Edelweiss:: WSS - Deposit growth sees momentum post in the increase in the rates by banks; non foo d off take remains robust

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Our observations: Tracking Investment and Credit
 Cash and lending by the banking system, as observed in the Weekly Statistical
Supplement (WSS) for the fortnight-ended February 25, can be stated as below:
1. M3 growth drops to 16.50% during the fortnight compared to 16.90%
on the previous fortnight, due to the higher base effect. On an absolute basis
the M3 increased by INR 517bn over the fortnight, mainly on account of the
healthy increase in the time & demand deposits. Reserve money saw a rise of
INR 107bn over the fortnight (currency in circulation component increased by
INR 48bn) leading to a marginal improvement in the multiplier to 4.97x.
2. SLR investment increased by INR 148bn over the fortnight compared to
a decline of INR102bn in the previous fortnight. Banks have maintained an
excess SLR of ~3.50% (adjusted for repo borrowing) for the fortnight.
However with a GoI borrowing of INR 3.43trn in FY12 and a sluggish growth in
the deposits, banks will have to dig into their excess SLR reserves to cater the
off take demand. Investment to Deposit ratio improved marginally to 29.21x
but significantly lower than the average of 30.80x reflective of the pressure on
banks to fund credit growth through excess SLR investment.
3. Deposit growth floated around the 16.40% level compared to 17% in the
previous fortnight. Banks managed to mobilize INR 417bn of incremental
deposits for the fortnight as the lag effect (after a series of rate increase by
banks to make deposits more attractive) started to kick in. In order to achieve
the target deposit growth of 18% for FY11, banks have to mobilize another
INR2.10trn in the month of March-11 (YTD mobilization at INR 5.97trn). With
persistently high inflation, banks are unlikely to achieve the target set by RBI.
4. Non food off take continues to be buoyant clocking in 23% growth for the
fortnight. The overall credit disbursed by SCBs so far in FY11 stood at INR
38.10trn, 23.21% higher than the outstanding credit of INR 30.92trn
outstanding a year ago. On an absolute basis the credit off take increased by
INR 259bn compared to 493bn during the previous fortnight mainly on
account of the sharp rise in the cost of borrowing. Credit to deposit ratio for
the SCBs eased marginally to 74.95 compared to 75.06 in the previous
fortnight due to a slower credit off take growth in the fortnight. However at
the pace credit is growing, banks will have to garner additional deposits of at
least another INR 3.50trn so as to maintain its CD ratio under 75. Given that
SCBs have managed to achieve an average growth of 12% per annum in the
incremental deposits for the last four years, this will put upward pressure on
the interest rates.
 Issuance of short term instruments remain strong during the fortnight as banks
borrowed heavily through CDs in order to roll over their maturing instruments as
well as meet the off take demand. Over the fortnight banks issued CDs amounting
to INR 267bn taking the outstanding CDs to INR 3.77trn.

PTC India Financial Services - ALL you need to know, prospectus, ASBA form, application form, rating

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PTC INDIA FINANCIAL SERVICES LIMITED
Symbol - Series	PTFS EQ
Issue Period	Mar 16, 2011 to Mar 18, 2011
Post issue Modification Period	Mar 19,2011
Issue Size	Public issue of 156,700,000 Equity Shares Of Rs 10/- Each.
Issue Type	100% Book Building
Price Range	Rs.26 to Rs.28
Face Value	Rs.10/-
Tick Size	Re. 1/-
Market Lot	250 Equity Shares
Minimum Order Quantity	250 Equity Shares
IPO Grading	CARE IPO GRADE 4, ICRA IPO GRADE 4,CRISIL IPO GRADE 3
Rating Agency	CARE,ICRA,CRISIL
Maximum Subscription Amount for Retail Investor	Rs.200000
IPO Market Timings	10.00 a.m. to 5.00 p.m.
Book Running Lead Manager	SBI Capital Markets Limited,JM Financial Consultants Private Limited,ICICI Securities Limited,Almondz Global Securities Limited
Co-Book Running Lead Manager	Avendus Capital Private Limited
Syndicate Member	SBICAP Securities Limited,Reliance Securities Limited,Avendus Securities Private Limited
Categories	FI,IC,MF,FII,OTH,CO,IND,and NOH
No. of Cities with Bidding Centers	47
Name of the registrar	Karvy Computershare Private Limited
Address of the registrar	Plot No. 17 to 24, Vithalrao Nagar Madhapur,Hyderabad 500 086,Andhra Pradesh, India
Contact person name number and Email id	Mr. Murali Krishna, Tel: +91 40 2342 0815-0820 Fax: +91 40 2342 0814,einward.ris@karvy.com
Prospectus	Click Here
Trading Member List	Click Here
Application Forms	Click Here
ASBA e-form link	e-Forms
Grading Report	Click Here

