JULY JULY 2011

Dear Investor, Market movements were volatile in June. The market corrected from 18,600 to 17,400 points with IIP numbers lower at 6.3% against 7.1% a month earlier, repo and reverse repo increase of 25 basis points, Indo-Mauritius tax treaty issues and concerns over the pledging of promoter holdings in mid-cap companies. Bad news seems to be pouring in for Reliance Industries with the CAG audit report and Niko's resources downgrade. The markets recovered smartly through the past eight trading sessions of June to end 2% higher MoM at 18,800 due to a correction in crude prices and the government's action in raising fuel prices, cutting duty, releasing coal blocks from "No-go" zones

From the desk of Rikesh Parikh

and conditional clearance to the Cairn-Vedanta deal. 4QFY11 was marked by widespread earnings downgrades, hurting equity valuations. We expect earnings to stay weak in 1QFY12, causing headwinds for meaningful up moves in markets. 1QFY12 numbers starting from the second week of July are to be seen as June is another tough quarter for earnings. We expect PAT growth to be modest even in 2QFY12 and 3QFY12 at 16-18% before picking up in 4QFY12 to reach 25%. Markets will be positively surprised if FY12 earnings estimates remain largely unchanged after this earnings season. We expect inflation to peak in June-July and then gradually moderate. The RBI's monetary tightening is also expected to pause after 3QCY11. These factors, coupled with fresh reform impetus by the government (Parliament session in August will be crucial for this), augur well for the markets. The markets have been consolidating in a narrow range over the past 18 months with global headwinds, strained government finances and interest rates at a decade high. Our model portfolio reflects our positive investment bias as we believe another quarter of consolidation at current levels will make markets attractive. Our earnings estimates for FY12 and FY13 still imply a strong 18% CAGR. Our top large-cap bets are ICICI Bank, Bajaj Auto, NTPC, Infosys and Tata Steel. Other key additions to the portfolio are Lupin, DLF, BPCL and Yes Bank. Happy investing Sincerely yours,

When the gap between perception and reality is the maximum, price is the best

Index
Rikesh Parikh Vice President
www.motilaloswal.com 1644 Business Locations 611 Cities

MOSt Value MOSt Momentum MOSt Mutual MOSt Insurance MOSt PMS MOSt Commodities

1-6 7-9 10-13 14-15 16-17 18-19

Midcap Research
Snapshot on Value Investing

An Extract
Central Bank Of India
Central Bank of India (CBOI) has 3rd largest network of branches (3800+) after State Bank of India and Punjab National Bank and CBOI has balance sheet size in excess of `2tn. The market capitalisation per branch for CBOI is `2cr, which is lowest in the industry, with industry average of `6.2cr. We believe that the current valuations are not discounting the huge physical presence and the business potential, which it presents. Improvement in RoA(Return on Assets) a key trigger: CBOI's return on total assets between FY06-11 has been in the range of 0.4%-0.7%. The average ROA for PSU space in FY11was 1%+. We believe that the improvement in efficiency was, due to i) more business per branch and ii) more focus on other income combined with lower NPLs (Non Performing Loan) and stable NIMs(Net Interest Margin) will result in improved ROA for CBOI, going ahead. We expect the ROA to be 0.9% in FY12 and will eventually reach ~1%+ in coming years, which will bridge the valuation gap it has with peers. Robust business growth : Central Bank's advances grew at 23% year on year (YoY) in FY11. We expect the bank to achieve NII(Net Interest Income) & PAT CAGR of 21% and 34% respectively, over FY11-13. Business growth remains strong for CBOI and with strong franchise we expect growth momentum to sustain. Strong operating profits and management guidance of moderation in slippages augurs well for bank's future profitability. Valuation Attractive, BUY We expect CBOI to report EPS of `30/36 during FY12E/13E and ABV(Adjusted Book Value) of `139/`167 during FY12E/FY13E. It trades at 0.9x/0.7x FY12E/13E P/ABV, which is at discount in excess of 30% as compared to stocks listed in PSU banking space. We believe, with improvement in RoA and RoE, the valuation discount with PSU Banking space is set to narrow. We recommend BUY with 12 month target price of `208 (P/ABV 1.5x FY12E, P/E 6.9x FY12E)

Gruh Finance
GRUH Finance (a subsidiary of HDFC Ltd. holding ~61%) provides housing finance to customers in deeper geographical pockets in semi urban and rural areas. Loan book/PAT CAGR of 23%/24% over FY11-13: Between FY08-11, GRUH's disbursals and loan book have grown 38% and 34% respectively. We expect GRUH to register a 23% growth in its loan book and 24% CAGR in PAT during FY11-13. Net Interest Margins to be maintained at current levels : GRUH's asset quality is one of the best among housing finance companies. The Net NPAs are NIL since last 5 consecutive years. Loan loss provisions have been in the range of 0.1% - 0.7% of advances over the last 5 years. Its provisions for standard assets are more than required even after recent increase in requirements by NHB. GRUH's PAT has CAGR of 31% over the last 10 years. Hereon, broadening of customer base and geographic diversification will bring in scale benefits through lower operational costs, which will in turn translate to greater traction in net profits. GRUH is available at 16x/ 12x FY11/FY12E EPS & 5.4x/4.3x FY11/FY12E ABV. We believe, current valuations will roll over the next year owing to strong parentage and high quality predictable growth, which brings in an upside potential of ~25% over next year. Recommend ACCUMULATE with target of `508. (15xFY12e EPS & 5.2xFY12eBV) in 12 months. Performance of Midcap Research Stocks Midcap Research Stocks Stocks Intitiated Partial/Booked Profit Open Positions Total 33 11 28

We have booked profit in Eclerx, Unichem , CMC ,Ajanta Pharma, Amara Raja and Page Industries. Partial profit booked in Deepak Fertilsers, GEShipping, Nesco and Bajaj Corp.

MOSt Wealth -2-

Model Portfolios
Snapshot on Value Investing

Select the portfolio that best suits your risk profile

AGGRESSIVE - High Risk, High Returns Scrip MBP* Wtg.*

Infosys SBI Sterlite Industries Central Bank Tata Steel BHEL Bharti Airtel BGR Energy M&M Tata Motors DVR Nagarjuna Constructions Sintex Industries Yes Bank Cash Total

3000 2500 180 135 625 2100 400 500 750 600 90 190 350

H H H H H M M M M M M M M 10 100

The Sensex ended June 2011higher by 2% MoM after a sharp recovery of 7% during the last two weeks of June due to policy
TOP PICK

reforms by the government in the form of its increasing LPG and diesel prices, duty cuts and a sharp decline in crude prices. Capital goods gained 6% MoM (LT up 11% and BHEL up 5%) due to strong order inflows. The FMCG and banking sectors gained 5% and 2% respectively. The oil & gas sector corrected 4% MoM (Cairn fell 8%, Reliance fell 5%, ONGC fell 2.5%). Cairn reacted negatively to the renegotiation of the Cairn-Vedanta deal and due to pre-conditions put up by the CCEA for approval of the deal. If the royalty precondition is implemented, it will lower Cairn India's valuation by ~`55/share. Reliance corrected due to CBI action on the CAG report and a government roadblock to further capex in the KG-D6 block. Tata Motors DVR replaced MRF in our aggressive portfolio and Lupin replaced GSK Pharma in our defensive portfolio. BPCL replaced IOC in our moderate and defensive portfolios as IOC will be relatively subdued given the FPO. We are adding Central Bank in our defensive portfolio with high weightage. We have reduced the weightage of BHEL in all our portfolios to medium as the government has announced an FPO. After these changes we will be invested to the tune of 90% in the aggressive, moderate and defensive portfolios. We will use the cash to invest in stocks during the month after first quarter results.
Allocation (%) Agg. Mod. Def.

