>Weekly Market Recap (RELIGARE SECURITIES)

Sensex belled the week on a firm note tracking encouraging global cues with the BSE Sensex registering a gain of 2.4% and the Nifty registering a gain of 3.2%. Foreign Institutional Investors (FIIs) were net buyers to the tune of Rs. 876 crore whereas the Mutual Funds were net buyers to the tune of Rs. 1,137 crore. India`s benchmark wholesale price index (WPI), inflation fell sharply to 0.44% for the week ended Mar. 7, 2009 as compared to 2.43% a week ago. It was at 7.78% during the corresponding week the previous year.

Mercator Lines has taken delivery of its new build Jack Up Rig at a cost of Rs. 1,000 crore approx from the world's leading shipyard Keppels FELS, Singapore. The rig was delivered on 11th March, 2009 about three weeks before schedule and has been immediately deployed under a firm bare boat contract for a period of three years. The new built state of the art premium Jack up Rig acquired through its Singapore based wholly owned subsidiary, Mercator Offshore Ltd , is Class B Mod V capable of working in a water depth of 30,000 ft.

Tata Communications has announced that the company is an anchor tenant customer on the privately owned SEACOM cable system. The SEACOM cable system enables it to provide fully integrated network services from South Africa, Mozambique, Tanzania and Kenya to its networks in Europe, Asia and India. Another subsidiary company, Tata Communications Transformation Services (TCTS), has been awarded the network administration, operations and maintenance contract of the cable supporting 1.28 Tbps of capacity.

State Bank of India has contracted to implement Anti Money Laundering (AML) software from 3i Infotech. The AMLOCK software is said to be implemented across the State Bank Group comprising of SBI and its 6 associate banks (State Bank of Patiala, State Bank of Bikaner & Jaipur, State Bank of Indore, State Bank of Hyderabad, State Bank of Mysore and State Bank of Travancore) having more than 16,000 branches across the country.

To see full report: MARKET RECAP 20-03-09

>Daily Dervatives (ICICI Direct)

• In yesterday’s trade, Nifty future saw covering in short positions along with some further long closure, which was followed by short rollover into the next series. The Nifty March series witnessed an unwinding of 741300 shares in OI accompanied by a nearly 1% rise in price
and widening of the discount to 15.05 pts. The April series added 1.44 million shares in OI.

• The PCR-OI surged to 1.58 on account of huge addition of OI in the 2800 and 2700 strike Puts. An addition of 22299 contracts in the 2800 Put and 18643 contracts in the 2700 Put along with rise in IV. This indicates buying in these strikes. Also, addition of 9663 contracts in the 2600 Put with IV almost unchanged indicates some Put writing at this strike. On the other hand, 2800 Call shed 4727 contracts along with marginal rise in IV indicating some further unwinding of positions by Call writers. The maximum addition in OI (16882 contracts) among Calls was seen in the 2900 Call with drop in IV. Market participants are advised not to carry any aggressive long positions as far as 2800 is held as resistance on a closing basis and 2835 on an intraday basis. However, 2700 may still continue to be a good support for the market.

• FIIs were net buyers to the tune of Rs 222 crore. DIIs were net buyers to the tune of Rs 526 crore.

To see full report: DERIVATIVES 200309

>Daily Market & Technical Outlook (ICICI Direct)

KEY POINTS

● Market outlook — Open flat to negative on mixed global cues
● Positive — FIIs buying
● Negative – MFs selling, crude above $51/bbl

MARKET OUTLOOK

● Indian markets are likely to open flat to negative, taking cues from global markets. Asian markets were trading mixed in the morning, with investors still digesting the implications of a surprise plan by the US Federal Reserve to pump an extra $1 trillion into the financial system. Before this US markets closed as much as 1.3% lower, as uncertainty over the cost of the Fed's plan prompted investors to book profits after the recent rally. Crude jumped more than 7% to top $51/bbl after the Fed’s announcement. The rupee is expected to consolidate around three-week peaks on Friday, with a revival in foreign equity inflows underpinning the market.

● The inflation rate stood at 0.44% for the week ended March 7 this year, against 2.43% in the previous week.

● The Sensex has supports at 8910 and 8840 and resistances at 9050 and 9090. The Nifty has supports at 2780 and 2760 and resistances at 2820 and 2830.

