Market Outlook

India Research
August 5, 2011

Dealers Diary
The benchmark indices edged higher in early trade, as bargain hunting emerged after a recent steep slide. After touching the psychological 18,000 mark, the indices retreated but hovered above the baseline until mid-morning session. Weakness still persisted and overshadowed the positivity, thereby drifting the indices marginally below the baseline. The indices moved on a flat note until the early afternoon session, with alternate movements between the positive and negative territories. On the back of ongoing macro and global headwinds, investor sentiment dampened and a fresh wave of selling jolted the market in mid-afternoon trade. Buoyed by pessimisms, the late trade session turned choppy and indices extended losses for the third day in a row. The Sensex and Nifty lost 1.4% each. The mid-cap and small-cap indices also closed down by 0.8% and 0.6%, respectively. Among the Sensex heavyweights, M&M, ITC, NTPC, Hindalco and Baja Auto lost 24%. Among mid caps, Cox & Kings, Jindal Poly., Hindusthan National Glass & Industries, Tata Global and FAG Bearings gained 26%, while Gujarat NRE Coke, India Securities, Anant Raj Industries, HDIL and Bombay Dyeing lost 48%.

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 Indian ADRs Infosys Wipro ICICI Bank HDFC Bank

Chg (%) -1.4% -1.4% -0.8% -0.6% -1.4% -0.4% -1.1% -2.1% -1.8% -0.8% -1.0% Chg (%)

(Pts) (73.0) (51.4) (46.3) (88.5) (32.1) (178.0) (74.3) (57.7) (Pts)

(Close) 5,332 6,734 8,063 6,313 8,254 8,475 8,766 5,682 (Close) 11,384 2,556 5,393 9,659 21,885 3,107 2,684 (Close) $58.2 $11.0 $42.8 $32.7

(247.4) 17,693

(127.9) 12,035 (239.7) 13,388

-4.3% (512.8) -5.1% (136.7) -3.4% (191.4) 0.2% -0.8% 0.2% Chg (%) -5.6% -3.3% -5.0% -4.6% 22.0 (23.3) 5.6 (Pts) (3.4) (0.4) (2.3) (1.6) -0.5% (108.0)

Markets Today
The trend deciding level for the day is 17,797 / 5,363 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,929 18,165 / 5,403 5,475 levels. However, if NIFTY trades below 17,797 / 5,363 levels for the first half-an-hour of trade then it may correct up to 17,561 17,429 / 5,292 5,252 levels.
Indices SENSEX NIFTY S2 17,429 5,252 S1 17,561 5,292 R1 17,929 5,403 R2 18,165 5,475

News Analysis

1QFY2012 Previews Cipla, Ranbaxy Labs, Bosch, MOIL, Aurobindo Pharma

Refer detailed news analysis on the following page

Advances / Declines Advances Declines Unchanged

BSE 1,127 1,705 135

NSE 463 959 65

Net Inflows (August 3, 2011) ` cr Purch FII MFs 1,906 568

Sales 2,707 545

Net (801) 23

MTD (727) (219)

YTD 8,007 3,558

Volumes (` cr) BSE 2,949 11,222

FII Derivatives (August 4, 2011) ` cr Index Futures Stock Futures Gainers / Losers Gainers Company Hindustan Copp HPCL Indian Oil Corp BPCL Tata Global Price (`) 263 392 329 686 111 chg (%) 6.3 4.0 3.5 3.2 2.9 Company Gujarat NRE Coke Adani Power Anant Raj Inds. HDIL Bombay Dyeing Losers Price (`) 39 94 74 130 316 chg (%) (8.9) (7.4) (6.8) (5.5) (5.4) Purch 2,405 1,248 Sales 3,040 1,406 Net (636) (158) Open Interest 13,544 31,304

NSE

Please refer to important disclosures at the end of this report

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Market Outlook | India Research

1QFY2012 Results Previews Cipla

For 1QFY2012, Cipla is expected to post net sales growth of 15.5% yoy to `1,649cr, driven by domestic as well as exports performance. OPM (excluding technical know-how fees) is expected to come in flat at 20.8% due to lower other expenses. Further, net profit is expected to increase by 9.3% yoy to `281.5cr. At the CMP, the stock trades at 20x FY2012E and 16.0x FY2013E earnings, respectively. We maintain our Buy recommendation on the stock with a target price of `377.

Ranbaxy Labs
Ranbaxy Labs net sales are expected to remain flat at `2,143cr during 2QCY2011. The company's gross profit margin is expected to remain flat, leading to margin of 17.4%. At the CMP, the stock trades at 18.9x CY2011E and 11.9x CY2012E earnings. We remain Neutral on the stock.

Bosch 2QCY2011
Bosch is slated to announce its 2QCY2011 results. We expect the company to deliver 16.5% yoy growth in its revenue to `1,930cr for the quarter. On the operating front, the company is expected to post a marginal 19bp yoy decline in its operating profit margin to 18.6%. Net profit is expected to register an 18.7% yoy increase to `249cr. The stock rating is under review.

MOIL
MOIL is slated to report its 1QFY2012. We expect net sales to decline by 35.4% yoy to `227cr mainly on account of a sharp decline in manganese ore prices. EBITDA margin is expected to contract by 1,333bp yoy to 57.7% in 1QFY2012. Net profit is expected to decrease by 43.0% yoy to `104cr. We maintain our Neutral view on the stock.

Aurobindo Pharma
For 1QFY2012, Aurobindo Pharma (APL) is expected to post net sales growth of 9.5% yoy, led by formulation exports. With improved gross margin for the period, strong growth of 253bp yoy is expected in the company's OPM at 17.6% for the quarter. Overall, net profit is expected to rise by 26.2% yoy on the back of improvement in operating profit. At the CMP, the stock trades at 10.6x FY2012E and 8.6x FY2013E earnings. We maintain our Buy recommendation on the stock with a target price of `278.

August 5, 2011

Market Outlook | India Research

Economic and Political News

Oilmeal July exports increase by 11.5% Food inflation at 8.04% year-on-year as at July 23 Government acknowledges Bt Cotton constitutes 90% of country's total acreage

Corporate News
Jyothy Lab acquires 1.76% more stake in Henkel India RIL sees 27% drop in KG-D6 output in June Axis Bank set to raise US$240mn
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

Events for the day Aban Offshore Bosch BPL Brescon Corp Carborundum Uni Cipla Claris Lifesciences Dharani Sugars Escorts Great Eastern Sh Hindustan Oil Hindustan Org IL&FS TRANS Jain Irrigation MOIL Ranbaxy Lab Redington India Sundram Fast Wyeth

Results Results Results Results Results Results Results Results Results Results Results Results Results Results Results Results Results Results Results

August 5, 2011

Market Outlook | India Research

Research Team Tel: 022-3935 7800 E-mail: research@angelbroking.com Website: www.angelbroking.com

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Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

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August 5, 2011