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Morning Buzz 25 November 2010Volume Shockers - BSE 100(‘000) Latest 2mth avg % ChgUnitech 30,819 27,354 112.7Power Grid 23,695 5,721 414.2IDBI Bank 13,362 8,831 151.3Suzlon Energy 10,286 18,093 56.8Mahindra Satyam 8,087 18,711 43.2Delivery Toppers - BSE 100Del % Tot Vol Days upAsian Paints 90.0 116,531 (1)Grasim 82.7 111,153 (1)Nestle India 82.1 39,079 (1)Tata Power 78.1 425,271 (1)HUL 76.0 4,763,503 2Punj Lloyd has won ~Rs 16bn of domestic and overseas contracts, including a ~Rs11bn order from IOC for the Paradip Refinery Project. (BL)The PNGRB would be inviting bids for the Surat-Paradip and Asansol-Howrah gaspipeline projects next week. (BS)Abbott India and Solvay India have jointly announced that they will merge at aswap ratio of 2:3. (ET)The government said there is no proposal to ban public sector firm BharatAluminium Company’s bauxite mining projects in Chhattisgarh. (Mint)Bangalore-based Kudremukh Iron Ore Company said it plans to set up anintegrated steel plant in Karnataka at an investment of Rs 80bn-90bn. (BS)BSE Sectoral IndicesLatest % Chg % YTDMidcap 8,004 (1.1) 19.2Smallcap 10,153 (0.6) 21.5Auto 10,116 0.1 36.1Banks 13,478 (2.9) 34.4Capital Goods 15,435 (1.2) 9.3Comm & Tech 3,632 (0.9) 10.8Con. Durables 6,521 (0.2) 72.3FMCG 3,622 0.2 29.7Healthcare 3,622 (0.3) 31.1IT 5,937 (1.1) 14.5Metals 16,211 (1.0) (6.8)Oil & Gas 10,149 (0.6) (3.1)Power 2,946 (0.9) (7.6)Realty 3,042 (2.9) (21.1)Market BreadthAdv Dec A/DNSE 509 895 0.6Sensex 5 25 0.2BSE 100 14 85 0.2BSE 200 32 167 0.2BSE 500 95 402 0.2Sensex Intraday19,90019,80019,70019,60019,50019,40019,3009:07 AM9:57 AM10:42 AM11:28 AM12:13 PM1:00 PM1:48 PM2:37 PM3:27 PMEconomic NewsThe FMCG market in rural India is tipped to touch US$ 100bn by 2025, accordingto a study by The Nielsen Company. (BS)The two-way commerce between India and Arab Nations is expected to reachUS$ 240bn by 2014. (BS)Ministry of State for Petroleum and Natural Gas said that the decision to decontroldiesel prices has been put on hold owing to the increase in food inflation. (BS)Global NewsIreland has unveiled a four-year plan to claw back US$ 20bn using spending cutsand extra taxes. (Mint)General Motors Co plans to invest US$ 163mn at plants in Michigan and Ohio toadd engine production for the Chevrolet Cruze, the Chevy Volt and an unnamednew small car. (ET)Axiom Telecom has reached a distribution deal with BlackBerry maker ResearchIn Motion. (ET)Rolls-Royce Group PLC has won a US$ 1.2bn engine service contract fromEmirates airline. (BL)Source: BL: Business Line, BS: Business Standard, ET: Economic Times, FE: Financial Express2
Macrosphere – cēterīs paribus India Economics 25 November 2010Macrosphere – cēterīs paribusRe-emergence of geo-political, sovereign debt and China risksJust when the markets had begun to settle down and demonstrate someresilience, we received jolts from the Korean peninsula and a resurfacing of theEuropean sovereign debt crisis. The debt crisis is likely to be a risk overhang formost of 2011, and may indeed turn uglier in Q2, when Spain may be ‘put on theblock’ by the markets. In addition, we have the threat of inflation in emergingmarket economies, most importantly China. Central bank actions to tameinflation can slow the growth engines of EMs, which have so far been doublingup as the global growth engine in the post-crisis recovery.India stands apart among the EMs because of earlier emergence of the inflationrisk and the early effectiveness of RBI policy steps. However, the risk of flowsdrying out and even reversing is significant, as the vulnerability of India’sexternal accounts has increased manifold in the last few years. Domestic risksinclude the recent spate of corruption charges as well as the return of corporategovernance issues.North-South Korea exchange fire; markets singed: Asian markets crashed whilegold prices shot up as a result of the flight to safety by investors on reports of anescalation in tension between North and South Korea. The standoff is believed tobe the worst since the war on the peninsula during 1950–53, and poses asignificant