Greaves Cotton: RECO : BUY; TP : Rs111 : Emkay Top Recommendations

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Greaves Cotton- RECO : BUY TP : Rs111
Investment Rationale
§ Growth drivers of Engines segment remain strong – Auto to maintain momentum, Industrial to pick-up and
Agriculture to nudge along
§ In Autos à Break-through with Tata Motors; Increasing penetration with M&M
§ Tata Motors à secured long-term supply contracts for Ace Zip and Ace Magic
§ M&M – single source supplier of single cylinder 3-Wheel vehicle engines
§ Infrastructure segment broke-even in Q2FY11 at EBIT level – after 8 quarters of posting loss
§ Expanding capacity by 160,000 units over next 2 years à To add 80,000 Units under Phase 1 by April 2011
§ Strong cash generation and return rations – ROCE and ROE at +35%
Valuations
§ At CMP, the stock is trading at 13.1X FY11E and 10.7X FY12E consolidated earnings of Rs6.4 per share and
Rs7.9 per share respectively

Coromandel International: RECO : BUY; TP : Rs435: Emkay Top Recommendations

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Coromandel International -RECO : BUY TP : Rs435

Investment Rationale
§ CIL has presence in Di-Ammonium Phosphate (DAP) and complex fertilisers and commands approx 15% market
share. It also has presence in the non fertiliser business which includes agrochemicals, specialty fertilisers, micro
nutrients, compost etc and contributes approximately 10% to revenues
§ CIL’s presence in complex fertilisers and its raw material sourcing arrangements make it a key beneficiary of the
recently announced Nutrient Based Scheme which is likely to drive its fertiliser profitability
§ Its non subsidy business enjoys high margins of 20-30% compared to ~10% in fertilisers. Attractive growth of 30-
40% in non-subsidy business is likely to drive the company’s earnings going forward. We expect, CIL to leverage
its strong brand equity and its rural retail chain of 400 own stores in Andhra Pradesh to sell its products and
support growth in non subsidy based business
§ Recently government has revised the NBS rates for FY12 which are ~12% higher than the previous year and is
in line with global prices which should help CIL maintain its margins
Valuations
§ We expect the company to report 13% CAGR (FY10-12E) in revenues and 43% in PAT. With improved
profitability in fertiliser segment and rising share of high margin business, EBITDA margins are expected to
improve by 600 bps to 15.3% in FY12E
§ We expect CIL to generate free cash of Rs 6-7 bn every year and hold net cash of Rs 6 bn by FY11. We expect
the company to report an EPS of Rs 22.2 and Rs 28.9 in FY11E and FY12E, respectively. FOSKAR listing and
inorganic growth plans are future positive triggers for the stock

Chambal Fertilisers: RECO : ACCUMULATE TP : Rs 86 ; Emkay Top Recommendations

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Chambal Fertilisers: RECO : ACCUMULATE TP : Rs 86
Investment Rationale
§ Chambal Fertilisers is one of the leading urea players in India, constituting 10% of the domestic urea capacity.
Chambal is proxy play on urea since it contributes ~ 80% to its profits
§ Chambal is one of the biggest beneficiaries of the change in Urea policy where subsidy on company's additional
urea production of ~140 thousand mt will be linked with International Price Party (IPP) with a floor and ceiling of
US$ 250 - 425/ mt. It expected to contribute ~15% to company’s profit in FY11
§ Expected policy changes in urea like urea decontrol and bringing it under Nutrient Based Scheme (NBS) is
positive for Chambal due to its energy efficiency, strong distribution network and access to feedstock. Under
NBS, company should benefit from the low production cost due energy efficiency
§ It has further plans to increase its capacity through debottlenecking / brownfield which will benefit from current
IPP linked subsidy. In recent budget, fertiliser companies have been given infrastructure status which is likely to
result in lower tax rates for new projects however additional gas allocation for new projects is key concern
Valuations
§ We expect revenue to grow at a CAGR (FY10-12E) of 7.5% and PAT at 14.5% with FY11E/FY12E EPS of Rs
8.5 / Rs 8.6. RoIC to improve from 12% in FY10 to 16% by FY12E. At current valuations of 8x and dividend yield
of ~3%, the stock looks attractive. Demerger of its shipping business and policy announcements are near term
catalysts for the company

