Weekly Review

July 17, 2010

Markets extend gains FII activity

(Rs crore)
The Indian stock markets extended their gains during the week with the Cash Futures Net
As on (Equity) Activity
Sensex and Nifty ending higher by 0.7% and 0.8%, respectively. BSE
Jul 09 3,466 1,591 5,056
mid-cap and small-cap indices continued their outperformance to the large- Jul 12 1,116 1,200 2,315
cap counterparts, further extending their gains during the week by 1.1% Jul 13 804 (274) 530
and 1.9%, respectively. The market opened the week on a positive note, Jul 14 647 (245) 402

crossing the psychological mark of 18,000 on BSE index but mostly traded Jul 15 561 (633) (72)
Net 6,593 1,638 8,231
in a narrow range during the week. Factors such as mixed global cues,
lower-than-expected growth in industrial production in May 2010 and weak
monsoon reports (24% below normal) weighed on investors' sentiment during Mutual Fund activity (Equity)
the week. On the sectoral front, the performance was mixed, as there were (Rs crore)
As on Purchases Sales Net Activity
equal number of sectors gaining and losing, with the BSE Realty and BSE
Jul 08 680 679 1
Bankex indices gaining the maximum of 6% and 3%, respectively.
Jul 09 496 633 (137)

Real Estate index gains 6% during the week Jul 12 692 869 (177)
Jul 13 610 727 (117)
The Real Estate index gained 6.0% for the week, outperforming the Sensex,
Jul 14 287 1,031 (743)
which was marginally up by 0.7%. Top gainers in the real estate space were Net 2,765 3,938 (1,174)
Parsvnath (up 10.3%), Unitech (up 9.1%), Omaxe (up 8.9%), DLF (up 8%)
and HDIL (up 5.8%). A speculation about the likelihood of government
relaxing the three-year lock-in period for repatriation of foreign direct Global Indices
investment in the realty sector led to the rally. This, coupled with the fact that Indices July July Weekly YTD
09, 10 16, 10 (% chg)
the sector has underperformed the benchmark indices in the recent past,
aided the positive sentiment. BSE 30 17,834 17,956 0.7 2.8

NSE 5352 5394 0.8 3.7

Inside This Weekly Nasdaq 2,196 2,179 (0.8) (4.0)

Kesoram Industries - Initiating Coverage: The company’s cement and tyre DOW 10,198 10,098 (1.0) (3.2)

businesses are currently trading at attractive valuations coupled with being Nikkei 9,585 9,408 (1.8) (10.8)

at a substantial discount to its peers and replacement costs. The cement HangSeng 20,379 20,250 (0.6) (7.4)

business is valued at a EV/tonne of US $65 which is at a considerable Straits Times 2,917 2,958 1.4 2.1

discount to the replacement costs of US$80/tonne. This gives an implied Shanghai Composite 2,471 2,424 (1.9) (26.0)

enterprise valuation of Rs1.4cr/tpd to the tyre business , which is at 35-63% KLSE Composite 1,324 1,337 0.9 5.0

discount to the peers. We Initiate Coverage on the stock with a Buy Jakarta Composite 2,944 2,992 1.6 18.1

recommendation and TTarget

arget PPrice
rice of Rs437. KOSPI Composite 1,723 1,738 0.9 3.3

Infosys -1QFY2011 Result Update : In rupee terms, Infosys top-line grew

4.3% qoq to Rs6,198cr backed by 7.6% qoq volumes growth, while the Sectoral Watch

blended pricing was lower by 1.6% qoq. However, on account of the annual Indices July July Weekly YTD
09, 10 16, 10 (% chg)
wage hike, EBIT margins fell by 178bp qoq to 28.3%, while the PAT declined
by 7.0%.W We maintain our Accumulate rating on the stock, with a TTarget
arget BANKEX 11,061 11,318 2.3 12.8

BSE AUTO 8,369 8,337 (0.4) 12.1

Price of Rs2,900.
BSE IT 5,478 5,459 (0.3) 5.3
Axis Bank
Bank-- 1QFY2011 Result Update : The Bank registered net profit growth
BSE PSU 9,469 9,389 (0.8) (1.5)
of 32.0% on a yoy basis to Rs742cr, which is better than our estimate of
Rs710cr mainly on account of the better-than-estimated net interest income
(NII). Strong operating performance with stable asset quality was the key
positive of the result. We maintain our Accumulate rating on the stock with
a TTarget
arget PPrice
rice of Rs1,477.

Note: Stock Prices are as on Report release date; Refer all Detailed Reports on Angel website.

Please refer to important disclosures at the end of this report

 Fundamental FFocus
ocus | July 17, 2010

Kesoram Industries - Buy Price - Rs300

Target Price - Rs437

Initiating Coverage

Tyre imprints on cement SO

SOTPTP TTarget
arget PPrice
rice of Rs437: We have arrived at a SOTP Target
Price of Rs437 for the company by valuing its cement business
Kesoram Industries (Kesoram) is a diversified player with
at EV/tonne of US $65. The tyre business has been valued at
presence in cement and tyre manufacturing. The company has
Rs2cr/tpd, which implies EV/Sales of 0.5x at a capacity utilisation
a total cement capacity of 7.3mtpa at two locations viz. Sedam
of 62%. The captive power plants (CPP) of the company have
(5.7mtpa) in Karnataka and Karimnagar (1.6mtpa) in Andhra
been assigned a value of Rs4cr/MW. The rayon and other
Pradesh. In tyres, the company currently has a total installed
businesses have been valued at market cap-to-sales of 1x. At
capacity of 823tpd, which is expected to increase to 988tpd in
the Target Price, the stock is available at attractive valuations of
FY2011E.
P/BV of 0.7x and EV/EBITDA of 5x on FY2012 estimates.
The company’s cement and tyre businesses are currently trading
at attractive valuations coupled with being at a substantial SOTP Valuation (FY2012E)
discount to their peers and replacement costs. The cement Segments Valuation PParameter
arameter (Rs cr)
business is valued at a EV/tonne of US $65 which is at a Cement 7.3mtpa x US $65/tonne 2,121
considerable discount to the replacement costs of US$80/tonne. CPP 75MW x Rs4cr 300
Tyre 988 (tpd) xRs2cr 1,976
This gives an implied enterprise valuation of Rs1.4cr/tpd to
Rayon & Others 1x Mcap/sales 256
the tyre business , which is at 35-63% discount to the peers
Enterprise V alue
Value 4,652
such as Apollo Tyres (Rs3.8cr/tpd) and Ceat (Rs2.3cr/tpd).
Investments 30% discount to market value 203
We Initiate Coverage on the stock with a Buy recommendation Net Debt 2,858
and TTarget
arget PPrice
rice of Rs437, implying an upside of 46% from Fair value 1,998
current levels. No. of shares (cr) 4.6
Value PPer
er Share (Rs) 437
Favourable regional exposure: The company’s relative proximity CMP (Rs) 300
to the western markets (40% of cement revenue derived from Upside PPotential
otential (%) 46
Maharashtra) is expected to cushion its cement operations from Source: Angel Research
the short-term demand-supply mismatch likely to prevail in
Key Financials
the south. Even in the south, we expect demand to start
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
improving from 2HFY2011E with the political situation in Andhra
Pradesh improving, which would result in increased government Net Sales 3,882 4,721 5,237 6,226
spending on infrastructure and housing projects. We expect % chg 29.8 21.6 10.9 18.9
the cement business to register 4.7% CAGR in top-line over Net PProfit
rofit 379 237 219 303
FY2010-12E from Rs1,913cr to Rs2,097cr.
% chg (1.1) (37.4) (7.7) 38.5
Poised to capitalise on presence in high-margin T&B radial OPM (%) 14.6 13.4 12.6 13.5
segment: The company is on expansion phase in the emerging
EPS (Rs) 82.9 51.9 47.9 66.4
T&B radial segment in its bid to capitalise on the prevailing
P/E (x) 3.6 5.8 6.3 4.5
scarce supply situation. The company expects to ramp up
capacity from 140tpd (FY2010) to 225tpd by end FY2011E, P/BV (x) 1.0 0.9 0.8 0.7
taking its T&B radial capacity to 23% of its overall FY2011E RoE (%) 32.8 16.5 13.4 16.3
tyre capacity, one of the highest in industry. We expect the tyre RoCE (%) 16.0 11.0 8.8 11.8
business to register 22.0% CAGR in top-line over FY2010-12E
EV/Sales (x) 0.9 1.0 0.9 0.7
from Rs2,850cr to Rs4,242cr.
EV/EBITDA (x) 6.0 7.3 6.8 5.0
Source: Company, Angel Research; Price as on July 16, 2010; Refer
detailed report to be released shortly.
Research Analyst - Rupesh Sankhe/ V Srinivasan

