market outlook 27th september 2011

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Market OutlookIndia Research

September 27, 2011

Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

Dealer’s Diary

The key benchmark indices extended last week's steep losses at the onset ofthe new trading week on concerns about the global economic outlook.

Weakness in Asian markets, triggered by reports that fresh aid for Greecemay take longer than expected, dragged the stocks to their one-month lows.The market breadth lingered in the negative zone during the morning sessionand deepened, after it passed well below the psychological 16,000 mark.Index heavyweights L&T, Hindalco and Sterlite touched their 52-week lows.During the afternoon session, the Sensex regained 16,000 in choppy trade. Itslowly recovered the lost ground and peeped above the base line just toretreat. Concerns on global outlook shadowed the gains and once againpulled back the indices. The Sensex and Nifty closed down by 0.7% each.The mid-cap and small-cap indices also lost 1.5% and 1.7%, respectively.

Among the front runners, JP Associates, Bharti Airtel, ICICI Bank, DLF andCipla gained 1-2%, while Coal India, Sterlite, Hindalco, Hero MotorCorpand Jindal Steel lost 3-5%. Among mid caps, Hathway Cables, Kirloskar Oil

Engines, KGN Inds, ABG Shipyard and Himadri Chemicals gained 4-8%,while Shree global Tradefin., Hindustan Oil Exploration Company, NCC,CIFC Ltd. and Jain Irrigation lost 6-10%.

Markets TodayThe trend deciding level for the day is 16,020 / 4,825 levels. If NIFTY tradesabove this level during the first half-an-hour of trade then we may witness afurther rally up to 16,240 – 16,429 / 4,891 – 4,946 levels. However, ifNIFTY trades below 16,020 / 4,825 levels levels for the first half-an-hour oftrade then it may correct up to 15,832 – 15,612 / 4,770 – 4,704 levels.

Indices S2 S1 R1 R2

SENSEX 15,612 15,832 16,240 16,429NIFTY 4,704 4,770 4,891 4,946

News Analysis JSW Steel’s production scaled down to 30% at its Vijaynagar plant BHEL FPO to come only after markets improveRefer detailed news analysis on the following page

Net Inflows (September 23, 2011)

` cr Purch Sales Net MTD YTD

FII 1,648 2,838 (1,190) (169) (977)

MFs 467 458 (9) (805) 5,469

FII Derivatives (September 26, 2011)

` cr Purch Sales NetOpen

Interest

Index Futures 5,867 5,980 (113) 17,698

Stock Futures 6,493 6,583 (90) 29,817

Gainers / Losers

Gainers Losers

Company Price (`) chg (%) Company Price (`) chg (%)

BOB 803 3.7 Hindustan Oil 107 (8.4)

Indiabulls Fin 159 3.6 Titan Inds 207 (7.3)

Indian Bank 207 3.2 NCC 61 (7.2)Central Bank 103 2.4 Hindustan Zinc 119 (5.9)

Jaiprakash Asso. 69 2.4 Jain Irrigation 143 (5.9)

Domestic Indices Chg (%) (Pts) (Close)

BSE Sensex (0.7) (111.0) 16,051

Nifty (0.7) (32.4) 4,835

MID CAP (1.5) (91.4) 6,131

SMALL CAP (1.7) (117.7) 6,923

BSE HC (0.4) (25.0) 5,847

BSE PSU (1.8) (132.5) 7,353

BANKEX (0.2) (21.9) 10,739

AUTO (1.1) (91.8) 8,328

METAL (2.9) (330.8) 11,183

OIL & GAS (1.6) (129.0) 8,134

BSE IT 0.4 20.8 5,006

Global Indices Chg (%) (Pts) (Close)

Dow Jones 2.5 272.4 11,044

NASDAQ 1.4 33.5 2,517

FTSE 0.5 22.6 5,089

Nikkei (2.2) (186.1) 8,374

Hang Seng (1.5) (261.0) 17,408

Straits Times (1.7) (44.5) 2,654

Shanghai Com (1.6) (40.0) 2,393

Indian ADRs Chg (%) (Pts) (Close)

Infosys 1.0 0.5 $48.7

Wipro 1.8 0.2 $9.3

ICICI Bank 2.9 1.0 $35.7

HDFC Bank 1.6 0.5 $29.2

Advances / Declines BSE NSE

Advances 767

Declines 2,017 1,137

Unchanged 83 44

Volumes (` cr)

BSE 2,923

NSE 10,774



September 27, 2011 2

Market Outlook | India Research

JSW Steel’s production scaled down to 30% of its capacity at Vijaynagarplant

JSW Steel’s 10.3mn tonne steel plant at Vijaynagar has been compelled to scale down itscapacity utilisation at 30% on account of shortage of iron ore. The Supreme Court hadbanned iron ore mining in the Bellary, Chitradurga and Tumkur districts on account of

environmental concerns during August-September 2011. However, the court hadpermitted NMDC to mine in Bellary region @ 1mn tonnes per month to meet therequirements of the steel industry. The court had also permitted liquidation of 25.0mntonnes of iron ore inventory in Karnataka via e-auctions. However, production ramp-up by NMDC and inventory liquidation have still not been achieved as per targets. Hence, JSW Steel and other steel makers in the region are currently facing shortage of iron ore.Nevertheless, we believe this shortage is temporary; we expect iron ore supplies to resumesooner than later. Also, we expect JSW Steel to procure higher quantities of iron ore fromother regions in case the supplies continue to remain short for an extended period.Meanwhile, we maintain our estimates for JSW Steel and our Neutral rating on the stock.

BHEL FPO likely to happen after markets improve

The proposed 5% disinvestment of BHEL is likely to get delayed on accountof unhealthy market conditions. While the Cabinet Committee of Economic

Affairs has given in- principal approval, the bearish sentiments in thecapital markets may not fetch the fair price for the stake sale. Thegovernment will go ahead with the FPO once the market conditionstabilises. In addition to the long-term structural concerns on the overallfinancial health of the company, the FPO element has remained anoverhang for the stock. We continue to remain Neutral on the stock.

Economic and Political News

Govt. approves NHAI, IRFC, HUDCO and PFC to raise ` 300bn from tax-free bonds

Farm loan to exceed target, touch ` 5.20lakh cr: Nabard

Consumption of synthetic rubber up by 11% in June

Corporate News

Defense Ministry puts Mazagon-Pipavav JV on hold

RIL's new gas finds in KG-D6 offshore block not viable at US$4.2/mmBtu price: DGH Exim Bank to raise at least ` 2.5bn via bonds

Petronas to buy 30% stake in GMR’s Singapore arm

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint



September 27, 2011 3

Market Outlook | India Research

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market outlook 27th september 2011

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