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Equity News 27th September – 1st October

DOMESTIC NEWS

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Economy

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·Food inflation, as measured by the Wholesale Price Index (WPI), rose to 15.46 per cent for the week ended September 11, primarily due to rise in prices of potatoes and onions. Food inflation stood at 14.77 per cent during the corresponding week in 2009 and at 15.1 per cent during the previous week ended September 4.
Realty/ Construction ·IVRCL Infrastructures & Projects Ltd (IVRCL) has bagged orders worth `750
crore for four laning and improvement of Karanji-Wani-Ghuggus – Chandrapur Road Maharashtra State Highway – 6&7 in Yavatmal and Chandrapur district on DBFOT basis.


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Cement

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·J K Lakshmi Cement would invest `1,800 crore over the next three-four years to double its cement production capacity to 10 million tonnes.

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Oil & Gas

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·GAIL India will make capital investment of around `40,000 crore ($8.8 billion) by 2014-15, mainly to expand its pipeline network and boost petrochemicals capacity.

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Telcommunication

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·Kavveri Telecom has bagged a contract worth `30 crore from one of the telecom operators for the supply of equipment and antennas. The order is to be completed within a year.

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·Bharti announced its entry into the fast-growing mobile handset business as group firm Beetel launched eight handsets in the price range of `1,750- 7,000. Bharti is India’s number one mobile service provider with over 140 million subscribers and the company recently acquired Zain Telecom in Africa to expand its footprint in 16 countries.

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Capital Goods

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·BHEL said it is in talks with SAIL and Vizag Steel to tie up for manufacturing high grade steel, while Korean steel maker Posco may join the proposed joint venture company as a technology partner.

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·Bharat Heavy Electricals Ltd has got a contract worth `2,665 crore ($583 million) to set up a 1,200 megawatts coal-fired power plant at Chhattisgarh in central India.

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Paint

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·Berger Paints India Limited has proposed to set up a paints manufacturing complex at Hindupur in Anantapur district of Andhra Pradesh comprising three units and involving an investment of around `350 crore.

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Pharmaceuticals

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·Aurobindo Pharma has received USFDA approvals for ampicillin and.sulbactam injections in bottle, single-use vial and bulk pack formats.

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Ampicillin and sulbactam is a sterile semi-synthetic penicillin product falling under the anti-infective segment.

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FMCG

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·Procter & Gamble India (P&G) is set to bring in one of its biggest global brands–Wella hair colour—as it looks to strengthen its health and beauty business in India. This is the first time that the detergents-to-diaper maker will enter the Indian hair colour market, which is dominated by L’Oreal India’s L’Oreal Excellence Crème and Garnier, and Godrej Consumer Products.

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INTERNATIONAL NEWS

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·US Fed left policy rates unchanged but appears to have begun preparations for additional easing-possibly at the post-election November FOMC. The fed funds target range was left unchanged at a range of zero to 0.25 percent and, again, the Fed stated that this rate is expected to remain low for an “extended period.”

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·US Housing starts showed unexpected strength in August with even the single-family component increasing. Housing starts in August jumped 10.5 percent after rising a modest 0.4 percent in July. The August annualized pace of 0.598 million units clearly topped analysts’ expectations for 0.550 million units and is actually up 2.2 percent on a year-ago basis. The gain in August was led by a 32.2 percent surge in multifamily starts, following a 36.0 percent increase in July. The single-family component rebounded 4.3
percent after dipping 6.7 percent in July.

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·US Existing home sales rose 7.6 percent in August to a 4.130 million annual rate, up substantially from July’s 3.840 million rate (revised from 3.830).

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Gains swept regions with supply coming down a bit, at a still extremely swollen 11.6 months. Prices are softening, down 1.9 percent to a median $178,600. The gain in sales was predicted by the pending homes sales report released early in the month, data that popped higher.

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IDFC leads the gainers of group ‘A’ on BSE

Infrastructure Development Finance Company (IDFC) is currently trading at Rs 204.80, up by 9.15 points or 4.68% from its previous closing of Rs 195.65 on the BSE.

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The scrip opened at Rs 197.00 and has touched a high and low of Rs 205.30 and Rs. 196.00 respectively. So far 1985833 shares were traded on the counter.

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The BSE group ‘A’ stock of face value Rs 10 has touched a 52 week high of Rs 201.05 on 16-Sep-2010 and a 52 week low of Rs 139.80 on 04-Nov-2009.

