    121.13     4473.39   2814.83   1658.56     18.14   148.39   482.12      0.0   1009.91         0.00   1009.91    2.7
     ITC                   200912    379.5    4531.85    207.42     4739.27   2872.51   1866.76     10.87   154.87   556.85      0.0   1144.17         0.00   1144.17    3.0
     ITC                   201003    381.8    5053.79    137.02     5190.81   3513.65   1677.16     18.51   153.86   476.57      0.0   1028.22         0.00   1028.22    2.7
     ITC                   201006    381.8    4816.63    129.19     4945.82   3210.25   1735.57      5.80   159.68   499.78      0.0   1070.31         0.00   1070.31    2.8
     ITC                   201009    767.7    5061.20    210.47     5271.67   3272.29   1999.38      5.36   163.99   583.29      0.0   1246.74         0.00   1246.74    1.6

     Jindal Steel         200909      93.1    2455.58     20.26    2475.84    1139.64   1336.20   102.62    247.42   177.80     0.0     808.36        0.00     808.36    8.7
     Jindal Steel         200912      93.1    2675.29     32.15    2707.44    1236.03   1471.41   107.46    253.92   235.68     0.0     874.35        0.00     874.35    9.4
     Jindal Steel         201003      93.1    3175.59     30.30    3205.89    1716.93   1488.96    52.30    254.57   218.71     0.0     963.38        0.00     963.38   10.4
     Jindal Steel         201006      93.4    2998.24     11.68    3009.92    1436.19   1573.73    86.14    250.91   279.71     0.0     956.97        0.00     956.97   10.1
     Jindal Steel         201009      93.4    3077.95      7.88    3085.83    1580.41   1505.42    78.18    273.05   259.95     0.0     894.24        0.00     894.24    9.5

     JP Associates         200909    280.4    1843.78   1010.49     2854.27   1368.71   1485.56    258.75   110.04   219.84     28.7    870.19      731.96     138.23    4.1
     JP Associates         200912    424.4    2852.37    116.29     2968.66   2290.53    678.13    276.23   110.94    81.28    106.7    103.02        0.00     103.02    0.5
     JP Associates         201003    424.9    3345.20     12.29     3357.49   2492.24    865.25    298.92   133.37    76.66    112.3    243.97        0.00     243.97    1.1
     JP Associates         201006    424.9    3174.19    556.75     3730.94   2532.77   1198.17    327.94   150.34   142.82     61.1    515.98      367.32     148.66    0.7
     JP Associates         201009    425.3    2993.26     84.69     3077.95   2312.19    765.76    323.35   152.78    56.93    117.2    115.52        1.09     114.43    0.5

     Kotak Mah. Bank      200909     346.8    1105.97   1210.93    2316.90    1424.15    892.75   426.42     38.22   127.21     0.0     299.77        0.00     299.77    8.7
     Kotak Mah. Bank      200912     347.7    1184.70   1225.87    2410.57    1444.92    965.65   444.92     36.34   147.97     0.0     331.40        0.00     331.40    9.6
     Kotak Mah. Bank      201003     348.1    1247.75   1701.78    2949.53    1827.09   1122.44   463.85     35.16   193.33     0.0     418.55        0.00     418.55   12.0
     Kotak Mah. Bank      201006     348.6    1315.66   1017.07    2332.73    1295.80   1036.93   523.28     36.70   151.06     0.0     327.69        0.00     327.69    9.4
     Kotak Mah. Bank      201009     366.7    1449.27   1496.23    2945.50    1776.05   1169.45   606.04     37.83   157.98     0.0     364.11        0.00     364.11    9.9

     Larsen & Toubro       200909    117.5    7866.18    334.42     8200.60 7123.14     1077.46    126.25   100.13   272.62     -1.9    580.40       18.61     561.79    9.9
     Larsen & Toubro       200912    120.1    8071.37    346.93     8418.30 7115.29     1303.01    133.92   104.52   302.16      3.6    758.82       62.55     696.27   11.6
     Larsen & Toubro       201003    120.4   13374.89    640.74    14015.63 11534.34    2481.29    135.56   116.22   804.56    -13.2   1438.10      100.58    1337.52   22.2
     Larsen & Toubro       201006    120.6    7835.10    276.97     8112.07 6878.26     1233.81    142.34   114.15   311.05      0.1    666.17        0.00     666.17   11.1
     Larsen & Toubro       201009    121.0    9260.77    523.02     9783.79 8325.08     1458.71    193.15   121.21   370.47      8.9    764.98       70.84     694.14   11.5

Note: Quarterly Results (Consolidated in Bold)



42
                  Beyond Market 07th Dec ’10                                                                                                     It’s simplified...
Quarterly Results of Nifty 50 Companies (For quarter ended September ’10)
        Co. Name      Year    Equity   Net Sale    Open       T.Inc.     T.Exp.    PBIDT      Int.      Dep.      Tax      D.Tax     Rep.      Ex. Item     Adj.     EPS
                                                  Interest                                                                           PAT                    PAT
 M&M                 200909    273.4    4465.00    316.83     4781.83    3726.59   1055.24     12.76     89.19    250.35      0.0    702.94       66.92     636.02   23.3
 M&M                 200912    273.6    4478.70     72.10     4550.80    3827.61    723.19     37.53     98.36    173.60      0.0    413.70        0.00     413.70   15.1
 M&M                 201003    283.0    5278.86     43.89     5322.75    4459.05    863.70      0.90     94.74    197.80      0.0    570.26        0.00     570.26   10.1
 M&M                 201006    283.1    5124.17     56.41     5180.58    4384.52    796.06    -22.70     97.62    158.75      0.0    562.39        0.00     562.39    9.9
 M&M                 201009    285.2    5311.26    322.87     5634.13    4539.39   1094.74     -9.05     97.00    248.30      0.0    758.49        0.00     758.49   13.4

 Maruti Suzuki       200909    144.5    7080.67    233.18     7313.85    6287.70   1026.15      5.97    203.11    247.07      0.0    570.00        0.00     570.00   19.7
 Maruti Suzuki       200912    144.5    7372.65    221.45     7594.10    6368.94   1225.16      8.37    202.78    326.48      0.0    687.53        0.00     687.53   23.8
 Maruti Suzuki       201003    144.5    8280.82    222.70     8503.52    7313.48   1190.04     12.85    223.04    297.60      0.0    656.55        0.00     656.55   22.7
 Maruti Suzuki       201006    144.5    8090.39    241.34     8331.73    7439.02    892.71      7.98    241.70    177.67      0.0    465.36        0.00     465.36   16.1
 Maruti Suzuki       201009    144.5    8977.37    303.87     9281.24    8186.95   1094.29      9.72    238.19    248.14      0.0    598.24        0.00     598.24   20.7

 NTPC                200909   8245.5   10782.79    739.82    11522.61 7567.88      3954.73    540.69    643.75    574.94     42.4   2151.95        0.00    2151.95    2.6
 NTPC                200912   8245.5   11183.73    779.13    11962.86 7818.48      4144.38    341.78    661.36    886.22   -111.7   2364.98        0.00    2364.98    2.9
 NTPC                201003   8245.5   12353.39    627.65    12981.04 9687.65      3293.39    481.79    732.16    -97.62    159.4   2017.65        0.00    2017.65    2.5
 NTPC                201006   8245.5   12944.49    584.93    13529.42 9957.76      3571.66    535.75    682.72    421.17     90.1   1841.89        0.00    1841.89    2.2
 NTPC                201009   8245.5   12989.29   2378.07    15367.36 11241.89     4125.47    590.20    506.28    643.33    278.3   2107.38        0.00    2107.38    2.6

 ONGC                200909   2138.9   15080.59   1250.29    16330.88    6357.09 9973.79        3.54   2356.06   2019.97    504.6   5089.64        0.00    5089.64   23.8
 ONGC                200912   2138.9   15314.49    161.52    15476.01    6171.46 9304.55        2.93   4675.79   1780.50   -208.3   3053.58        0.00    3053.58   14.3
 ONGC                201003   2138.9   14713.26   1758.21    16471.47    6584.31 9887.16       56.08   4448.03   1009.34    597.3   3776.41        0.00    3776.41   17.7
 ONGC                201006   2138.9   13665.60    564.62    14230.22    5629.80 8600.42        2.76   3114.27   1825.60     -3.4   3661.14        0.00    3661.14   17.1
 ONGC                201009   2138.9   18193.59   1142.87    19336.46    7108.47 12227.99       0.91   4400.07   2231.96    206.3   5388.77        0.00    5388.77   25.2

 Power Grid Corpn    200909   4208.8    1701.30     99.60     1800.90     277.08   1523.82    393.47    581.85     87.09      2.9    459.97        -0.68    460.65    1.1
 Power Grid Corpn    200912   4208.8    1525.41    224.99     1750.40     278.71   1471.69    411.76    535.97     33.74      2.4    487.84         0.36    487.48    1.2
 Power Grid Corpn    201003   4208.8    2230.46   -123.87     2106.59     506.23   1600.36    331.87    394.86    181.86    145.3    546.52         0.00    546.52    1.3
 Power Grid Corpn    201006   4208.8    1999.12    151.77     2150.89     318.03   1832.86    404.91    502.39    170.06     52.3    703.18         0.91    702.27    1.7
 Power Grid Corpn    201009   4208.8    2126.63     96.34     2222.97     344.37   1878.60    401.66    545.60    188.38     91.6    651.40        -2.45    653.85    1.6