TCS: RECO :ACCUMULATE TP : Rs 1,275: Emkay Top Recommendations

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Investment Rationale
§ Fastest growing Offshore IT services player amongst Tier I Universe
Ø Expected to end FY11 with 29.3% YoY Growth for US$ Revenue, second consecutive year to post the
highest growth in the industry.
Ø Demand for offshore services to continue growing and India’s market share being <5% globally, huge
opportunity persists.
Ø Posed at the right position, at the right time with the right scale! Has showed tremendous resilience in
slowdown.
Ø Growing at ~6% CQGR since last 7 Quarters.
§ Investments made in slowdown is paying well!!
Ø Margin expansion by ~400 bps in last seven quarters. Large scale to further help manage wage and
currency pressures.
Ø The only player hiring aggressively in slowdown. Better placed to capture the flush of demand.
§ Premium Valuations to continue
Ø Considering huge potential, and growth rate, premium valuations to sustain.
Valuations
§ At CMP of Rs 1,076, the stock is trading at a P/E of 24.6x/21.0x on FY11E/FY12E earnings of Rs 43.8/Rs 51.3
respectively

SBI: RECO : ACCUMULATE TP : Rs3,000: Emkay Top Recommendations

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Investment Rationale
§ Healthy CASA keeps margin higher: The bank’s CASA mix which is among the highest in the industry at 45%,
has helped the bank to maintain higher margins in the current rising rate scenario. The NIM’s for the Q3FY11
stood higher at 3.6%.
§ Slippages likely to come down in H1CY11: Though the slippages during M9FY11 was higher at 2.3%
(annualised) as compare to 1.9% in FY10, we believe that from H1CY11 onwards the slippage number is likely to
come down with NPAs in agriculture and restructured asset portfolio likely to taper off.
§ Return ratios to show improvement over FY11-12: Earnings likely to grow by a healthy 30% over FY11-12
driven by higher margins and healthy asset growth. Consequently, the RoA and RoE of the bank likely to
improve to 1.15% and 18.73% in FY12 from 0.91% and 14.8% respectively in FY10.
Valuations
§ At the CMP, the stock is quoting at 2.6x FY11E ABV and 2.1x FY12E ABV with a likely average RoE of 18% over
FY11-12E

Cadila Healthcare: RECO : ACCUMULATE TP : Rs847 : Emkay Top Recommendations

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Investment Rationale
§ Cadlila Healthcare emerges our top pick given its strong growth prospects (30% earnings CAGR over FY10-
13E), wide geographical reach and foray into difficult to manufacture generics such as transdermal patches, biosimilar
and vaccines.
§ Expect international business to grow at a CAGR of 28% over FY10-12E
§ US likely to witness 8-10 ANDA launches in FY12E and FY13E each
§ 3 products slated to get introduced in US and 6 in Europe over the next 18 months (includes recently approved
Taxotere (Docetaxel, US$1.2bn market))
§ Clarity on niche product filings in the US generic market could provide a positive upside and lead to expansion in
valuation multiple
§ Hospira ramp-up to allay concerns around Nycomed JV (expect Rs2550mn contribution from Hospira in FY12E).
Cadila currently has supply agreement for 6 Oncology products with Hospira.
§ Aiming to attain revenue of US$3bn by 2016
§ Healthy return ratios (RoE> 30%)
Valuations
§ We expect an earnings CAGR of 30% over FY10-12E
§ At CMP, the stock is trading at 25x/ 19x/ 15x, FY11E/ FY12E/ FY13E EPS of Rs31.3/ Rs40/ Rs51.6 respectively.

