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Market Outlook India Research

July 18, 2011

Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

Dealer’s Diary The key benchmark indices slipped into the red to hit fresh intraday lows in morning trade. The market trimmed losses in mid-morning trade as Asian stocks rose in volatile trade. The market hovered in red in early afternoon trade. Weakness continued in afternoon trade as European stocks declined in early trade on caution ahead of the release of European bank stress tests results. The market trimmed intraday losses in mid-afternoon trade as index heavyweight RIL rose. The market moved in a tight range in the negative terrain in late trade. The Sensex and Nifty closed with losses of 0.3% each. The mid-cap index ended lower by 0.1%, while the small-cap index closed with gains of 0.1%. Among the front runners, TCS, Mahindra & Mahindra, RIL, Wipro and HDFC Bank gained 1–2%, while Tata Motors, Sterlite Inds, ONGC, Cipla and HDFC lost 1–3%. Among mid caps, SKS Microfinance, Amara Raja, A2Z Maint & Engg, Shree Global Trd and MOIL gained 4–10%, while Anant Raj Inds, Shree Renuka Sugars, Bajaj Holdings, JM Financial and Glodyne Tech lost 3–6%.

Markets Today

The trend deciding level for the day is 18,671/5,592 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,828 – 19,094/5,621 – 5,661 levels. However, if NIFTY trades below 18,671/5,592 levels for the first half-an-hour of trade then it may correct up to 18,405 – 18,247/5,552 – 5,523 levels.

Indices S2 S1 R1 R2

SENSEX 18,247 18,405 18,828 19,094

NIFTY 5,523 5,552 5,621 5,661

News Analysis

GSM net subscriber addition – June 2011 Tata Motors reports flat yoy global sales in June 2011 1QFY2012 Result Review – HT Media

Refer detailed news analysis on the following page

Net Inflows (July 14, 2011) ` cr Purch Sales Net MTD YTD

FII 2,405 2,068 338 6,475 9,145

MFs 1,011 467 544 399 3,625

FII Derivatives (July 15, 2011)

` cr Purch Sales Net Open

Interest

Index Futures 1,515 1,703 (188) 12,900

Stock Futures 1,078 1,285 (207) 32,066

Gainers / Losers Gainers Losers

Company Price (`) chg (%) Company Price (`) chg (%)

Jet Air 506 3.4 Anant Raj Ind. 84 (6.1)

Torrent Power 251 3.4 Oracle Financials 2,204 (3.8)

MRF 7,755 3.4 Zee Entertainment 124 (3.2)

Castrol India 574 3.0 Shree Renuka 71 (3.0)

GE Shipping 279 3.0 Bajaj Holdings 750 (2.9)

Domestic Indices Chg (%) (Pts) (Close)

BSE Sensex -0.3% (56.3) 18,562

Nifty -0.3% (18.7) 5,581

MID CAP -0.1% (7.8) 7,007

SMALL CAP 0.1% 6.8 8,363

BSE HC -0.2% (14.3) 6,518

BSE PSU -0.5% (45.5) 8,542

BANKEX -0.3% (32.4) 12,847

AUTO -0.6% (53.6) 8,994

METAL -0.9% (125.2) 14,610

OIL & GAS -0.1% (9.3) 9,121

BSE IT 0.4% 21.5 5,857

Global Indices Chg (%) (Pts) (Close)

Dow Jones 0.3% 42.6 12,480

NASDAQ 1.0% 27.1 2,790

FTSE -0.1% (3.3) 5,844

Nikkei 0.4% 38.4 9,974

Hang Seng -0.3% (64.8) 21,875

Straits Times -0.1% (4.5) 3,084

Shanghai Com 0.4% 9.7 2,820

Indian ADRs Chg (%) (Pts) (Close)

Infosys 0.4% 0.2 $61.4

Wipro 0.2% 0.0 $12.8

ICICI Bank 0.1% 0.1 $47.3

HDFC Bank 0.4% 0.7 $178.0

Advances / Declines BSE NSE

Advances 1,384 622

Declines 1,472 816

Unchanged 135 69

Volumes (` cr)