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Last one week high and low of the scrip stood at Rs 205.30 and Rs 191.10 respectively. The current market cap of the company is Rs 29243.72 crore.

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The Institutions holding in the company stood at 86.68% and Non institution were holding 13.32% of stake respectively.

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The other top gainers of BSE group ‘A’ were DLF up by 4.86%, Centeral Bank up by 4.58%, Aban Offshore up by 4.57%, Federal Bank up by 4.48% and Everest Kanto up by 4.38%

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The Institutions and Non-Institutions holding in the company stood at 86.68% and 13.32% respectively.

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Infrastructure Development Finance Company (IDFC) is planning to mop up about Rs 3,400 crore via issue of long-term bonds which is expected to open in the first week of October. In this regard, the company has already filed the draft papers with the market regulator Securities and Exchange Board of India (SEBI).

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According to the Draft Shelf Prospectus, the said bonds will have the face value of Rs 5,000 and some part will be utilized for infrastructure lending. This will be the first public issue under the new rule that allows tax benefits for investment in long-term infrastructure bonds.

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The company has reported a net profit of Rs 319.71 crore for the quarter ending on June 30, 2010 against Rs 243.49 crore for the quarter ending on June 30, 2009, up 31.30%.

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The company provides financial assistance to various segments such as power, roads, ports, telecommunications, information technology, urban infrastructure, healthcare, education infrastructure, food and agri-business infrastructure, healthcare and tourism.

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Commodity Weekly Commentary 20th – 24th September 2010

Its seems that sky is the limit for bullion counter now a days, as prices surged high to their life time highs on domestic bourses. However, strong Indian rupee limit the upside movement in prices in both gold and silver. In international markets gold hit a record high above $1,280 per ounce last week, as currency market jitters and broader economic uncertainty enticed more investors towards the metal’s safe-haven credentials. The metal’s rise this year has been fueled largely by investor nervousness that stemmed from the fallout from the euro zone debt crisis and from economic data that has suggested global economic growth may be losing momentum.

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Base metals also surged high last week on weakness in dollar index and after reassuring comments from China’s central bank about its plans to keep monetary policy loose. In energy counter crude oil lost its esteem and traded down. Crude traded around $76 per barrel amid low U.S inventories, while Chicago pipeline leak continues weighing on prices as new Tropical Storm Karl threatens the Gulf of Mexican. The EIA report showed a drop in fuel demand by 1% to 19.5 MB. Gasoline also shed 694 thousand barrels to 224.5 MB. This comes at a time where imports have reached their lowest level in five months.

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Unlike metals, agro commodities fell like nine pin, even fall in dollar index could not supported them very much. It was not a good week for spices as sellers were more active than buyers in spot market. Future market reacted in the same fashion. Panic selling was continued in turmeric, jeera and chilli as well. Cardamom was also the victim of arrival pressure and closed down. Stockiest liquidation at higher levels dragged down chana futures on NCDEX as well. With declining prices of churi and korma, guarseed and guargum continuously traded southward.

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Wheat closed down on negative cues. Furthermore, traders preferred profit booking at higher levels in menthe futures. Strong crop projection of soya bean along with rise in crop projection of mustard seed crop in rabi season compelled oilseeds and edible oil futures to trade in negative zone. Higher domestic stocks, imports in the middle of arrivals in the domestic mandies further pressurized the oil seeds prices. As per expectation, the total crop size of soyabean in the current season is likely to be around 95 lakh tonnes, up 2% from last year.

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However there was a commodity which surprised the market with its nonstop three week upside on higher offtake amid tight supply and it was maize.

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Reliance Broadcast Network touches roof as its arm acquires Line V of DMRC

Reliance Broadcast Network is currently trading at Rs. 109.80, up by 5.20 points or 4.97 % from its previous closing of Rs. 104.60 on the BSE.

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The scrip opened at Rs. 109.75 and has touched a high and low of Rs. 109.80 and Rs. 109.75 respectively. So far 52,300 shares were traded on the counter.

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The BSE group ‘T’ stock of face value Rs. 5 has touched a 52 week high of Rs. 145 on 04-Dec-2009 and a 52 week low of Rs. 45.60 on 27-May-2010.

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Last one week high and low of the scrip stood at Rs. 109.80 and Rs. 96 respectively. The current market cap of the company is Rs. 506.47 crore.

