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  • Market OutlookAugust 13, 2012

    www.angelbroking.com

    Market OutlookAugust 13, 2012

    Dealers Diary Indian markets are expected to open negative, tracing negative opening trades in the SGX Nifty and the major Asian indices. The US markets moved modestly lower in early trading on Friday due to disappointing Chinese trade data for July which showed Chinas trade surplus narrowed during the month as growth rates for both exports and imports fell below estimates, thus leading to renewed concerns about the outlook for the global economy. A report released by China's General Administration of Customs showed that Chinese exports grew by just 1% yoy in July 2012, decelerating from the 11.3% growth reported for June 2012, while imports rose at a slower rate in July 2012, up 4.7% compared to the 6.3% increase in June 2012. Also, the US Labor Department recently released a report showed an unexpected decrease of 0.6% in import prices in the month of July 2012 after tumbling by 2.4% in June 2012. The major European markets have also moved to the downside on Friday on the back of weak Chinese trade data.

    Meanwhile, Indian shares ended a choppy session on Friday with the rupee trading weak, tracking the ailing euro, and global cues remaining lackluster in the wake of dismal Chinese trade data.

    Markets Today The trend deciding level for the day is 17,540 / 5,315 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,608 17,659 / 5,336 5,351 levels. However, if NIFTY trades below 17,540 / 5,315 levels for the first half-an-hour of trade then it may correct up to 17,489 17,421 / 5,300 5,279 levels.

    Indices S2 S1 PIVOT R1 R2

    SENSEX 17,421 17,489 17,540 17,608 17,659

    NIFTY 5,279 5,300 5,315 5,336 5,351

    News Analysis Bosch to temporarily suspend manufacturing operations at its plants Supreme Court denies PNGRB to enquire into IGLs books of accounts Work on Dholera special investment region to start within a year Electrosteel Castings associate, Electrosteel Steels reports 1QFY2013 results 1QFY2013 Result Reviews- ONGC, SBI, Sun Pharma, Glaxo Pharma, RCom,

    Bharat Forge, Ashoka Buildcon, Godawari Power, CCCL, Madhucon Projects, Hitachi Home.

    1QFY2013 Result Previews- Coal India, Tata Steel, Bosch, NMDC, India Cem. Refer detailed news analysis on the following page

    Net Inflows (August 9, 2012) ` cr Purch Sales Net MTD YTD

    FII 2,231 1,914 317 3,867 57,147

    MFs 551 801 (250) (513) (8,592)

    FII Derivatives (August 10, 2012) ` cr Purch Sales Net Open Interest

    Index Futures 1,059 1,080 (21) 15,745

    Stock Futures 1,381 2,006 (625) 24,645

    Gainers / Losers Gainers Losers

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

    Amtek Auto 96 11.5 JPINFRATEC 50 (7.2)

    Jain Irrigation 84 5.0 SBI 1,888 (4.3)

    Tech Mahindra 800 5.0 Power Finance 183 (4.2)

    Indraprastha Gas 252 4.9 Ranbaxy Lab 483 (3.7)

    Shree Cement 3,199 3.6 GMR Infra 22 (3.4)

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

    BSE Sensex (0.0) (3.1) 17,558

    Nifty (0.1) (2.6) 5,320

    MID CAP 0.0 1.5 6,100

    SMALL CAP (0.3) (18.9) 6,550

    BSE HC (0.2) (15.9) 7,292

    BSE PSU (0.8) (60.0) 7,084

    BANKEX (0.9) (102.1) 11,889

    AUTO (1.2) (115.9) 9,367

    METAL 0.1 9.2 10,521

    OIL & GAS 0.3 22.2 8,310

    BSE IT 1.3 73.0 5,542

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

    Dow Jones 0.3 42.8 13,208

    NASDAQ 0.1 2.2 3,021

    FTSE (0.1) (4.4) 5,847

    Nikkei (1.0) (87.2) 8,891

    Hang Seng (0.7) (133.4) 20,136

    Straits Times 0.1 2.0 3,054

    Shanghai Com (0.2) (5.3) 2,169

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

    INFY 0.5 0.2 $41.8

    WIT 1.0 0.1 $8.2

    IBN (0.1) (0.1) $34.9

    HDB 0.7 0.3 $35.6

    Advances / Declines BSE NSE

    Advances 1,182 580

    Declines 1,577 898

    Unchanged 129 88

    Volumes (` cr)

    BSE 2,192

    NSE 10,499

  • www.angelbroking.com

    Market Outlook August 13, 2012

    Bosch to temporarily suspend manufacturing operations at its plants Bosch (BOS) has announced to temporarily suspend manufacturing at its plants (partial/full) during August 2012 in order to avoid unnecessary buildup of inventory and align the production as per the market demand. The domestic automobile industry which is the primary driver of companys revenue, have witnessed a slowdown in demand recently due to sluggish economic growth, increasing fuel prices and weak consumer sentiments.