For Private Circulation Only | Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP00000154 6 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE: INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946 2
 Fundamental FFocus
ocus | July 17, 2010

Infosys - Accumulate Price - Rs2,742

Target Price - Rs2,900

1QFY2011 Result Update

Performance Highlights However, the increasing attrition rate is a cause for concern.
Hence, we expect employee cost to move up going forward to
Y/E March 1QFY11 4QFY10 (qoq) 1QFY10 % chg
retain the best of the talents, as the job opportunities are coming
(Rs cr) % chg (yoy)
Net Reveneus 6,198 5,944 4.3 5,472 13.3 back with buoyancy in the overall economy. However, on the
*EBIT Margins (%) 28.3 30.1 (1.8) 30.0 (1.7) back of strong volume-backed growth and stable pricing, we
PAT 1488 1,600 (7.0) 1,525 (2.4) believe that the company will maintain the EBIT margins albeit
Source: Company, Angel Research in a narrow band going forward.
Performance backed by healthy volume growth: Infosys Outlook and Valuation
consolidated Top-line for 1QFY2011 was in line with our
estimates. In rupee terms, top-line grew 4.3% qoq to Rs6,198cr, We expect Infosys to register CAGR of 19% in top-line over
while in US dollar terms, the growth was 4.8% qoq to US FY2010-12E backed by 17% CAGR in volumes. However, EPS
$1358mn. The growth was backed by volumes, which were up is likely to register subdued CAGR of 12.6% during the period
7.6% qoq, while the blended pricing was lower by 1.6% qoq. on account of lower EBIT margins and increased tax rate. The
However, on account of the annual wage hike, EBIT margins stock is currently trading at 23.2x FY2011E EPS of Rs118 and
fell by 178bp qoq to 28.3%, while the PAT declined by 7.0% 20x FY2012E EPS of Rs138. Though adverse macro economic
qoq to Rs1,488cr on account of higher tax rate. factors like the Europe crisis and cross-currency movements
are cause for concern for the IT companies, we believe growth
FY2011E guidance revised upwards: Infosys has revised its will be sustained through volumes with pricing remaining stable.
FY2011E revenue growth guidance from the earlier 16-18% to Thus, we have valued the stock at 21x FY2012E earnings, which
19-21% yoy, and EPS growth from the earlier 4-9% to 5-10% is at ~25% premium to Sensex PE of 17x FY2012E earnings
yoy in US dollar terms. In rupee terms also, the revenue growth (Infosys has traded at an average premium of ~25% to the
guidance has been revised upwards from the earlier 9-11% to Sensex PE during FY2005-10) and maintain our Accumulate
16-18% yoy, and EPS growth guidance from the earlier rating on the stock, with a TTarget
arget PPrice
rice of Rs2,900.
(2.6%)-1.4% to 7.2-11.5% yoy.

Strong growth in US and emerging geographies to combat

Key Financials (Consolidated)
Europe crisis: Though Europe continues to be a spoilt sport for Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
the Indian IT industry till the concerns wear out, some of the Net Sales 21,693 22,742 26,916 32,042
other levers for the company's growth are the recovery in the IT % chg 30.0 4.8 18.4 19.0
spend from the US and emerging geographies. The company
Net PProfit
rofit 5,975 6,219 6,735 7,882
also expects to get increasing wallet share from its existing clients
% chg 28.2 4.1 8.3 17.0
and is witnessing improvement in IT spends more on offshore.
Moreover to combat the European concerns the company plans EBIT Margin (%) 29.6 30.4 29.5 29.0
to proactively increase investments in creating capabilities and FDEPS (Rs) 104.7 108.9 118.0 138.0
hence plans for strong manpower intake in FY2011. We expect P/E (x) 26.3 25.2 23.2 19.9
growth to remain broad-based with key verticals like BFSI,
P/BV (x) 8.2 6.5 5.4 4.6
energy and utilities and high-margin services like consulting
and package implementation are expected to do well. RoE (%) 36.2 28.7 25.5 25.0
RoCE (%) 41.8 36.5 33.9 33.1
Strong volume led growth with stable pricing to maintain
EV/Sales (x) 6.7 6.3 5.2 4.2
profitability:Though the cross-currency movement remains a
profitability:
concern, we expect the company's short-term hedging policy to EV/EBITDA (x) 22.7 20.9 17.6 14.6
arrest its impact on operational profitability to a large extent. Source: Company, Angel Research; Price as on July 15, 2010

Research Analyst - Vibha Salvi

For Private Circulation Only | Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP00000154 6 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE: INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946 3
 Fundamental FFocus
ocus | July 17, 2010

Axis Bank - Accumulate Price - Rs1,345

Target Price - Rs1,477

1QFY2011 Result Update

Performance Highlights The cumulative restructured assets till 1QFY2011, however

declined to Rs 2,151cr (1.81% of gross customer assets). The
Y/E March 1QFY11 4QFY10 (qoq) 1QFY10 % chg
(Rs cr) % chg (yoy) bank restructured ~69% in the large and mid corporate credit,
Net Interest and 20% in the SME segment, while the balance was restructured
Income 1,514 1,460 3.7 1,046 44.8 in agriculture and capital markets. A sector-wise analysis by
Pre-Prov the bank indicates that restructuring of textiles was the highest
Profit 1,450 1,384 4.8 1,176 23.3
at 22%, followed by shipping 22%, sugar, petroleum and real
PAT 742 765 (3.0) 562 32.0
estate at 8% each.
Source: Company, Angel Research