Our Aggressive Portfolio works on the principle of no pain no gain. The target returns are high at 30%+. Portfolio includes commodity, cyclical and small-cap stocks.

MODERATE - Medium Risk, Medium Returns Scrip MBP*

Wtg.*

Infosys SBI Sterlite Industries Tata Steel Central Bank M&M Power Grid BHEL Bharti Airtel Yes bank BPCL Cash Total

3000 2500 180 625 135 750 110 2100 400 350 680

H H H H H H H M M M M 10 100

TOP PICK

Some moderation is achieved in this portfolio by investing in large and growth stocks available at value. The aim is to generate 20%+ annualized returns with less risk.

DEFENSIVE - Low Risk, Low Returns Scrip

MBP*

Wtg.*

Infosys SBI Sterlite Industries M&M Power Grid ICICI Bank Central Bank BHEL GAIL Bharti Airtel BPCL Lupin Cash Total

3000 2500 180 750 110 1150 135 2100 500 400 680 460

H H H H H H H M M M M M 10 100

Sector

TOP PICK

Automobiles Banking Capital Goods Construction IT Metal Oil & Gas Other Pharma Telecom Utility Cash Grand Total

10 25 10 5 10 20 5 5 10 100

10 25 5 10 20 5 5 10 10 100

10 25 5 10 10 10 5 5 10 10 100

Our Defensive portfolio works on the principle of balanced growth to outperform the market. The aim is to get annualized returns in excess of 15% taking minimal risks.
MBP* : Maximum Buying Price. One should not buy the stock if Price is above MBP . Wtg.* :Weightage refers to the size of the position recommended. H-10%, M-5%

Additions or deletions of stocks are being communicated through our morning conference calls, Most Market Action emails or on AWACS during market hours.

MOSt Wealth -3-

India Strategy
Snapshot on Value Investing

An Extract
July 11
DUSK or DAWN? The full picture's not yet clear but the scenes are getting better Indian markets underperform in 1HCY11: The BSE Sensex closed 1HCY11 at 18,800 levels, down 8% over December 2010. A late rally towards June-end helped Indian markets to recoup part of the losses made over the last few months. India has been among the most underperforming markets during this period, led by heightened concerns on inflation and slowing industrial activity. During this period, FY12 earnings estimates have been cut by 5%, and FII flows have been negligible at USD1bn v/s USD23bn in 2HCY10 and USD7bn in 1HCY10. Biased for DAWN: Our model portfolio reflects our positive investment bias, as we believe that another quarter of consolidation at current levels will make markets attractive. Our earnings estimates for FY12 and FY13 still imply a strong 18% CAGR. Our Economist expects inflation to peak in JuneJuly and then gradually moderate thereafter. RBI's monetary tightening is also expected to pause post 3QCY11. These factors, coupled with any fresh reform impetus from the government (Parliament session in August will be crucial for this), dawn well for the markets. 1QFY12 - A tough quarter for earnings: June quarter will mark another tough quarter for earnings. While aggregate earnings seem healthy with PAT growth (excluding RMs) of 15% YoY, the growth is not widespread. Excluding Oil & Gas, PAT growth is sub-8%. Most sectors are likely to report a drop in EBITDA and PAT margins. We expect PAT growth to remain modest even in 2QFY12 and 3QFY12 at 16-18% before picking up in 4QFY12 to 25%. Aggregate PAT to grow 15% YoY; Sensex PAT 11% YoY 1QFY12 is set to be a tough quarter in terms of corporate earnings. The key highlights are: Aggregate PAT growth (ex RMs) is modest at 15% YoY

This is the second in the series of lowest 4 consecutive quarters of Sensex PAT growth excluding global crisis period.
Some of the key macro assumptions for 1QFY12 earnings: Interest rates have increased by an average of 50bps over 4QFY11. The total interest cost of MOSL Universe is estimated to increase by 12.6% over 4QFY11, post a 7.5% CAGR in 2HFY11. We model average interest costs for corporates to be higher by 180bps in FY12 over FY11.

Indian rupee is unchanged in June-end over March-end levels at 44.5. We model similar levels of 44.5 for rest of FY12. Oil prices have averaged USD116 in 1QFY12 vs USD105 in 4QFY11. We model FY12 average at USD105, implying ~USD100 average for the balance 9 months of the year. Our metal price assumptions are unchanged in FY12 over 1QFY12.
1QFY12 Sensex PAT growth low at 11%:

We expect Sensex Sales growth of 24% YoY EBITDA growth of 16% , YoY and PAT growth of 11% YoY The growth ex SBI's one-off clean. up mode is much healthier at 16% YoY. The dominance of Oil & Gas is visible here too - ONGC accounts for 35% of PAT growth followed by Reliance with 21%. The top five PAT growth Sensex companies are expected to be Sterlite Industries (+62%), ONGC (+36%), HDFC Bank (+32%), ICICI Bank (+25%) and Bajaj Auto (+24%). The bottom five PAT growth companies are expected to be SBI (-45%), DLF (-27%), RCom (-27%), Bharti (-16%) and RCom (-9%). This is the second in the series of lowest 4 consecutive quarters of Sensex PAT growth ex global crisis period
Top bets: Meanwhile, sectors where valuations have corrected and/or headwinds are expected to subside will likely perform well. In our model portfolio, we are raising Autos to Overweight, increasing exposure to NBFCs, and introducing several mid-caps. Our top large cap bets are ICICI Bank, Bajaj Auto, NTPC, Infosys and Tata Steel.Other key additions to the portfolio are Lupin, DLF, BPCL and Yes Bank.

But this is almost single-handedly driven by upstream oil. Excluding Oil & Gas, PAT growth is less than 8% YoY 12 of 15 sectors will see de-growth in EBITDA and PAT margins 1QFY12 Sensex PAT growth low at 11%
MOSt Wealth -4-

Research Update
Snapshot on Value Investing

Torrent Pharma
13th June 11 / CMP: `589
Y/E MARCH NET REVENUE (` BN) ` NET INCOME (` BN) ` EPS (`) ` EPS GR. (%) % P/E (X) CEPS (`) ` EV/E (X) DIV. YIELD (%) ROCE (%) % ROE (%) %