● Asian stocks opened mixed, offsetting declines by banks amid scepticism that US and Japanese plans to purchase bonds will ease the financial crisis. The Hang Seng declined 141.4 points, or 1.1%, to trade 12,989.5.

● US stocks fell on Thursday on concerns that the Federal Reserve's latest efforts to stem the US recession are too costly and untested, prompting investors to book profits on bank shares after the recent sharp rally. The Dow Jones fell 85.78 points, or 1.15%, to 7,400.80. The S&P 500 lost 10.31 points, or 1.30%, to 784.04. The Nasdaq shed 7.74 points, or 0.52%, to 1,483.48.

● Stocks in news: Pantaloons Retail, RIL, Satyam Computer, Areva T&D

To see full report: OPENING BELL 200309

>Rupee Report (MF GLOBAL)

Market Recap:
Spot rupee appreciated marginally against the US dollar, following a firm close in domestic key equity indices. This helped support the view that foreign funds selling in domestic markets may have slowed down thus reducing the demand for dollars. Demand for dollars from oil companies was also not present with RBI announcing Thursday, that it would start special market operations whereby it would buy bonds from oil companies in exchange for dollars. According to newswire reports major banks were among the dollar sellers with atleast 240 million being sold during the session. On overseas economic data front, it was the US non-farm payroll figure for February that the global markets were awaiting. There were expectations that US firms would cut jobs in services sector by 650,000 in Feb. The actual Feb number was in line with expectations at 651,000. The umpemployment rate rose to a 26 year high at 8.10% in Feb from 7.60% in Jan. With US jobs data pretty much inline with expectations, US dollar depreciated against its amjor counterparts on reduced risk perception.

Market Outlook:
Rupee is likely to remain under marginal pressure against the US dollar on weaker cues from domestic equity markets and weaker cues from Asian currencies against US dollar. Major Asian indices have slipped in to negative territory, with Nikkei at 7,115 (- 57.91 points) and Hang Seng at 11,750 (-171 points). SGX Mar Nifty futures contract was at 2568 (-44 points). With weaker
domestic equity markets, there would be renewed concerns over increased FII selling. On currencies front, US dollar was trading weak against major units, but marginally firm against the Asian units, including the locally closely followed Korean Won. Likely range for spot rupee today, is 51.50-51.90 per USD.

Trade Recommendation:
Prices charts indicate that the 51.50 support could hold for spot rupee. We had suggested buying 1-month dollar rupee futures at 51.70 with a stop at 51.50, for targets of 51.90 and 52.20 and will hold maintain this trade.

To see full report: RUPEE REPORT

>Rolta (CENTRUM)

● 42% decline in stock price unwarranted: Rolta saw a sharp sell-off last week with the stock falling 42%. Our talks with the management indicate the fundamentals of the company remain intact and the sell-off is unwarranted.

● Management confident of 10% revenue growth in FY10 even in ‘worst-case’ scenario: The management exuded confidence of achieving a 10% revenue growth in FY10E even on a ‘heavens may fall’ scenario. In such a case, the company would deliver a fully-diluted EPS of Rs17.2 per share.

● Buyback of FCCBs a likely near-term trigger: Rolta has announced plans to buyback FCCBs of $150mn in part or in full. This is a likely near-term trigger for the stock.

● Order book to help achieve targeted growth: The company has an order book of Rs15,918mn, executable over the next 15 months. We believe this would help the company achieve its targeted 35%-40% growth in FY09.

● Maintain Buy rating: At CMP, the stock trades at a attractive P/E of 2.7x, despite having best in class return ratios and revenue growth. We maintain our Buy rating with a DCF-based price target of Rs124, which discounts our FY10E EPS of Rs18.8 by 6.6x. At the current price, the stock now delivers a dividend yield of 9%, with minimal risk in our view.

To see full report: ROLTA

>Infotech Enterprises Ltd.(MERRILL LYNCH)

Cut to Underperform; PO cut to Rs75
We cut FY10E and FY11E earnings by 27% and 39% respectively to factor in increasing signs of challenges faced by its top 5 clients. We forecast 20% decline in earnings (excl forex losses) over the next two years. While the stock has underperformed about 30% in last 6 months, our downgrade reflects our 15% below consensus earnings & lack of catalysts. Cut PO to Rs75 (vsRs180), at 4x

FY10E, a 20% discount to historical valuations.
Top clients face challenging business conditions Last two months, Infotech’s top 3 engineering clients – Boeing, Pratt & Whitney, and Bombardier reported challenging business conditions & announced layoffs, which could impact project inflows to Infotech. We also see downside risk to
growth from TeleAtlas (largest GIS client) which caters primarily to the auto industry. TeleAtlas’s parent and key client TomTom guided at flat unit sales for portable navigation devices for CY09. Top 5 clients contribute ~40% to revs.