Stronger -than-
Stronger-than- expected advances growth: Advances increased
-than-expected Asset quality pressures have shown signs of easing, with an
by a robust 39.1% yoy and 4.1% sequentially to Rs1,08,609cr, improving economic outlook and reducing corporate leverage
while deposits increased to Rs1,47,479cr, a growth of 33.8% owing to which the NPA provisions are expected to decline,
yoy and 4.4% sequentially. The advances growth was driven by going forward. Accordingly, we estimate a decline in NPA
the large and mid-corporate segment (mainly telecom), which provisions by 21.1% in FY2011E (implies NPA provision at 0.5%
increased by 54.7% yoy. Consequently, the NII of the bank of assets in FY2011E v/s an average of 0.3% over FY2005-09).
recorded a growth of 44.8% yoy and 3.7% sequentially. Outlook and Valuation
The deposit growth was driven by 17.2% qoq growth in Term At the CMP, the stock is trading at relatively attractive valuations
deposits. The CASA ratio of the bank declined to 40.2% (which of 2.5x FY2012E ABV, a 24% discount to HDFC Bank. We remain
is a seasonal phenomenon in the first quarter of the financial positive on the bank and believe that it deserves premium
year) from 46.7% in 4QFY2010, though it was stable on yoy valuations on account of its attractive CASA franchise, multiple
basis. Reported NIM at 3.71%, registered a decline of 38bp sources of sustainable fee income, strong growth outlook and
sequentially largely on account of the payment of interest on A-list management. W Wee have an Accumulate rating on the stock,
savings deposits on daily balance from 1QFY2011 onwards. with a TTarget
arget PPrice
rice of Rs1,477, implying an upside of 10%.

Reasonable non-interest income growth: Fee income registered

19% yoy growth, rising to Rs743cr (Rs627cr) during Q1FY2011,
with strong contribution from the corporate segment. Fee income
from large and mid-corporate credit (including infrastructure) Key Financials
grew 42% yoy, followed by that from treasury and debt and Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
capital markets (22% yoy), capital markets (10% yoy), retail NII 3,686 5,004 6,314 7,950
business (8% yoy), business banking (6% yoy) and fee income
% chg 42.6 35.8 26.2 25.9
from the SME and agri lending businesses declined by 6%.
Net PProfit
rofit 1,815 2,515 3,042 4,078
The bank generated Rs196cr (Rs326cr) of trading profits during
% chg 9.5 8.5 21.0 34.1
Q1FY2011, a decline of 40% yoy. About 60% of the total trading
NIM (%) 3.0 3.1 3.2 3.2
profit was related to trading of corporate bonds.
EPS (Rs) 50.6 62.1 75.1 100.7
Asset quality stable: The gross slippage during the quarter stood
at Rs421cr, indicating an annualised slippage ratio of 1.6% P/E (x) 26.6 21.7 17.9 13.4

lower than FY2010, which was at 2.2%. Gross NPAs increased P/ABV (x) 4.8 3.4 3.0 2.5
by 1.7% sequentially to Rs1,341cr, while net NPAs stood at RoA (%) 1.4 1.5 1.5 1.6
Rs413cr (Rs419cr). Gross and net NPA ratios of the bank were
RoE (%) 19.1 19.2 17.7 20.5
stable at 1.1% and 0.4%, respectively.
Source: Company, Angel Research; Price as on July 15, 2010

Research Analyst - Vaibhav Agrawal/Amit Rane/Shrinivas Bhutda

For Private Circulation Only | Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP00000154 6 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE: INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946 4
 Fundamental FFocus
ocus | July 17, 2010

Exide Industries - Accumulate Price - Rs136

Target Price - Rs153

1QFY2011 Result Update

Performance Highlights Higher other income of Rs6.2cr (Rs0.9cr), up 592% yoy helped
the company to record substantial increase in net profit. Overall,
Y/E March 1QFY11 4QFY10 (qoq) 1QFY10 % chg
Exide's net profit margins improved by a healthy 80bp yoy on
(Rs cr) % chg (yoy)
the back of robust growth in top-line, higher other income and
Net Sales 1,152.1 903.5 27.5 1,030.3 11.8
reduction in other expenditure during the quarter.
Operating Profit 263.2 209.5 25.7 217.5 21.0
OPM (%) 22.8 23.2 (34)bp 21.2 169bp Outlook and Valuation
Reported PAT 165.3 122.4 35.1 134.5 22.9 We estimate the company to clock around 14% CAGR in
Source: Company, Angel Research volumes over FY2010-12E on the back of which top-line and
Net sales up 27.5%; overall volumes up by around 18%: For bottom-line would post a CAGR of 19% and 22% respectively,
1QFY2011, Exide Industries clocked 27.5% yoy growth in net in the mentioned period. We expect the prices of its main raw
sales to Rs1,152cr (Rs904cr), which was above our estimate of materials to be stable or increase marginally over the mentioned
Rs1,059cr. The company's OE and replacement sales growth, period (after the recent run-up in FY2010 and the current higher
which had started improving since the beginning of FY2010, inventory levels at the LME), which will gradually be passed on.
extended the same to 1QFY2011. The improving growth in We have upgraded our EPS estimates to Rs8 (Rs7.2
commercial vehicles (CV) and tractor replacement sales (up earlier) and to Rs9.4 (Rs8.9 earlier) for FY2011E and
14% yoy) and the significant 27% growth in the motorcycle FY2012E respectively, owing to the better-than-expected
battery segment aided the company to report higher growth in 1QFY2011performance. At the CMP, the stock is quoting at
the auto battery segment during the quarter. This was also 17x FY2011E and 14.5x FY2012E earnings. We have valued
supported by the healthy growth registered by the industrial the company's stake in ING Vysya Life Insurance at Rs12/share
battery segment during the quarter. Overall, the company on the FY2012E new business arrived profit (NBAP). At adjusted
recorded around 18% yoy growth in volumes and higher lead valuations of 15x FY2012E earnings for its core business, the
price passed on to customers helped the company to clock better stock is available at reasonable levels. Hence, we maintain an
yoy growth in realisations. Accumulate on the stock, with a TTarget
arget PPrice
rice of Rs153.