 Punjab Natl.Bank    200909    315.3    5304.52    771.34     6075.86    1373.24   4702.62   3312.29      0.00    463.37      0.0    926.96        0.00     926.96   29.4
 Punjab Natl.Bank    200912    315.3    5505.54    731.01     6236.55    1523.81   4712.74   3176.44      0.00    524.99      0.0   1011.31        0.00    1011.31   32.1
 Punjab Natl.Bank    201003    315.3    5607.63    934.60     6542.23    1721.95   4820.28   3109.68      0.00    575.57      0.0   1135.03       54.04    1080.99   34.3
 Punjab Natl.Bank    201006    315.3    5991.86    871.52     6863.38    1926.05   4937.33   3373.29      0.00    495.75      0.0   1068.29        0.00    1068.29   33.9
 Punjab Natl.Bank    201009    315.3    6455.43    718.25     7173.68    2110.88   5062.80   3478.74      0.00    509.52      0.0   1074.54        0.00    1074.54   34.1

 Ranbaxy Labs.       200909    210.2    1189.60    185.37     1374.97    1073.70    301.27      7.35     31.67     76.17      0.0    186.08         6.22    179.86    4.4
 Ranbaxy Labs.       200912    210.2    1522.88    186.00     1708.88     783.84    925.04    -75.84     55.98    456.67      0.0    488.23         0.00    488.23   11.6
 Ranbaxy Labs.       201003    210.3    1648.51    767.99     2416.50    1056.36   1360.14     22.41     73.59    392.34      0.0    871.80         0.00    871.80   20.7
 Ranbaxy Labs.       201006    210.3    1069.58    382.67     1452.25    1283.21    169.04    123.60     44.33      1.19      0.0     -0.08       -14.74     14.66    0.0
 Ranbaxy Labs.       201009    210.4    1130.99    378.06     1509.05    1209.93    299.12      9.57     45.47     22.31      0.0    221.77        89.48    132.29    3.1

 Rel. Comm.         200909    1032.0    5352.36   350.20     5702.56    3677.77    2024.79    663.57    714.37 -173.93       0.0     740.30       -2.85     743.15    3.6
 Rel. Comm.         200912    1032.0    5128.97   180.80     5309.77    3519.94    1789.83   -407.55    833.06 200.26        0.0    1108.01      -18.81    1126.82    5.4
 Rel. Comm.         201003    1032.0    4698.24   276.54     4974.78    3441.54    1533.24   -813.40   1084.66 192.33        0.0    1170.11        0.00    1170.11    5.7
 Rel. Comm.         201006    1032.0    5014.96    94.58     5109.54    3477.16    1632.38    439.67    964.77 -71.86        0.0     250.89        0.00     250.89    1.2
 Rel. Comm.         201009    1032.0    4972.59   145.71     5118.30    3459.67    1658.63    279.70    955.28 -66.09        0.0     445.92        0.00     445.92    2.2

 Reliance Capital   200909     246.2    1395.31    71.08     1466.39     863.85     602.54   360.77      15.38    81.60     -13.5    155.83       -0.03     155.86    6.3
 Reliance Capital   200912     246.2    1352.93   135.90     1488.83    1021.64     467.19   345.72      17.51    49.59     -11.7     63.18        0.00      63.18    2.6
 Reliance Capital   201003     246.2    1694.28    24.71     1718.99    1343.41     375.58   258.73      20.46    24.74       4.8     64.49        0.00      64.49    2.6
 Reliance Capital   201006     246.2    1035.18   232.02     1267.20     861.92     405.28   294.41      12.84    32.85     -12.8     76.97        0.00      76.97    3.1
 Reliance Capital   201009     246.2    1280.61    34.45     1315.06     824.93     490.13   339.69      11.85    36.86     -14.3    111.97        0.11     111.86    4.6

 Reliance Inds.      200909   1643.0   46848.00    628.00    47476.00   39631.00 7845.00      462.00   2432.00 800.00       299.0   3852.00        0.00    3852.00   23.4
 Reliance Inds.      200912   3270.0   56856.00    508.00    57364.00   49012.00 8352.00      550.00   2795.00 699.00       300.0   4008.00        0.00    4008.00   12.3
 Reliance Inds.      201003   3270.0   57570.00    615.00    58185.00   48434.00 9751.00      525.00   3392.00 821.00       303.0   4710.00        0.00    4710.00   14.4
 Reliance Inds.      201006   3271.0   58228.00    722.00    58950.00   48886.00 10064.00     541.00   3485.00 987.00       200.0   4851.00        0.00    4851.00   14.8
 Reliance Inds.      201009   3272.0   57479.00    672.00    58151.00   48083.00 10068.00     542.00   3377.00 1026.00      200.0   4923.00        0.00    4923.00   15.1

 Reliance Infra.     200909    225.3    2571.88    240.94     2812.82    2336.64    476.18     73.96     73.96     25.48     -2.6    306.90        0.00     306.90   13.6
 Reliance Infra.     200912    225.3    2235.14    267.93     2503.07    2052.12    450.95     56.53     83.02     48.77    -14.5    277.13        0.00     277.13   12.3
 Reliance Infra.     201003    244.9    2553.12    257.57     2810.69    2372.51    438.18     58.06     90.67     38.36      0.0    251.09        0.00     251.09   10.3
 Reliance Infra.     201006    244.9    2135.38    273.09     2408.47    1974.60    433.87     61.31     76.86     49.45      0.0    246.25        0.00     246.25   10.1
 Reliance Infra.     201009    244.9    2364.33     23.98     2388.31    2022.87    365.44     60.04     82.53     52.38      0.0    170.49        0.00     170.49    7.0

 Reliance Power     200909    2396.8       0.00   246.15      246.15      15.77     230.38     0.00       0.09     35.76     0.0     194.53        0.00     194.53    0.8
 Reliance Power     200912    2396.8       0.00   179.16      179.16      26.74     152.42     0.00       0.16     18.61     0.0     133.65        0.00     133.65    0.6
 Reliance Power     201003    2396.8       0.00    82.56       82.56      53.77      28.79     7.02       5.34    -75.97     0.0      92.40        0.00      92.40    0.0
 Reliance Power     201006    2396.8     139.34   287.41      426.75     130.13     296.62    28.96      23.75     48.50     0.0     195.41        0.00     195.41    0.8
 Reliance Power     201009    2396.8     168.69   343.71      512.40     140.50     371.90    49.90      37.49     49.71     0.0     234.80        0.00     234.80    1.0

 SAIL                200909   4130.4    9943.92    627.67    10571.59    7647.01   2924.58     73.50    332.22    853.28      2.1   1663.49        0.00    1663.49    4.0
 SAIL                200912   4130.4    9697.14    588.33    10285.47    7300.24   2985.23    110.11    339.04    866.04     -5.5   1675.55        0.00    1675.55    4.1
 SAIL                201003   4130.4   11955.20    717.49    12672.69    9132.70   3539.99    134.71    338.44    808.68    173.3   2084.90        0.00    2084.90    5.1
 SAIL                201006   4130.4    9029.37    490.15     9519.52    7290.46   2229.06    129.64    350.51    578.05     -5.8   1176.65        0.00    1176.65    2.9
 SAIL                201009   4130.4   10602.88    578.67    11181.55    9111.39   2070.16    109.04    368.82    487.28     15.0   1090.01        0.00    1090.01    2.6

Note: Quarterly Results (Consolidated in Bold)



            Beyond Market 07th Dec ’10                                                                                                        It’s simplified...            43
 Quarterly Results of Nifty 50 Companies (For quarter ended September ’10)
           Co. Name       Year    Equity   Net Sale    Open       T.Inc.     T.Exp.     PBIDT        Int.      Dep.       Tax     D.Tax     Rep.       Ex. Item     Adj.     EPS
                                                      Interest                                                                              PAT                     PAT

     Sesa Goa            200909     82.1     534.11     93.89      628.00     386.01     241.99       1.98      20.23     48.65      1.9    166.46        0.00     166.46     2.1
     Sesa Goa            200912     82.1    1866.79    154.84     2021.63     853.13    1168.50      25.06      22.45    284.86      5.7    827.51        0.00     827.51    10.2
     Sesa Goa            201003     83.1    2403.54    144.42     2547.96     915.89    1632.07      22.65      16.64    385.87     -8.2   1212.87        0.00    1212.87    14.6
     Sesa Goa            201006     86.0    2394.04    179.98     2574.02     953.45    1620.57      13.74      19.14    283.19      0.0   1301.79        0.00    1301.79    15.2
     Sesa Goa            201009     86.0     906.82    111.96     1018.78     578.55     440.23      14.01      19.42     18.90      0.0    384.94        0.00     384.94     4.5

     Siemens             200909     67.4    2482.05     31.29     2513.34    2271.01     242.33       -8.67     21.33     94.06    -15.9    151.54        0.00      151.54    4.5
     Siemens             200912     67.4    1834.01     32.59     1866.60    1503.39     363.21      -15.72     21.15    123.82     -2.5    236.41        0.00      236.41    7.0
     Siemens             201003     67.4    2212.42     13.66     2226.08    1939.98     286.10      -11.72     23.74     95.35     -2.4    181.09        0.00      181.09    5.4
     Siemens             201006     67.4    2234.94     11.46     2246.40    2004.42     241.98      -18.06     24.95     88.12     -9.2    156.12        0.00      156.12    4.6
     Siemens             201009     67.4    3000.80     24.48     3025.28    2628.06     397.22      -21.44     30.07    143.24     -6.1    251.47        0.00      251.47    7.5

     St Bk of India      200909    634.9   25017.91 8083.74      33101.65   11092.83   22008.82   17146.18       0.00   1729.48     0.0    3050.99        0.00    3050.99    48.1
     St Bk of India      200912    634.9   24948.45 7283.00      32231.45   11026.67   21204.78   16166.75       0.00   1683.09     0.0    3304.59        0.00    3304.59    52.1
     St Bk of India      201003    634.9   25473.26 9912.77      35386.03   15304.37   20081.66   15800.43       0.00   1608.14     0.0    2619.72        0.00    2619.72    41.3
     St Bk of India      201006    634.9   26312.95 6495.11      32808.06   11198.88   21609.18   15961.93       0.00   2180.16     0.0    3365.26        0.00    3365.26    53.0
     St Bk of India      201009    635.0   27919.03 10006.41     37925.44   17328.29   20597.15   16458.74       0.00   1701.29     0.0    2363.95     -277.26    2641.21    41.6

