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    Market Outlook 16th March 2012

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    Angel Broking
    The Indian markets are expected to open higher tracking gains in Asian markets. Domestically, the RBI maintained the status quo on key policy rates as expected. Inflation levels have been declining and the outlook remains benign, indicating the possibility of monetary easing beginning in April. Larsen & Toubro won orders worth Rs. 1,140 crore across various divisions.

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    Market Outlook 16th March 2012

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    Angel Broking
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    The Indian markets are expected to open higher tracking gains in Asian markets. Domestically, the RBI maintained the status quo on key policy rates as expected. Inflation levels have been declining and the outlook remains benign, indicating the possibility of monetary easing beginning in April. Larsen & Toubro won orders worth Rs. 1,140 crore across various divisions.

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    The Indian markets are expected to open higher tracking gains in Asian markets. Domestically, the RBI maintained the status quo on key policy rates as expected. Inflation levels have been declining and the outlook remains benign, indicating the possibility of monetary easing beginning in April. Larsen & Toubro won orders worth Rs. 1,140 crore across various divisions.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    708 views4 pages

    Market Outlook 16th March 2012

    Uploaded by

    Angel Broking
    The Indian markets are expected to open higher tracking gains in Asian markets. Domestically, the RBI maintained the status quo on key policy rates as expected. Inflation levels have been declining and the outlook remains benign, indicating the possibility of monetary easing beginning in April. Larsen & Toubro won orders worth Rs. 1,140 crore across various divisions.

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    of 4

    Market Outlook

    India Research
    M

    Dealers Diary
    The Indian markets are expected to open in green tracking positive cues from the Asian markets and a fresh batch of data suggesting the US economy may be picking up momentum will underpin investor sentiment. Globally, US Stocks moved higher over the course of the trading day on Thursday, extending the upward move seen in recent sessions. Optimism about the outlook for the US economy contributed to the strength on Wall Street, with a report from the Labor Department showing a bigger than expected drop in initial jobless claims in the week ended 10 March. A separate report from the New York Federal Reserve showed a continued expansion in regional manufacturing activity, with the index of activity in the sector showing an unexpected increase. The European markets largely closed to the upside on Thursday, with the exception of the FTSE 100 of the UK. On Thursday, markets snapped four day winning streak dragged by rate sensitive shares after expectations of a rate cut were dashed with the Reserve Bank of India maintaining a status quo on key policy rates. The markets will be closely watch out for Union Budget today.

    Domestic Indices BSE Sensex Nifty MID CAP SMALL CAP BSE HC BSE PSU BANKEX AUTO METAL OIL & GAS BSE IT Global Indices Dow Jones NASDAQ FTSE Nikkei Hang Seng Straits Times Shanghai Com

    Chg (%)

    (Pts)

    (Close)

    (1.4) (243.5) 17,676 (1.5) (1.4) (1.0) (0.4) (83.4) (90.0) (66.2) (28.2) 5,381 6,405 6,780 6,485 7,684

    (2.0) (154.4) (0.7)

    (2.6) (325.7) 12,203 (71.8) 10,132 8,524 6,081


    (Close)

    (1.4) (164.9) 11,777 (1.9) (161.1) 0.1


    Chg (%)

    5.5
    (Pts)

    0.4 0.5 (0.1) 0.7 0.2 (0.0) (0.7)


    Chg (%)

    58.7 13,253 15.6 (4.7) 3,056 5,941

    Markets Today
    The trend deciding level for the day is 17,739/ 5,402 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,855 18,035 / 5,441 5,502 levels. However, if NIFTY trades below 17,739 / 5,402 levels for the first half-an-hour of trade then it may correct up to 17,559 17,443 / 5,341 5,302 levels.
    Indices SENSEX NIFTY S2 17,443 5,302 S1 17,559 5,341 PIVOT 17,739 5,402 R1 17,855 5,441 R2 18,035 5,502

    72.8 10,123 45.6 21,354 (0.6) (17.5)


    (Pts)

    3,026 2,374
    (Close)

    Indian ADRs

    INFY WIT IBN HDB


    Advances / Declines Advances Declines Unchanged

    0.6 (0.4) (0.2) (1.2)

    0.4 (0.0) (0.1) (0.4)


    BSE

    $59.1 $11.1 $37.6 $34.2


    NSE

    News Analysis
    Monetary Policy Review L&T bags orders worth `1,140cr

    Refer detailed news analysis on the following page

    1,006 1,848 129

    380 1,074 58

    Net Inflows (March 14, 2012)


    ` cr FII MFs Purch 4,185 640 Sales 2,110 1,113 Net 2,075 (473) MTD 6,332 (767) YTD 42,630 (4,794)

    Volumes (` cr) BSE NSE

    2,768 12,278

    FII Derivatives (March 15, 2012)


    ` cr
    Index Futures Stock Futures

    Purch 2,144 1,649

    Sales 2,647 1,914

    Net (503) (265)

