>GENERAL INSURANCE INDUSTRY REPORT JANUARY 2010 (RELIGARE)

■ Major Players in the private Sector: Among the private players, ICICI was leading
again with 25%, followed by Bajaj Allianz by 17% & Reliance by 14% holding the major market share in the general insurance segment. These 3 players' aggregate to 55% of the total market share in the private insurer segment.

■ Growing Market Share of Private Players

• Over the last 6 years, the market share of the private insurer has grown to 40% in 2009, from 19% in September,2004 .
• On the other hand the PSU players were unable to cope up with their counter parts and witnessed a fall in their market share to 60% in FY09, from 81% in FY04.

■ Segment wise growth

• The motor Segment clocked a growth of 7% in its total gross premium income. However the total share of this segment has slipped to 39% in Apr-Sept 09, from 40% in Apr-Sept 08.
• Meanwhile the growth of health insurance was 16% and the market share of the segment grew to 22% to Rs.3905 Crs in Apr-Sept 09, from 21% in Apr-Sept 08.
• The general Insurance industry grew by 24% year on year from Oct 08 to Oct 09 to Rs.3330Cr from Rs.2676Cr in the last year.
• In the Private players, the Y-o-Y fall in the market share of the Insurers like ICICI fell by 20%, Bajaj by 13% and Reliance by 4% witnessing 14% fall in the over all market share among the private insurers. At the same time, HDFC ERGO Gross Premium Income heightened by 141% due to the immense rise in their market share.
• Among the public players United India is leading as it rose by 3% while the other 3 witnessed a fall in the market share.
• The overall holdings of the private players in the general insurance industry grew by 2% from 41% in Oct 08 to 43% in Oct 09. On the other side the holding of public sector fell by 2% from 59% in Oct 08 to 57% in Oct 09.

To read the full report: GENERAL INSURANCE

>AMBUJA CEMENTS LIMITED (INDIA INFOLINE)

■ Pricing concern looms despite improved regional mix
All India retail prices have fallen 5-30% qoq Sep-Dec'09 period in response to higher supply, The pricing pressure has been severe in Southern (up to 40% correction) and Central (down ~25%) regions, where ACL has a miscule presence.

■ CY09-11 revenue CAGR to lag volume growth of 8.4%
We model in sales volume of 21mtpa, a yoy increase of 12.6% and 4.4% in CY10 and CY11 respectively driven by completion of major capex at Bhatapara, Rauri, Dadri and Nalgarh units.

■ Margin to improve post Bhatapara plant commencement
ACL meets its partial requirement of clinker from ouside as a result of which it's 9M CY09 margin stood at 28.2%, significantly lower than to its peers like ACC (34.6%) and Ultratech (32.7%).

To read the full report: AMBUJA CEMENTS LIMITED

>Emerging country risk is still overvalued by the markets (NATIXIS)

Probably because of historical habits, financial markets still consider emerging countries to be riskier than OECD countries: this can be seen from the level of risk premia and the reaction of financial markets when risk aversion rises.

This is maybe still true overall, but in many cases it seems to us that emerging countries as investment vehicles are at least as solid as OECD countries today, considering the situation of foreign trade, public finances, growth prospects, technological progress, education, demographics and now the solid monetary management in emerging countries and the exchange-rate policies.

We take as examples the cases of Brazil and Spain, and look at the relative risk of these two countries.

To read the full report: EMERGING COUNTRY RISK

>Time to glide after the stride (ICICI DIRECT)

Equities — The asset class to be in
Equity as an asset class has outperformed other asset classes including gold in CY09. The outperformance also sustained over a longer period of time as can be seen from the exhibits below. Emerging equity markets have outpaced their developed counterparts in the last 10 years since 2001, indicating growing importance of developing economies as a preferred
investment destination.
Commodities, as represented by Reuters/Jefferies CRB Index, have performed well in phases but huge volatility makes them less attractive visà- vis equities over a long period of time.

Investor’s dilemma in 2010
The year 2010 would be a litmus test for the markets after we witnessed one of the best calendar year returns of all times, surprising us all. Investing was easy in 2009 with markets rewarding a basket of asset classes. Year 2010 would be different in this regard, where an investor would need to choose the right asset class and of equally sound quality. At the same time, the return expectation needs to be moderated as a repeat of 2009 is unlikely.

Choosing an asset class in 2010 will become even more difficult when the global economy still throwing conflicting signals about the intensity of recovery. An investor would be facing major dilemmas and this noise is going to get even louder when we have lower liquidity, going forward. Some of the major predicament an investor could face would be whether
the market would rally further and how emerging markets are likely to perform on that scale? Would there be tightening of money supply and could we face a double dip? or is Chinese growth for real? Even domestic factors like higher inflation, economic growth and efficacy of the government’s role would create impediments in the minds of an investor.
We try to asses these factors and hope to bring clarity on the same.

Emerging markets to lead the global recovery…
Global economies, despite some concerns have been on the recovery path for sometime now backed mainly by sustaining manufacturing activities, improvement in inventory cycle, rising home sales, etc. The International Monetary Fund (IMF) has revised upward the global growth prospect with ~3% growth in 2010 following a contraction of ~1% in 2009. During 2010- 14 the growth is forecast to be ~4%, below the average of ~5% just before
the financial crisis.

However, the pace of recovery is faster in emerging economies. Still, the stronger domestic demand helped these countries to replace the export dependence to a large extent. This, in turn, helped them to come out of the recession at a faster rate compared to the developed countries. The IMF has upgraded China’s GDP growth prospect again with the current forecast of 9% growth for 2010. On the other hand, however, India’s growth forecast has been downgraded marginally to 6.4% for the same period. We believe this is because of the adverse effects of the poor monsoon in the country.

Share of developing economies in total GDP to improve…
It is clear that the importance of emerging economies would improve, going ahead, in the global economic arena. The balance of power is also likely to shift towards emerging countries, as the share of emerging economies to the total world GDP is rising steadily.

Whether out performance by emerging markets will continue?

To read the full report: MARKET STRATEGY