FY10 cyclical pressures grow; Weak 4Q
We expect FY10 reported earnings to grow by 30% which should be primarily driven by lower forex hedging losses. We expect USD revenues to decline 1% and EBITDA to decline 5% yoy. 4QFY09 too is likely to be weak given low volume growth, fluctuations in cross currency impacting revenues, and a likely Rs300mn hit from FX hedge losses. We expect 4Q PAT to decline 58% QoQ.

Upside risks from offset business, rupee depreciation
Key factors we would look for before we become more constructive on the stock: a) faster than expected pick-up in product development by aerospace/rail clients b) Progress in awarding defence equipment related contracts and consequent offset business c) Rupee depreciation, where 1% depreciation can impact margins by an estimated. 30-40bps.

To see full report: INFOTECH

>India Essentials (MACQUARIE RESEARCH)

India cable and satellite TV
Pain for Z IN, positive for ZEEN IN

We analyse the trends in weekly gross rating points (GRP) for Hindi general entertainment channels (GEC), Hindi news channels and regional GECs for the week ending 28 February 2009.

Sterlite Industries (Outperform)
Asarco - not the best but cheap

Revised bid for Asarco's assets: Sterlite's revised offer for US-based mining firm Asarco's (not listed) copper assets, ring fenced from all other liabilities, has been accepted by the lenders and is now placed before the bankruptcy court for approval.

MacQTel AsiaPac Portfolio
Winners and losers Tim Smart

The MacQTel AsiaPac Portfolio is down 3.2% for the week (27 Feb–5 Mar), underperforming the benchmark MSCI AP telco index, which was down 2.5%, and the broader market (MSCI AP), down 2.7% (all performance in US$).

Macquarie China Commodities Weekly
Chinese steel demand in 2009: focusing on the fundamentals and stimulus plan

This week we look at Chinese steel demand in 2009 and focus on the stimulus package and other drivers of demand. First, we predict that crude steel production in 2009 is likely to fall to 460–500mt.

Macquarie Commodities
Iron ore spot prices sink again . . . for now

We review the reasons and implications for recent spot iron ore price falls. Latest news Copper resumed its upward march as stocks declined again, with the majority of materials believed destined for China.

To see full report: INDIA ESSENTIALS

>Reliance Power (CENTRUM)

● Huge potential upside: We believe Reliance Power (RPower) is well-placed to capitalise on the emerging opportunities in the power sector. The stock currently trades close to its bear-case value of Rs90, which would be rewarding in the long-term, considering the huge 207% potential upside in our best case scenario.

● Rs120bn cash in books, internal accruals adequate to fund 21GW capex: About Rs120bn cash combined with internal accruals from initial projects and treasury gains should be adequate to fund its 21GW capex plan. We expect the Rosa (Phases 1 and 2), Butibori, Sasan, Krishnapatanam, Dadri and Tilaiya projects to be funded without resorting to equity dilution.

● Projects are fundable, nearing financial closure: RPower’s projects have equity support, tied-up fuel requirements, received requisite clearances and in most cases completed land acquisition. We believe these factors give RPower projects good chance to complete financial closure at the earliest.

● Projects are profitable; provide high IRR: We estimate the equity IRR of Sasan and regulated projects at around 18% and that of Krishnapatanam and Tilaiya UMPPs at about 25%. Based on a tariff of Rs2.5/unit, the Chitrangi and Dadri projects have an estimated IRR of about 50%.

● 2bn tonne excess coal reserves a significant value add: We believe the excess 1bn tonne reserves from the coal mines allocated to it for the Sasan and Tilaiya projects and the additional 1bn tonne coal reserves from its Indonesian mines are a significant value add.

● Base case valuation gives target price of Rs140: Based on our base case valuation, we arrive at a target price of Rs140 using DCF methodology. The stock has limited downside from here, but the upside potential is 207% in a best case scenario.