     Sterlite Inds.      200909    168.1    6103.91    451.75     6555.66    4712.88    1842.78      83.48     173.39    259.33     0.0     958.85      -19.59     978.44    11.8
     Sterlite Inds.      200912    168.1    6676.96    441.31     7118.27    5345.20    1773.07      92.89     178.21    290.34     0.0     731.33     -220.65     951.98    11.3
     Sterlite Inds.      201003    168.1    7110.80    665.62     7776.42    5043.42    2733.00     120.61     224.55    452.82     0.0    1380.90        0.00    1380.90    16.4
     Sterlite Inds.      201006    336.1    5924.50    737.24     6661.74    4551.38    2110.36     140.85     217.04    368.46     0.0    1008.43        0.00    1008.43     3.0
     Sterlite Inds.      201009    336.1    6028.98    633.22     6662.20    4601.30    2060.90      -0.32     212.34    455.52     0.0    1008.03      -15.95    1023.98     3.0

     Sun Pharma.Inds.    200909    103.6    1185.17     66.37     1251.54     737.87     513.67     -32.47      37.90     39.96     0.0     453.81        0.00     453.81    21.9
     Sun Pharma.Inds.    200912    103.6    1020.86      9.14     1030.00     652.45     377.55     -23.31      35.89     26.05     0.0     338.95        0.00     338.95    16.4
     Sun Pharma.Inds.    201003    103.6    1109.15    -11.14     1098.01     690.64     407.37     -24.87      41.94     -1.26     0.0     394.48        0.00     394.48    19.0
     Sun Pharma.Inds.    201006    103.6    1399.70     -8.76     1390.94     783.73     607.21     -20.32      40.20      9.70     0.0     564.32        0.00     564.32    27.2
     Sun Pharma.Inds.    201009    103.6    1370.07     55.59     1425.66     903.03     522.63     -36.78      35.18     17.21     0.0     503.65        0.00     503.65    24.3

     Suzlon Energy       200909    311.3    4793.34     62.57     4855.91    4734.68     121.23     292.60     188.04      1.81     0.0    -355.52      -20.16     -335.36    0.0
     Suzlon Energy       200912    311.4    5590.03    291.80     5881.83    5341.98     539.85     289.51     167.29     56.38     0.0      14.10      187.37     -173.27    0.1
     Suzlon Energy       201003    311.4    6083.61    109.77     6193.38    5629.37     564.01     300.15     145.06    295.31     0.0    -188.47       -9.88     -178.59    0.0
     Suzlon Energy       201006    311.4    2398.65     29.32     2427.97    2994.60    -566.63     261.10     126.50    -23.71     0.0    -912.22      -37.28     -874.94    0.0
     Suzlon Energy       201009    349.1    3771.56     67.45     3839.01    3680.52     158.49     267.09     137.28    132.33     0.0    -369.23        0.00     -369.23    0.0

     Tata Motors         200909    514.1   20877.67    637.19    21514.86   19800.93    1713.93     559.03     847.94    289.42     0.0      21.78        8.78      13.00     0.4
     Tata Motors         200912    544.0   25979.61     88.71    26068.32   23306.71    2761.61     545.75    1307.20    242.87     0.0     650.26     -169.64     819.90    15.1
     Tata Motors         201003    570.6   28734.80   1386.80    30121.60   26021.31    4100.29     551.41     887.76    409.20     0.0    2227.80        0.00    2227.80    39.0
     Tata Motors         201006    570.6   26876.08    229.62    27105.70   23241.54    3864.16     561.60    1011.54    296.02     0.0    1988.73      -23.55    2012.28    35.3
     Tata Motors         201009    570.6   28572.71    381.15    28953.86   24780.36    4173.50     531.27    1094.86    313.10     0.0    2222.99      112.81    2110.18    37.0

     Tata Power Co.      200909    237.1    4735.46    115.27     4850.73    3803.67    1047.06     187.73     224.42    238.68     0.0     368.73        0.00     368.73    15.8
     Tata Power Co.      200912    237.2    4313.04     66.86     4379.90    3793.65     586.25     185.30     220.79     26.48     0.0      98.57        0.00      98.57     4.2
     Tata Power Co.      201003    237.3    5278.85    519.78     5798.63    4235.72    1562.91     185.30     231.40     78.93     0.0     946.78        0.00     946.78    39.9
     Tata Power Co.      201006    237.3    5151.62    -51.84     5099.78    4045.97    1053.81     171.84     235.00    289.01     0.0     317.67        0.00     317.67    13.1
     Tata Power Co.      201009    237.3    4797.84    337.03     5134.87    3672.17    1462.70     208.08     247.01    264.81     0.0     675.54        0.00     675.54    28.3

     Tata Steel          200909    886.7   25276.14    166.80    25442.94   25934.56    -491.62     717.18    1153.52 327.52        0.0 -2707.25       -784.97    -1922.28    0.0
     Tata Steel          200912    886.7   26068.55    598.52    26667.07   23447.16    3219.91     763.04    1154.68 814.78        0.0   472.65        -73.26      545.91    6.2
     Tata Steel          201003    886.7   27225.40    865.57    28090.97   23111.53    4979.44     659.95    1094.55 786.60        0.0 2434.06           0.00     2434.06   27.4
     Tata Steel          201006    886.7   27010.06    285.77    27295.83   22822.09    4473.74     597.59    1043.94 1000.46       0.0 1825.26         -38.73     1863.99   21.0
     Tata Steel          201009    901.7   28090.91   1369.86    29460.77   25005.44    4455.33     663.71    1078.10 744.97        0.0 1978.81         -22.91     2001.72   22.2

     TCS                 200909    195.7    7435.23     -8.63     7426.60    5317.25    2109.35       3.53     165.96    277.27     0.0    1642.21        0.00    1642.21     8.4
     TCS                 200912    195.7    7648.53     65.51     7714.04    5375.79    2338.25       3.66     167.91    322.52     0.0    1823.90        0.00    1823.90     9.3
     TCS                 201003    195.7    7738.17    189.64     7927.81    5399.89    2527.92       5.20     169.02    319.87     0.0    2000.59        0.00    2000.59    10.2
     TCS                 201006    195.7    8217.28     95.46     8312.74    5808.08    2504.66       2.68     161.53    402.80     0.0    1906.07        0.00    1906.07     9.7
     TCS                 201009    195.7    9286.39     70.75     9357.14    6510.22    2846.92      15.28     172.46    460.14     0.0    2169.21        0.00    2169.21    11.1

     Wipro               200909    293.3    6917.70    128.40     7046.10    5390.10    1656.00      49.20     208.60    221.70     0.0    1170.70        0.00    1170.70     8.0
     Wipro               200912    293.3    6963.40    109.40     7072.80    5409.00    1663.80      21.90     192.30    229.10     0.0    1217.40        0.00    1217.40     8.4
     Wipro               201003    293.6    6982.90    144.60     7127.50    5457.80    1669.70     -34.20     188.70    301.50     0.0    1209.10        0.00    1209.10     8.3
     Wipro               201006    489.9    7236.40    150.80     7387.20    5598.70    1788.50      40.30     188.40    234.50     0.0    1318.60        0.00    1318.60     5.4
     Wipro               201009    490.4    7730.50    161.40     7891.90    6130.40    1761.50      46.70     196.80    218.30     0.0    1284.90        0.00    1284.90     5.3

Note: Quarterly Results (Consolidated in Bold)