Lower raw material costs pump up margins qoq: During

Key Financials
1QFY2011, Exide witnessed a 34bp yoy decline in EBITDA
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
margins owing to the 69bp yoy rise in raw material costs, which
accounted for around 58.6% of sales (58% in 1QFY2010). Net Sales 3,393 3,794 4,617 5,359
However, on a qoq basis, the company registered a % chg 19.3 11.8 21.7 16.1
substantial169bp jump in EBITDA margins, largely because of Net PProfit
rofit 283.3 537.3 679.1 796.8
the significant drop in other expenditure. During the quarter,
% chg 14.2 89.7 26.4 17.3
average lead prices, which declined by 13% qoq to US $1,924/
OPM (%) 16.1 23.5 23.7 23.6
tonne, helped the company to improve margins, while average
lead prices increased 28% yoy (US $1,509/tonne in 1QFY2010). EPS (Rs) 3.6 6.3 8.0 9.4
This was also aided by a favourable rupee-dollar movement P/E (x) 38.2 21.5 17.0 14.5
during the quarter. Exide registered net exchange gains of P/BV (x) 8.9 5.3 4.2 3.4
Rs4.8cr (Rs1cr) during the quarter. Further, a 100bp yoy decline
RoE (%) 25.0 31.0 27.1 25.4
in other expenditure also helped to arrest OPM contraction to
RoCE (%) 31.7 40.8 37.8 35.4
a certain extent. Operating profit during the quarter grew by a
robust 25.7% yoy to Rs263cr (Rs209cr). EV/Sales (x) 3.3 2.9 2.4 2.0

Bottom-line grows 35.1%: The company reported a 35.1% yoy EV/EBITDA (x) 20.3 12.3 10.0 8.6
increase in net profit to Rs165cr (Rs122cr) during the quarter. Source: Company, Angel Research; Price as on July 13, 2010

Research Analyst - Vaishali Jajoo/Yaresh Kothari

For Private Circulation Only | Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP00000154 6 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE: INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946 5
 Fundamental FFocus
ocus | July 17, 2010

Sintex Industries - Buy Price - Rs332

Target Price - Rs385

1QFY2011 Result Update

Performance Highlights Textile margins showing signs of improvement

Y/E March (Rs cr) 1QFY11 4QFY10 % qoq 1QFY10 % yoy
Y/E March 1QFY11 4QFY10 (qoq) 1QFY10 % chg
Total Revenues 931 1,116 (16.6) 698 33.3
(Rs cr) % chg (yoy)
Plastics 812 988 (17.8) 586 38.4
Net Sales 911 1,094 (16.7) 662 37.5
Textiles 99 105 (6.2) 76 30.0
Operating Profit 137 193 (28.9) 87 57.2
Unallocated 20 22 (8.9) 36 (43.6)
OPM (%) 15.1 17.6 (260bp) 13.1 189bp
EBIT Margin (%) 13.0 16.2 (313bp) 12.4 62bp
PAT 79 139 (43.2) 61 30.1
Plastics 13.4 14.2 (79bp) 11.3 209bp
Source: Company, Angel Research
Textiles 11.6 9.1 244bp 9.0 260bp
Sintex Industries' (Sintex) 1QFY2011 results were marginally Unallocated 6.4 138.4 (13,204bp) 38.1 (3,174bp)
above our expectations. The company reported strong revenue Source: Company, Angel Research
growth of 37.5%, largely driven by its monolithic, standalone
pre-fab and domestic custom moulding segments. During the Outlook and Valuation
quarter, Sintex booked Rs20.5cr of one time loss, resulting in a
At Rs332, the stock is trading at 9.4x FY2012E earnings and
43.6% yoy decline in other income. Management reiterated its
1.7x FY2012E book value. Over the past five years, Sintex has
strong outlook for the domestic plastic segment and growth
traded at 13.2x its one-year forward average P/E, which makes
trajectory going ahead. We maintain Buy on the stock.
current valuations attractive. Moreover, the company's
Strong growth across segments: Sintex's consolidated net sales fundamentals have strengthened with a well-capitalised balance
grew by 37.5% yoy to Rs911cr. Strong yoy revenue growth was sheet, strong revenue visibility (the monolithic segment's order
primarily led by the monolithic (up 89.2%), standalone pre-fab book stands at Rs2,300cr) and robust demand in the domestic
(up 30.1%), domestic custom moulding (140.1%) and textile plastic segment. We maintain a Buy rating on the stock with a
(up 30.0%) segments. Nief and Wausaukee reported moderate target price of Rs385.
revenue growth on account of higher rupee appreciation;
however, they reported strong numbers in constant currency
terms. Sintex's 1QFY2011 consolidated operating profit stood Key Financials (Consolidated)
at Rs137cr, up 57.2% yoy. OPM for the quarter stood at 15.1%, Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
up 189bp yoy on higher contribution from the high-margin
Net Sales 3,136 3,319 4,068 4,853
monolithic segment. During the quarter, the company booked
% chg 35.5 5.9 22.6 19.3
Rs17.5cr of MTM loss (on its FCCB), and Rs 3.5cr of one time
settlement, resulting in a 43.6% yoy decline in other income Net PProfit
rofit 325.1 329.0 389.3 479.2
and higher interest expenses (up 75.5% yoy). Consequently, % chg 41.2 1.2 18.3 23.1
PAT came in at Rs78.8cr, up 30.1% yoy, which was in line with EBITDA (%) 16.6 16.2 16.8 17.8
our expectation.
EPS (Rs) 24.0 24.3 28.7 35.4
Operating performance driven by Monolithic Segment: The
P/E (x) 13.8 13.7 11.6 9.4
plastic segment reported growth in EBIT margin, up 209bp yoy
P/BV (x) 3.0 2.6 2.1 1.7
on account of a better product mix in favour of the high-margin
monolithic segment. The company reported 19% OPM in the RoE (%) 20.3 18.0 18.2 18.9
monolithic segment in 1QFY2011, as against 12% in RoCE (%) 13.9 12.4 14.2 16.4
1QFY2010. EBIT margin in the textile segment expanded by EV/Sales (x) 1.7 1.8 1.6 1.3
260bp yoy owing to pick-up in demand in high-end fabrics. In
EV/EBITDA (x) 10.4 11.3 9.5 7.4
our view, the quarterly margins are not a fair indicator of the
Source: Company, Angel Research; Price as on July 13, 2010
company's performance due to lumpiness of its business.
Research Analyst - Param Desai/Mihir Salot

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 Technical Picks | July 17, 2010

Market consolidates, undertone still bullish

Sensex (17956) / Nifty (5394)

In our previous Weekly report, looking at the "Flag pattern" Future Outlook
breakout on the Daily chart we had mentioned that markets
We maintain our view that the indices are likely to test
are poised to register a new 52 - week high. The initial part of
18500 - 18700 / 5500 - 5570 levels based on the "Flag pattern"
the week witnessed a rally, which registered a new 52 week
breakout on the Daily chart. The said pattern would only negate
high of 18147 / 5453 after which, minor profit booking was
once indices trade below, 17335 / 5200 levels.
observed and the Sensex closed with net gains of 0.7%, whereas
the Nifty gained 0.8% vis-à-vis the previous week. Hence, we reiterate our view that traders can hold on to their
long positions as long as the Nifty holds 5200 level.
Pattern Formation
„ On the Weekly chart, the prices have resumed their upward
momentum after a consolidation and there is a possibility that
it could test the upper trendline of the "Channel".