3/11A 3/12E 3/13E

22.3 25.8 30.0

2.7 3.3 4.0

31.9 39.2 47.6

0.8 22.9 21.3

18.4 15.0 12.4

39.3 50.6 61.4

12.4 9.4 7.6

1.6 1.3 1.6

23.3 25.2 25.9

29.2 28.7 27.8

Strong profitable growth, robust balance sheet, attractive valuations: Torrent Pharma is one of the better plays on the branded generics opportunity. Leadership in fast growing segments like CVS(Cardio Vascular System) and CNS(Central Nervous System) will enable the company to sustain above industry average growth in domestic formulations. Internationally, regulated markets and new product introductions in semi-regulated markets will drive revenue growth, while emerging markets will drive profitability improvement. Strong revenue CAGR of 16% along with improving profitability will lead to 22% EPS CAGR over FY11-13. We initiate coverage with a Buy rating and a target price of `761 (29% upside). Domestic formulations - play on highly profitable, fast growing lifestyle segments: Though ranked 17th in terms of total revenue in the domestic formulations segment, Torrent derives its strength from being the leader in some of the most lucrative and fastest growing chronic therapy segments. It enjoys market leadership in niche therapy segments of CVS and CNS, which are highly profitable and are likely to sustain high growth. We expect 17.5% revenue CAGR for this business over FY11-13, led by strong chronic therapy franchise, recent addition in field force, geographic expansion and entry into new therapy segments. International business - regulated markets lead growth; emerging markets lead profitability improvement: Torrent Pharma has established itself in large international markets like Brazil and Germany. We believe that the next phase of growth will be driven by regulated markets like US and Europe (ex-Germany). We expect revenue from regulated markets (ex- Germany) to grow at a CAGR of 25% over FY11-13, led by the US market. Other emerging markets including Brazil are likely

to see improvement in profitability, led by critical size and operational leverage. Financial analysis - prudent fiscal management, healthy return ratios, high cash on books offer comfort The company has consistently delivered improving financial performance, with RoCE increasing from 14.5% in FY05 to 24.1% in FY11, RoE from 15.7% to 29.2% and EBITDA margin from 8.3% to 14.4%. Over FY05-11, revenue grew at 26% CAGR, and EBITDA and net profit grew at 33% and 34% CAGR respectively; however, capital employed grew at just 17% CAGR. Torrent's net debt-equity ratio has come down from 0.7x in FY07 to zero in FY11. Valuation and view - strengths not captured fully, expect re-rating We believe that current valuations do not reflect the improvement in business profitability, the turnaround of international operations and the company's strong positioning in domestic formulations. At 12x FY13E earnings, the stock trades at historic valuations, despite growing in size and profitability. We initiate coverage with a Buy rating and a target price of `761 (29% upside). Stock Performance (1 Year)

Torrent Pharma

MOSt Wealth -5-

Price

MOSt 3x3
Snapshot on Value Investing

Top picks of the month

Bharti Airtel Bharti Airtel is an integrated telecom operator with presence in wireless, fixed-line and broadband, long distance, enterprise, and passive infrastructure services across India, Sri Lanka, Bangladesh and Africa. Bharti is the largest Indian wireless operator with a subscriber market share of ~20% and population coverage of 86%. Post its acquisition of Zain's Africa business, Bharti has become the fifth largest wireless company globally (in terms of subscribers), with asubscriber base of ~221m. Tariff pressure in India operations has abated to a significant extent and is now limited to only certain pockets (~20% of the footprint). With continued growth in non voice revenue stream, Revenue per minute (RPM) can start inching up after 3-4 quarters. We model 3% decline in RPM in FY12, 0% in FY13 and 2% increase in FY14 (incl 3G/data) Our earnings estimates remain unchanged and imply consolidated EBITDA growth of 29/14% and EPS growth of 28/31% during FY12/ 13. Given strong build-up in 3G and stabilizing competition in voice, we are increasing our target multiple for India and South Asia business to 8x FY13 EBITDA (7.5x earlier), thus revising the target price to `440 (vs `410 earlier). Hindalco Industries Hindalco is the largest aluminum producer in India, with captive bauxite mines sourcing ~67% of its requirement for its 1.5mtpa alumina refinery. The company also has a 0.54mtpa smelting capacity and is the largest maker of flat rolled aluminum products in India. Hindalco has put domestic green-field projects on the fast track to add 718ktpa of capacity by the end of 2012. Aluminum production is expected to post CAGR of 19% and alumina CAGR of 35% over FY11-13. Novelis' cash flow is improving due to well planned restructuring, expiry of price ceiling contracts and the return of pricing power due to changing industry dynamics. Though a stronger LME would tend to expand margins of the Indian aluminum business, cost inflation due to rising coal prices, CPC, staff costs and general inflation tend to offset part of the gains. We have also raised our LME assumptions to US$2,500 per ton (to factor in higher aluminum prices) in FY12 and FY13 from US$2,200 and US$2,300 respectively. The benefits of higher LME get offset by rising raw material costs, and so there is no change in earnings estimates. The stock trades at attractive valuations.
MOSt Wealth -6-

Pidilite Industries Pidilite, a play on growth opportunities in the consumer and industrial segments, created brands like Fevicol in a commoditized adhesive market. It is consolidating in emerging segments like mechanized joinery, modular furniture, flooring, and automobile care and waterproofing. Pidilite's innovation straddles new products, advertising, marketing and retailing. It retails art material through its Hobby Ideas stores. Pidilite is expected to complete its elastomers (polychloroprene) unit at Dahej by the end of FY12 as (1) civil work is in full swing and (2) Pidilite has placed orders for major equipment. The management expects a payback within 4-5 years of completion of the project. We estimate that the project can contribute 7.7% to estimated earnings in FY13 and 10.8% in FY14. We estimate 21% sales CAGR over FY11-13. We estimate 24% PBT CAGR over FY11-13. However a higher tax rate (22% in FY11 to 27% in FY13) will restrict PAT growth to 21%. We value Pidilite on an SOTP basis, assigning P/E of 20x to standalone operations in FY13, and other businesses at 20% discount to the book value. We initiate coverage with a Buy rating and target price of `195. Tata Motors DVR Tata Motors is the largest commercial vehicle manufacturer in India. Its product portfolio includes passenger and goods segment carriers across all tonnage categories. Tata Motors also manufacturers passenger car vehicles and utility vehicles. Significant turnaround in JLR performance backed by revival in key markets, favorable response to new product launches ( Jaguar XJ, Land Rover 2010 models, LR Evoque), coupled with cost saving initiatives. Tata Motors' investments in its subsidiary and associate companies add substantially to the company's valuations. We are downgrading our FY12 EPS by 3.5% to factor in a) lower CV volumes, b) higher cost pressures in both JLR and domestic business, and c) higher capex plan. There could be further downside to our normalized EPS estimate for FY12-FY13 if the proportion of R&D in total capex increases. The DVR share trades at 3.6x FY12 Cons EPS and 7.2x FY12 normalized EPS, and is trading at dividend yield of 3.2%. We prefer DVR over ordinary share due to significant discount. Buy with price target of `993 (~30% discount to TP for ordinary share) - an upside of 75%.

Market Outlook
Snapshot on Technicals and Derivatives

Support at 5,200 strengthens

In the last edition of MOSt Momentum, we had said that the Nifty has found support in between 5,178 and 5,348 points over the past four months. In June the Nifty retested the lower end of the support zone making a double bottom at 5,196 on 20th June. Thereafter the Nifty moved up for eight trading days, closing June with a gain of 87 points. Thus the Nifty reversed two months of losses, but closed the quarter in the red, down 187 points. The Nifty also gave a bullish crossover of the intermediate 50dma, which is at 5,500, but is still trading below the long-term 200dma, which is about 5,750 points. The CNX Midcap Index underperformed the Nifty, losing 1.2% in June. The FMCG, Capital Goods and Financial sectors gained ground while the Oil & Gas, Metals and Realty sectors registered losses. Going forward Since February the Nifty has been trading sideways between 5,200 and 5,900, and found support during the past four months out of five 5 in a band between 5,200 and 5,400. Thus the Nifty has established a formidable support zone, which should not break if it is to maintain the longer-term uptrend in the markets. The upper end of the trading band remains in the 5,775-5,944 zone, which has provided resistance over the past few months. The 200dma at about 5,750 points also needs to be exceeded to reverse a declining long-term trend. The intermediate 50dma at 5,500 points should provide the Nifty with support in July. A breakout above the April high of 5,944 will also result in a higher top/higher bottom formation and reconfirm the long-term bull market. Actionables: 1. Long-term investors can buy at about the Nifty's support zone between 5,200 and 5,400. 2. Positional traders can initiate long positions at about 5,500 points due to support from the 50dma with stop loss of 5,350. 3. The Nifty is likely to face resistance at the 200dma at 5,750. Positional traders can initiate short positions around these levels with stop loss at 5,950. 4. Trade sector-wise rallies with respect to developments in the sector within the above trading zone.