44
                Beyond Market 07th Dec ’10                                                                                                           It’s simplified...
CHANGE IN PRICE AND OPEN INTEREST
                                     CHANGE IN PRICE AND OPEN INTEREST OF THE NIFTY 50 COMPANIES
                                                15th Nov'10      30th Nov'10
              Company Name                              Price         Open               Price      Open      Change Change Change                 Change
                                                        (Rs)         Interest            (Rs)      Interest   in Price in Open in Price            in Open
                                                                                                                (Rs)   Interest  (%)               Interest
                                                                                                                                                      (%)
   Nifty Futures                                      6140.25 28101350                   5886.90   26644100   -253.35    -1457250      -4.13         --5.19
   Bank Nifty                                        12789.95   1610500                 12008.95    1397625   -781.00     -212875      -6.11        -13.22
   ACC Ltd                                            1070.05   2289750                   986.45    1698750    -83.60     -591000      -7.81        -25.81
   Ambuja Cements Ltd                                  155.80 23308000                    140.65   12028000    -15.15   -11280000      -9.72        -48.40
   Axis Bank Ltd                                      1527.70   2210250                  1376.75    2011000   -150.95     -199250      -9.88          -9.01
   Bajaj Auto Ltd                                     1595.10   1332000                  1579.25    1138250    -15.85     -193750      -0.99        -14.55
   Bharti Airtel Ltd                                   311.40 22865000                    360.35   11333000     48.95   -11532000      15.72        -50.44
   Bharat Heavy Electricals Ltd                       2404.30   2776375                  2208.80    2288625   -195.50     -487750      -8.13        -17.57
   Bharat Petroleum Corporation Ltd                    741.30   3892500                   679.05    2780500    -62.25    -1112000      -8.40        -28.57
   Cairn India Ltd                                     331.00 16966000                    315.70   14229000    -15.30    -2737000      -4.62        -16.13
   Cipla Ltd                                           345.45   8403000                   345.00    5378000     -0.45    -3025000      -0.13        -36.00
   DLF Ltd                                             324.40 18445000                    307.05   13460000    -17.35    -4985000      -5.35        -27.03
   Dr Reddy's Laboratories Ltd                        1764.45    640750                  1794.90     600500     30.45      -40250       1.73          -6.28
   GAIL (India) Ltd                                    494.90   2357500                   487.05    1498500     -7.85     -859000      -1.59        -36.44
   HCL Technologies Ltd                                406.15   1806500                   406.30    1275000      0.15     -531500       0.04        -29.42
   HDFC Ltd                                            714.35   5350625                   689.65    4650875    -24.70     -699750      -3.46        -13.08
   HDFC Bank Ltd                                      2386.80   1496250                  2299.15    1511125    -87.65       14875      -3.67           0.99
   Hero Honda Motors Ltd                              1827.50   3024875                  1987.70    2012250    160.20    -1012625       8.77        -33.48
   Hindalco Industries Ltd                             224.30 16462000                    207.05   12276000    -17.25    -4186000      -7.69        -25.43
   Hindustan Unilever Ltd                              304.45 11571000                    299.35   11540000     -5.10      -31000      -1.68          -0.27
   ICICI Bank Ltd                                     1227.65   9572250                  1152.10    9671500    -75.55       99250      -6.15           1.04
   IDFC Ltd                                            196.60 30672000                    187.30   18776000     -9.30   -11896000      -4.73        -38.78
   Infosys Technologies Ltd                           3032.55   2813875                  3060.05    2221500     27.50     -592375       0.91        -21.05
   I T C Ltd                                           175.60 19014000                    172.35   15258000     -3.25    -3756000      -1.85        -19.75
   Jindal Steel & Power Ltd                            680.80   4850500                   641.15    4527500    -39.65     -323000      -5.82          -6.66
   Jaiprakash Associates Ltd                           128.65 47124000                    110.50   32534000    -18.15   -14590000     -14.11        -30.96
   Kotak Mahindra Bank Ltd                             484.55   2856000                   477.75    1953000     -6.80     -903000      -1.40        -31.62
   Larsen & Toubro Ltd                                2088.00   2060500                  1958.25    2488250   -129.75      427750      -6.21         20.76
   Mahindra & Mahindra Ltd                             805.20   7139000                   769.50    4280500    -35.70    -2858500      -4.43        -40.04
   Maruti Suzuki India Ltd                            1442.85   2463250                  1424.00    1707250    -18.85     -756000      -1.31        -30.69
   NTPC Ltd                                            190.95 24514000                    184.85   20769000     -6.10    -3745000      -3.19        -15.28
   Oil & Natural Gas Corporation Ltd                  1321.80   2917750                  1241.45    2340250    -80.35     -577500      -6.08        -19.79
   Punjab National Bank                               1339.30   1319500                  1208.90    1431000   -130.40      111500      -9.74           8.45
   Power Grid Corporation of India Ltd                  98.65 87986000                     95.70   54828000     -2.95   -33158000      -2.99        -37.69
   Ranbaxy Laboratories Ltd                            569.20   5540000                   572.60    3192000      3.40    -2348000       0.60        -42.38
   Reliance Communications Ltd                         169.15 35504000                    132.85   33232000    -36.30    -2272000     -21.46          -6.40
   Reliance Capital Ltd                                762.50 10815500                    655.40    7790500   -107.10    -3025000     -14.05        -27.97
   Reliance Industries Ltd                            1060.80 21804000                    993.95   19828250    -66.85    -1975750      -6.30          -9.06
   Reliance Infrastructure Ltd                        1031.80   7857500                   851.20    7603500   -180.60     -254000     -17.50          -3.23
   Reliance Power Ltd                                  182.30 33418000                    160.80   25044000    -21.50    -8374000     -11.79        -25.06
   Steel Authority of India Ltd                        195.40   8795000                   177.45    6075000    -17.95    -2720000      -9.19        -30.93
   State Bank of India                                3164.15   4572250                  2986.50    3858000   -177.65     -714250      -5.61        -15.62
   Sesa Goa Ltd                                        341.75 13252500                    308.25   11434500    -33.50    -1818000      -9.80        -13.72
   Siemens Ltd                                         823.60   1529000                   773.15    1148500    -50.45     -380500      -6.13        -24.89
   Sterlite Industries (India) Ltd                     183.35 14668000                    162.75   12563000    -20.60    -2105000     -11.24        -14.35
   Sun Pharmaceutical Industries Ltd*                  464.08   2028125                   449.50    1686875    -14.58     -341250      -3.14        -16.83
   Suzlon Energy Ltd                                    53.95 100688000                    47.80   79952000     -6.15   -20736000     -11.40        -20.59
   Tata Motors Ltd                                    1260.95 11091750                   1238.00    8557250    -22.95    -2534500      -1.82        -22.85
   Tata Power Co Ltd                                  1393.40    562000                  1300.40     631750    -93.00       69750      -6.67         12.41
   Tata Steel Ltd                                      620.05 20908500                    585.75   16954500    -34.30    -3954000      -5.53        -18.91
   Tata Consultancy Services Ltd                      1071.15   3656750                  1078.35    3312750      7.20     -344000       0.67          -9.41
   Wipro Ltd                                           434.20   4090530                   422.00    3478943    -12.20     -611587      -2.81        -14.95
* - price and OI data with respect to 15-Nov-10 has been adjusted for 1:5 stock split                                                          Source: NB Research


          Beyond Market 07th Dec ’10                                                                                                It’s simplified...          45
BULK DEALS
Bulk deals take place from normal trading windows that brokers provide and can be done
any time during trading hours. In a bulk deal, the total traded quantity exceeds 0.5%
of the number of equity shares of a company.
                      MAJOR BULK DEALS WHERE OVER 1% OF EQUITY WAS TRADED FROM 15th Nov ’10 TO 30th Nov ’10                              Price (Rs)
  Ex      Date                    Company                                 Client                      Trade   Quantity    % of Eq   Traded      Close
 BSE   15 Nov'10      Computer Point Ltd                  Camellia Suppliers Pvt Ltd                   Buy      575,318    1.92        7.98       7.88
 BSE   15 Nov'10      Computer Point Ltd                  Jai Software & Systems Pvt Ltd               Sell     500,000    1.67        8.00       7.88
 BSE   16 Nov'10      IAG Company Ltd                     IAG Co Ltd Disinvestment                    SELL      235,000    3.65       16.92      17.70
 BSE   16 Nov'10      Marathwada Refractories Ltd         Saha Infrastructure Pvt Ltd                 BUY        19,400    2.77      268.81     270.20
 BSE   16 Nov'10      IAG Company Ltd                     Goldmine Barter Pvt Ltd                     BUY        99,500    1.55       16.95      17.70
 BSE   16 Nov'10      Sanjivani Paranteral Ltd            Sainath Herbal Care Marketing Pvt Ltd       BUY        76,117    1.29       57.07      57.05
 BSE   16 Nov'10      Neha International Ltd              Elia Construction Pvt Ltd                   BUY       167,011    1.02      246.34     236.50
 BSE   18 Nov'10      IAG Company Ltd                     IAG Co Ltd Disinvestment                    SELL      286,698    4.45       14.54       0.00
 BSE   18 Nov'10      Marathwada Refractories Ltd         Saha Infrastructure Pvt Ltd                 BUY        20,000    2.86      280.94       0.00
 BSE   18 Nov'10      Well Pack Papers & Containers Ltd   Aman Tieup Pvt Ltd                          BUY     1,437,763    1.76       42.80       0.00
 BSE   18 Nov'10      Well Pack Papers & Containers Ltd   Pumarth Infrastructure Pvt Ltd              SELL    1,409,000    1.72       42.80       0.00
 BSE   19 Nov'10      Amtek India Ltd                     Warburg Pincus Intnl Llc                     Sell   5,500,000    3.97       64.96       0.00
 BSE   19 Nov'10      Marathwada Refractories Ltd         Saha Infrastructure Pvt Ltd                  Buy       13,000    1.86      294.86       0.00
 BSE   19 Nov'10      Compuage Infocom Ltd                Mandhana Industries Ltd                      Buy       91,746    1.77      233.83       0.00
 BSE   19 Nov'10      Silverline Animation Tech Ltd       Mukund Motor Parts Pvt Ltd                   Buy    1,000,000    1.61       20.95       0.00
 BSE   19 Nov'10      Amtek India Ltd                     North Eastern Publishing And Advt Co Ltd     Buy    2,000,000    1.45       65.79       0.00
 BSE   19 Nov'10      BS Transcomm Ltd                    Mukund Motor Parts Pvt Ltd                   Buy      250,000    1.14      207.37       0.00
 BSE   19 Nov'10      Silverline Animation Tech Ltd       Live Star Marketing Pvt Ltd                  Buy      643,298    1.04       20.95       0.00
 BSE   19 Nov'10      Priyadarshini                       Tarini Enterprises Pvt Ltd                   Sell     112,718    1.02      122.51       0.00
 BSE   22 Nov'10      Indcap Financial Ltd                Shark Communications Pvt Ltd                 Sell     100,000    1.66        9.36       9.35
 BSE   22 Nov'10      Apl Apollo Tubes Ltd                Fidelity Institutional Funds                 Buy      248,708    1.23      148.00     151.65
 BSE   22 Nov'10      Amtek India Ltd                     Warhol Ltd                                   Sell   1,500,000    1.08       64.48      64.45
 BSE   23 Nov'10      Sangam (I) Ltd                      India Advantage Fund I                       Sell   6,207,229   15.75       50.00       0.00
 BSE   23 Nov'10      Sangam (I) Ltd                      Pacific Corporate Services Ltd               Buy    4,572,000   11.60       50.00       0.00
 BSE   23 Nov'10      Sangam (I) Ltd                      Swiss Finance Corporation (Mauritius) Ltd    Sell   2,865,590    7.27       50.00       0.00
 BSE   23 Nov'10      Sangam (I) Ltd                      Withal Commercial Pvt Ltd                    Buy    1,799,990    4.57       50.00       0.00
 BSE   23 Nov'10      Monsanto India Ltd                  Monsanto Holdings Pvt Ltd                    Buy      383,810    4.45     1830.00       0.00
 BSE   23 Nov'10      Monsanto India Ltd                  Bretco Holdings (Mauritius) Ltd              Sell     383,810    4.45     1830.00       0.00
 BSE   23 Nov'10      Indcap Financial Ltd                Shark Communications Pvt Ltd                 Sell     169,954    2.82        8.45       0.00
 BSE   23 Nov'10      Amtek India Ltd                     Copthall Mauritius Investment Ltd            Sell   2,666,549    1.93       64.43       0.00
 BSE   23 Nov'10      Amtek India Ltd                     Neelanchal Mercantile Pvt Ltd                Buy    2,280,000    1.65       64.37       0.00
 BSE   23 Nov'10      Dhanus Technologies Ltd             UCO Bank                                     Sell     190,421    1.06       16.71       0.00
 BSE   23 Nov'10      Sky Industries Ltd                  Vijit Asset Management Pvt Ltd               Sell      40,000    1.01      120.16       0.00
 BSE   24 Nov'10      Seax Global Ventures Ltd            CDC Medinvest                                Sell     395,500    4.47       34.95      34.95
 BSE   24 Nov'10      Shetron Ltd                         Copthall Mauritius Investment Ltd            Sell     244,775    2.72       43.24      43.25
 BSE   24 Nov'10      Le Waterina Resorts & Hotels Ltd    Pawantar Agro Agencies Pvt Ltd               Sell     168,500    2.53      134.00     134.00
 BSE   24 Nov'10      Le Waterina Resorts & Hotels Ltd    Miatru Agro Marketing Pvt Ltd                Sell     150,000    2.25      134.00     134.00
 BSE   24 Nov'10      Micro Technologies (India) Ltd      Withal Commercial Pvt Ltd                    Buy      179,000    1.29      182.07     181.65
 BSE   24 Nov'10      Dhanus Technologies Ltd             Uco Bank                                     Sell     220,000    1.23       15.46      14.70
 BSE   25 Nov'10      Sea Tv Network Ltd                  Narvada Exim Pvt Ltd                         Buy      245,000    2.04       82.00      78.80
 BSE   25 Nov'10      Shetron Ltd                         Copthall Mauritius Investment Ltd            Sell     119,840    1.33       43.03      41.95
 BSE   25 Nov'10      Taneja Aerospace & Aviation Ltd     Taib Bank E C                                Buy      250,000    1.00       45.98      45.95
 BSE   26 Nov'10      Well Pack Papers & Containers Ltd   Cresta Fund Ltd                              Buy    2,600,000    3.18       35.15      35.15
 BSE   26 Nov'10      Shetron Ltd                         Copthall Mauritius Investment Ltd            Sell     186,055    2.07       41.71      42.75
 BSE   29 Nov'10      Sark Systems India Ltd              Shree Vihar Housing & Developers Pvt Ltd     Buy      185,000    1.98       10.02      10.44
 BSE   29 Nov'10      Shetron Ltd                         Copthall Mauritius Investment Ltd            Sell     157,133    1.75       41.10      39.70
 BSE   29 Nov'10      Systematix Corporate Services Ltd   India Discovery Fund Ltd                     Buy      135,000    1.06      215.00     214.10
 BSE   29 Nov'10      Amtek India Ltd                     North Eastern Publishing And Advt Co Ltd     Buy    1,450,000    1.05       61.69      61.70
 BSE   30 Nov'10      Kay Power And Paper Ltd             Bhaijee Portfolio Ltd                        Sell     179,100    1.68       24.61      24.70
 BSE   30 Nov'10      BAMPSL Securities Ltd               Bhaijee Portfolio Ltd                        Buy    1,278,850    1.24        2.41       2.44
 BSE   30 Nov'10      Visagar Polytex Ltd                 Global Film & Bord Casting Ltd               Sell      80,851    1.01       74.51      75.90
Source: NSE and BSE


