Market Outlook J une 8, 2 012 www.angelbroking.com Market Outlook J une 8, 2 012 Dealer’s Diary The Indian markets are expected to open in the red tracing negative opening in most of the Asian bourses and the SGX Nifty. Asian stocks were trading lower after comments by Federal Reserve Chairman B en S . B ernanke o vers hado wed Chi na’ s first interest-rate cut since 2008. The People’s Bank of China has lowered its benchmark lending and deposit rates by 25 basis points. The announcement, two days before China is due to report inflation, investment and output figures, may signal that the economy is weaker than the government expected. Bernanke said the central bank will need to assess conditions before deciding if more measures are needed to stoke an economy threatened by Europe’s debt crisis and U.S. budget cuts. Meanwhile Indian shares extended recent gains on Thursday after the rupee breached the 55 mark to hit a two-week high against the dollar reflecting a return of appetite for risk. Talks of the government giving a big push to infrastructure development bolstered sentiments. Although there were reports of the Union Cabinet deferring a decision on the Pension Bill due to lack of consensus, the benchmark indi ce s ended the trading da y with s ignifi cant gains. Mar kets T oday T he trend deciding lev el fo r the day is 16 ,617 / 5,0 39 leve ls . If N IF T Y t rades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,713 – 16,7 77/ 5,0 70 – 5,0 91 levels . Howev er, if N IF TY trades below 16,617/5,039 levels for the first half-an-hour of trade then it may correct up to 16,552 – 16,4 56/ 5,018 – 4,987 levels. Indices S 2 S 1 P IVO T R1 R 2 SENSE X 16,45 6 16,552 16,617 16,713 16,7 77 NIF T Y 4,987 5,018 5,039 5,070 5,091 N ews Analys is China cut borrowing costs RIL plans a capex of 100,000cr over next 4 years L&T bags orders worth 2,410cr Refer detailed news analysis on the following pageN et Inflow s ( J une 06, 2012) cr P urch S ales Net MTD YTD FII 3,329 3,160 169 (1,173) 40,765 MF s 831 361 470 817 (5,649) F II Der ivatives (J une 07, 201 2) cr P urch S ales Net Open Interes t Index Futures 2,165 1,034 1,132 8,544 Stock Futures 1,640 999 641 22,150 Gain ers / Los ers Gainers Losers Company P rice ( ) chg (%)Company P rice ( ) chg (%)S hree R enuka S ugars 28 7.6T ata Comm. 220 (2.6) R eliance Capi tal 337 7.2IRB Infr astructur e 120 (2.0) India Infoline 55 6.2Wipro 401 (1.9) IVRCL Ltd. 44 5.5HPCL 295 (1.9) Zee Entertainment 137 5.0Indian Oil Corp. 250 (1.8) Domest ic Indices Chg (%) (Pt s ) (Cl ose) BSE Sensex 1.2194.8 16,649 Nifty 1.1 52.6 5,050 MID CAP 0.742.9 5,975 SMALL CAP 0.529.0 6,314 BSE HC 0.320.1 6,636 BSE PSU 0.534.9 6,911 BANKEX 2.1 236.7 11,455 AUTO 1.3119.9 9,187 METAL 1.3133.8 10,269 OIL & GAS 0.643.7 7,743 BSE IT 0.420.6 5,659 Global Indices Chg (%)(Pts) (Close) Dow Jones 0.446.2 12,461 NASDAQ (0.5) (13.7) 2,831 FTSE 1.263.7 5,448 Nikkei 1.2106.2 8,640 Hang Seng 0.9157.8 18,678 Straits Times (0.1) (1.6) 2,759 Shanghai Com (0.7) (16.4) 2,293 Indian ADRs Chg (%)(Pts) (Close) INFY (2.4) (1.1) $43.9 WIT (1.2) (0.1) $8.9 IBN 0.1 0.0 $30.1 HDB 3.31.0 $30.7 Advances / Declines BS E NS E Advances 1,527 848 Declines 1,172 589 Unchanged 12 5 101 Volumes ( cr ) BSE 2,177 NSE 10,686
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The Indian markets are expected to open in the red tracing negative opening inmost of the Asian bourses and the SGX Nifty. Asian stocks were trading lower aftercomments by Federal Reserve Chairman Ben S. Bernanke overshadowed China’s
first interest-rate cut since 2008.
The People’s Bank of China has lowered its benchmark lending and deposit ratesby 25 basis points. The announcement, two days before China is due to reportinflation, investment and output figures, may signal that the economy is weakerthan the government expected. Bernanke said the central bank will need to assessconditions before deciding if more measures are needed to stoke an economythreatened by Europe’s debt crisis and U.S. budget cuts.