Exhibit 1: Sensex Daily chart

Channel

Source: Falcon

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 Technical Picks | July 17, 2010

Weekly Pivot Levels For Nifty 50 Stocks

SCRIPS R2 R1 PIVOT
PIVO S1 S2
SENSEX 18304 18130 17993 17819 17682
NIFTY 5502 5448 5400 5346 5298
BANK NIFTY 10262 10138 9938 9813 9613
A.C.C. 861 837 819 796 777
ABB LTD. 889 881 871 863 853
AMBUJACEM 116 112 110 107 105
AXISBANK 1434 1396 1331 1292 1227
BHARAT PETRO 762 711 669 618 576
BHARTIARTL 321 310 301 290 282
BHEL 2577 2507 2450 2381 2324
CAIRN 336 325 314 303 291
CIPLA 348 339 332 324 317
DLF 343 331 314 303 286
GAIL 490 466 451 426 411
HCL TECHNOLO 386 379 368 362 350
HDFC BANK 2156 2098 2052 1994 1948
HERO HONDA 2067 2023 1994 1951 1921
HINDALCO 158 154 151 147 145
HINDUNILVR 274 270 263 259 251
HOUS DEV FIN 3220 3120 3045 2945 2870
ICICI BANK 947 924 892 870 838
IDEA 80 72 64 56 48
IDFC 205 200 192 187 178
INFOSYS TECH 2981 2879 2808 2706 2635
ITC 305 302 299 295 292
JINDL STL&PO 648 636 629 618 611
JPASSOCIAT 136 133 129 127 123
KOTAK BANK 808 796 774 762 740
LT 1951 1911 1858 1818 1765
MAH & MAH 664 634 618 588 572
MARUTI 1462 1418 1391 1347 1320
NTPC 203 201 199 197 195
ONGC CORP. 1345 1302 1261 1218 1177
PNB 1090 1079 1062 1052 1035
POWERGRID 103 102 101 99 98
RANBAXY LAB. 473 461 453 441 432
RCOM 202 195 188 181 174
REL.CAPITAL 846 826 792 772 738
RELIANCE 1112 1088 1070 1045 1027
RELINFRA 1207 1179 1158 1130 1109
RPOWER 181 178 175 172 169
SIEMENS 769 751 733 715 697
STATE BANK 2542 2495 2433 2386 2324
STEEL AUTHOR 207 203 198 194 189
STER 178 172 169 163 159
SUN PHARMA. 1802 1771 1749 1719 1697
SUZLON 69 64 58 54 47
TATA POWER 1368 1352 1329 1313 1291
TATAMOTORS 877 855 814 791 750
TATASTEEL 535 522 507 494 479
TCS 886 860 812 786 739
UNITECH LTD 91 87 81 77 71
WIPRO 426 414 405 393 383

Technical Research Team

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 Derivatives Review | July 17, 2010

Global cues and long unwinding may take market below 5300
Nifty spot has closed at 5394 this week, against a close of 5352 last week. The Put-Call Ratio has increased from 1.31 to 1.41 levels
and the annualized Cost of Carry (CoC) is positive 2.26
2.26%. The Open Interest of Nifty Futures has increased by 9.59
9.59%.

Put-Call Ratio Analysis Futures Annual Volatility Analysis

The Nifty PCR has increased from 1.30 to 1.41 levels. Week- The Historical Volatility of the Nifty has decreased from 20.92%
on-week, significant build-up was observed in the 5300 and to 18.48%. IV of at the money options has decreased from
5400 put options. We believe this is more of buying, as IV is 17.70% to 17.00%. Some liquid counters where HV has
very low and market continues to face resistance around increased significantly are POLARIS, TCS, LICHSGFIN, PFC and
5400-5450 levels. On the Call side, the 5500 strike has highest TATATEA. Stocks where HV has decreased are GTLINFRA, RNRL,
position in terms of open- interest and, 5200 and 5300 put STERLINBIO, BHUSANSTL and ABIRLANUVO.
options have almost same open- interest.

Open Interest Analysis Cost-of-Carry Analysis

The total Open Interest of the market is Rs1,54,341cr, as against The Nifty July Future closed at a premium of 4.35 points as
Rs1,36,680cr last week, and the Stock Futures' open interest against a premium of 1.60 points last week and Aug future
increased from Rs37,978cr to Rs41,875cr. Stocks which added closed at a premium of 10.65 points. Some liquid counters
significant open interest are PFC, UNIONBANK, ORIENTBANK, where CoC turned from negative to positive are NAGARFERT,
TCS and ALBK. Stocks where open interest decreased VOLTAS, MRPL, FEDERALBNK and M&M. Stocks where CoC
significantly are CESC, IBREALEST, HDIL, CAIRN and turned from positive to negative are RELCAPITAL, SAIL, DLF,
HINDZINC. AXISBANK and BHUSANSTL.

Derivative Strategy

Scrip : SBIN CMP : Rs. 2449.00/- Lot Size : 125 Expiry Date (F&O) :
29th July, 2010
View: Mildly Bearish Strategy: Long Put Expected Payoff

Buy/Sell Qty Scrip Strike Series Option Buy Rate Closing PPrice
rice Expected
Profit/Loss
rofit/Loss
Price Type (Rs.)
Buy 125 SBIN 2400 July Put 25.00 Rs. 2250.00 Rs. 125.00
Rs. 2300.00 Rs. 75.00
BEP
BEP:: Rs. 2,375.00/-
Rs. 2350.00 Rs. 25.00
Max. Risk: Rs.3,125.00/- Max. PProfit:
rofit: Unlimited
Rs. 2400.00 (Rs. 25.00)
If Stock closes on or above Rs2400 on expiry. If SBIN continues to trade below BEP.
Rs. 2450.00 (Rs. 25.00)
Note: Profit can be booked before expiry, if stock moves in a favorable direction.
Rs. 2500.00 (Rs. 25.00)

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 Mutual FFund
und FFocus
ocus | July 17, 2010

Hybrid Category of Mutual Funds

What is Hybrid Fund? Hybrid Funds should form a vital part of Investor's
Hybrid Fund is a mutual fund scheme that invests in a mix of equity
MF Portfolio
and debt which can vary proportionally over time or remain fixed „ They have performed not only in short term, but also in long
with the objective of conserving the principal, providing regular term despite the global turmoil in Equities Markets.
income, and achieving long-term growth.
„ The debt portion takes care of short term volatility as well
Why Hybrid Fund in Current Market Scenario provides stable returns to the portfolio.

„ These funds seek the best of equity, debt and gold by investing
Equity Side
in equities, fixed income instruments and gold.
„ Hybrid funds invest 30-40% in equities.
„ It includes the power of equities, stability of debt market
„ These funds invest in equities of those companies which have instruments and hedging against market volatility via gold.
strong and sustainable growth potential.
„ Ideal for all sorts of investors as part of asset allocation.
„ Equity provides capital appreciation and long term wealth
„ It's a power investment tool because of its inherent design, which
creation.
allows maintaining an effective balance between debt, equity
„ Equity exposure provides long term growth. and gold.
„ In the current low interest rate regime, equity becomes an
Returns on Asset Classes
attractive investment avenue.
Year Stocks Bonds Gold Average
„ These factors indicate the high returns potentials of Equity
1995 -23% 3% 14% -2%
investments.
1996 -1% 13% -3% 3%
Debt Side 1997 20% 24% -14% 10%
„ These funds invest 30-40% in debt. 1998 -18% 8% 8% 0%
1999 67% 16% 2% 29%
„ Hybrid Funds invest in high credit quality debt instruments.
2000 -15% 13% 1% 0%
„ They invest in corporate bonds, gilt and money market
2001 -16% 25% 6% 5%
instruments.
2002 3% 23% 24% 17%
„ Debt provides capital protection and stable returns.
2003 72% 12% 13% 33%
„ Debt instruments carry low risk compared to stocks, thereby
2004 11% -1% 1% 3%
balancing the risk of the fund.
2005 36% 6% 22% 22%
„ These Factors show that the debt markets have the potential to
2006 40% 6% 21% 22%
provide stable returns.
2007 55% 7% 17% 26%
Gold 2008 -52% 27% 31% 2%

„ Exposure of these funds towards gold is 20-30%. 2009 76% -6% 19% 30%

„ Gold is purchased for jewellary and industrial uses.