  46
              Beyond Market 07th Dec ’10                                                                                   It’s simplified...
 TECHNICAL OUTLOOK FOR THE FORTNIGHT
KEY HIGHLIGHTS                                              three month’s average. The marketwide rollover stood
The Indian benchmark indices tanked sharply in              at 76%, significantly lower than the past three months’
November due to various negative developments               average of 85%. Overall, the data suggests a high level
globally, like the exchange of fire between North           of uncertainty prevailing in the markets.
Korea and South Korea and fears that the sovereign
debt crisis in Europe might engulf other nations too.       The markets will continue to track FII flows as well as
                                                            developments in the European and Chinese markets
In India, the busting of the loan bribery scandal by the    closely as nervousness continues to persist. But the
CBI recently, aggravated the situation further. The         data on housing, unemployment and retail sales from
unearthing of the scam led to huge sell-offs in the         the US seems to be improving. The S&P 500 chart is
realty and banking sectors. The realty index was down       giving strong indications of the likelihood of a big
13% week-on-week, while the banking index dropped           rally, if the index holds above the 1,200 level in the
3% week-on-week.                                            near term. The S&P 500 has a strong support at the
                                                            1,170 level. Unless this level is broken, we don’t see
The Indian markets have corrected almost 10.20%             any negative signs coming from the US markets. On
since the Nifty’s recent peak of 6,338 in the first week    the higher side, the S&P 500 could rally up to the
of November due to region-wide concerns and India-          levels of 1,250 - 1,275 in the coming days.
specific issues. For the November series, the Nifty
ended 188 points lower at 5,799.                            As far as Options data is concerned, the 5,900 Put and
                                                            5,800 Put have the highest open interest (OI) while the
Foreign Institutional Investors (FIIs) were net buyers      out-of-the-money (OTM) 5,400 and 5,300 Put saw
to the tune of `5,518 crore, while Domestic Institu-        additions on 29th Nov ’10. On the call side, 6,200 and
tional Investors (DIIs) were buyers of `2,492 crore in      6,300 have the highest OI base.
the cash segment for the month of November. This
shows that the market corrected almost 10.2% from           The Put Call ratio (PCR) for the Nifty stands at 1.22,
the recent top without any sell-offs from big institu-      indicating a steady and positive trend in the coming
tional players, largely due to excess leveraged             days. The Nifty premium is seen lowering from `30 to
positions from HNIs or from corporate funding,              `12, showing slight uncertainty at current levels. The
leading to massive sell-offs in individual stocks.          Nifty is holding above the major important 89-day
                                                            EMA of 5,845 and a fresh round of selling is possible
Technically, a correction was due in the Indian             only if the Nifty drifts below the 5,800 level. A major
markets after a spectacular rally of almost 18.5% from      upmove is possible only if the Nifty holds above the
the lows of 5,348 to the highs of 6,338. The markets        6,080 level in the near term.
have witnessed a price correction. In the December
series, we believe that the 89-day exponential moving       India’s long-term outlook remains promising as the
average (EMA) of 5,845 and the 100-day simple               Nifty is still trading above its long-term 200-DMA of
moving average (SMA) of 5,788 could act as a strong         5,475. From a near-term trading perspective, the
support. The next round of sell-offs would take place       89-day EMA of 5,845 will act as an important support
only if the Nifty trades below the 5,788 level.             level. From a very short-term trading perspective, the
                                                            5-DMA of 5,935 is likely to act as an immediate
STRATEGY                                                    support level and if this gets violated, then 5,845 –
Going forward from the current levels of the Nifty          5,780 will be the key levels that people should watch
futures at 6,010, we see that the Indian markets are        out for in the near term.
technically well shaped from a long-term perspective.
However, we believe that the markets could correct a        On the higher side, the 6,080 - 6,145 - 6,185 levels
bit if the Nifty slips below the important level of 5,788   should be breached and sustained with positive market
on global jitters, from a very short to medium-term         breadth to maintain stability and regain investor confi-
perspective.                                                dence. The Bank Nifty is likely to trade in the range of
                                                            11,800 - 12,600 and a major move will be seen only if
The Nifty rollover stood at 91%, higher than the past       the index breaks any of the given points. The overall

Beyond Market 07th Dec ’10                                                                          It’s simplified...   47
           outlook remains positive for the Indian markets in the               Bharat Forge Ltd, Canara Bank, Bharat Petroleum
           coming fortnight, provided the Sensex holds the 19,330               Corporation Ltd, Exide Industries Ltd, IDBI Bank Ltd,
           level, while the Nifty holds the 5,800 level.                        Praj Industries Ltd, Raymond Ltd, Rural Electrification
                                                                                Corporation Ltd, Spicejet Ltd, Whirlpool of India Ltd
           STOCK IDEA                                                           and Yes Bank Ltd can be bought from trading and
           If there is a correction in the indices, then stocks like            investment perspectiveS.


            NIFTY FUTURE DAILY CHART: The 5,910 level may act as an intermediate support in the near term. If this
            point gets violated, then the next support can be seen at the 100-DMA 5,790, which should be treated as an impor-
            tant support for the bullish trend to continue. On the higher side, 6,075 will be the level to watch out for. If this
            level sustains, a fresh rally may begin.