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The promoters holding in the company stood at 61.47% while Institutions and Non-Institutions held 1.14% and 37.38% respectively.

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Reliance Broadcast Network (RBNL)‘s Out of Home (OOH) arm — Big Street — has acquired Line V of the Delhi Metro Rail Corporation (DMRC) for its outdoor advertising activities for a period of five year’s. The company has already acquired Line II and III of the DMRC. With the latest win, it now holds 40% of premium inventory in the DMRC network.

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The OOH market in India is estimated to be around Rs 1,700 crore. The company is looking to capitalize its OOH inventory with the Line V acquisition as DMRC attracts around 1.5 million commuters daily.

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The Anil Dhirubhai Ambani group company operates the Big 92.7 frequency modulation (FM) radio station . It runs 45 radio stations. The company was demerged from Reliance MediaWorks in August 2009.

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SILVER……GROWING AVENUE OF INVESTMENT

Recently silver, known as poor’s gold, is gaining not only against the dollar and other old world currencies but also outperforming gold. Due to high prices gold is loosing its own attraction from common man and importance of silver as precious metals is gaining momentum. The declining trend of gold/silver ratio indicate that silver become better destination for investment. Like gold, silver has retained rally momentum due to recent poor economic data that has caused investors to purchase Silver as a “safe haven” alternative investment. The pickup of silver industrial demand due to the emergence and growth of a number of new end uses, and continued strong investment demand is pushing silver prices sharply higher.

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Like all metals, London Bullion Market is the global hub for silver trading, while the New York’s Comex Futures dominate the solver fund activity. The world’s largest silver backed exchange-traded fund, the i Shares Silver Trust, said its holdings rose to 9,280.40 tonnes by Sept. 1 from 9,151.03 tonnes on August 5.

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Global demand- supply of silver According to World Silver Survey 2010 , global silver mine production rose last year, by almost 4%, its seventh straight annual increase to reach a record high of 22,072 ton.Peru is the world’s largest silver producing country followed by Mexico, China, Australia and Bolivia. GFMS is forecasting a further mine production rise of 3 per cent this year.

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According to GFMS, In the last ten years, the world jewellery demand was down 8 per cent and silverware as much as 38 per cent. And because of technology changes silver use in photography sector had suffered a major fall of 62 per cent. But as strengthening of belief in silver as a precious metal is the 145 per cent demand gain since 2000. The industrial application of silver is almost 48 per cent of total silver use.

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Indian demand- supply of silver Though India is generally believed to have a great appetite for gold, Indians also love to possess silver in their homes for jewellery. India is voluminous importer of silver. Of the 4,000 tonnes that India used to import annually, around 2,600 tonnes was used to make jewellery and ornaments. MMTC is the largest importer of gold in the country. The firm’s silver imports fell by more than 44% in the fiscal year to end March 2010, as high prices dented demand. More than 60% of India’s silver demand comes from farmers.

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Last year silver demand dipped because the country experienced one of the worst monsoon seasons in over four decades. However, with much better monsoon this year, the situation is set to reverse and India’s appetite for silver has also been boosted because gold has become too expensive at current prices. According to official data, India’s silver imports in the first six months of 2010 are up 579%.

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From April this year, India has also started hallmarking of the white precious metal to ensure purity. With increasing amounts of impurities in jewellery being sold across the country, public sector trading major, Minerals and Metals Trading Corporation (MMTC) is banking on its branded jewellery, silverware gift items and coins to push up its market share.

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Like gold, silver has not enjoyed equal recognition from hedge funds, pension and retirement funds, insurance companies, and sovereign wealth funds– but this is likely to change as fund managers recognize silver’s relative value and simply wish to diversify their precious metals exposure.

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Outlook

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Good monsoon, high gold prices and global trends may help silver outperform the yellow metal in India. Better harvesting will underpin demand from the farming community this year. Since gold prices are trading over `19,000 per 10 gm, many rural families are now switching to silver.The weakening of rupee also supporting the prices.

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More and more people here are using silver as a speculative commodity play as many others are looking at it as a safe haven asset. The overall market sentiment is bullish for silver. So it could be a more decisive silver price breakout before the year ends to touch the level of `33500.