Bajaj Auto: RECO : BUY TP : Rs1,650 :Emkay Top Recommendations

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Investment Rationale
§ We expect company to grow at above industry rate in FY12 due to its increasing focus on semi-urban/rural
market and ‘discover’ family.
§ We expect exports to be a strong growth driver over next three years (upwards of 15% CAGR) on volumes as
well as profitability due to the strategy of focusing on new markets and increasing market share in existing
markets.
§ Contrary to the perception, we believe that recent changes in product mix (higher share of Pulsar 135 cc and
Discover 100cc/150cc) will be margin remunerative.
Valuations
§ We have valued the stock at a target PER of 15.5x our FY12 estimates.
§ The key trigger in the stock will be positive surprise on three wheeler business.
§ While rising metal prices is a concern, given high EBITDA margin (20%) the impact of high metal prices will be
lowest in our auto universe.

Allahabad Bank: RECO : BUY TP : Rs250: Emkay Top Recommendations

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Investment Rationale
§ Healthy CASA proportion to help in rising rate scenario: The bank’s CASA mix which stands at a healthy
33.3%, will help bank to get better margins than peers in the current rising rate scenario. The NIM’s for the
Q3FY11 stood higher at 3.4%.
§ Healthy asset quality: The bank’s asset quality is comfortable with gross and net NPAs at 1.8% and 0.6%
respectively. Moreover slippage rate remain under control at 1.4% (annualised) for FY11.
§ Superior Cost/Income (C/I) ratio: The bank C/I ratio, which reflects the operating efficiency of the bank, is
39.7%, one of the lowest among the peers.
§ Attractive return ratios: The savings on account of lower provisions requirement on account of lower slippages
and improvement in cost structure will help maintain the RoAs at 1.2%, while RoE’s likely to be healthy at 23%
for FY11-12.
Valuations
§ At the CMP, the stock is quoting at 1.3x FY11E ABV and 1.1x FY12E ABV with a likely average RoE of 23% over
FY11-12E

Anand Rathi- Overview: Week of March 14th

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It was the Japanese quake that dictated
trading trends across the globe on Friday and
India was no different.
Sensex closed and Nifty closed down ~1.7%
doen on weekly basis. On sectotal front only
oil& gas and Realty closed positive ~1% and
all other sector closed in negative territory.
893 shares advanced 1985 shares declined
and 482 shares remained unchanged on BSE.

Edelweiss:: Cement Channel Check – prices seem to have peaked in North, Central and East

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Cement prices seem to have peaked in northern, central and eastern regions,
post the hikes of ~INR 5-10/bag taken after the budget. Our channel checks
in these regions suggest demand resistance at higher levels even as
companies have announced further price hike of INR 10/bag from mid-March.
Prices may however remain flat or witness marginal declines in the coming
few weeks. While prices in West could rise further, select states in South may
witness further hikes. At current levels, prices are higher by ~INR 5-40/bag
in trade and non-trade segments across regions against last month. Feedback
from dealers suggests improved demand in South and West, but sluggishness
in North, Central and East compared with previous month.

Buy Tata Power ;Target : Rs 1383 :: ICICI Securities

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M i x   o f   v a  l u e   a n d   g r o w t h …
Within the Indian utility space, we believe Tata Power (TPL) offers the
best mix of value and growth. Unlike other private players, TPL offers
value in terms of the existing assured return power assets, presence in
transmission and distribution business and growth profile in terms of
the ongoing capacity addition phase (2.8x increase in generation
capacity by FY13E). Also, its stake in Bumi Resources (30%) enables TPL
to have a net long position on coal, thereby making a derivative play on
coal coupled with adequate fuel security. With a more visible plan of
expansion, we expect the company to deliver a CAGR of 19% and 12%
in revenues and profitability, respectively, over FY11E-FY13E. Hence, we
are initiating coverage on the stock with a BUY rating.
Regulated return power portfolio offers stability, capacity addition at inflection point
Tata Power’s operational capacity portfolio as of now stands at 2976 MW.
Almost ~94% of the existing capacity is based on the assured return
model (~6% is on merchant basis). Further coupled with this is the
presence across the T&D business, whereby the company has 1200 cKm
of transmission lines under its portfolio (51% stake in NDPL). TPL also
supplies electricity in the cities of Mumbai and Delhi (customer base of
0.1 million and 1 million, respectively, as on Q3FY11). Going ahead, we
believe TPL’s generation capacity will grow 2.8x over FY10-FY13E to 8412
MW, as the projects under development get commissioned. The
prominent among these include Maithon (1050 MW to be operational by
Q2FY12) and Mundra UMPP (4000 MW to be operational by FY13E).
Derivative on coal play: Bumi Resources bolsters investment book
In FY07, the company acquired a  30% stake in Bumi Resources for
sourcing the captive requirement for Mundra UMPP. With this acquisition,
currently it is one of the few Indian utilities that has a net long position in
coal. The company has a net long position in coal to the extent of 18
million tonnes (MT) in FY11E and 19.4 MT in FY12E enabling TPL to take
advantage of the current high coal prices. We expect coal realisation in
FY11E and FY12E at ~$70/tonne each.
Valuations
Given the diversified business stream, we have adopted a sum of the part
approach to value the different business segments. Based on the same,
we have arrived at a fair value of | 1383/share and rate the stock as BUY