geo-political risk given the US stake in the region and the relationshipbetween Washington and Pyongyang.Sovereign debt crisis endangers EU: The sovereign debt crisis has intensifiedonce again in the Eurozone, with the CDS over Ireland, Greece and Portugalreaching new highs. However, likely support from the IMF and EU calmed nervestowards the end of last week. As per estimates, Ireland might require foreignloans of over € 50bn to strengthen the country’s banks. This news flow led to afurther weakening of the euro.China hikes required reserve ratioRequired Reserve Ratio(%) CPI Inflation (R) (% YoY)20108156410250(2)0(4)Mar-06Jul-06Nov-06Mar-07Jul-07Nov-07Mar-08Jul-08Nov-08Mar-09Jul-09Nov-09Mar-10Jul-10Nov-10Source: Bloomberg, RCML ResearchThe month that was India’s industrial production grows by 4.4% YoY;high volatility in monthly data raises concernsWPI inflation increases marginally to 8.6% YoY;expected to moderate in next few months on theback of negative base effectChina hikes its reserve requirement ratio by100bps in October along with a 50bps hike ininterest ratesUS Fed releases its monetary easing program ofUS$ 600bn; long-term rates to remain low at therisk of higher inflationNorth-South Korea exchange artillery fire; shellhits marketsThe month that will beToo big to save? Greece and Portugal were the warm-up acts; Spain is the mainthreat, where stakes rise several fold. Greece and Ireland hold extraordinarily highlevels of debt—totalling ~US$ 2tn—primarily carried by European banks, whoseexposure is equivalent to 20% of the Eurozone GDP. Spain and Portugal are seen asthe next vulnerable sovereign debt scares. So this adds a whole new dimension to theconcept of ‘European contagion’. A wave of sovereign defaults in these peripheralcountries would deal a serious blow to the European banking system at the very timewhen the region’s banks are yet to fully recover from their 2008–09 loan losses.Chinese inflation, escalation of tensions in Asia,sovereign debt crisis in Europe and further capitalcontrols among EMsBesides surveys and leading indicators, the focuswill also remain on Q3 GDP numbers for theIndian economyThe primary challenge for US banks was exposure to bad mortgages. In June ’08, theirtotal exposure to sub-prime mortgages was US$ 2.5tn. In this context, the US$ 2tnexposure of European banks to peripheral sovereign debt may at best hamper theirability to facilitate economic recovery and at worst trigger another economic downturn.2 nd hike in two weeks for Chinese RRR: The Chinese central bank increased thereserve requirement ratio (RRR) by 50bps for the second time in two weeks, in abid to squeeze out excess cash from the economy and thus rein in inflationbefore it gets out of hand. This was the fifth such announcement this year, andtakes the RRR to 18.5% for big banks, which is a record high. The move comesafter the central bank increased interest rates in October for the first time in threeyears; we expect more rate increases before the end of the year. Theannouncement is likely to further incite US officials calling for an appreciation ofthe Chinese yuan against the dollar, in order to balance international trade.For further refer to our detail report release on 24November10Macro indicatorsIndicatorLatest Release(% YoY)Q1 GDP 8.8WPI Inflation 8.6Industrial Production 4.4Bank Credit 22.0Exports 21.3Imports 6.8PMI Manufacturing 57.2PMI Services 56.2Commercial Vehicles Production 21.4Compiled by RCML ResearchJay Shankar(91-22) 6766 34442jay.shankar@religare.in3
Page 1: Morning Buzz 25 November 2010Indice
Page 7 and 8: NTPC Ltd Company Update 25 November
Page 9 and 10: Siemens Ltd Results Review 25 Novem
Page 11 and 12: Siemens Ltd Results Review 25 Novem
Page 13 and 14: Banking Alert 25 November 2010Banki
Page 16 and 17: Coal India Ltd Alert 25 November 20
Page 18 and 19: Morning Buzz 25 November 2010Events
Page 20 and 21: Sector Valuation Snapshot 25 Novemb
Page 22 and 23: Sector Valuation Snapshot 25 Novemb
Page 24: Sector Valuation Snapshot 25 Novemb
Page 27: Coverage ProfileBy recommendationBy

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