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Weekly Update 13th – 17th September 2010

The Indian markets saw good gains in the week gone by, as foreign investors continued to put money in search of growth which is lukewarm in major part of the world. According to the latest FED beige book finding, the U.S. economy has shown “widespread signs of a deceleration” in mid-July through the end of August. The Beige Book showed that within manufacturing, weakness was largely related to construction while strength was in auto-related production, including production of steel indicating that the FOMC may consider stimulus package in the September meeting.

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Deficit concerns pertaining to European countries also waned when Portugal managed to clock bids for 2.6 times the amount offered for sale of bonds due in 2021 compared to 1.6 times in the March sale. The better response to the bond sale gave relief to the investors over the health of European nations. Chinese government would continue to take measures in order to curb down speculation in property market and U.S. may call for protection against China imports are some of the concerns that are playing out in the market. Agovernment report showed that the manufacturers in Japan were optimistic for the fifth consecutive quarter. Japanese government is expected to revise up its estimate for the second quarter economic expansion as the companied have cut spending at the slowest pace since 2007.

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Going ahead, market will keep an eye on the RBI move in its monetary review due next week. There is a chance that RBI may leave policy rate unchanged for a while or tinker with Repurchase (Repo) rate by hiking it by 25 basis points. The expectations of good growth especially in the industrials have been built as the companies are now more confident about their expansion plans. The expected uplift in the manufacturing in the third quarter is likely to provide the gains in materials like cement and steel companies in terms of better realization of the products.

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Despite mixed cues from the global indices, Indian markets traded with the positive bias throughout the week. It almost tested the upper trend of the weekly channel so one should be careful for the week ahead and wait for the sustainability above that zone for confirmation of breakout before initiating fresh investment. Nifty has support between 5540-5475 and Sensex between 18300- 18000 levels.

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It was a truncated week for Indian market. Upside in bullions dazzled the eye of investors. Gold is trading near the mark of all time high as investors increased their long position in gold futures on safe haven buying. Mighty commodity crude, lost its shine on end of driving season in US amid comfortable stocks. Increasing short position in gasoline is adding further pressure on prices. Crude may trade in a range of $71-$76 dollar per barrel. Investors should keep a tight vigil on the data of US Michigan Confidence, advance retail sales etc, which is likely to provide further direction in commodities. As regards agro commodities it should be a good week for oil seeds and edible oil complex where investors may see some lower level buying. However, ample of stocks may cap the upside.

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COMMODITY WEEKLY COMMENTARY 6th-10th September 2010

International gold prices rose back above $1250 an ounce for the second time in a week, as government bonds ticked lower together with energy prices. Silver prices also touched a new 16-week high at $19.57 an ounce on international bourses while it made a life time high on MCX.

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Apart from bad economic news globally, a weak Rupee is also pushing up prices in India. Base metal pack also ended higher last week on positive manufacturing and improved jobless data from both China and US which pushed prices higher. However, lower dollar index also supported prices. After being top performer for many days, Nickel has marginally underperformed other base metals as inventories on LME increased. In energy counter, crude oil futures got jiggled in hands of both bulls and bears. Prices remained volatile for the week amid mixed fundamentals.

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On one hand, prices got support from improved economic data but upside was offset by building inventories. The positive sentiment was offset by the effect of the abysmal inventory status report.

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U.S commercial crude oil inventories increased by 3.4 million barrels from the previous week; at 361.7 million barrels. U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 0.2 million barrels last week, and are above the upper limit of the average range.

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It was an action pack week for agro commodities in which they agro commodities saw big movements. Most of the spices closed on negative note bearing in mind the overseas weakness coupled with arrivals in some spices. Dip in Brazilian and Vietnamese pepper parity put pressure on Indian pepper as well and hence we saw two week continuous weakness. Similar to pepper, jeera futures also dragged down on dull spot trading. There was no respite for turmeric futures and they fell like nine pins for straight seven week on low stock buying amid the news of increase in acreage in Andhra Pradesh.

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Cardamom was sideways, while chilli was marginally up on short covering tracking the firm spot markets. Due to strong arrivals in major mandies coupled with beginning of fresh sowing of kharif pulses, chana futures surrendered their previous gain to some extent. Timely arrival of monsoon in southern and western regions has improved the sowing activity. Selling intensified in oil seeds and edible oil on the back of better crop estimate together with weakness in overseas market. Damaged crops in Russia, Europe and Canada, boosting demand for U.S. supplies to make animal feed, food and fuel revived maize futures. Guar counter was up on lower level buying.

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