     MUTUAL FUND, FII ACTIVITY AND NIFTY
     This graph and data represent the Mutual Fund and FII activity                         Date             MF Net*   FII Net *       Nifty
     that took place in the last fortnight, whether the Fund Houses                       15 Nov'10           -77.10    -683.20       6121.60
     were buyers or sellers.                                                              16 Nov'10          -108.00     526.40       5988.70
                                                                                          18 Nov'10           196.10     -16.80       5998.80
                                 MF Net , FII Net & Nifty                                 19 Nov'10           -52.70    -218.80       5890.30
                                                                                          22 Nov'10           297.10    1443.50       6010.00
      2000.00                                                                6200.00
      1500.00
                                                                                          23 Nov'10           346.00     525.90       5934.75
                                                                             6100.00
      1000.00                                                                             24 Nov'10          -453.60   -1396.20       5865.75
                                                                             6000.00
       500.00                                                                             25 Nov'10          -407.80    1775.50       5799.75
                                                                             5900.00
         0.00                                                                             26 Nov'10           234.70    -532.20       5751.95
                                                                             5800.00
      -500.00                19 Nov'10                                                    29 Nov'10           -48.90    -671.90       5830.00
     -1000.00    15 Nov'10                                       29 Nov'10   5700.00
                                                                                          30 Nov'10          -305.00     272.10       5862.70
     -1500.00                                                                5600.00
                                                24 Nov'10                                 01 Dec'10           228.70    1190.70       5960.90
     -2000.00                                                                5500.00
                                                                                       Source: NB Research                   *Net activity in Equity
                                   MF     FII      NIFTY (RHS)



48
                Beyond Market 07th Dec ’10                                                                                 It’s simplified...
  MOVERS AND LAGGARDS IN MUTUAL FUND SCHEMES
                                                                                            Absolute %
                                                                              NAV
                                 Scheme Name                                              (Point to Point)
                                                                          (1st Dec '10)
                                                                                             2 Weeks
    Equity Schemes
    Movers
    JM Telecom Sector Fund - Growth                                  8.2655                     4.2032
    ICICI Prudential Technology Fund - Growth                      18.6200                      2.0833
    Franklin Infotech Fund - Growth                                65.1664                      1.5904
    Birla Sun Life Enhanced Arbitrage Fund - Growth                10.6308                      0.8931
    Sundaram Growth Fund - Growth                                 103.2985                      0.8678
    Laggards
    JM Hi Fi Fund - Growth                                           5.8015                    -5.9038
    DSP BlackRock Natural Resources & New Energy Fund - Ret - Gth 14.5300 *                    -5.4713
    JM Mid Cap Fund - Growth                                       27.2504                     -5.1457
    HSBC Midcap Equity Fund - Growth                               24.9117                     -5.0838
    Reliance Infrastructure Fund - Ret - Growth                    10.9506                     -4.9774

    Debt Schemes
    Movers
    Canara Robeco InDiGo Fund - Growth                                  10.3777                 0.6664
    Birla Sun Life Medium Term Plan - Ret - Growth                      11.0010                 0.4272
    ICICI Prudential SMART Fund - Series D - 24 Months - Ret - Growth 13.7002**                 0.3722
    Religare Active Income Fund - Reg - Growth                          11.3099                 0.2980
    ICICI Prudential Banking & PSU Debt Fund - Prem Plus - Growth       10.5369                 0.2893
    Laggard
    ICICI Prudential SMART Fund - Series G - 36 Months - Ret - Growth 20.0080                  -2.8771
    ICICI Prudential SMART Fund - Series H - 36 Months - Ret - Growth 15.3474                  -1.0739
    ICICI Prudential SMART Fund - Series F - 36 Months - Ret - Growth   16.1077                -0.5618
    Sundaram Bond Saver - Growth                                        28.0393                -0.4279
    DWS Premier Bond Fund - Regular Plan - Growth                       16.1772                -0.1167

    Balance Schemes
    Movers
    Baroda Pioneer Balance Fund - Growth                                    29.8200             0.7092
    ING Balanced Fund - Growth                                              26.7700             0.0374
    FT India Balanced Fund - Growth                                         50.1081             0.0224
    ICICI Prudential Balanced - Growth                                      47.1500            -0.1482
    SBI Magnum Balanced Fund - Growth                                       53.5600            -0.2235
    Laggards
    JM Balanced - Growth                                                    23.8545            -2.5512
    DSP BlackRock Balanced Fund - Growth                                    68.2270            -1.9572
    Escorts Balanced Fund - Growth                                          65.1153            -1.6813
    LIC Balanced - Plan C (Growth)                                          58.7792            -1.4470
    Kotak Balance                                                           23.8340            -1.3983
  *(30-Nov-10),* *(25-Nov-10) Source: NB Research

                                                        Disclaimer
                                                        The information provided here has been obtained from
                                                        various sources and is considered to be authentic and
                                                        reliable. However, Nirmal Bang Securities Private
                                                        Limited is not responsible for any error or inaccuracy
                                                        in the same.


Beyond Market 07th Dec ’10                                                                    It’s simplified...   49
     N Rangachary:
     A Man Of Principles

                                                            N
                                                                       ambi Iyengar Rangachary was appointed the
                                                                       chairman of the Central Depository Services
                                                                       Ltd (CDSL), promoted by the Bombay Stock
                                                                       Exchange (BSE), on 16th Aug ’10. He is also
                                Seventy-two-year-old N      the former chairman of the Insurance Regulatory and
                                                            Development Authority of India (IRDA). Rangachary,
                                Rangachary is a man of      72, started out as an Indian Revenue Services officer and
                              actions who lets his work     has a career spanning 40 years in insurance and financial
                             speak for himself. And his     services collectively.
                                appointments to various     Rangachary is a fellow member of professional bodies
                                  positions in public and   such as the Institute of Chartered Accountants of India
                             private organizations bear     (ICAI), the Institute of Cost and Works Accountants of
                                                            India (ICWA) as well as the Institute of Company Secre-
                              testimony to his immense
                                                            taries of India (ICSA). He is also an honorary member of
                                      contribution to the   the Indian Institute of Actuary. He holds a National
                                 insurance and financial    Diploma in Commerce from All India Institute of
                                                            Technical Education, New Delhi.
                                          services sector
                                                            In 1960, he joined the Indian Revenue Services and went
                                                            on to become the chairman of the Central Board of Direct
                                                            Taxes in the year 1995. He retired from this post in July
                                                            ’96 and was appointed as the chairman of the Insurance
                                                            Regulatory and Development Authority (IRDA) in 1997.
                                                            IRDA became an autonomous body in April ’00 and
                                                            Rangachary was the first chairman to head the insurance
                                                            watchdog. He stepped down from this post in June ’03.
                                                            He has also been the advisor to the finance department of
                                                            the government of Andhra Pradesh from 2003 to 2008.

50
      Beyond Market 07th Dec ’10                                                                     It’s simplified...
He was awarded the ‘International Insurance Man of the         just goes to prove that he had created a level playing field
Year’ in 1999 by US-based International Insurance              for all players with no bias.
Council, a council of leading insurers working to liberal-
ize the closed insurance markets around the world. He is       Between 1996 and 2003, Rangachary supervised the
the first insurance regulator to receive this award for        entry of the private sector players and was also involved
excellence. On 18 occasions before this, the council has       in developing the entire industry structure to facilitate the
awarded only the chief executives of the insurance             entry of several new insurance businesses in India.
companies for their professional accomplishments.
                                                               He also introduced new accounting norms for Indian
Rangachary has held posts of additional secretary in the       insurance companies since he was of the view that the
department of space; controller of insurance, government       nationalized insurers were indulging in wrong practices.
of India; chairman of the Tariff Advisory Committee and        He managed to bring different insurance bodies such as
advisor to the government of Andhra Pradesh on finance,        the office of the insurance controller and the tariff
risk management and insurance. He was also the finan-          advisory committee, which fixes premiums for general
cial advisor for United India Insurance Company Ltd,           insurers, under his purview.
Chennai. He has served as an advisor to various central
and state government initiatives and is still frequently       When the General Insurance Company called for an
requested to assist in such projects.                          upward revision of motor insurance premium,
                                                               Rangachary strongly opposed this move. He also reduced
He is also the director of companies like RT Exports Ltd,      fire insurance rates by around 30%. He has drafted
Gokuldas Exports, Take Solutions Ltd, Shriram Proper-          regulations for the appointment of actuaries, insurance
ties Ltd, Cecilia Healthcare Services Pvt Ltd, Tiger           brokers, agents and surveyors too. Rangachary was
Warehouse Cold Chain Pvt Ltd, Equitas Micro Finance            called the most ‘customer-friendly’ regulator.
(India) Pvt Ltd, MTAR Technologies Pvt Ltd and Root
Multiclean Ltd. He is an independent director of AIG           CHAIRMAN, CDSL
Trustee Company (India) Pvt Ltd and a non-executive            CDSL is promoted by the Bombay Stock Exchange and
director at Max New York Life Insurance Company Ltd.           has over 72 lakh active accounts and 529 agents or
He is the chairman and non-executive independent               depository participants (DPs) offering depository
director at Orient Green Power Company Ltd.                    services to investors. Rangachary, Chairman at CDSL,
                                                               was offered this plum post because CDSL expects him to
Rangachary started his career as a junior officer in the I-T   bring in business from the taxation and insurance
department and was eventually elevated to the post of          segments due to his illustrious career.
chairman, Central Board of Direct Taxes. Subsequently,
he took over as the chairman of what was initially IRA         On being appointed at CDSL in August this year,
(Insurance Regulatory Authority) in 1996. In 2001, he          Rangachary said: “We will endeavour to enter into new
got a two-year extension as the head of IRDA.                  segments to expand the business of CDSL and grow with
                                                               distinction.” Rangachary’s main concern at CDSL is to
Rangachary did his mandatory practical training from D         direct the depository’s venture into businesses that have
Rangaswamy & Co, a firm of chartered accountants. He           up till now been the monopoly of the bigger rival,
went on to successfully pass the chartered accountancy         National Securities Depository Ltd (NSDL).
course. He then decided to join the I-T department, even
though he had an attractive offer from the Hindu Group         CDSL has always wanted to enter the pension and
of publications. In the following years, he completed the      taxation space. Rangachary, with his background as
cost accounting and company secretary course as well.          taxman plus his contacts with top insurance firms, could
                                                               be the answer to this depository’s plans.
CHAIRMAN, IRDA
Rangachary is considered as a very down-to-earth               ON THE PERSONAL FRONT
regulator in the financial services space in the country.      N Rangachary has a different style of dressing in a
He has been credited with privatizing the insurance            spotless white shirt and white trousers along with a red
industry in India. On the privatization of the insurance       tilak across his forehead. Rangachary is also the
sector, experts believed that the Life Insurance Corpora-      chairman of Healing Fields, a not-for-profit organization
tion of India (LIC) would lose up to 10% market share          that works as a micro-health insurer for the needy. He is
over a span of five years. But LIC lost between 8% to          a man of principles and is brutally honest, if need be.
10% in the first two years itself. Rangachary had said that    Rangachary practices humility and has an inclination
new entrants were learning the trade fast and competing        towards idealism. He is also quite familiar with the ‘shas-
with the established players on the insurance front. This      tras’ and Hindu scriptureS.