Nifty Daily Chart

Nifty Points

The above views are based on Technical analysis and could differ from our fundamental views. For further ideas on Technicals contact:Tel.: +91 22 30896815

MOSt Wealth -7-

MOSt on Dot
Snapshot on Technicals and Derivatives

Derivatives & Options Trading

June expiry has ended 4.4% higher at 5648 at the month's high compared to last expiry of 5412. The movement during the month was very volatile touching 5600 in the first four days and corrected to 5200 levels, with global markets correcting, rumors of Mauritius tax treaty issues, rumors of pledged shares of midcap companies. Nifty staged a smart recovery in the last 8 trading sessions from 5250 to 5650 levels on the back of policy reforms from the government after a year in the form of increase in LPG and diesel prices and duty cuts, sharp decline in crude oil prices. Total roll over was at 85% (6-m avg 84%) and Nifty Rollover of 65% (6m-avg 63%). Nifty Futures OI stands at 21.3m shares. Total OI at the start of Jun'11 series stands at `915bn as against `922bn at the start

of the previous series Among sector roll overs we have seen higher roll overs compared to 6m avg in engineering, pharma, chemicals and psu banks sector, while lower roll over was observed in infra, media and sugar compared to 6-m avg. As far as the current month is concerned, IV's are trading at lower levels at 18; Nifty OI PCR is 1.3 this is mainly led by heavy open interest in the put strikes in strike prices of 5400 and 5300 levels as there was a sharp run of 8% in the last 10 days of expiry. This coupled with rise in Put in strikes near the current levels indicate creation of hedges in Nifty. Considering the recent 8% move, and lower levels of put writing we recommend Nifty Bear Put Ladder to play a small fall in the markets.

INDEX: NIFTY
View Rationale : : Hedging 1. Nifty futures rolled longs just partially indicating possible correction in the index. 2. Congestion in the Puts may not let the Nifty fall far beyond 5,400 on expiry 3. If the Nifty continues the uptrend there will be no cost to hedging. Premium Outflow: Span Margin: : : `200.0 (per spread) `32,000.00 (approximately) Strategy: Nifty Bear Put Ladder Buy/Sell BUY SELL SELL Scrip NIFTY NIFTY NIFTY Pay off Profile On Expiry Break Even Point N.A Maximum Profit `4,800 Between `5,500- 5,400 levels Maximum Loss Unlimited below `5,200 levels
150 100 50 0 -50 -100 -150 5200 5300 5400 5500 5600 5700

LOT SIZE: 50

Series JULY JULY JULY

Option Type PE PE PE

Strike Price 5600 5500 5400

NIFTY Bear Put Ladder

Reco Price `76 `46 `26

5800

5900

MOSt Wealth -8-

MOSt 3x3
Snapshot on Technicals and Derivatives

Summary

1st week (4th June, 2011)

2nd week (10th June, 2011)

3rd week (18th June 2011)

4th week (25th June 2011)

Large Cap
ICICI Bank Infosys Tech. M&M

CMP(`) `
1,049 2,814 667

Large Cap
L&T ICICI Bank M&M

CMP(`) `
1,694 1,035 662 185 285 418

Large Cap
Bharti Airtel Hindalco Tata Motors DVR

CMP(`) `
380 170 565

Large Cap
Infosys Hindalco Tata Motors DVR

CMP(`) `
2,862 173 533

Mid Cap
Action Construction Pantaloon Retail PFC
CMP: current market price

Mid Cap
43 272 203 NIIT Technologies Pantaloon Retail Gruh Finance Ltd.

Mid Cap
Central Bank IVRCL Torrent Pharma 116 72 642

Mid Cap
Central Bank PTC Pidilite Inds 116 75 161

Blue Colour: New entry in MOSt 3x3

Red Colour: Re - entry in MOSt 3x3

MOSt Wealth -9-

Mutual Fund Returns

Snapshot on Mutual Funds

Performance of recommended debt schemes as on 30th June 2011

Returns (P2P %) Scheme Name 2 Weeks 1 Mth 3 Mths 6 Mths 1 Yr 2 Yrs Daily Rolling MIP AGGRESSIVE (EQUITY > 15%) HDFC MIP - LTP - Growth Reliance MIP - Growth MIP CONSERVATIVE (EQUITY < 15%) Birla Sun Life MIP - Savings 5 - Growth HDFC Multiple Yield Fund - Plan 2005 - Growth INCOME FUND Birla Sun Life Dynamic Bond Fund - Ret - Growth 0.65 1.32 0.94 2.31 1.53 4.21 3.02 6.32 4.98 0.0177 0.0128 0.65 0.43 1.27 1.14 2.14 3.40 3.27 4.28 6.54 7.30 0.0179 0.0327 0.87 0.65 1.64 0.98 1.71 1.29 2.01 1.17 7.46 5.76 0.0307 0.0293

ICICI Prudential Income Opportunities Fund - Ret - Growth 0.41 GILT FUND Birla Sun Life G Sec Fund - LT - Growth ICICI Prudential GFIP - Growth SHORT TERM FUND DSP BlackRock Short Term Fund - Growth IDFC SSIF - MTP - Plan A - Growth ULTRA SHORT TERM FUND Birla Sun Life Ultra Short Term Fund - Growth Reliance Money Manager Fund - Retail - Growth LIQUID FUND HDFC Cash Mgmt Fund - Savings Plan - Growth Reliance Liquid Fund - TP - Retail - Growth LIQUID IP FUND Fidelity Cash Fund - IP - Growth Reliance Liquid Fund - TP - IP - Growth FLOATING RATE FUND Birla Sun Life Floating Rate Fund - STP - Growth UTI Floating Rate Fund - STP - Growth 8.79 8.32 8.62 8.57 8.59 8.32 9.37 8.91 0.41 0.55 0.29 0.16

0.69 1.06

1.18 0.91

2.43 2.25

4.64 5.19

0.0274 0.0092

0.92 1.38

2.28 2.09

4.21 3.83

7.30 5.57

0.0157 0.0220

9.11 8.66

8.84 8.87

8.56 8.60

7.48 7.35

0.0159 0.0160

8.51 8.36

8.58 8.39

8.45 8.27

7.46 7.09

0.0160 0.0152

8.56 8.61

8.45 8.65

8.31 8.53

7.38 7.36

0.0149 0.0158

8.76 8.16

8.94 8.41

8.56 8.23

7.53 7.28

0.0165 0.0159
Source: MFI Explorer

MIP Aggressive,Income Fund ,Gilt Fund, Short Term < 1 year Absolute,> 1 Year CAGR Liquid Fund,Liquid plus Fund,Floating Rate < 1 year Simple Annualised,> 1 Year CAGR