Economy: January IIP: Muted but resilient ::Kotak Sec

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Economy
Industrial Production
January IIP: Muted but resilient. IIP growth for January at 3.7% was above
consensus expectations of 2.9% and our expectation of 2.6%. Manufacturing growth
came in at 3.3%. On the use-based classification, one of the drivers for this was the
strong consumer durables sector. Capital goods sector continued to remain subdued
(and volatile) with a contraction of 18.6%. December IIP growth was revised up to
2.5% from 1.6%.

Kotak Sec, News Round-up March 14, 2011

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Economy News
4 Shares in Asia's developed markets fell on Monday and oil nursed losses
after a massive earthquake in Japan sent investors scurrying to safe
haven assets and raised concerns of falling demand for commodities. (ET)
4 Central Electricity Authority (CEA) of India, which monitors power
generation and utilisation across the country, has suggested that power
projects coming up within a distance of 50 km from an existing or
proposed gas pipeline should prequalify under the projects for gas
linkage during the 12th Plan. (BS)
4 Under pressure from the garment industry over levy of excise duty on
branded garments, the government is reviewing the Budget proposal.
While a complete rollback is ruled out, it is considering giving some relief
through easing of some procedures. (BS)
Corporate News
4 The National Highways Authority of India (NHAI)  has been told to
work on awarding contracts for around 100 projects, covering 11,151 km,
over the financial year starting April 1. On an average, NHAI would have
to award eight projects every month. “We have prepared a tentative list,
which we will be awarding in the next financial year. Awarding these
should not be an issue,” said a senior NHAI official, who did not want to
be identified. (BS)
4 The civil aviation ministry will soon come out with a blueprint seeking to
arm the directorate general of civil aviation (DGCA) with powers to
regulate air fares which hit the roof during the last festival season. The
blueprint, which will be ready in a month, mainly looks at transforming
DGCA into a powerful regulatory body called Civil Aviation Authority
(CAA). (ET)
4 Hitting out at the delays in executing the stake sale,  Bharti Airtel has
withdrawn its bid to buy out the governments 30% stake in its subsidiary
Bharti Hexacom, which offers mobile services in six north-eastern states
(excluding Assam) and Rajasthan. (ET)
4 State-run Hindustan Petroleum Corporation Ltd (HPCL) is poised to
merge Prize Petroleum Co Ltd (PPCL) with itself after attempts to woo
buyers for a 50% stake in its oil exploration firm did not yield favourable
response. HPCL, which holds 50% equity in Prize, said its board would
take a final decision on March 25. (ET)
4 Anil Dhirubhai Ambani Group's flagship infrastructure company Reliance
Infrastructure expects revenue from toll roads to jump and hopes to bag
10% of highway projects of up to 80,000 crore that are likely to be
awarded every year, Chief Executive Officer Lalit Jalan told ET. (ET)
4 State-run  NTPC Ltd, India’s biggest power generation utility, may be
changing its strategy on securing critical fuel supplies by seeking longterm coal supply agreements instead of trying to buy overseas mines
outright.The rethink comes against the backdrop of NTPC’s failure to
secure equity in coal mines in countries such as Australia, Indonesia and
South Africa. (Mint)


