>IT Sector update(MOTILAL OSWAL)

Downgrading estimates to factor ~13% cross currency movement in 3Q
Cross currency woes — worsening: Adverse impact of cross currency, has continued
into 3Q as well. We expect the impact of this phenomenon to hit 3Q US$ revenues if the
exchange rate for the GBP and Euro do not reverse in the latter half of 3Q.
While average depreciation of the GBP and Euro against the US$ was ~4% during
2QFY09, the depreciation has been sharper at ~13% in 3Q (until date). With nearly 50%
of working days already concluded in 3Q, we note that IT companies would not have
anticipated such sharp currency movements when they provided guidance in mid-October.
We believe this sharp cross currency movement will put pressure on 3QFY09 US$
revenue guidance of Infosys and Satyam, unless a sharp reversal occurs in the remaining
part of the quarter. The substantial volatility in key currencies across the globe versus
the US$ would mean IT companies effectively have to contend with an additional challenge
— cross currency — besides the existing ones such as global slowdown, hedging, pricing
pressure, outsourcing backlash, MNC competition etc. Infosys had guided for 3Q revenue
growth of 0.3% (upper end) QoQ at an assumption of 1.86USD/GBP and 1.36USD/
EUR. At the current rates, we believe 3QFY09 US$ revenues will be negatively impacted
by ~3%.

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>JET(CITI)

What's new? — Press reports (ET, Mint) indicate Jet is negotiating to sell a 10%
equity stake to Temasek Holdings for consideration of Rs2.5bn. The company
is also reportedly raising debt funds of Rs10bn from Abu Dhabi-based
Mubadala Development Corporation to help fund working capital requirements.

Management denies this development — Management has indicated these talks
are speculative, and that the company has no plans to infuse equity or debt
(from Mubadala). However, management has said that Jet plans to raise fresh
debt funds to meet its working capital requirements.

What are Jet's funding requirements? — We forecast Jet's cash losses at
Rs31.3bn (over FY09E-10E) (after interest payments, but before principal
repayments of c.US$280m). The company is trying to curb operational losses
through various initiatives – cutting loss-making flights, reducing ticket
commissions, etc. The biggest positive is the sharp fall in crude oil prices
(<$60 vs. our FY10/11 estimates of $75/bbl). If crude prices continue to
decline, there could be a substantial positive upside to our current numbers.

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>Hindlever(Merrill Lynch)

Rising concern on demand but relative safe haven; Buy
Our mgmt meeting revalidated our view that margin outlook is improving but we
were surprised by mgmt's rather sombre outlook for demand. Our 2009 forecast
of margin expansion of 150bp remains intact. However our sales forecast of 11%
could be at risk should macro environment continue to deteriorate. Nonetheless
overall, we believe HUVR is well placed to grow earnings in mid teens, way ahead
of average Sensex growth. Hence we reiterate our Buy rating.
Margin outlook is improving
We estimate lower input cost benefits will begin to flow in partly from March Q and
fully from June Q. The benefits will differ category to category - Soaps will witness
benefits being passed on, detergents will see benefits being retained.
Key issue #1: Is there risk to volumes?
HUVR’s volume growth has been slowing down from 10% in March Q to 7% in
Sept Q in response to rising prices. Despite stabilizing retail prices, the macro
environment is not favourable enough to suggest that volume acceleration is likely
near term. Key concern is falling employment in 2nd tier cities and uncertain
economic outlook. Yes, HUVR’s products are non discretionary but down-trading
is likely as was the case during the drought years of 2002/2003.
Key issue #2: Will low price competition be rekindled?
Lower commodity prices invariably come in with the negative of reenergizing low
price competitors. This is most likely the case in soaps as margins here will
expand the maximum. We expect HUVR to withstand higher competitive activity
through its diversified portfolio which gives it the flexibility to cut prices and retain
margins more effectively versus competitors.

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>Technical & Derivative strategy(EMKAY)

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Technical & Derivative strategy(EMKAY)