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Indian stock market and companies daily report (August 27, 2010, Friday)

Contributed by Angel Broking

By Angel Broking

The benchmark indices opened in the green amidst positive trend across Asian markets and overnight gains in US markets. The markets continued to trade in the positive zone in the morning trade, thereafter, as FMCG and banking stocks witnessed strong buying momentum. However, indices remained range bound at the onset of the afternoon trade, but soon extended morning gains following firm opening of the European markets. A sharp slide was witnessed in late afternoon trade as markets turned volatile and traded in the red ahead of the expiry of August futures. Finally, markets closed marginally higher with the Sensex and Nifty closing up 0.3% each. BSE mid-cap ended lower by 0.1%, while BSE small-cap was up 0.1%. Among the front liners, NTPC, DLF, ITC, SBI and HDFC gained 1-3%, while RCOM, Sterlite, RIL, HUL and JP Associates lost 0-3%. Among mid caps, Eicher Motors, Essar Shipping, Indusind Bank, Astrazeneca Pharma and FDC gained 3-14%, while State Bank of Mysore, State Bank of Travanacore, State Bank of Bikaner and Jaipur, MVL and Wockhardt declined 4-10%.

Markets Today

The trend deciding level for the day is 18216 / 5473 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18272 – 18317 / 5491 - 5505 levels. However, if NIFTY trades below 18216 / 5473 levels for the first half-an-hour of trade then it may correct up to 18170 – 18114 / 5460 - 5441 levels.

TVS Motor to invest Rs200cr on capacity expansion

TVS Motor plans to invest Rs200cr by April 2011 to increase its two-wheeler production capacity to 28 lakh units from the present 21 lakh units. With the company operating at high utilisation levels, capacity expansion is being carried out to meet the surge in demand in the two-wheeler space. Moreover, demand for TVS Jive and TVS Wego continues to remain robust, which has enabled the company to ramp up its production.

We expect overall two-wheeler demand to increase at a 12% CAGR over FY2010-12E. We estimate TVS Motor to post a 23% CAGR in its top line and around 64% CAGR in net profit over FY2010-12E, aided by around 16% CAGR in volume and improving operating performance due to change in product mix and better operating leverage. At the CMP of Rs141, TVS Motor is trading at 19.6x FY2011E and 14.4x FY2012E earnings. We believe the recent run-up in stock price factors in the higher volume and earnings growth expected over FY2010-12E. We continue to maintain our Neutral rating on the stock.

RIL to ink a deal with DE Shaw to launch a US $700mn-800mn infra fund

After telecommunications, Mukesh Ambani is getting into another of his brother’s territories— financial services. RIL is close to inking a deal with global hedge fund DE Shaw to launch a US $700mn–$800mn infrastructure fund. Apart from a PE fund, the two players are also looking at other areas such as carbon trading. No financial terms of the tie-up were available, but it is said that officials from DE Shaw’s global headquarters met Mukesh Ambani last week to work out the details. Interestingly, Mukesh Ambani is said to be on the board of DE Shaw India. Recently, Mukesh Ambani and his younger brother Anil Ambani scrapped a pact in May 2010 that had earlier prevented them from entering each other’s businesses. As a result, sectors such as telecom, power and financial services were open to Mukesh Ambani. We believe this is a step further towards exploring newer avenues to deploy surplus cash. We maintain Buy on RIL with a Target Price of Rs1,260.

Economic and Political News
- Direct tax provisions cleared by Union Cabinet
- Commerce Ministry turns down rubber import duty cut
- Natural gas availability in India to increase by 52% by 2013-14
- Investment in real estate to touch US $300bn in 2010
- Food inflation eases to 10.05%
- Monsoon rains 29% above normal in the past week
- Government to soon notify fuel efficiency standards

Corporate News
- Tata Motors to raise up to Rs4,700cr: CEO
- ONGC to start gas production from KG Basin block in 2016-17
- Sona Koyo plans Rs80cr expansion by January 2011