News Round-up
` India's Industrial output grews 3.7% in January. (BSTD-Sat)
` RBI is on course to raise a key policy rate by a 25 basis points, for the eighth straight
time at its monetary policy review this week to combat inflation. (ECNT)
` Iron ore duty hike plan takes toll, cos. cut back on spot export orders. Govt. proposes
a 20% export duty to discourage shipments & make ore available for local steel Cos.
(ECNT)
` Specialised steel manufacturers who supply high value grades to car makers may
switch to monthly contracts to reduce risks posed by increased volatility. Specialised
steel includes a high-value alloy that accounts for about a fifth the total cost of a car.
Until now the contracts were made for 3 months. (ECNT)
` With the costs of coffee beans, sugar, milk and rentals shooting up, coffee retailers in
India are looking at a 10-12% rise in prices in the next few weeks. (BSTD-Sat)
` The department of telecommunications is likely to send notice to telecom operators,
including Reliance Communications (RCOM IN), Bharti Airtel (BHARTI IN), Idea
Cellular (IDEA IN) and Tata Teleservices (TTLS IN) for demand of about USD 244 mn
for under reporting revenues. (BSTD-Sat)  
` Hitting out at delays in executing Bharti Hexacom stake sale, Bharti Airtel (BHARTI IN)
has withdrawn its bid to buy out the govt.'s 30% stake in the co. (ECNT)
` Gas Transporters and shippers have differed over the charges and duration of trading
in gas transmission capacity proposed by the Petroleum and Natural Gas Regulatory
Board (PNGRB). While transporters such as GAIL (GAIL IN) and Reliance Gas
Transportation Infrastructure Ltd (RGTIL) are pushing for higher durations and rates,
shippers such as NTPC (NATP) and the fertiliser industry are seeking lower durations
and rates. (BSTD)
` HDFC Bank (HDFCB IN) hikes FD rate by up to 100 bps, lending rate by 75 bps. (TTOI)  
` HPCL (HPCL IN) is poised to merge Prize Petroleum Co. Ltd. with itself after attempts
to woo buyers for a 50% stake in its oil exploration firm did not yield favourable
response. (ECNT)
` Reliance Infra. (RELI IN) expects revenue from toll roads to jump & hopes to bag 10%
of highway projects of up to USD 17.78bn that are likely to be awarded every year.
(ECNT)
` The USD 29 bn Aditya Birla Group is set to join the race to buy Australian coal mining
company White-haven Coal. Close to 20 players, including the Anil Dhirubhai
Ambani Group, are believed to be interested in Whitehaven Coal. (BSTD)
Source: ECNT= Economic Times, BSTD = Business Standard, FNLE = Financial Express, THBL = Business Line.

Range bound trade; 10 year benchmark bond closes the week at 7.95 :Edelweiss

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Range bound trade; 10 year benchmark bond closes the week at 7.95%
Government securities
 Sovereign bonds ended steady today as most participants refrained from taking
any big positions before the release of the wholesale price inflation data scheduled
for Monday. Yields did not react significantly to the industrial growth data (3.70%
in Jan-11) since the inflation number for Feb-11 will provide further clarity on the
pace of the rate hike from the central bank. However the sentiment in the market
has been upbeat over the fortnight owing to the absence of fresh supply of bonds,
the auction of unutilized limits for FIIs and lower weekly food inflation data.
Non-SLR market
 Short terms rates eased further due to the improvement in the liquidity. Three
month CDs were dealt at 9.70%-9.80% while the six months and beyond CDs
were dealt at 9.85%-9.95% level. Rates may rise in the coming fortnight since
demand from mutual funds will be relatively muted due to the outflow of money
from the liquid funds (for payment of advance taxes by corporate).
 State Bank of Travancore & State Bank of Patiala placed INR 1bn each of one year
CD at 9.86% and 9.85% respectively. OBC & BOI placed INR 3bn & INR 5bn
respectively of three month CD at 9.70%. Corporation Bank placed INR 4bn of 24th
June maturity CD at 9.65%.
Money markets
 Overnight rates ended flat since the demand for funds from banks remained muted
towards the end of the reporting cycle. In the coming fortnight, outflow of advance
taxes to the tune of INR 450-INR500bn is likely to put pressure on the overnight
rates. At the LAF facility, the central bank injected INR 621bn compared to INR
600bn on Thursday.

