By Angel Broking

Political uncertainty weighed on the market sentiments with Samajwadi Party and Rashtriya Janata Dal deciding to withdraw support to the ruling UPA government. Shares of SBI and its associate banks surged after the Finance Minister introduced a bill in the Lok Sabha to allow the bank to raise more capital from the market. The Sensex and the Nifty closed the trading session in green with gains of 0.6% and 0.7% respectively. The BSE Mid-cap and Smallcap indices outperformed the benchmark indices and closed in green with gains of 0.7% and 1.1% respectively. Among the front-liners, M&M, Hero Honda, ITC, ICICI Bank and ACC were up by 2-4%, while Bharti Airtel, HUL, Reliance Infra, Hindalco and Reliance Communication were down by 1-2%. In the Mid-cap segment, Future Capital, Mahindra Holidays, Emami, Bombay Dyeing and State Bank of Bikaner were up by 7-15%, while Britannia, Pipavav Shipyard, Deccan Chronicle, Indiabulls Finance and Oriental Bank were down by 3-7%.

Markets Today

The trend deciding level for the day is 17108 / 5121 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17182 – 17261/ 5150 – 5176 levels. However, if NIFTY trades below 17108 / 5121levels for the first half-an-hour of trade then it may correct up to 17029 – 16956/ 5095– 5066 levels.

NMDC FPO- Recommend Avoid

NMDC Follow on Public offer (FPO) opens on 10th March’10 and closes on 12th March’10. The FPO entails issue of 33.2cr equity shares priced in the band of Rs300-350. The company will raise between Rs9,900-11,600cr depending on the cut-off price. The issue of 33cr equity share by Government of India (GoI) represents 8.38% of the total outstanding share capital of the company. Retail Investors are entitled for a 5% discount of the issue price. Post the issue the government holding will be around 90% of the total share capital. The company will not receive the offer proceeds as it is a part of Government divestment plan.

NMDC, India’s leading iron ore producer benefits from huge iron ore reserves, better quality ore and low cost advantage. At the lower price band, NMDC is trading at 12.6x and 9.6x FY2011E and FY2012E EV/EBITDA while at the upper band it is trading at 15.1x and 11.5x its FY2011E and FY2012E EV/EBITDA. In comparison to Sesa Goa (only listed domestic iron ore company), which is trading at 7.8x and 6.4x FY2011E and FY2012E EV/EBITDA, we feel that the FPO pricing is overpriced. We recommend an Avoid on the FPO.

Nagarjuna Constructions bags Orders worth Rs1,221cr

Nagarjuna Construction (NCC) has secured orders aggregating to Rs1,221cr. The work orders are spread across verticals of Road construction, turnkey electrical works and building construction and are to be completed over a span of next 12-30months. The Order Book of NCC stands at Rs16,600cr or 3.5x its FY2010E revenues. At the CMP of Rs163, the stock trades at 16.4x FY2012E Earnings and 1.7x FY2012E P/BV. We recommend an Accumulate on the Stock with a Target Price of Rs186.

Wipro signs a strategic contract with Financial Intelligence Unit, India

Wipro Infotech, the India and West Asia IT business of Wipro Ltd, has won a turnkey project from the Financial Intelligence Unit (FIU), ministry of finance. Wipro has been selected through an open and stringent bidding process. The value of the deal is expected to be just under Rs100cr. As part of the project, Wipro will implement Financial Intelligence Network (FINnet) for FIU. The scope of services includes development of the portal, datawarehousing, analytical application and ERP implementation, at the data centre and disaster recovery site. The project is scheduled to be completed in 24 months in different phases with a further service period of 36 months. FINnet will enhance the efficiency and effectiveness in the FIUs core function of collection, analysis and dissemination of financial information to ensure substantially higher productivity and effective monitoring in all areas of FIUs work. The project assumes significance in the light of growing economic crimes within the country and the government's  efforts to arrest it. This win is very crucial for Wipro in light of the IT e-governance related budget allocation done by the finance ministry for FY2010E-11E, wherein Wipro has likelihood of winning other key projects in this space. We maintain an Accumulate on the stock.

Economic and Political News
- Govt. to reduce stake in SBI from 59.4% to 51%
- RBI drafting new norms for NBFCs
- Andra Pradesh to get Jute Park, set to attract investments worth Rs500cr

Corporate News
- ICICI bank sells Prabhadevi property for Rs3.7cr
- PE firm Sequoia may pick up 9.4% in CARE
- Daimler looking to exit Tata Motors via market