„ It is an investment as well as a substitute for currency. Positive average returns in 14 out of 15 years

„ Gold demand has sustained due to risk averse investors and " The best and worst performer changes year by year
year,, but 2 out
of 3 are positive in most of the years.
low interest rate.
" Even 52% fall in stocks in 2008 was balanced by gains in
„ Gold acts as the best hedge at the time of bearish equity market
bonds and gold.
due to negative correlation with stocks
This is historical data. Past performance may or may not be sustained in
„ It is the best hedge during financial instability. the future. Stocks are represented by the S&P CNX Nifty and Bonds by the
I-Sec Sovereign Bond Index. Source data: Bloomberg

Disclaimer: Angel Capital & Debt Market Ltd is not responsible for any error or inaccuracy or any losses suffered on account of information contained in this report. Mutual Fund investments are subjected to
market risk. Please go through offer document before investing

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 Mutual FFund
und FFocus
ocus | July 17, 2010

Axis Triple Advantage Fund - NFO Analysis

Fund Features NFO Date: - 30th June to 29th July 2010
Scheme Objective Seeks to help investors take advantage of the benefits of diversification by investing in a mix of three assets classes viz. equity,
bonds and gold.

Type of Fund Open Ended Hybrid Fund

Bench Mark Index S&P Nifty, CRISIL Composite Bond Fund Index, INR Price of Gold

Min Investment Initial Purchase - Rs. 5,000 and multiples of Re.1 thereafter
Subsequent Purchase - Rs. 100 and multiples of Re. 1 thereafter

Entry /Exit Loads Entry-Nil

Exit - 1% if redeemed or switched within 1 year from the date of allotment

Re-Opening Date for 28th August 2010

Fresh Subscription &
Redemption(on or before)

Plans/Options Growth , Dividend Payout and Dividend Re-investment

Fund Manager Mr. Chandresh Nigam - Head, Investments
Mr. Ninad Deshpande - Fund Manager, Fixed Income

Asset Allocation Instruments Indicative Allocation Risk Profile

(% of Total Assets)
Equity 30 % - 40 % High
Bonds 30 % - 40 % Low to Medium
Gold 20% - 30% Medium to High

Why invest in this Fund? Performance of the Funds Managed by

„ Axis Triple Advantage Fund provides diversification across asset Fund Manager: Mr. Chandresh Nigam
classes leading to reduction in risk
Scheme 1 2 3 6 Since
„ It generates potential returns even with reduced risk levels. Month Months Months Months Inception
„ This fund generates returns which is more stable than pure Axis Equity Fund 48.57 32.89 13.11 16.12 18.06
equity or gold investment over the long term.
S&P Nifty 44.11 34.38 4.71 4.84 91.32
„ Investing in this fund gives investor an opportunity to invest in
Axis Tax Saver Fund 54.96 41.84 18.37 31.80 29.29
three asset classes through a single application.
BSE 200 48.09 33.72 7.81 5.17 84.04
Equity Side Note: Returns (%) are simple annualized as on 15th July 2010
„ Equities act as a great hedge against inflation. They have mostly
Fund Manager: Ninad Deshpande
stayed ahead of inflation rate.
Scheme 1 2 3 Since
„ This fund invests in stocks of the companies which have strong
Month Months Months Inception
and sustainable growth potential.
Axis Liquid Fund 5.18 4.88 4.67 4.56
Debt Side Axis Treasury Advantage Fund 4.85 4.78 4.75 4.65
„ Bonds are less risky than equities. Crisil Liquid Fund Index 5.20 4.61 4.21 6.98
„ They serve as an effective tool to bring stability and regular Axis Short Term Fund 2.14 2.85 4.69 5.48
income to the portfolio.
Crisil Short Term Bond Fund Index 5.14 4.03 5.29 7.92
„ They have potential for capital appreciation through active
Note: Returns (%) are simple annualized as on 15th July 2010
management.
Ideal for Investors
Gold
This fund is suitable for investors who prefer stable but moderate
„ Gold acts as best hedge during strong equity bear markets.
growth as against those who seek less predictable but possibly
„ It has strong negative correlation with stocks during bear phases. high paced growth. It is a medium risk fund suitable for investments
„ It is the best hedge against financial crises. the long term.
Disclaimer: Angel Broking Ltd is not responsible for any error or inaccuracy or any losses suffered on account of information contained in this report. Data source is from MFI Explorer and Canara Robeco
Mutual Fund NFO Product Note. Mutual Fund investments are subjected to market risk. Please read the Statement of Additional Information and Scheme Information document carefully before investing.