Edelweiss:: Economy - powerful quake hits Japan

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A powerful earthquake (intensity 8.9 on Richter scale) hit northern Japan and
triggered a massive Tsunami along the coastline areas. The quake occurred
230 miles North-East of Tokyo.
Japan’s equity markets were about to close when the tremors hit, but
Japanese Yen (JPY) fell sharply in a knee-jerk reaction. However, the
currency recovered equally sharply thereafter, possibly, in expectation that
money would be repatriated back to Japan given its safe-haven status.
Notably, JPY exhibited a similar behaviour after Kobe earthquake in early
1995, appreciating in the days following the earthquake. Therefore, if money
flows back to Japan, it might have implications for EM assets in the very
short-term.
In any case, we do not see this event to have a substantial long-term impact on
markets. We believe that medium-to-long-term performance of the Indian markets will
continue to be shaped by macro-economic concerns. However, the quake in Japan
could have some effect on a few sectors/companies as highlighted below:
Impact on sectors
1) Oil & Gas: Positive impact on refining margins and LNG prices: Japan is heavily
reliant on nuclear energy. Nuclear power plants in two locations have been shut,
following the quake. While the Japanese government has stated that the plants
are safe, they may take some time to resume production. Until all reactors start,
demand for diesel and LNG will have a positive impact as they will be used to
meet the power requirements. Further, Cosmo Oil’s 0.228 mbpd Chiba refinery
has caught fire. Depending on the magnitude of the fire, the refinery might take
6-12 months to resume production. Both these factors could raise refinery
margins. We see lower risk of cut in Japanese crude demand estimates, as we had
earlier already estimated -0.17 mbpd (-3.9%) fall in crude demand from Japan.
2) Pharma: Overall limited impact - Lupin has the largest revenue exposure in Japan
among Indian pharma companies, but the impact is expected to be limited as its
production facility is in southern Japan.
3) Autos: Overall limited impact - Any disruption in port or production facilities of
vendors could affect Maruti’s production (imports one-third of its raw materials).
However, the company has, so far, not received any negative news to this effect.
4) Hotels/Hospitality: Immediate impact on outbound travel of Japan - Cox and
Kings generates ~8% of its total revenue from Japan. As Japan is an outbound
center, revenues could get negatively impacted.

Edelweiss:: Nestle-High capex & second R&D centre reflects aggressive India plans

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Mr. Antonio Helio Waszyk, Chairman and MD, Nestle India (Nestle), has said that
growth in India is on track and the company can sell more, but for capacity
constraints. Nestle has chalked out ~ INR 18 bn investment plan over the next twothree
years and also on the anvil is second Research and Development (R&D) centre.

tax-free dividend income

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Please avail attractive tax-free dividend income by investing in the following top performing mutual fund schemes:

Tata Dividend Yield Fund

• The quantum of dividend will be Rs 1.00 per unit (of face value Rs.10) as on the record date
• The record date for dividend has been fixed as 18^th  March 2011
• The current NAV of the scheme is Rs. 19.04 (for dividend option as on 11^th March 2011)
• The fund has delivered an impressive return of around 14% (annualised) over the past 5 years

  

SBI Magnum Taxgain Scheme 93

• The quantum of dividend will be Rs 4.00 per unit (of face value Rs. 10) as on the record date
• The record date for dividend has been fixed as 18^th March 2011
• The current NAV of the scheme is Rs. 38.73 (for dividend option as on 11^th March 2011)
• The fund has delivered over 10% annualised returns over the past 5 years

HDFC Prudence Fund

• The quantum of dividend will be Rs 3.50 per unit (of face value Rs.10) as on the record date
• The record date for dividend has been fixed as 17^th  March 2011
• The scheme recorded NAV of Rs. 31.18 (for dividend option as on 11^th March 2011)
• The fund has delivered an impressive return of around 17% (annualised) over the past 5 years

Please invest before the record date to get tax-free dividends on these top performing schemes!

 

Milk Sliding 14% as Cows Boost Output, Cheese Hits 1984 High

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The milk rally that sent prices up 48 percent this year, more than any agricultural commodity, may be ending as farmers respond with record production and the costliest cheese in a quarter century curbs demand.

Output in the U.S., the world’s second-largest producer, may rise 1.7 percent to 196 billion pounds in 2011, enough to fill about 34,500 Olympic-sized pools, the Department of Agriculture estimates. Demand will weaken as restaurants cut promotions and grocers raise prices, said INTL FCStone Inc., a New York-based broker. Futures may drop 14 percent to $16.86 per 100 pounds by Dec. 31, a Bloomberg survey of 10 analysts showed.