MOSt Wealth -10-

Mutual Fund Returns

Snapshot on Mutual Funds

Performance of recommended equity schemes as on 30th June 2011

Returns (P2P %) Scheme Name EQUITY DIVERSIFIED - LARGE CAP DSP BlackRock Top 100 Equity Fund - Growth Fidelity Equity Fund - Growth Franklin India Bluechip - Growth HDFC Top 200 - Growth UTI Dividend Yield Fund - Growth EQUITY MULTI CAP FUNDS HDFC Equity Fund - Growth ICICI Prudential Discovery Fund - Growth IDFC Imperial Equity Fund - Plan A - Growth Reliance Equity Opportunities Fund - Growth Reliance RSF - Equity - Growth SMALL & MID CAP FUND Birla Sun Life Dividend Yield Plus - Growth Franklin India Prima Fund - Growth HDFC Mid-Cap Opportunities Fund - Growth Umbrella - Emerg Buss Fund - Growth THEMETIC - INFRASTRUCTURE FUNDS Birla Sun Life Infrastructure Fund - Plan A - Growth-12.10 DSP BlackRock India Tiger Fund - Growth ICICI Prudential Infrastructure Fund - Growth ELSS Canara Robeco Equity Taxsaver - Growth Fidelity Tax Advantage Fund - Growth HDFC Taxsaver - Growth INDEX FUND HDFC Index Fund - Sensex Plan SBI Magnum Index Fund - Growth BALANCED FUND Birla Sun Life 95 - Growth HDFC Balanced Fund - Growth ARBITRAGE DERIVATIVE EQUITY HDFC Arbitrage Fund - Retail - Growth UTI Spread Fund - Growth 3.67 3.68 8.22 6.86 6.00 5.20 6.23 6.78 --0.0197 0.0162
Source: MFI Explorer

6 Mths -3.82 -5.36 -4.53 -5.25 -4.99 -5.04 -4.96 -4.98 -3.55 -9.10 -3.94 -5.71 -0.41 0.14

1 Yr

2 yrs

3 Yrs

5 Yrs

2 Year Daily Rolling 0.0447 0.0656 0.0495 0.0549 0.0680 0.0760 0.0949 0.0362 0.0981 0.0517 0.0836 0.0882 0.0695 0.0959 0.0768 0.0269 0.0211 0.0216 0.0653 0.0702 0.0756

3 Yrs SIP Yield (%) 19.32 23.81 22.54 24.85 24.10 29.66 33.35 16.24 32.93 20.85 28.45 30.32 24.09 32.79 34.70 12.37 10.80 10.31 -24.65 26.74

7.78 7.50 10.26 9.03 8.67 11.03 6.87 5.45 11.40 1.37 7.34 5.39 3.56 12.92 19.03 -7.53 -6.48 -0.76 6.61 7.34 7.88

18.26 23.40 19.58 21.49 25.59 27.54 33.34 14.50 34.92 18.43 28.93 31.28 24.87 34.57 32.15 9.34 7.95 9.05 23.86 24.98 26.67

16.77 19.49 20.03 22.50 22.38 25.24 26.67 15.02 25.37 17.58 28.41 23.02 17.52 24.60 18.99 11.07 9.65 8.92 -20.30 23.03

18.47 18.77 16.62 19.83 21.09 19.82 17.30 15.36 17.58 21.98 19.30 -11.04 -13.70 12.11 13.19 17.33 -18.66 15.36

DSP BlackRock Small and Midcap Fund - Growth -6.65

-11.30 -9.50 -2.95 -5.78 -4.81

-8.05 -7.45 -1.81 2.30

6.27 6.27 8.74 13.53

13.65 14.64 19.23 26.46

10.29 11.26 20.58 22.37

9.08 10.60 17.21 16.85

0.0350 0.0305 0.0524 0.0742

15.43 16.10 21.68 26.92 6.46 6.12

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For All Equity Schemes : Return Caculated on < 1 year Absolute,> 1 Year CAGR

Overview
Snapshot on Mutual Funds

Debt Overview
The benchmark 7.80%, 2021 bond ended at 8.32% or `96.51 on 30th June 2011 against 8.41% or `95.81 on 31st May 2011. Corporate bonds yields were range-bound during the month, the 5-year AAA and 10-year AAA closed at 9.62% (prev month closing:9.72%) and 9.61% (prev month closing: 9.61%) respectively. In June the Reserve Bank of India (RBI) raised interest rates on 16th June 2011 for the tenth time since March 2010, keeping up its fight against inflation even as growth slows in Asia's third-largest economy. The RBI raised the repo rate at which it lends to banks by 25bp to 7.50%. In June the RBI made the repo rate its sole independently moving policy rate and pegged the reverse repo rate, at which it absorbs excess liquidity, 100bp below the repo rate, which means the reverse repo rate was raised by 25bp to 6.50%. The increase confirms the determination of policymakers to continue to fight inflation. India's economy, Asia's third-largest, is largely driven by domestic demand. In February, the government forecast economic growth would be about 9% in the current fiscal year, which started on 1 April while the RBI projects it about 8%. April industrial output grew 6.3% under a newly devised series, lower than 8.8% in March, an indication that the rising cost of credit and high inflation are slowing growth momentum in the economy. The wholesale price index, India's main inflation gauge, rose more-than-expected 9.06% a year in May, above the April figure of 8.66%. - In its policy review in May, the RBI projected headline inflation at 6% with an upward bias at the end of March 2012. The benchmark 7.80%, 2021 bond yield rose by 2bp to 8.35% after the policy announcement. The main share index was down 0.4% and reacted little to policy measures. The benchmark 5-year swap rate was broadly unchanged at 7.72% after falling sharply before the policy announcement. Fuel price inflation accelerated to an eight-week high in mid-June and the govt's increase in diesel and other fuel prices is expected to put upward pressure on prices in coming weeks and push headline inflation towards double digits. However, annual food inflation eased to a six-week low of 7.78% in the week to 18 June from 9.13% a week earlier, although the fuel price increase and its knock-on effects are expected to maintain pressure on the RBI to continue monetary policy tightening. The fuel price index climbed to 12.98% in the week to 18 June, before the fuel price rise took effect, from 12.84% a week earlier.
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Overview of Funds
Equity Funds
Indian stock indices closed in positive territory in June. The BSE Sensex closed the month up 1.85% at 18,845.87 points from 18,503.28 points in May and the Nifty closed up 1.57% to 5,647.40 points from the previous month close of 5,560.15 FIIs were net buyers of equity worth `1,014.10cr and domestic mutual funds bought equity worth `1,201.40cr. In June among large-cap funds, ICICI Prudential Focused Bluechip Equity Fund topped with a 1-year absolute return of 13.47% and in the multi-cap category, Birla Sun Life India GenNext Fund settled at 15.86%. In the ELSS category Axis Tax Saver Fund was first, delivering returns of 13.06% in 1 year. Category 6 Mths Abs (P2P %) -6.72 -7.06 -7.50 -7.29 -6.99 1 Yr 5.48 2.67 0.67 5.82 3.62 2 Yrs 3 Yrs CAGR(%) 16.20 17.68 22.59 14.24 17.57 13.26 13.21 13.28 11.59 12.40