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Currency performance in the past fortnight
The Indian Rupee depreciated marginally by 0.3% in the past
fortnight, taking mixed cues from gains in equities coupled with
movement in the DX. Sharp gains in the currency were capped
despite a weaker DX. The DX slipped sharply by more than 4%
but this factor failed to provide support to the Rupee. Domestic
equities gained more than 1% in the past fortnight but sentiment
continues to remain mixed. With the rise in equities, the Rupee
managed to trade below a low of 47.15 and closed at 46.60.
Despite inflows in the Indian capital markets in the past fortnight,
sharp gains in the Rupee were capped. This indicates that
concerns over global economic issues still persist. FII inflow in
the month of July totaled Rs7,075crore. In the month of June
itself FIIs bought equities worth Rs10,500crore. FII inflow on a
year-to-date basis totaled Rs38,150crore. Industrial production
rose 11.5% in May as against 16.5% in the previous month.
Prices over past fortnight
Currency Rates Open High Low
USD / INR 46.71 47.15 46.50
Dollar Index 86.06 86.26 82.29
EUR / USD 1.2232 1.2955 1.2191
The past fortnight has witnessed poor economic data from the
US. Pending home sales in the US decreased by 30% in May as
against a previous increase of 6%. This was the biggest decline
in a month since 2001. The ISM Manufacturing PMI also
declined to 56.2 in June from 59.7 in the earlier month,
indicating slower manufacturing activity. Poor economic data
releases dented hopes of a rise in interest rates in the US in the
short-term. Also a rise in risk appetite despite global economic
concerns led to decreased demand for the low-yielding currency.
The DX slipped from a high of 86.26 in the past fortnight to
close below crucial levels around 82.50. During the same
period, the Dow Jones gained a whopping 5.9% and gained
support above the crucial 10,000 mark. But such sharp gains
may not be sustainable as investors remain cautious.
From the Euro Zone too, few economic data releases were
disappointing. German factory orders fell by 0.5% in May, as
against a previous increase of 3.2% in April. The decline was
the first in the last five months. German ZEW economic sentiment
declined to 21.2 in July from 28.7 in June. The investor
confidence declined as the ongoing debt crisis is threatening
the economic growth in the region. Moreover, Moody's Investor
Service downgraded Portugal's credit rating by two notches to
A1 from AA2. The Euro was the best performers amongst the
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Currency Corner | July 17, 2010
currencies pack in the past fortnight with gains of almost 6%.
The currency touched a high of 1.2955 and managed to hold
firm despite downside of Portugal's credit rating by Moody's
Investor Service.
Fundamental Outlook
We expect the Indian Rupee to trade on a range bound note in
the next two weeks. Weakness in the DX will prevent the Rupee
from depreciating sharply but mixed economic sentiments will
cap gains in the currency. Chinese economic data in the last
week has not been very supportive and this factor could dent
investor sentiment in the coming week. Despite existing
European and Chinese economic concerns, we expect demand
for the DX to remain subdued on account of poor economic
data. This has affected demand for the currency as a respite
from uncertainty in the financial markets. Month-end dollar
Close % Chg demand by importers is expected to lead to depreciation in the
46.60 +0.3 Rupee during the last week of this month. Investors await the
82.37 -4.3 Reserve Bank of India's (RBI) policy meeting which is scheduled
1.2931 +5.7 on 27th July. Markets expect a rate hike in the near-term and
this will provide further cues to the Rupee.
Technical Outlook
The Indian Rupee weakened against the USD in the past
fortnight and touched a low of 46.50. Spot Rupee is currently
trading above its 10-Day EMA (46.37) and 30-Day EMA (46.19)
with 14-day RSI at 55 levels. 14-Week RSI is at 60.18 levels
and sloping upwards. Daily MACD Histogram is flat, where as
Weekly MACD Histogram is in the positive territory. The Rupee
shall meet with immediate resistance around 47.15 levels. But
a breakout above this resistance level could lead to further
depreciation and the Rupee may test 47.75 levels. On the
downside, the Rupee has found crucial support around 46.30
levels.
Fortnightly Outlook (2 weeks)
View: Sideways
Range: 46.00 - 47.75
Short-term Outlook (1-2 months)
Short-term
View: Depreciation
Range: 45.55 - 48.00
Research Analyst (Commodity) - Reena Walia Nair
12
 Commodities Center | July 17, 2010

Commodities Update

Exhibit 1: Commodities Weekly Performance
17th July
July,, 10th July
July,, % Change
2010 2010
Non Agri- Commodities (MCX)
Top Gainers
Natural Gas 213.9 206.7
Top Losers
Zinc 83.85 87.45
Copper 306.6
Agri Commodities (NCDEX)
Top Gainers
Black Pepper 20245 19041
Jeera 14365 13722
Chana 2351 2273
Top LLosers
osers
Potato 403.4 428.7
International PPerspective:
erspective: The international commodities pack
slumped towards the end of the week taking cues from the
weak sentiments in the global equity markets. Moreover poor
economic data from the US also added to the woes. Natural
gas prices made a smart rally in the last week gaining more
than 3% on the MCX. Prices were supported because of the
expected increase in the temperature in the US. The US National
Weather Service said that temperatures will be above normal
in the next week, and hence cooling requirements will be 27%
higher than normal. As per the US Energy Department, 22% of
electricity is generated using natural gas. Natural gas inventories
increased by 78 billion cubic feet as against expectations of 82
billion cubic feet in the week ending July 9th.
Zinc prices faced downside pressure in the last week on poor
economic data on manufacturing, slow growth in China, and
increasing inventories on the LME warehouse. GDP growth in
China eased to 10.3% in the second-quarter. In the first-quarter
China had witnessed GDP growth of 11.9% and the latest data
indicates a deeper second-half slowdown and the risks
associated with it. Inventory scenario for zinc has not been
supportive as inventories have increased more than 26.6% on
a year-to-date basis. Copper prices declined on the MCX mainly
in the later part of the week on poor economic data from the
larger economies. However, sharp downside in the red metal
prices was cushioned on the back of weakness in the US dollar
index (DX). Inventory scenario at the LME warehouse was bullish,
but the Shanghai warehouse reported an increase in inventory
levels by 2,279 tonnes in the last week. This faded away the
positive sentiment.
Agri PPerspective:
erspective: All the major Spices particularly Black pepper
and Jeera continued to trade firm tracking supportive
fundamentals and gave returns of 6.3 percent and 4.7 percent.
Prices of Black pepper in the international market of major
origins (Vietnam, India, Indonesia and Brazil) surged,
anticipating lower global availability. Further, Vietnam the major
producer and exporter have lower stocks of Black Pepper till
3.4
the fresh arrivals in the month of April next year. This will help
-4.1 prices to find support at the domestic market. Strong
316 -2.9 international prices of Syria, the other major producer of Jeera
Jeera,
in the international market, led overseas buyers to place fresh
orders in India. According to the market sources, prices in Syria
6.3 rose from $2,850-$2,900/tonne to $3,100-$3,600/tonne in
4.7 this week. Indian origin rose from $2,900/tonne to $3,200/
3.4
tonne. The other commodity, which entered as a performer in
-5.9
this week was Chana
Chana. Chana after trading in rangebound
manner in the past couple of weeks, surged by 3.4 % in this
week on account of improved buying at lower levels by the
stockists. Potato continued its downward trend and stood in the
major loser category with prices falling by 5.9%. Good stocks
of potato in the cold storage and better arrivals pressurized the
prices.
Exhibit 2: Major Economic Data Releases this week
Date Country Indicator Forecast Previous
20-July US Building Permits 0.57M 0.57M
20-July US Housing Starts 0.58M 0.59M
22-July US Existing Home Sales 5.15M 5.66M
23-July Euro Zone German Business Climate 101.5 101.8
Source: Forex Factory
Outlook: Markets are currently witnessing a re-emergence of
concerns over global economic slowdown. Poor economic data
from the US has reiterated fear that recovery may not be fast
paced. This along with the ongoing European sovereign debt
crisis also raises fears over the impact of it on global economy.
On The US Dollar Index (DX) will continue to weaken as poor
economic data has affected hopes of rise in interest rates in the
world's largest economy. We do not expect weakness in the DX
to provide support to base metals and crude oil. We expect
these commodities to trade on a range bound note this week
as mixed sentiments will reduce appeal of base metals and
crude oil despite DX weakness. Gold and silver prices are
expected to witness downside pressure on the back of uncertain
financial market conditions.
In the agri segment this week too, prices of Spices are expected
to continue its bullish trend due to supportive fundamentals.
Revival of monsoon in the food belt of India, particularly Central
and North Western regions would be crucial to determine the prices
in the highly traded commodity Guar, Chana and Oil Complex.