Dairies are missing out on profits from milk’s biggest rally since at least 1996 as the surge in grain that drove world food pricesto a record, contributing to protests in northern Africa and the Middle East, also boosted the cost of feeding cows. While income for grain and cotton growers will rise more than 20 percent this year, earnings at dairies may drop 13 percent, the government estimates.

“Grain farmers are having some of the best years they’ve had in a long time profit-wise, but you couldn’t say that for dairy,” saidBob Cropp, an economist at the University of Wisconsin in Madison who has been studying the industry since 1966. “Dairy facilities are running at the maximum. With a little softening in demand, prices are going to come down.”

Milk futures on the Chicago Mercantile Exchange closed on March 11 at $19.65, a 32-month high. Prices fell 0.1 percent to $19.63 in electronic trading today. Prices are up 55 percent from a year earlier as importers from Mexico to China increased buying and the rebounding U.S. economy bolstered domestic demand.

Commodities Rally

Milk’s 2011 rally has exceeded those of all agricultural futures traded in New York and Chicago including cotton, which surged 42 percent and reached a record last week. The Standard & Poor’s GSCI Index of 24 commodities advanced 11 percent, and the S&P 500 Index of stocks rose 3.7 percent. As of March 10, Treasuries gained 0.1 percent this year, a Bank of America Merrill Lynch index shows.

Traders are already anticipating a drop, with the December contract at a 15 percent discount to the one that expires this month. Shawn Hackett, the president of Hackett Financial Advisers, who correctly projected in October that milk would surge, now says prices may fall as low as $15 amid higher output in Australia and New Zealand, the largest exporter.

Riots have erupted from Bahrain to Morocco, in part fueled by food costs the United Nations says reached a record last month. Protests already toppled leaders in Egypt and Tunisia. The projected drop in milk prices will do little to relieve the surge in food inflation that the World Bank says helped drive 44 million more people into extreme poverty since June.

Food Market

Milk’s rally may continue for several more months because exports will support prices, said Jerry Dryer, the Delray Beach, Florida-based publisher of the Dairy & Food Market Analyst, who has been following the industry for three decades.

Shipments surged 63 percent to $3.7 billion last year, nearing the 2008 record of $3.8 billion, U.S. Dairy Export Council data show. Cheese exports rose to an all-time high, and milk-powder sales climbed 61 percent, the Arlington, Virginia- based trade group said.

U.S. exports rose as New Zealand boosted sales to China, said James Dunn, an economist at Pennsylvania State University in University Park. China bought about 353 million kilograms (778 million pounds) last year, compared with 69 million kilograms in 2008, according to New Zealand government data.

Pimco Sells All U.S. Government Bonds

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The king of bonds Bill Gross just dumped all of his U.S. government bond holdings that were owned by his Total Return Fund (PTTRX). In the month of January the fund owned $28.6 billion in U.S. government bonds, but its holdings are now down to zero. Gross also reduced the fund’s holdings of mortgage backed securities to 34% from 42% of its total assets. The fund’s cash holdings have surged from $11.9 billion to $54.5 billion.

 

BSE -14.3.11-trading

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(Rs Crore)	Clients
Trade Date	Buy	Sales	Net
14-03-2011	2,121.08	2,188.43	-67.35
11-03-2011	2,815.75	2,807.14	8.61
10-03-2011	2,131.87	2,126.75	5.12
Mar , 11	20,060.84	20,430.69	-369.85
Since 1/1/11	1,12,082.98	1,12,828.40	-745.42
(Rs Crore)	NRI
Trade Date	Buy	Sales	Net
08-03-2011	0.37	0.88	-0.51
07-03-2011	1.40	0.27	1.14
04-03-2011	0.47	0.21	0.27
Mar , 11	9.04	7.59	1.46
Since 1/1/11	58.18	46.59	11.59
(Rs Crore)	Proprietary
Trade Date	Buy	Sales	Net
08-03-2011	578.14	548.25	29.90
07-03-2011	767.74	762.71	5.02
04-03-2011	644.21	631.97	12.24
Mar , 11	5,919.39	5,732.40	186.99
Since 1/1/11	33,335.38	33,502.35	-166.96