Beyond Market 07th Dec ’10                                                                                 It’s simplified...   51
     Knowing Is
     Half The Battle Won
                                                         V
                         Half knowledge is always                  ery often we come across people who have
                                                                   entered the stock markets without any formal
                       dangerous. More so, if you                  knowledge. The only thing they know is how
                             are in for the long run.              to buy and sell stocks. While this may be
                                                         useful for short-term players, those with a long-term
                                  Answers to the most    perspective need to have thorough information about the
                                  frequently occurring   stock markets.

                     questions will surely aid you       The questions and answers mentioned in the article are
                   in understanding the markets          not intended to assess your Intelligence Quotient (IQ)
                                                         regarding the stock markets, instead it is meant to help
                    better and also help you play        you grasp a few of the generalized concepts of the stock
                                  well on the bourses    markets. Go ahead and test your skills; who knows you
                                                         might feel the need to brush up your theoretical know-
                                                         how a little bit.

                                                         For your convenience, we have listed a few questions
                                                         with four options and also the right answer with a
                                                         suitable explanation.

52
     Beyond Market 07th Dec ’10                                                                  It’s simplified...
Q. What is the difference between a Depository and a         Explanation: Often when dividend is declared it is done
Depository Participant (DP)?                                 so in percentage terms, which could be very misleading
                                                             at the first glance. The main thing to focus on is the face
A. Depository is a bank for securities whereas Deposi-       value because whenever the dividend is in the percentage
tory Participant is an agent of the Depository               form, it is a percentage of the face value and not of the
B. Depository participant is a bank for securities while     market price of the shares. So for a face value of `5, a
Depository is an agent of the Depository participant         30% dividend works out to `1.5 per share.
C. Depository is a bank for securities whereas Deposi-
tory Participant is a bank for bonds                         Q. A company issues 1:1 bonus shares, after
D. Both are one and the same                                 which_________

Correct Answer is A                                          A. The number of shares with an investor remains the
Explanation: A depository is a bank for securities where     same, but the market price of the share changes
dematerialized physical securities are held in custody and   B. The number of shares with an investor increases, but
from where they can be traded. Whereas, a depository         the market price remains the same
participant is an agent of the Depository through which      C. The number of shares with an investor decreases but
the depository provides its services to the investors.       the market price remains the same
                                                             D. The number of shares with an investor increases, but
Q. What is the price band on securities on which deriva-     the market price decreases proportionately
tive products are available?
                                                             Correct Answer is D
A.   5%                                                      Explanation: Bonus shares are free shares allotted to
B.   10%                                                     existing shareholders by converting the free reserves into
C.   20%                                                     share capital and issuing it as bonus shares in proportion
D.   No price band                                           to the bonus ratio announced. Post bonus, the number of
                                                             outstanding shares of the company increases and so the
Correct Answer is D                                          earnings per share decreases and theoretically, the share
Explanation: Price bands, also known as circuit filters      price also falls by the same factor.
or circuit breakers, set the upper and lower limit within
which a stock can fluctuate on any given trading day. For    Hence, if an investor is holding 1,000 shares at `50, post
example, stock ABC closed at `100 on a particular day.       bonus, he would hold 2,000 shares at `25. There is no
The stock has a price band of 5%, which means the next       change in the overall wealth of the investor and hence
day the stock can go up to a maximum of `105, and a          bonus shares should not be considered as a reward or an
minimum of `95. Price bands help to reduce extreme           incentive to shareholders. Bonus shares are issued
fluctuations in the price movement and check unwanted        primarily to increase the number of shares, thus increas-
price manipulation.                                          ing both liquidity and the traded volume in the stock.

However, there is no price band applicable on a stock on     Q. If a buyer A places a buy order for 100 shares of ABC
which a derivative product (F&O) is available. These are     at a price of `25 and simultaneously another buyer B also
fairly widely held shares and enjoy high institutional       places a buy order for 100 shares of ABC at `25.50.
interest and if they are constrained by price bands, then    Whose order will get executed first assuming that there is
settlement would become very complicated. Such stocks        a seller for 100 shares of the same company?
can have unlimited movement on either side, which
makes them riskier than other stocks.                        A.   Buyer B
                                                             B.   Buyer A
Q. If a company declares a dividend of say 30% on its        C.   Buyer A and B
share with a current market price of `80 and a face value    D.   None of the above.
of `5, then how much is the dividend that you will
receive per share?                                           Correct Answer is A
                                                             Explanation: All orders are arranged in a price-time
A.   `3                                                      priority basis in the system. Hence, if there is a seller for
B.   `24                                                     100 shares, the order will first be matched with the buy
C.   `12                                                     order of Buyer B since he has offered a better price. This
D.   `1.5                                                    is price priority. In case, both buyers were to quote the
                                                             same buy price of `25, in that case the buyer who had
Correct Answer is D                                          placed the order earlier would get priority.

Beyond Market 07th Dec ’10                                                                               It’s simplified...   53
     Q. If you have bought some shares but the counterparty          Correct Answer is A
     fails to deliver the shares on the pay-in date, then______      Explanation: The answer lies not in the dividend given
                                                                     for the stock but in a concept known as the dividend
     A. You get the shares as and when the counterparty              yield, which is a financial ratio that shows how much a
     delivers the shares                                             company pays out in dividends each year, relative to its
     B. You have to accept it as an inherent risk of the stock       share price. In other words, it is the return you are getting
     market and bear the loss                                        for each rupee invested.
     C. You may get the shares via auction
     D. The matter goes to court                                     Dividend Yield = Dividend per share x 100
                                                                                        Market price
     Correct Answer is C                                             So, for Stock A    Dividend yield = 2/20 x 100 = 10
     Explanation: An auction is an exchange mechanism for                for Stock B    Dividend yield = 2/40 x 100 = 5
     getting shares for the buying broker in case of default by
     the selling broker. If there is non-delivery of securities on   So you see, stock A has a higher dividend yield of 10%
     the pay-in day, the securities are put up for auction by the    as compared to 5% of stock B thereby making stock A a
     exchange. The exchange purchases the required quantity          much better stock to have in your portfolio.
     in the auction markets and gives them to the buying
     trading member.                                                 Q. If you bought a stock on one exchange and sold it off
                                                                     simultaneously on another exchange for a small profit,
     In this manner you would not be affected for the default        what strategy did you just employ?
     of the opposite party. If, however, you do not get the
     shares via auction, the trade will be closed out either at a    A. Hedging
     price that is 20% higher than the last closing price or         B. Arbitrage
     highest price recorded in the scrip from the settlement in      C. Averaging
     which the transaction took place up to a day prior to the       D. Churning
     day of the auction and you will get back your money.
                                                                     Correct Answer is B
     Q. Which group of shares are the riskiest?                      Explanation: Arbitrage means buying in one market and
                                                                     selling it in another, profiting from a temporary price
     A.   B1                                                         difference between the two markets. If a stock has a
     B.   A                                                          seller at `25.10 on one exchange and a buyer at `25.30
     C.   B2                                                         on another exchange at the same time, an arbitrage trader
     D.   Z                                                          would buy the stock at `25.10 on the first exchange and
                                                                     simultaneously sell it at `25.30 on another exchange,
     Correct Answer is D                                             thus pocketing a profit of `0.20 per share. Normally, an
     Explanation: A, B1, and B2 are highly liquid stocks             arbitrage trade involves huge volumes and, hence, even a
     with good performance and good track record. However,           profit of 10 or 20 paise leads to great profits due to the
     the Z group, which was introduced in the year 1999,             larger number of shares involved. Arbitrage is consid-
     includes those companies that have failed to comply with        ered as a risk-less profit.
     the listing rules and regulations of the stock exchanges or
     have not addressed investor complaints or have not              Q. What is the investment limit for the retail category of
     published annual reports or all of the above. In a way, the     investors in an IPO?
     Z group shares are blacklisted shares, which may be
     suspended from trading at any given point of time due to        A.   `50,000
     the above-stated reasons and hence, are considered very         B.   `1 lakh
     risky for trading and investment purposes.                      C.   `2 lakh
                                                                     D.   No limit
     Q. Stock A, trading at a market price of `20 gives a
     dividend of `2. Stock B, trading at a market price of `40       Correct Answer is C
     also gives a dividend of `2. Which stock is a better option     Explanation: If you are not an active market participant
     to have in your portfolio?                                      or follower but just an occasional by-passer, your
                                                                     obvious answer would be `1 lakh, which would have
     A.   Stock A                                                    been right a few months back. But, if you are a regular
     B.   Stock B                                                    market player, you would be well aware that a few
     C.   Stock A and B                                              months ago the investment limit for retail investors in an
     D.   Neither A nor B                                            IPO or FPO was increased to `2 lakh from `1 lakh.

54
     Beyond Market 07th Dec ’10                                                                                  It’s simplified...
Q. If you fall under the aggressive risk-taking class of      Explanation: Just as Dematerialization is the process of
investors, which stock would you want to include in your      converting securities held in the physical form to
existing portfolio?                                           electronic form, similarly, Rematerialization is the
                                                              process of converting securities held in electronic form in
A.   Low Beta                                                 a demat account back to physical form. As primitive as it
B.   Neutral Beta                                             may sound, some people do opt to receive their share
C.   High Beta                                                certificates back in physical form. Rematerialization is
D.   Negative Beta                                            the exact opposite of Dematerialization.

