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Market OutlookIndia Research

July 7, 2011

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

Dealers DiaryThe market edged higher on the back of firm Asian stocks. In a quick span, theindices retreated and moved in a tight range below the baseline till the early

afternoon session. Weak opening of European shares also weighed on themarket. Selling pressure was witnessed in banking and OMC stocks.

With strong volatility, the market reversed previous losses and ascended abovethe baseline. Nonetheless, weak investor sentiments pulled back modest gains.The indices ended with marginal losses with the Sensex and Nifty losing~0.1% each. The mid-cap index remained flat, whereas the small-cap indexgained 0.2%. Among the front-runners, Tata Motors, HDFC, Hindalco, L&Tand RIL gained 0.82%, while RCom., Tata Power, ICICI Bank, Hero Hondaand JP Associates lost ~2%. Among mid caps, SpiceMobile, GujaratFluoroChemicals, Bharat Forge, Sadbhav Eng. and Wabco TVS India gained510%, while Greaves Cotton, Sterling Intl., KGN Ind., IRB Infra. andTata Teleservices lost 35%.

Markets TodayThe trend deciding level for the day is 18744 / 5631 levels. If NIFTY tradesabove this level during the first half-an-hour of trade then we may witness afurther rally up to 18806 18885 / 5650 - 5675 levels. However, if NIFTYtrades below 18744 / 5631 levels for the first half-an-hour of trade then it maycorrect up to 18665 18603 / 5606 - 5586 levels.

Indices S2 S1 R1 R2SENSEX 18,603 18,665 18,806 18,885

NIFTY 5,586 5,606 5,650 5,675

News Analysis HDFC Bank splits shares in 1:5 ratio Cadila Healthcare receives warning letter from USFDA

Refer detailed news analysis on the following pageNet Inflows (July 05, 2011)` cr Purch Sales Net MTD YTDFII 2,662 1,801 861 4,723 6,045

MFs 363 464 (101) (16) 3,109

FII Derivatives (July 06, 2011)` cr Purch Sales Net OpenInterestIndex Futures 902 892 10 12,532

Stock Futures 823 1,101 (278) 30,275

Gainers / LosersGainers Losers

Company Price (`) chg (%) Company Price (`) chg (%)Bharat Forge 322 4.6 LIC Housing Fin. 224 (4.8)

Torrent Power 245 3.6 IRB Infra. 169 (4.0)

Unitech 34 3.5 Castrol India 555 (3.8)

Mcleod Russel 283 2.8 Tata Teleservices 19 (3.0)

Titan Ind. 224 2.8 Indiabulls Fin. 168 (2.7)

Domestic Indices Chg (%) (Pts) (Close)BSE Sensex -0.1% (17.6) 18,727

Nifty -0.1% (6.7) 5,625

MID CAP 0.0% 2.6 6,962SMALL CAP 0.2% 19.2 8,358

BSE HC -0.4% (28.1) 6,388

BSE PSU -0.4% (38.0) 8,595

BANKEX -0.9% (121.1) 12,915

AUTO 0.4% 33.3 8,97

METAL 0.1% 20.7 15,184

OIL & GAS 0.2% 16.0 8,971

BSE IT -0.1% (8.5) 6,175

Global Indices Chg (%) (Pts) (Close)Dow Jones 0.5% 56.2 12,626

NASDAQ 0.3% 8.3 2,834

FTSE -0.4% (21.1) 6,003

Nikkei 1.1% 110.0 10,083

Hang Seng -1.0% (230.4) 22,518

Straits Times -0.5% (15.0) 3,115

Shanghai Com -0.2% (5.9) 2,810

Indian ADRs Chg (%) (Pts) (Close)Infosys -0.4% (0.3) $66.5

Wipro 0.0% 0.0 $13

ICICI Bank -2.7% (1.3) $48.2

HDFC Bank -0.2% (0.3) $180.0

Advances / Declines BSE NSE Advances 1,449

Declines 1,418 704

Unchanged 116 65

Volumes (` cr)BSE 2,674

NSE 9,881

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MarketOutlook |IndiaResearch

HDFC Bank splits shares in 1:5 ratioAt the 17th Annual General Meeting held on July 6, 2011, HDFC Bank announced thesub-division of stocks in the ratio of 1:5 in order to encourage wider retail participation in

the company. The bank's shareholders have approved the stock split in the company'sshare in a 1:5 ratio i.e., one share of `10 will be split into five shares of `2 each. HDFCBanks fundamentals and earnings outlook remain strong but at 3.4x FY2013E ABV, webelieve the stock is fairly valued. Hence, we remain Neutral on the stock.

Cadila Healthcare receives warning letter from USFDACadila Healthcare has received warning letter from USFDA for Sarkhej site. Although this

development is negative, it is not going to impact the companys financial performance as

the site is still not contributing to the turnover. Until all corrections have been completed

and FDA has confirmed corrections of the violations and the firms compliance with CGMP

is completed, FDA may withhold approval of any new applications or supplements listingthe firm as a drug product manufacturer. Management is in the process of replying and

taking the corrective steps for the same. Additionally, the other USFDA facilities were

re-inspected in January 2011 and have not received any adverse comments. Thus, given

the development, we maintain our estimates. At the CMP of `949, the stock trades at 25xFY2012E and 18x FY2013E P/E. We recommend Accumulate on the stock with a targetprice of `1,053.

Economic and Political News Companies raise `4,781cr in May via IPOs, rights issues Oil Ministry refers Reliance-BP deal to CCEA for approval Review meet for power, coal sectors by PM postponed Government macro data not reliable, says RBI Probe into Essar, Swan to be over by August 31: CBI

Corporate News Lupin's US arm gets FDA nod for hypertension drug Coromandel inks pact with Qatar firm for urea supply Tata Steel sales volume in India up 14% in 1QFY2012 JSW's crude steel production up 9% to 1.7mt in 1QFY2012 SC allows Lafarge to mine limestone in Meghalaya

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

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

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