BSE 2,099

NSE 8,816

July 18, 2011 2

Market Outlook | India Research

GSM net subscriber addition – June 2011 Cellular Operators Association of India (COAI) reported GSM subscriber data for June 2011, which continued its declining trend in this month as well. GSM subscriber data was reported to be weak on mom basis across all operators (except BSNL). The net subscriber addition number stood at 9.6mn, down 10% mom, taking the total GSM subscriber base to 598.8mn. Weakness across the board: In June 2011, net addition run rate on mom basis for all operators (except BSNL) dropped steeply. Among the incumbents, Idea, after adding 2.5mn plus net subscribers every month from November 2010–April 2011, reported a drop in its net subscriber additions to merely 1.4mn, down 24.8% mom. Also, net subscriber addition numbers of Bharti, Vodafone and Aircel dropped by down 13.5%, 14.5% and 17.3% mom to 2.1mn, 2.1mn and 0.9mn, respectively. On the other hand, BSNL, which was reporting mom decline in its subscriber additions since the last five months, reported a 78.8% mom jump in June 2011 with net subscriber addition of 0.8mn. Subscriber market share of all the incumbents remained almost flat mom – Bharti at 28.3%, Vodafone at 23.6%, Idea at 15.9%, BSNL at 14.8% and Aircel at 9.7%. All the new operators reported a sharp decline in subscriber net addition numbers for June 2011. Uninor, DB Etisalat and S-Tel reported 17.4%, 37.1% and 7.8% mom decline in net subscriber additions, with addition numbers of 0.9mn, 0.1mn and 0.2mn, respectively. Loop Mobile emerged as the dark horse and reported a 30.8% mom increase in subscriber addition at 0.02mn. Circle-wise highlights: In June 2011, the net addition run rate of Metro circle declined to 0.7mn vs. 1.0mn in May 2011. In the Metro circle, in this month again Vodafone had the highest net additions at 0.21mn, followed by Bharti and Idea reporting 0.17mn net additions each. Subscriber addition run rate of B circle bounced back to 3.0mn from 2.4mn in May 2011. However, subscriber additions in B and C circles declined to 3.4mn and 1.5mn from 4.0mn and 2.1mn in May 2011, respectively. This led to a considerable decline in their net subscriber addition market share to 39.2% and 17.7% from 41.9% and 22.4% in May 2011, respectively. For Bharti and Idea, this kind of cooling off in subscriber net addition was along expected lines, thus our estimates remain unchanged. Bharti continues to be a better bet due to its low-cost integrated model (owned tower infrastructure), potential opportunity to scale up in Africa, established leadership in revenue and subscriber market share and relatively better KPIs. However, we remain Neutral on the telecom sector.

Tata Motors reports flat yoy global sales in June 2011 Tata Motors reported flat yoy global sales volume in June 2011, primarily due to a 12% yoy decline in global passenger vehicle volumes. Total global volumes, however, witnessed a marginal 1.8% mom increase to 89,846 units. Global commercial vehicle volumes including Tata Daewoo and Tata Hispano Carrocera range posted healthy 13% yoy growth to 45,285 units. Jaguar and Land Rover (JLR) posted lower-than-expected volume growth as Jaguar sales witnessed a sharp 40.4% yoy decline, while Land Rover sales declined by 9.7% sequentially. JLR sales reported flat yoy growth of 0.8% (lower by 8.7% sequentially) to 20,358 units with Jaguar and Land Rover reporting volumes of 4,038 and 16,320 units, respectively. We recommend Neutral on the stock.

July 18, 2011 3

Market Outlook | India Research 1QFY2012 Result Review HT Media

HT Media posted a good set of numbers both on the revenue and the profitability front. The company reported top-line growth of 22.7% yoy to `494cr. Recurring earnings grew by robust 34.4% yoy on account of good revenue growth and a significant decrease in tax rate. Key highlights for the quarter include 1) overall growth of ~17% yoy in advertising revenue, driven by ~18% yoy growth in English and ~15% yoy growth in Hindi – however, sequentially, the company’s advertising revenue growth in English was flat with only ~1.5% growth, though advertising revenue in Hindi grew by ~18% qoq, 2) ~3.5% yoy/qoq increase in circulation revenue, 3) ~75% yoy jump and ~17% qoq decline in radio revenue and 4) 174bp yoy OPM contraction due to 253bp yoy gross margin contraction. We maintain our Accumulate rating on the stock. The Target Price is currently under review.

Economic and Political News

70% of Indian population lives in rural areas: Census

India produces 241mn tonne of foodgrains in FY2011

Services exports up 3.2%, imports rise 2.8% in May 2011

Corporate News

RIL plans to shut 110,000 bpd VGO unit in September 2011

MMTC invites bids for sale of 2,000tn of pulses

JB Chemicals sells Russian business to J&J for `939cr

Suzlon bags `650cr order from Orient Green Power

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

Events for the day BASF India Results ING Vysya Bank Results Persistent Systems Results Zydus Wellness Results

July 18, 2011 4

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

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