Correct Answer is C                                           Q. A company announces a stock split in the ratio of 1:10
Explanation: High beta stocks are high-risk, high-return      and a bonus of 1:1. It fixes the ex-date as 25th Oct ’10.
stocks. Beta is a ratio, which measures the volatility (the   To be eligible for both corporate benefits, by when
rate at which the price of an entity moves up or down) of     should you buy the shares?
a stock or portfolio in relation to the markets on the
whole. For example, if the beta of a stock, say ABC is 1.     A.   Before 25th October
It simply means that the stock will move in line or in        B.   After 25th October
tandem with the market movement.                              C.   On 25th October
                                                              D.   Any time
If the beta is less than 1, then the stock will be less
volatile than the market and if the beta is greater than 1,   Correct Answer is A
then the stock will be more volatile compared to the          Explanation: Ex-date is the first day from which a stock
markets on the whole. Therefore, an aggressive investor       trades without corporate benefits. The buyer of a stock on
will look for a high beta stock (beta greater than 1) since   or after the ex-date will not be eligible for corporate
such stocks will give greater returns than the overall        benefits. Before the ex-date, the share trades as cum-
market during a rise. But don’t forget that the risk also     bonus or cum-split or cum-dividend. This means that it
increases since the stock tends to fall much more during      ‘includes’ the said benefit.
a fall in the markets.
                                                              But, on and after the ex-date, the stock trades as ex-bonus
Q. Dividends received in respect of equity shares of an       or ex-split or ex-dividend. This means that it is “exclud-
Indian company are ______                                     ing” the said benefits. Hence, in the above case, the
                                                              stocks need to be bought before 25th October to be
A. Taxable in the hands of individual shareholders            eligible for corporate benefit.
B. Not taxable in the hands of individual shareholders
C. Taxable both to the company and individual share-          Q. Securities and funds’ pay-in and pay-out are carried
holders                                                       out on the ______day.
D. None of the above
                                                              A.   T+3
Correct Answer is B                                           B.   T+2
Explanation: Dividends are nothing but distribution of        C.   T+1
profits of a company. In India, dividends of equity shares    D.   Within 24 hours of the sale
are not taxable in the hands of individual shareholders
because the company issuing the dividends has already         Correct Answer is B
paid tax on that profit and so taxing it again in the hands   Explanation: Pay-in is the day when brokers make
of shareholders would amount to double taxation of the        payment or delivery of securities to the exchange and
same income.                                                  pay-out is the day when exchange makes payment or
                                                              delivery of securities to the brokers.
Q. The process of conversion of securities held in
electronic form in a demat account back to physical form      In rolling settlement, trades executed during the day are
is called as ________                                         settled on a T+2 basis, where ‘T’ stands for the Trade
                                                              Day. For instance trades executed on Monday will be
A.   Revertible                                               settled on Wednesday (that is 2 working days from the
B.   Reverse Dematerialization                                trade date).
C.   Regression
D.   Rematerialization                                        We hope that these questions and answers will help you
                                                              to better understand the basic concepts of trading and
Correct Answer is D                                           investing in the stock marketS.

Beyond Market 07th Dec ’10                                                                              It’s simplified...   55
                                                          &




                          Beyond
                                           Present




       LEARN THE ART OF
     COMMODITY INVESTING                                          Exchange Partner




                                   Date: 25th November, 2010
                                  Venue: Siri Fort Auditorium,
                                           New Delhi.
56
     Beyond Market 07th Dec ’10                                  It’s simplified...
                                                                          Experts continue to remain
WINNING HEARTS                                                            optimistic about the rally

  IN THE INDIAN                                                           in commodities and urge
                                                                          market participants to make
       CAPITAL                                                            the most of the potential
                                                                          the markets have to offer


T  he second in the series of commodity camps called Beyond Mandi, organized by Nirmal Bang,
one of the leading broking houses in India, in association with Zee Business, was indeed worth the
wait. This was clearly evident from the huge turnout at the Siri Fort auditorium in Delhi on 25th
November. The crowd, comprising a healthy mix of traders and investors from the commodity
markets, was eagerly waiting to hear industry experts speak on the immense potential of the
commodity markets and ways to take advantage of the opportunities offered by this avenue.

Experts like Anjani Sinha, MD & CEO of NSEL; Kunal Shah, Head of Commodity Research at
Nirmal Bang; SK Jindal, Chairman Jindal Group of Companies and Investment and Capital Markets
Chairman at the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and Rahul
Gupta, Director, PP Jewellers won the audience over by the end of the commodity camp, with their
intellectual discussion.
                                                                                                             Amish Devgan,
Amish Devgan, Commodity Editor and Anchor at Zee Business, and also the compere for the event                Commodity Editor and
could not agree less. He introduced the panelists to the audience and said that the speakers would           Anchor at Zee Business
shed light on the different aspects of the commodity markets.



Anjani Sinha, the first speaker to address the gathering, dwelt on the importance of spot
exchanges. NSEL, he said, is currently creating an avenue for investors where they have the
option of products like e-gold, e-silver, etc. These products will help create a new platform
for investors, eventually making the process of investing in commodities hassle-free and less
complicated. Besides, these products can be converted into the physical form. He said NSEL
plans to launch 20 more products in the next one year. This will lead to the emergence of
cash markets in commodities.



                                                                                Anjani Sinha
                                                                                MD & CEO at NSEL


                                                   The next speaker, Kunal Shah, on the other hand, spoke about the value of commodities
                                                   as an asset class and the opportunities in the commodity markets. He also informed the
                                                   audience about how commodities have performed in the past 10 years. And finally, he gave
                                                   an outlook on some of the key commodities. Shah said he believes that the commodity
                                                   markets are likely to grow three to four times in the near future. Moreover, the changes in
                                                   regulations will work in favour of the commodity markets, especially spot markets.

                                                   Talking about the returns on commodities over the past 10 years, Shah says barring a year
              Kunal Shah                           or two, a bull run was visible. He feels that the bull run may continue and people should
              Head of Commodity                    take advantage of the same. He sees the value of commodities rising.
              Research at Nirmal Bang


           Beyond Market 07th Dec ’10                                                                            It’s simplified...     57
           In the coming times, issues like the probable rate hikes by China, measures to control food inflation and persistent problems in the
           Euro zone, could impact the commodity markets, he says. The rate hikes could impact base metals and crude oil negatively. Further,
           in the base metals complex, copper could touch the level of `385/kg - `388/kg, wherein individuals can take a short position with
           stop loss at `395 and it could again touch the levels of `368/kg - `370/kg. Zinc, on the other hand, is likely to see a bounce back. In
           such a situation, market participants can take short positions around `94/kg - `95/kg. However, he sees a continued bull run in gold
           and silver. The yellow metal may touch $1,450/ounce on the Commex and silver around $28.50/troy ounce - $29/troy ounce. Silver
           could rise further if a 1%-2% correction is seen, then long-positions can be taken.

           As regards agri commodities, he remains bullish and states that it will be the most preferred complex among commodities. He is
           equally bullish on guar seed and guar gum. People can take long positions in guar seed `2,450/quintal - `2,500/quintal for January
           contracts. Levels of `2,700/quintal - `2,750/quintal can be seen in one to one-and-half months. Similarly, the outlook is bullish on
           soy oil and soy bean too. People can buy soy oil January contracts at `570/10 kg - `580/10 kg and in one month, it could be around
           the `600/10 kg - `605/10 kg levels. They can also take long positions in jeera at `14,300/quintal - `14,500/quintal with a stop loss
           of `13,700/quintal. It could touch the `16,000/quintal level. Shah is upbeat on black pepper too and expects a rally of `1,500/quintal
           to `2,000/quintal, touching the `24,000/quintal level in a month. As regards natural gas, Shah is bullish on this complex and expects
           it to touch `230/mmBtu - `235/mmBtu and it may outperform all other commodities.




SK Jindal, who took the discussion forward, said the commodity markets have the poten-
tial to make money and grow in times of global uncertainty. Maximum quantities of gold
and silver are found in Indian households. He said that India stands fifth in terms of energy
consumption and similarly mentioned the standings of other commodities too.

He urged people not to take overpositions in gold as prices increase on rising global fears.
Risk management is very important. He says that new products introduced by NSEL like
e-gold and e-silver are gaining acceptance among people and these products have the
potential to grow further. Such products bring efficiency and completeness to the markets.
He sees tremendous potential in the agricultural complex too. According to him, continu-
ous reforms will help the sector to achieve growth targets and fast results. New develop-
ments will be seen in time, he concludes.
                                                                                                        SK Jindal
                                                                                                        Chairman at Jindal Group of Companies
                                                                                                        Investment & Capital Markets Chairman
                                                                                                        at ASSOCHAM
Hailing from a family of jewellers, Rahul Gupta shared his experience in the industry
over the years. He sees gold as an asset class and says how its value has grown over the
years. “A lot of things have happened in the yellow metal in the past and we are seeing a
repetition of sorts,” said Gupta. He expects prices of gold to double in the coming times.
He believes India can control the prices of gold to a large extent owing to the amount of
gold that Indian consumers possess. China too is seen buying gold like never before.




       This was followed by a discussion among the panelists and a round of questions and
       answers. The camp was a huge success going by the number of people who attended
       the meet. This encourages us to hold more such camps in the near future and thus
       educate investors by inviting industry experts to give sharp insights and wider perspec-
                                                                                                        Rahul Gupta
       tives, eventually enabling them to take informed decisions.                                      Director at PP Jewellers

       The next camp will be held on 18th December at Pride Hotel in JaipuR.



  58
            Beyond Market 07th Dec ’10                                                                              It’s simplified...
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