    Open Interest 15,169 30,515

    Gainers / Losers
    Gainers Company
    Educomp Sol Pipavav Defence JSW ENERGY Wockhardt United Brew

    Losers Company
    Lanco Infra Sintex Inds GMR Infra Titan Inds Reliance Cap

    Price (`)
    206 81 70 583 555

    chg (%)
    4.8 4.3 4.1 2.6 2.1

    Price (`)
    20 84 31 233 409

    chg (%)
    (8.9) (6.3) (6.2) (5.9) (5.9)

    Please refer to important disclosures at the end of this report

    Sebi Registration No: INB 010996539

    Market Outlook | India Research

    Monetary Policy Review


    Key highlights
    Keeps SLR and CRR unchanged at 24.0% and 4.75%, respectively Holds on to key policy rates (Repo: 8.5%, Reverse Repo: 7.5% and MSF: 9.5%) Monetary policy maintains status quo in-line with consensus: The Reserve Bank of India (RBI) in its mid-quarterly monetary policy review kept both CRR and repo rate unchanged, in-line with streets expectations. The RBI, in its third quarter review of the monetary policy (January 24, 2012), had clearly stated that fiscal consolidation measures in the forthcoming budget (scheduled on March 16, 2012) would be a critical factor in the commencement of the monetary easing cycle. Accordingly, it was widely expected that the RBI would hold on to key policy rates in todays monetary policy and wait for credible signs of fiscal consolidations before initiating rate cuts. Also, while February inflation readings were in-line with the RBIs year-end projections, the RBI preferred to adopt a wait-and-watch approach, pointing out that the current readings do not reflect higher fuel, power and fertilizer prices. The RBI has injected nearly `2lakh cr in the past six months (~`1.2lakh cr via OMOs and `0.8lakh cr via cumulative 125bp CRR cut). Hence, in the backdrop of the 75bp CRR cut already done just a few days back, as expected, the RBI kept the CRR unchanged in todays monetary policy. Inflation environment benign for monetary easing commencement: Food inflation for February 2012 climbed back to 6.1% yoy (negative 0.5% yoy for January 2012). However, the sharp yoy jump in food inflation can be attributed to the low base effect (decline of 5.8% mom in food inflation in February 2011). Also, for February 2012, annualized mom food inflation levels stood at 5.6%, lower than the six-month annualized figure of 7.1%. Manufacturing inflation eased further to 5.7% yoy (lowest levels in over a year) from 6.5% yoy levels in January 2012. Annualized mom growth in the manufacturing index stood at 4.2% and even the six-month annualized figure was at low 4.6% levels. More importantly, core inflation, which the RBI tracks closely for its monetary policy decisions, eased further to 5.5% levels. The marked decline in manufacturing inflation levels over the past three months (~240bp) has been visible post the dip in primary inflation, as a large part of pass-through of primary inflation is, in our view, already done with. Going ahead, sustained lower food inflation levels are likely to lead to lower wage inflation, which in turn are likely to translate into further easing of manufacturing inflation levels. Hence, in our view, the overall inflation environment, apart from fuel-related concerns, seem to be benign for monetary easing commencement; and we expect the RBI to begin with more decisive signaling through repo rate cuts from April 2012. Resurgence in inflation levels (we assign a low probability to the same) and a more populist budget than expected are possible impediments that could push back the initiation of rate cuts.

    March 16, 2012

    Market Outlook | India Research

    L&T bags orders worth `1,140cr


    Larsen & Toubro's (L&T) construction arm bagged new orders worth `1,140cr under various divisions during March 2012. The company's building and factories division has secured a `970cr order for the design and construction of a IT campus facility in Kolkata. The project will be executed on a joint venture model along with Shapoorji & Pallonji Co within a period of 32 months. L&T Oman LLC has bagged a new contract worth `170cr from Oman Electricity Transmission Co for replacing some substations within 15 months. At the CMP of `1,363, the stock is trading at PE of 19.3x FY2013E earnings, which is below the historical trading multiple for L&T. We have used the SOTP methodology to value the company to capture all its business initiatives and investments/stakes in different businesses. Ascribing separate values to its parent business on P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to `1,607, which provides 17.9% upside from current levels. Hence, we maintain our Buy rating on the stock.

    Economic and Political News


    EPFO cuts rate to 8.25% World Bank approves US$4.3bn aid to India Survey pegs FY2013 economic growth at 7.6% Hydro-power projects worth `1,700cr caught in green net Food Security Bill unlikely in Budget Session

    Corporate News
    Infosys to double R&D team, add 500 people in two years M&M to pump `1,780cr into Ssangyong Abbott India appoints Rehan Khan as MD SKS to raise `200cr through securitization
    Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

    March 16, 2012

    Market Outlook | India Research

    Research Team Tel: 022 - 39357800

    E-mail: research@angelbroking.com

    Website: www.angelbroking.com

    DISCLAIMER
    This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

    March 16, 2012

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