Large Cap Funds Diversified Funds Small & Mid Cap Funds Index Funds ELSS Funds

<1 Year, Absolute and >1 year, CAGR

Source: MFI Explorer

Debt Funds
In June the benchmark 7.80% 2021 bond softened by 6bp to end at `96.35 or 8.35% lower than its closing in May, which was `95.95 or 8.41%. In its fight against inflation, the Reserve Bank of India (RBI) hiked key short-term lending and borrowing rates by 25bp for the tenth time in 15 months on 16 June 2011. While the short-term lending (repo) rate was raised to 7.5%, the borrowing rate was raised to 6.5%. As on 31st May 2011 in the Gilt Long term category, Baroda Pioneer Gilt Fund topped the charts with 1year returns of 7.93%. In the Income category the topper was SBI Dynamic Bond Fund - G generating returns of 8.71%. In the Debt MIP category, HDFC Multiple Yield Fund - G Fund topped the charts with 1-year returns of 8.67%. In the Liquid category Escorts Liquid Plan-G topped with one-year returns of 9.05%. In the ShortTerm Income category, Sahara Short Term Bond Fund scheme topped the charts with 1-year returns of 12.67%. Category 1Mth(%) 3Mths(%) 6Mths(%) 1Yr(%) Liquid Liquid Plus Income Funds Debt MIP Debt - Short Term Gilt - Long Term 8.13 8.79 11.33 1.18 12.44 10.32 8.11 8.51 7.35 1.58 9.57 3.42 7.95 8.32 7.00 1.69 8.96 4.71 7.04 7.07 5.91 5.15 6.73 4.40

<1 Year, Absolute and >1 year, CAGR

Source: MFI Explorer

Fund of the Month

Snapshot on Mutual Funds

Franklin India Bluechip Fund

Franklin India Bluechip Fund is an open-ended growth scheme with the main objective of providing medium to long-term capital appreciation. The fund manager seeks steady and consistent growth by focusing on well established, large companies. This fund is an excellent pick for investors who want to beat the Sensex over the long term without taking undue risk. By and large, this fund delivers returns superior to the category average and occasionally astounds, catapulting it to the top slot. Fund manager Anand Radhakrishnan is focused on long-term value and not following the crowd or playing the momentum game. During the 2008 downturn, his cash exposure averaged just 5%. So, periods of relative underperformance will come with the territory but are not a reflection of the fund's character. During the 2008 crash, when his peers were piling up cash, he went bargain shopping to increase exposure to the financial services sector. In 2010, the fund generated an annualized return of 23% against a category average of 17.63%. This placed it in fourth spot among 55 funds in its category. Scrip Name (TOP 5) As on May 31, 2011 Bharti Airtel Ltd. Infosys Technologies Ltd. ICICI Bank Ltd. Reliance Industries Ltd. Grasim Industries Ltd. Sector Name (TOP 5) As on May 31, 2011 Banks Petroleum, gas and petrochemical products Software and consultancy services Telecom services Power & control equipment manufacturers Allocation (%) 7.85 7.50 6.67 5.97 3.53 Allocation (%) 16.84 11.26 9.58 9.03 4.62

Scheme Name 1 Year 2 Year 3 Years 5 Year Franklin India Bluechip - G 10.25 19.58 20.02 16.61 BSE Sensex 6.46 14.02 11.86 12.17

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ICICI Pru Pinnacle Super

Snapshot on Insurance

ICICI Pru Pinnacle Super

ICICI Pru Pinnacle Super is a unit-linked insurance plan that offers multiple choices in investing. You can choose to put your money in the highest NAV Fund B and get 110% of the highest NAV of the Highest NAV Fund B in the first seven years, guaranteed at maturity (conditions applyT&C1). Alternatively you can select from nine funds as per your risk appetite. The fund also gives you the option to pay premiums only once or for five years and offers insurance cover for the policy term. Key benefits Option to get 110% of highest NAV of the Highest NAV Fund B in the first seven years, guaranteed at T&C1 maturity (conditions applyT&C1). You can also manage your portfolio yourself by choosing from nine funds as per your risk appetite. Choose between paying premiums only once or for five years. Get rewarded for staying the long term - get loyalty addition of 2% of the fund value at maturity at the prevailing NAV. Get tax benefits on premiums paid and benefits received, as per the prevailing tax lawsT&C2. How does the policy work? Decide your premium amount and the premium payment option. Choose the sum assured as per your protection needs. Invest your premiums in the funds of your choice as per your risk appetite. On maturity of your policy, receive your maturity benefit as a lump-sum to meet your financial goals. In the unfortunate event of death of the life assured during the term of the policy, the nominee will receive the death benefit. How does the 'Highest NAV Fund B' work? The 'Highest NAV Fund B' guarantees (conditions apply) you the higher of the following two values on maturity: a 110% of the highest NAV recorded on a daily basis within the first seven years of the launch of the series, at maturity OR b The NAV at maturity. This maturity date is exactly 10 years from the date of your policy. The highest NAV recorded on a daily basis in the first seven years
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of launch will be applicable only at maturity. The period of seven years starts from the date of launch of 'Highest NAV Fund B' and will end on the completion of seven years (for instance, from 14/03/2011 to 14/03/2018). Illustration Premium: `100,000 Age at entry: 30 years Premium payment option: Five pay Sum assured: `1,000,000 Choice of Portfolio Strategy: Fixed
Assumed rate of Assumed rate of returns @ 6% a year returns @ 10% a year Fund value at maturity including loyalty addition

`612,252

`831,844

This illustration is for a healthy male with 100% of investment in the Highest NAV Fund B. These are illustrative maturity values, net of all charges, service tax and education cess. Since your policy offers variable returns, the given illustration shows two different rates (6% and 10% a year as per the guidelines of Life Insurance Council) of assumed future investment returnsT&C3

What are the charges under the policy? Premium Allocation Charge: The premium allocation charge depends on the premium payment option chosen and is deducted from the premium amount at the time of premium payment. This charge is a percentage of the premium. Units are allocated in the chosen fund thereafter. One pay option
Single Premium (`) Charge (percentage of single premium) < `500,000 5% >= `500,000 4%

Five pay option

Year 1 6% Year 2 5% Year 3 3% Year 4 3% Year 5 3%

All top up premiums are subject to an allocation charge of 2%.

ICICI Pru Pinnacle Super

Snapshot on Insurance

ICICI Pru Pinnacle Super (Cont...)

Fund Management Charge (FMC): The following fund management charges will be applicable and will be adjusted from the NAV on a daily basis. This charge will be a percentage of the fund value.
F und(s) FMC Highest NAV Fund B, Maximiser V, 1.35% a year Opportunities Fund, Multi-Cap Growth Fund, Bluechip Fund, Dynamic P/E Fund, Multi-Cap Balanced Fund, Income Fund, Smart Trigger Equity Fund, Smart Trigger Debt Fund Money Market Fund Return Guarantee Fund 0.75% a year 1.25% a year
Policy Administration Charge (percentage of single premium) Year 1 to Year 5 Year 6 to Year 10 0.12% a month Nil

For Five Pay option The policy administration charge* is a percentage of the annual premium and will be charged through the term of the policy, subject to a maximum of `500 a month
Policy Administration Charge (percentage of single premium) Year 1 to Year 5 Year 6 to Year 10 0.25% a month 0.10% a month

These will be charged by adjustment to NAV. There will be an additional charge for the investment guarantee, made by adjustment to the NAV, for the funds below: Highest NAV Fund B: 0.50% a year Return Guarantee Fund: 0.25% a year Policy Administration Charge For One Pay option The policy administration charge* is a percentage of the single premium amount and will be charged for the first five years, subject to a maximum of `500 a month ICICI Pru Pinnacle Super at a glance (At a glance)
Modes of premium payment Pre paying term Policy Term Yearly One pay (one year) or Five pay (five years) 10 years (fixed) One Pay Min Sum Assured Age at entry < 45 years Age at entry >=45 years 125%* of premium 125%* of premium Five Pay 10 X annual premium 7 X annual premium

Mortality Charges It will be deducted on a monthly basis on the life cover. Switching Charges: Four free switches are allowed every policy year. Subsequent switches will be charged `100 per switch. Any unused free switch cannot be carried forward to the next policy year*. Switching in to the Highest NAV Fund B is not allowed. Miscellaneous Charges: If there are any policy alterations during the policy term, they will be subject to a miscellaneous charge of `250 per alteration*. These charges will be deducted through redemption of units.