Research Analyst (Commodity) - Nalini Rao/Reena Walia Nair

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 Commodities Center | July 17, 2010

Refined Soybean Oil

Global Vegetable Oil Supply and Distribution at a (SEA) data, the import of vegetable oils has slumped by 6% on
Glance: a month on month basis in June 2010 to 7.32 lakh tonnes. The
Current Scenario of Global Major Vegetable Oil Supply and
Vegetable overall import of vegetable oils during November 2009 to June
Distribution: 2010 is reported at 55.81 lakh tonnes as compared to 58.23
World production of vegetable oil for 2010-11 is projected at lakh tones during the same period last year, down by 4%. Crude
146.64 million tonnes. Indonesia accounts for 19.30% of world palm oil futures at Bursa Malaysia Derivative Exchange sparked
vegetable oil production. While Malaysia 14.26%, China in tandem with huge gains in soy oil futures at CBOT and better
12.55%, EU 11.40% , USA 6.58%, Argentina 6.15%and India export figures of Palm Oil in the Malaysia during the period of
accounts for 4.85% only. World vegetable imports for 2010-11 July 1-15 as compared to previous month during the same
are projected at 58.36 million tonnes. China accounts for period. As per SGS (Cargo Surveyor, Malaysia) Malaysia's palm
18.30% and India accounts for 17.60% of world vegetable oil oil exports during the period of July 1-15 was at 668,573 metric
import. China, EU and India consumes about 50% of total world tonnes, up 11 % as compared to previous month during the
domestic consumption of vegetable oils. same period. As per latest WASDE monthly Oilseed supply &
Current Scenario of Global Soybean Oil Supply and demand report, Rapeseed production is sharply reduced for
Canada due to lower harvested area, this also favored to bulls.
Distribution: World production of soybean oil for 2010-11 is
The USDA's weekly export sales report released on July 15,
projected at 39.964 million tonnes. China accounts for 23% of
world soybean oil production. While USA 21%, Argentina 19%, 2010, revealed that the net export sales for soybean oil sales
Brazil 16%, EU 6% and India accounts for 3% only. World were 13,000 tonnes for the current marketing year and 40,000
tonnes for next year for a total of 53,000 tonnes. Sales need to
soybean oil imports for 2010-11 are projected at 8.852 million
tonnes. China accounts for 24% of world soybean oil import average 9,000 tonnes each week to reach the USDA forecast.
and India accounts for 14% only. Fundamentals and TTechnical
echnical Outlook: In the coming week,
World PPalm
alm Oil Imports Scenario: World Palm oil imports for prices are expected to move slightly higher on firm global market
sentiments as we are major importer of edible oils. The cost of
2010-11 are projected at 37.377 million tonnes. India accounts
for 22% of world palm oil import, while China 19%, EU 14% importing will increase, thereby raising the domestic prices .
and Pakistan accounts for 6% only. However, in the long term, huge stock of imported edible oil
and existing better carry over stock of oilseeds this year as
India's Current Scenario of Edible Oil PProduction:
roduction: Domestic
compared to last year will weigh on the prices. Also, poor export
vegetable oil production was 63.7 lakh tones in 2009-10 and
demand of domestic soy meal are in favour of bears.
it is projected at 70.9 lakh tones for the year 2010-11, which is
not sufficient to meet domestic requirement. India needs to NCDEX August contract shall find a strong support at 455/450
levels and resistance at 475/480 levels for the coming week.
import more than 50% vegetable oil to meet their demand.
Soybean, mustard and cotton seed oil are major contributor in Technical Indicators: On the daily charts, prices closed above
total production, which accounts for about 60% of total domestic its 10 Day EMA and its 20 Day EMA and MACD-Histogram is
production. in positive territory, which indicates bullish market sentiments.
Weekly Market Commentary of Refined Soy Oil: NCDEX August 14-Day RSI is at 82.38, which is in overbought zone.
soybean oil prices rallied in the last week and breached its NCDEX - August 2010 Contract: Daily Chart
contract high of Rs 460/10 kg on account of firm global market
and finally it managed close at Rs 467/10 kg with a gain of
about 3% as compared to previous week's close of Rs 454/10
kg. Refined soy oil futures at Chicago Board of Trade (CBOT)
surged due to hot and dry weather, which may impact on yield.
Weakness in the US dollar also added bullish tone. Domestic
edible oil demand improved slightly on account of rainy season.
Edible oil import declined in the month of June also favored
the bulls in short term. As per Solvent Extractors Association Source: or may not be sustained in future.

AVP Research - (Fundamentals) - Badruddin

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 Commodities Center | July 17, 2010

Commodity Technical Report

MCX August Gold MCX September Silver
Last week, Gold prices opened week at Rs.18, 430 per 10 grams. During the previous week, Silver prices opened at Rs.28,882 per
Initially, rallied upwards to Rs.18,518 but could not able to sustain kg. Prices touched an high of Rs. 29,340 and found strong
the levels. Later during the week, prices fell sharply and made a resistance at Rs.29,340 levels. Lately, silver prices fell sharply and
low of Rs.18, 250. Gold prices finally closed the week at Rs.18,324 made a low of Rs. 28,654 on MCX. Prices finally ended the week
with a loss of Rs.106 to close at Rs.28,793 as compared with
down by Rs 90 as compared with previous week's close of
previous week's close of Rs.28,899.
Rs.18,414.
As per the Daily chart below, Silver prices have closed below the
Technically, the trend for Gold prices during this week is bearish as supporting trend line. Along with this, prices are trading below 10
market is currently trading below 10 Day EMA and also Daily MACD Day EMA and Daily MACD histogram too is in negative territory.
histogram is also in negative territory. This may lead to short term bearishness in the market.
Trend : Down Trend : Down
MCX GOLD Daily Chart MCX SILVER Daily Chart

Source: Telequote Source: Telequote

Key LLevels
evels FFor
or Week :
Week Key LLevels
evels FFor
or Week :
Week
S1 - 18200 S2 - 18090 R1 - 18470 R2 - 18630 S1 - 28510 S2 - 28240 R1 - 29200 R2 - 29610
Trading Strategy: Sell MCX Silver September between Rs. 29,100-29,200
with strict stop-loss above Rs. 29,450 for a target of Rs. 28,600 and 28,300

MCX August Copper MCX Autust Crude

Copper prices opened last week with a high of Rs.315.55 per kg. In the past week, Crude prices traded with positive bias showing
During the past week, copper traded with negative bias and touched some volatility. Prices opened the week at Rs.3,591 per barrel. In
a low of Rs. 306.45. Prices finally ended the week with a loss of the opening sessions of the week, prices fell slightly, but recovered
sharply from strong support at Rs.3531. Crude peaked at Rs. 3667
Rs.9.80 to close at Rs.306.20 as compared with previous week's
on July 14th at MCX. Prices finally ended the week with a marginal
close of Rs.316.
gain of Rs.2 to close at Rs.3594 as compared with previous week's
Trend is Range bound for the week with daily charts showing slight close of Rs.3592.
weakness in prices. Daily MACD histogram is flat. Daily chart is showing weekly sideways movement and prices may
test Rs. 3665 on the upside. Prices are trading above 10 Day EMA
with Daily MACD histogram also in positive territory.
Trend : Sideways Trend : Sideways
MCX COPPER Daily Chart MCX CRUDEOIL Daily Chart

Source: Telequote Source: Telequote

Key LLevels
evels FFor
or Week :
Week Key LLevels
evels FFor
or Week :
Week
S1 - 303 S2 - 299 R1 - 313 R2 - 320 S1 - 3530 S2 - 3460 R1 - 3665 R2 - 3735

Sr. Technical Analyst (Commodities) - Abhishek Chauhan

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