Meanwhile Indian shares extended recent gains on Thursday after the rupeebreached the 55 mark to hit a two-week high against the dollar reflecting a returnof appetite for risk. Talks of the government giving a big push to infrastructuredevelopment bolstered sentiments. Although there were reports of the UnionCabinet deferring a decision on the Pension Bill due to lack of consensus, thebenchmark indices ended the trading day with significant gains.
Markets TodayThe trend deciding level for the day is 16,617 /5,039 levels. If NIFTY trades abovethis level during the first half-an-hour of trade then we may witness a further rallyup to 16,713 – 16,777/ 5,070 – 5,091 levels. However, if NIFTY trades below16,617/5,039 levels for the first half-an-hour of trade then it may correct up to16,552 – 16,456/ 5,018 – 4,987 levels.
Indices S2 S1 PIVO T R1 R2SENSEX 16,45 6 16,552 16,617 16,713 16,777
NIFTY 4,987 5,018 5,039 5,070 5,091
N ews Analysis China cut borrowing costs RIL plans a capex of
`
100,000cr over next 4 years L&T bags orders worth
`
2,410crRefer detailed news analysis on the following page
China reduced interest rates for the first time since 2008 and loosened controls onbanks’ lending and deposit rates, in its bid to combat a deepening slowdown as
Europe’s ongoing debt crisis threatens global growth. The one-year lending rateand one-year deposit rate were reduced by 25bps to 6.31%, and 3.25%,respectively. Banks are now given more leeway to offer upto 10% higher thanbenchmark deposit rate to depositors and to charge upto 20% lower than the keybenchmark lending rate (previously 10%).
RIL plans a capex of`
100,000cr over next 4 years
Reliance Industries (RIL) conducted its Annual General Meeting (AGM) for FY2012.With cash and equivalents of ~
`
80,000cr as of March 31, 2012 on RIL’s balance
sheet, Chairman Mr. Mukesh Ambani announced that the company plans to invest`
100,000cr across business segments over the coming four years. It targets toinvest ~ US$3.5bn on shale gas. On its core petrochemical business, RIL aims toincrease its capacity to 25mn tonnes from the current 15mn tonnes and also investin operational efficiency projects. RIL aims to become a market leader in retailbusiness and targets to achieve top-line of
`
40,000-50,000cr over the next three-four years (current top-line
`
7,600cr). Further RIL informed that although KG D6production has declined over the past one year to 34mmscmd, it aims to raisetotal gas production to 60mmscmd by 2015. On profitability front, Mr. Ambanisaid that RIL aimed to double its operating profits in the coming five years. RIL hasbought back 2.79cr shares at a cost of
`
1,929cr under its share-buybackprogram. Alongside decline in KG D6 gas output, deployment of huge cash pilewas amongst the key concerns on the stock. Clarity over deployment of cash ispositive in our view. We maintain our Buy rating on the stock with a target price of`
879 .
L&T bags orders worth`
2,410cr
L&T’s construction arm has won`
2,410cr new orders across various businessesduring April-June 2012. The Buildings and Factories IC has secured new ordersworth
`
1,921cr. The orders are from leading developers for the construction of
major residential towers across various cities in the northern part of the country.L&T Infrastructure IC has won orders to the tune of
`
345cr for the design andconstruction of viaducts and three elevated stations from Delhi Metro RailCorporation which also includes additional orders from various ongoing projects.Water effluent and treatment business has bagged new orders worth
`
244cr fromBangalore Water Supply and Sewerage Board for upgrading the existing waterdistribution systems including additional orders from various ongoing projects.
At the CMP of`
1,277, the stock is trading at 16.7x FY2014E earnings and 2.4xFY2014E P/ BV on a standalone basis. We have used the SOTP methodology tovalue the company to capture all its business initiatives and investments/ stakes in
different businesses. Ascribing separate values to its parent business on a P/ E basisand investments in subsidiaries on P/ E, P/ BV and mcap basis, our target priceworks out to
`
1,553, which provides 21.6% upside from current levels. Werecommend Buy on the stock .
People’s Bank of China cuts interest rates as economy continues to slide Monsoon 36% below average in first week: IMD PM's push for infra sector to boost investor confidence: CII Cabinet defers decision on pension reforms bill
Corporate N ews Tata Steel to set up
`
30,000cr plant in Karnataka Suzlon to invest
`
15,000cr to set up a 2,500 MW wind farm in Karnataka Dr Reddy's launches generic Parkinson's disease tablets in US BHEL commissions 250MW unit at UP thermal power project Jubiliant Life Sciences to invest ~
`
1,000cr across businesses in KarnatakaSource: Economic Times, Business Standard, Business Line, Financial Express, Mint