● Risks: Key risk is delay in achieving financial closure of projects. Failure to tie-up gas supply for Dadri plant would impact estimates as this project alone adds Rs39 per share in our base case value of Rs140.

To see full report: RELIANCE POWER

>Bharat Heavy Electricals (MERRILL LYNCH)

‘Buy Indian’ tender in 1QFY10; Potential 4.9GW orders; Buy:
India’s proposed power equipment purchase policy offers an opportunity for BHEL to win orders worth minimum 4.9GW and maximum 7.2GW once approved by the prime minister. First of the two tenders is likely out in April 09 and order likely by 3QFY10E, in our view. This translates to estimated backlog of Rs123bn (11% of backlog) to Rs179bn (16%) over FY10-11E. Key to BHEL’s potential success here is that it will bid on a level playing field (with visibility of 7 sets of 660/800 MW order) v/s its current competitive disadvantage of low volume on super-critical
(SC) plants. We believe the stock correction is an attractive opportunity to buy ahead of growth bounceback in FY10E.

NTPC/DVC to order 12GW; BHEL could win 4.9GW
We think India’s Prime Minister is likely to approve the SC power plant tendering policy for 660/800MW in two weeks, under which, NTPC/DVC will tender 11x660MW projects on a competitive bid basis. Only vendors who have or intend to have phased manufacturing programs in India can bid for this tender. If BHEL is lowest bidder (L1), we estimate it could get orders for 6x660MW but if it is L2/L3, as per government policy it would still win orders for 5 sets at L1 price. Similarly, we anticipate NTPC/DVC will tender 6x800MW in FY11E, where we estimate
BHEL may win minimum 2 sets. A 5 set order for 660MW set would help BHEL reach 9 set order (6220MW - see Chart 3) required to indigenize SC technology from Alstom & Siemens and compete on a level playing field in future.

Competitive landscape building up; BHEL comfortable
Key competitors for BHEL in these tenders are: L&T-Mitsubishi (L&T-MHI) for Boilers and L&T-MHI, Alstom-Bharat Forge and Toshiba-JSW for turbine & generators. Given that the difference in potential order in the 11x660MW tender is not substantial – 5 if BHEL is L2 and 6 if BHEL is L1, BHEL may not bid aggressively in general and boiler tender (58% of value) in particular. Overall, SC orders would improve visibility of growth beyond FY12E and competitiveness, as it would likely encourage BHEL to expand capacity to 20GW by FY12E v/s 15GW in FY10E.

To see full report: BHARAT HEAVY ELECTRICALS

>India Week Ahead (MERRILL LYNCH)

Grey Holi, but track Chinese data, Asia may be stabilizing
India celebrates Holi – the festival of colors – to welcome the Basant – the spring - Wednesday. Yet, lives get greyer, with the global recession snaking into the economy: we ourselves cut growth recently here. Commerce secretary Pillai estimates that exporters could retrench 1.5/~10mn workers by March. And yet, surely, Holi cant be all bleak? Well, we think the economy’s bottoming, but bottom out will likely stretch end-09. Our Asian economist, T J Bond, expects China’s credit/ industry data to support our above consensus 8% 09E growth here. Do read our GEM strategist, Mike Hartnett, on why Asia is stabilizing here.

(-) 1.3% industrial growth: Oil PSU strike impacts ~40bp
At home, we expect January IIP to contract 1.3% Thursday. February should be worse, given a high base effect. Falling exports – (-)13% Feb 09 – are severely impacting industry. Whither Indian domestic demand? Well, Brazilian and Russian January IP fell ~17%. Note the oil public sector undertaking strike contracted crude petroleum (4.2% of IIP) 8.1%, impacting industrial growth 40bp.

Intervention to balance INR, March credit; US$8bn ‘limit’
We expect continued tactical intervention against contagion from Asian fx volatility. At the same time, the RBI remains circumscribed by credit demand that peaks seasonally in March. We estimate US$8+bn intervention – US$18bn October! - would stress money markets after mid-March ~US$10bn advance tax payments. To support liquidity, the RBI has reverted to selling fx to oil companies against oil bonds. Incidentally, bouts of INR volatility in no way dilute our view of BoP risks overdone here. Lower oil prices have already halved the monthly - February - trade deficit to ~US$4bn. Do find our fx strategists’

To see full report: INDIA WEEK AHEAD