Market Outlook

India Research
January 12, 2012

Dealers Diary
Indian markets are expected to open flat taking cues from flat to marginally positive opening in most of the Asian markets today and flat closing in the global markets yesterday. The Indian markets ended marginally higher yesterday, extending the previous session's rally after the government removed restrictions on foreign investment in India's single-brand retail sector. Also, continued anticipation of further monetary policy easing from China kept investors across the Asian markets in good mood. Globally, most of the US and European markets ended almost flat yesterday and largely erased intraday losses on the ongoing tug between Europes debt troubles and an improving U.S. economy. Meanwhile, preliminary figures from the Germanys Federal Statistics office showed that Germanys economy contracted by 0.25% in 4QCY2011. The markets today will be closely watching out from IIP numbers (estimate 2.1%) and Infosys results to be announced today. In addition, jobless claims data of the US economy will be on radar.

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

Chg (%) 0.1 0.2 1.0 1.3 0.5 0.3 1.1 0.3 2.3 1.0 (1.4) Chg (%) (0.1) 0.3 (0.5) 0.3 0.8 1.0 (0.4)

(Pts) 10.8 11.4 54.4 79.0 29.6 20.2 22.6 79.8 (84.3) (Pts) (13.0) 8.3 (25.9) 25.6 27.3 (9.7)

(Close) 16,176 4,861 5,506 6,075 6,125 6,927 8,394 7,915 5,832 (Close) 12,450 2,711 5,671 8,448 2,747 2,276

112.7 10,140 227.7 10,310

Markets Today
The trend deciding level for the day is 16,183 / 4,860 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,238 16,300 / 4,878 4,896 levels. However, if NIFTY trades below 16,183 / 4,860 levels for the first half-an-hour of trade then it may correct up to 16,121 16,066 / 4,843 4,824 levels.
Indices SENSEX NIFTY S2
15,799 4,737

147.7 19,152

S1
15,982 4,793

R1
16,081 4,825

R2
16,265 4,881

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank

Chg (%) 1.7 2.2 1.3 1.6

(Pts) 1.0 0.2 0.4 0.5

(Close) $56.9 $10.5 $30.3 $28.3

News Analysis
Credit growth falls to two-year low of 15.9% 3QFY2012 Result Preview Infosys, HDFC
Refer detailed news analysis on the following page

Advances / Declines Advances Declines

BSE 1,877 963 103

NSE 1,009 453 48

Net Inflows (January 10, 2012)

` cr FII MFs ` cr Index Futures Stock Futures Purch
2,783 508

Sales
2,378 447

Net
405 67

MTD
1,536 (67)

YTD
1,536 (67)

Unchanged

Volumes (` cr) BSE 2,621 11,716 NSE

FII Derivatives (January 11, 2012)

Purch
1,542 1,813

Sales
1,270 1,774

Net
272 38

Open Interest
11,804 26,099

Gainers / Losers
Gainers Company
HDIL Adani Power Wockhardt Adani Enter Jet Air India

Losers Company
Hindustan Copp GVK Power MMTC TCS Grasim Inds

Price (`)
71 77 337 312 204

chg (%)
13.2 11.7 10.8 10.1 7.0

Price (`)
286 14 952 1,137 2,397

chg (%)
(5.7) (3.1) (3.1) (2.5) (2.4)

Please refer to important disclosures at the end of this report

Sebi Registration No: INB 010996539

Market Outlook | India Research

Credit growth falls to two-year low of 15.9%

Growth in bank credit of Scheduled Commercial Banks (SCBs) fell to its lowest since the start of FY2011 to 15.9% yoy, although on a high base (24.5% growth in December 2010). Credit offtake during the fortnight was robust at `98,662cr; however, it was cyclically lower by 18.3% compared to credit offtake during the same fortnight last year. Deposit growth came in at 16.9% yoy, while overall deposits in the system rose by strong `155,316cr (although lower by 13.5% compared to the same fortnight last year) during the fortnight. The spread between credit and deposit growth remained negative at 0.9%. Overall systemic credit-to-deposit ratio remains elevated at 74.9% levels. FY2012 in YTD, credit offtake has declined by 18.0% yoy, while deposit mobilization has risen by 26.4% yoy.

Result Preview Infosys

Infosys is slated to announce its 3QFY2012 results. We expect a modest performance by the company, with revenue growing by 4.0% qoq to US$1,816mn, led by volume growth of 4.9% qoq. In INR terms, revenue is expected to grow by whopping 13.9% qoq to `9,222cr because of ~11% qoq INR depreciation. EBITDA margin is expected to expand by 159bp qoq to 32.6%. PAT is expected to come in at `2,197cr. Key points to watch out for are a) managements commentary on the macro picture and initial sense of client budgets for CY2012 and b) revision, if any, in USD revenue growth guidance for FY2012, which we expect to reduce from 1719% yoy to 17-18% yoy. We maintain our Accumulate recommendation on the stock with a target price of `2,990.

HDFC
HDFC is scheduled to announce its 3QFY2012 results. We expect the bank to report healthy NII growth of 18.2% yoy to `1,215cr. Non-interest income is expected to register 12.7% growth yoy, leading to operating income growth of 17.0% yoy to `1,553cr. Operating expenses are expected to grow by 9.9% yoy to `110cr. Pre-provision profit is expected to grow by 17.5% yoy to `1,443cr. Provisioning expenses are expected to increase by 18.5% yoy to `18cr, leading to net profit growth of 17.5% yoy to `1,047cr. At the CMP, HDFCs core business (after adjusting `215/share towards value of the subsidiaries) is trading at 4.4x FY2013E ABV of `107.1 (including subsidiaries, the stock is trading at 4.3x FY2013E ABV of `159.3). We maintain our Neutral recommendation on the stock.

January 12, 2012

Market Outlook | India Research

Quarterly Bloomberg Brokers Consensus Estimates

Infosys Ltd - Consolidated (12/01/2012)
Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 3QFY12E 9,154 3,006 32.8 2,267 3QFY11 7,106 2,363 33.3 1,780 27 y-o-y (%) 29 27 2QFY12 8,099 2,739 33.8 1,906 19 q-o-q (%) 13 10

HDFC Ltd (12/01/2012)

Particulars (` cr) 3QFY12E 1,029 3QFY11 891 y-o-y (%) 16 2QFY12 971 q-o-q (%) 7

Net profit

Economic and Political News

Centre asks states to boost procurement for Food Bill Fitch rates Indian auto components sector 'stable' in 2012 India to cut Iran oil imports, may not seek waiver: sources Rupee fall adds `66,000cr cost to imports in May-Dec

Corporate News
Escorts ties up with Honeywell for technology assistance NMDC signs `509cr contract for steel plant Praj acquires 50% stake in Neela Systems Suzlon wins second order in Brazil

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

Results Calendar
12/01/2012 13/01/2012 16/01/2012 17/01/2012 18/01/2012 Infosys, HDFC Sintex South Indian Bank TCS, HCL Technologies MindTree, Infotech Enterprises

January 12, 2012

Market Outlook | India Research

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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January 12, 2012