Min age at maturity Max age at entry

18 years

70 years, in case of one pay and 65 years, in case of five pay 80 years, in case of one pay and 75 years, in case of Max age at maturity five pay One Pay Five Pay Max Sum Assured Age at entry < 500%* of premium 60 years Age at entry >=60 years 125%* of premium As per maximum sum assured multiples As per maximum sum assured multiples

* If the sum assured under the policy is 125% of the single premium: Tax benefit u/s 80C will be limited only up to 20% of sum assured Tax benefits u/s 10(10D) will not be available and benefits received under the policy will be taxable

Terms and Conditions

1. The product offers 110% of the highest daily NAV of the Highest NAV Fund B in first seven years, guaranteed at maturity. This guarantee is applicable only at maturity and is not available on partial withdrawal, surrender and death. There will be an additional charge for the cost of investment guarantee of 0.50% a year. This will be made by adjustment to the NAV.

2. Tax benefits under the policy are subject to conditions under section 80C and 10(10D) of the Income Tax Act, 1961. Service tax and education cess will be charged extra as per applicable rates. The tax laws are subject to amendments from time to time. 3. The returns shown in the benefit illustration are not guaranteed and they are not the upper or lower limits of what you might get back, as the value of your policy depends on a number of factors including future investment performance.

To know more about ICICI Pru Pinnacle Super

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Email: insurance@motilaloswal.com I Call: 022 39804379 I SMS: MOSL INS to 575753

Portfolios Overview
Snapshot on Portfolios Management

Overview
Fund Manager Report - June 2011
In June 2011 Indian equity markets posted a recovery of sorts after pain in May. June was a topsy-turvy month with the index weak in the first half of the month before rebounding in the latter half to end the month up 1.57% in INR terms. FII buying drove the late rally. The International Energy Association's (IEA) unexpected supply release and the subsequent decline in crude prices and positive developments around the Greek debt bailout process, were key catalysts. It also helped that the government finally showed some gumption in June with bold moves on the increase in energy prices and duty cuts on domestic fuels. The Prime Minister in his muchawaited interaction with the media reiterated his government's commitment to move ahead with reforms. This, in our view, is likely to set the platform for the economic and market recovery in 2H FY12. renewed concern over growth emanating from global uncertainty. Monsoon: On 21st June, the Indian Meteorological Department (IMD) cut its rainfall forecast for this year to 'below normal', despite the fact that rainfall has so far been 11% above the long-term average. Hence, the forecast is for a weak July, which is concerning, given its importance as a sowing month in India.

Political developments
Reforms: After several deferrals, the EGoM bit the bullet on the fuel price hike. The government hiked diesel prices by 9%, LPG prices by 15% and kerosene prices by 20%, showing its intent on reforms. Clearances: After being passive for most of the first half of this year, the government showed signs of getting its act together in June. The Environment Ministry approved nine coal mines in the last week of June and chances are, six more will be approved in July. The long overdue Cairn-Vedanta deal was sanctioned but on condition that royalty paid by ONGC be treated as cost-recoverable. Fiscal Deficit: The government tried to cushion the absolute price hike in fuels with a cut in excise/customs duties. This however drains its finances by INR490bn and could push up the fiscal deficit to 5.50% of GDP against the budgeted 4.60%.

Macro round up
Growth: The New Industrial Production Index was released for April - base year changed and the list of items made more realistic. Headline April 2011 IIP growth came in at 6.30% as per the new index and 4.40% as per the old index (against our estimate of 5.50%). Going forward, we expect IIP to be lackluster until August 2011 and pick up in 2HFY12 to close the year at an average of 7.60% as per the new series (6.50% per the old index). Inflation: Headline inflation stayed elevated at 9.10% in May, above the estimate of 8.60%. However the 9-20% hike in fuel prices (6.30% of WPI) will have a net ~1.20% impact on inflation (0.70% direct + 0.50% indirect). As a result, our inflation forecast for the end of March 2012 has moved up to 8.40% from 8% earlier. Monetary Policy: In the mid-quarterly RBI policy meet on 16th June and after a surprise 0.50% hike in May, the RBI stuck to expectations in June and raised rates by 0.25%. As inflation in the current phase appears structural with a rather prolonged period of high single digit inflation, the RBI is expected to persist with its rate hike cycle; we expect two more hikes of 0.25% each in the rest of FY12. However, the RBI is unlikely to enforce stronger measures that would be disruptive to the market or the economy, given

Sector-wise performance
Infrastructure: The capital goods and consumer goods sectors stood out in June. L&T led the capital goods space, as its recent orders offered more visibility on its 15% order inflow growth guidance in FY12. Consumer stocks across the board ran up notwithstanding the 'below normal' monsoon forecast. ITC and Hindustan Lever gained, benefiting partly from a slide in crude. The likes of Colgate and Nestle benefited from the "developed market stocks with emerging market exposure" trade. Cement: The sector suffered in June, much as it did in May. Demand was flat and hence the cartel-led price hikes in the early part of the year were now difficult to sustain. The advent of the monsoons also put pricing pressure on the sector.

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Portfolios Overview
Snapshot on Portfolios Management

Overview
Property: Stocks still failed to see light at the end of the tunnel. Shrinking volumes remained the big concern and at a CII Property Conclave this month, as developers put the ball in the government's court, blaming lack of approvals for execution delays and hence sluggish volumes. The RBI tightened lending norms for property loans made by banks. The overwhelming response to DLF's Garden City launch in Delhi was one of the few silver linings in the sector. Energy: The sector was dragged by poor performance of leader Reliance. The fresh news this time was Niko Resources forecasting a decline in its three KG blocks and a CAG report that accused Reliance's production of not being commensurate with capex costs that Reliance projected. OMCs benefited from the fuel price hikes, duty cuts and the overall slide in Brent crude prices. ONGC also benefited from the decision on the Cairn deal. Telecom: The sector remained in favor as Telenor and DoCoMo highlighted challenges faced by the new entrants. This hinted at a smoother road ahead for the incumbents and the likely peaking of the competitive scenario.

Actions taken in various strategies during the month

Value Strategy In June we partially sold and reduced weightages in SBI and increased the weightage of HDFC Ltd. Value Strategy was on 1.6% cash as of 30th June 2011. Bulls Eye Strategy We partially sold and reduced weightages in Bharti Airtel, HDFC Bank, Tata Steel and exited SBI, Grasim and Reliance Industries. HPCL, ITC, Sun TV and LIC Housing were introduced in the strategy. Bulls Eye Strategy was on 19% cash as of 30th June 2011. NTDOP Strategy We exited Ahluwalia Contracts & Time Technoplast and increased the weightage of Engineers India, IDFC and Central Bank of India. We introduced Sobha Developers in the strategy. TDOP Strategy was fully invested as of 30th June 2011. Optima Strategy We partially sold and reduced weightages in Bharti Airtel, ACC, Reliance Industries, Tata Steel and Ultratech Cement. HPCL, ITC, Sun TV and LIC Housing were introduced in the strategy. Optima Strategy was on ~9.50% cash as of 30th June 2011. Focused Series - IV - Flexi Cap Strategy We exited SBI and introduced HDFC Bank in the strategy. Focused Series - IV was fully invested as of 30th June 2011. Focused Series V - Contra Strategy There were no transactions in this strategy. Focused Series V was on 2.85% cash as of 30th June 2011 Invest India Strategy We exited REC, Reliance Industries, Maruti Suzuki and reduced weightage in SBI. The strategy increased weights of HDFC Bank, ITC, HPCL and Page Industries and introduced LIC Housing. Invest India Strategy was on 4.10% cash as of 30th June 2011.