    Plant location Partial/full Dates of shutdown

    Bangalore Partial 11, 13, 14, 25, 27

    Nashik Partial 17 to 31

    Jaipur Full 16, 17, 18, 27, 28, 29

    The company has been suspending operations at its plants in a phased manner to align production in-line with the market demand since June 2012. It had earlier announced temporary shutdown at its Jaipur plant (from June 28 to June 30, 2012 and July 25 to August 4, 2012), Bangalore plant (from June 29 to June 30, 2012, from July 13 to July 14, 2012 and July 27 to July 30, 2012) and Nashik plant (July 30 to July 31, 2012). At the CMP of `8,865, the stock is trading at 19.3x CY2013E earnings, which is in-line with its historical average of 20x. Thus, we recommend Neutral rating on the stock. Supreme Court denies PNGRB to enquire into IGLs books of accounts The Supreme Court (SC) has declined to permit the Petroleum and Natural Gas Regulatory Board (PNGRB) to proceed with its inquiry against Indraprastha Gas Ltd (IGL) and some other companies over determining network tariff and compression charges. However, the SC has sought IGLs reply on the same before passing the final order. During June 2012, the Delhi High Court had ruled that the PNGRB did not have the power to fix any component of network tariff or compression charges for any entity having its own distribution network. We maintain our Neutral view on the stock. Work on Dholera special investment region to start within a year According to news reports, work on Dholera Special Investment Region will start within a year. The central government has approved `3,000cr to create basic infrastructure for the project. The planned project will be coming up 90Kms from Ahmedabad within the Delhi Mumbai Industrial Corridor (DMIC). The investment sectors identified for the project include Heavy engineering, Automobiles and ancillaries, electronics, Pharmaceuticals & biotechnology, agro and food processing and IT/ITES. Mahindra lifespaces had signed a MOU with the government of Gujarat. The MOU is for the development of 3,000acres of integrated business city along the lines of the existing Mahindra World City (MWC). We maintain BUY rating on MLIFE with a Target price of `396.

  • www.angelbroking.com

    Market Outlook August 13, 2012

    Electrosteel Castings associate, Electrosteel Steels reports 1QFY2013 results Electrosteel Steels (ESL), an associate of Electrosteel Castings (ECL) reported an operating loss during 1QFY2013 as most of its integrated steel plants are yet to commission operations. ESLs top-line stood at `12cr compared to `2cr in 1QFY2012 as it commenced partial operations at its plant (pig iron and DI pipes) during the quarter. However, it reported an operating loss of `10cr during the quarter. Depreciation and interest expenses stood at `14cr and `23cr respectively. Hence, it reported a loss at the PAT level of `46cr. We await results of ECL (expected to report results on August 14, 2012). Until then, we maintain our Buy rating on ECL with a target price of `22. Result Reviews

    ONGC (CMP: `279/ TP: `321/ Upside: 15%) ONGC reported better-than-expected 1QFY2013 standalone results due to lower-than-expected subsidy burden. The companys top line increased by 23.9% yoy to `20,084cr (slightly above our expectation of `19,478cr. The company shared a subsidy burden was `12,346cr in 1QFY2013 vs. `12,046cr of subsidy shared in 1QFY2012 and `14,170cr in 4QFY2012. ONGCs crude oil net realization declined by 4.4% yoy to US$46.6/bbl. Oil production increased by 3.2% yoy to 6.54mn tonnes during 1QFY2013. EBITDA margin expanded by 230bp yoy to 57.7% and EBITDA increased by 24.0% yoy to `11,130cr. Reported net profit increased by 48.4% yoy to `6,077cr above our estimate of `5,382cr. The company has notified 10 discoveries during FY2013 including one major discovery (D1) off the west coast. D1s Initial Oil in-place (IOIP) is expected to be 140mtoe. Currently D1 block is producing 12,500bopd. The company expects the production to reach 60,000bopd by January 2014. We maintain our Buy rating on the stock with a target price of `321. Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

    March (` cr) (%) (` cr) (`) (%) (x) (x) (x) (x)

    FY2013E 156,331 37.7 26,796 31.3 18.7 8.9 1.6 3.5 1.2

    FY2014E 159,043 36.3 27,892 32.6 17.3 8.6 1.4 3.3 1.1

    State Bank of India (CMP: `1,888/ TP: `2,270/ Upside: 20%) During 1QFY2013, SBI reported standalone net profit of `3,752cr as against `1,584cr in 1QFY2012, which was in line with our estimates. The operating income growth was however lower than our expectations which was negated by lower than estimated provisioning expenses (investment write-back of `521cr). We recommend a Buy rating on the stock.

    Slippages surge up significantly: During 1QFY2013, the banks advances grew by 18.9% yoy, while deposits were up by 16.1% yoy. Domestic saving deposits growth was moderate at 13.4% yoy which coupled with 2.9% yoy decline in volatile

  • www.angelbroking.com

    Market Outlook August 13, 2012

    domestic current account deposits lead to domestic CASA deposits growing at a modest pace of 10.1% yoy. The domestic NIMs for the bank were lower by 42bp qoq on account of inter

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