Outlook
July is littered with important events that will dictate the market's future course of action. On the global front, progress on the approval of a loan payout and the second bailout package to Greece in midJuly and the outcome on the US debt ceiling increase is likely to dominate market attention. At home, markets are likely to await cues on more reforms by the government, progress of the monsoons and most importantly corporate earnings announcements for the April-June quarter. Led by these, while indices may stay rangebound and consolidate in the near term, given the recent sharp upmove, we expect considerable stock and sector-centric volatility in the near term.

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Market Roundup
Snapshot on Commodities

Review and outlook

Gold
Related News

Copper
Related News
Copper prices closed at a bullish monthly high on the last day

Comex gold futures prices traded lower in June because of the Greek debt crisis and appear to have stabilized for the moment, which made for calmer markets and better investor risk appetite, and that pulled away some interest in safe-haven precious metals. The Greek parliament passed very unpopular austerity measures and world markets are looking at other matters, such as Japanese and US economic data, which served to lift investor spirits though overall sentiment was under pressure. The dollar index, which measures the performance of the US unit against a basket of six currencies, rose to 74.463, from 74.314 in late North American trading. A stronger greenback tends to discourage investment in dollar-priced commodities such as gold. Outlook for this month
In the long term, the outlook for gold prices is intact as low

of June. The weaker US dollar index helped to boost copper as did some stronger economic data from Japan and the US.
Copper rose in New York, reducing last week's drop, as shrinking

inventories fueled speculation that demand was improving in China, the world's biggest user of the metal.
Copper ended up for a third consecutive session, rallying to

its highest in two months, as risk sentiment was at a high after the safe passage of Greece's austerity plan. The threesession rally helped copper to hold unchanged in the second quarter, going against a more negative trend in the broader base complex. Outlook for this month
The outlook for copper and other base metals is healthy on

interest rates in the US, uncertainty in the euro zone's fiscal situation and high inflation in major emerging economies are likely to retain its appeal.Liberalization of the Chinese gold market - such as moves to allow domestic investors to buy gold ETFs - will increase buying interest in gold. As long as real interest rates are negative, demand for gold as an alternative savings vehicle will stay intact.

tight global supplies and firm demand from top consumer China, analysts said. US interest rates are incredibly low and monetary policy is still stimulatory and with China likely to keep on growing strongly, albeit slightly weaker than it was, and this is positive for copper. China's copper imports are likely to rise in 2HCY11 after a fall in the past months as China uses domestic stocks,

Technical Snapshot
MCX gold prices rallied over the past few months but in the last one month prices traded on a negative note. We expect the downtrend to extend. Resistance at 22,000/22,230 will be crucial in the coming week. If prices are sustained above the immediate support of 21,760 one can see a minor pullback. Gold will continue its downtrend unless it breaches 22,230.

Technical Snapshot
Over the past few months copper has been showing a bearish trend but in June prices resumed their uptrend, which indicates a bullish trend ahead. Immediate resistance of 425 can limit upside gains in the short term. A sustained move above 425 can help prices to rally towards 445/450. Strong support can be seen at 413/410.

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Market Roundup
Snapshot on Commodities

Review and outlook

Crude Oil Related News US crude futures ended higher for a third successive session on the last day of June, but finished 7% lower on the month. A weak dollar, Greece's passage of an austerity plan and supportive Midwest manufacturing data supported crude prices along with a higher finish by expiring July refined product contracts. Uncertainty about the effect of consumer nations' release of oil reserves and lingering worries about slowing economic growth limited its price strength. Oil dipped below US$95 a barrel after China reported its manufacturing sector rose in June at its slowest in over two years, pointing to a possible slowdown in energy demand. The China Federation of Logistics and Purchasing managers index fell to 50.9 in June, the slowest pace in 28 months.
Outlook for this month Oil prices are being impacted by economic problems in Europe

Pepper Related News

In June pepper traded on a negative note led by short selling on

weak export demand. The price of exports to the US increased slightly, Indonesia's target price being BG1-Asta at US$6,450/ton and the price of BG2-Asta at $6,150/ton, Brazil ASTA target price was US$6,300/ton.
Vietnam's pepper exports, to 15,000 tons in May, brought the

total exports in the five months of 2011 to 56,000 tons, valued at US$293m, up 60% over that a year earlier. US and Germany have been Vietnam's two largest export markets from the start of this year, accounting for 27% of exports. Estimated exports in 2011 will double compared to 2010 to reach US$766m.
The supply of pepper on the Indian market is abundant at this

time because of high imports. Between March and 5th May 2011 India imported 4,500 tons of pepper, only less than 100 tons of exports. Outlook for this month
Upcoming pepper prices will drop again, as Indonesia and

and the US, while the US dollar is a big factor and driver of the price of oil. However, oil demand will have the last say for oil prices as global supplies tighten and demand climbs. Demand is diminished relative to what might have been expected and it is mainly happening in the east. They're getting towards the peak of the maintenance season in the east, so it may be a temporary lull.

Brazil enter the harvest season, July-August. Indonesia's pillow case reserves are unclear but exports from these countries increased over the past years in a row.

Technical Snapshot
Crude traded on a positive note over the past one month and we expect prices to continue the uptrend in coming weeks. Support at 4,115/4,065 will be crucial. As long as prices trade above these levels, the trend will be bullish. A decisive break above 4,300 will confirm our bullish view for a target of 4,500. Momentum oscillator RSI, which is trading above 50, indicates the bullishness.

Technical Snapshot
Pepper traded on a positive note over the past few months but in June it resumed its downtrend. If prices are sustained below the resistance level of 28,500/29,000, the downtrend will continue. Momentum oscillator RSI is on the overbought position around 80, which indicates a bearish trend ahead.

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For further details : Call your Relationship Manager or Contact us: +91 (022) 3089 6680 SMS: MOSL INFO <Type Your Query> to 575753 Email : info@motilaloswal.com
Motilal Oswal Securities Ltd. Member of NSE and BSE Registered Office: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai 400 064. Tel 022 30801000 NSE (Cash): INB231041238, NSE(F&O): INF231041238, BSE (Cash:) INB011041257, BSE(F&O): INF011041257, PMS: INP000000670, CDSL: IN-DP-CDSL-09-99, NSDL: IN-DP-NSDL-152-2000, AMFI:ARN-17397 Motilal Oswal Commodities Broker Pvt. Ltd. MCX 29500, NCDEX CMID MS0114. FMC Unique membership code: MCX: MCX/TCM/CORP/0725 & NCDEX: NCDEX/TCM/CORP/0033
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Disclosure of Interest Statement: Analyst ownership of the stock: None Group/Directors ownership of the stock : Bharti Airtel, Birla Corporation, Coal India, GSK Pharma, Hero Honda, IDFC, IOC, Marico, Nestle India, Oriental Bank, South Indian Bank, State Bank, Tata Steel Broking relationship with company covered: State Bank of India Investment Banking relationship with company covered: None Analyst Certification: The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. 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