9am with Emkay

9am with Emkay

Contents

n        Research Update Included

Glenmark Pharma Visit Note; Visibility improves but concerns prevail, Maintain Hold; Target: Rs 308

n    Increasing approvals for niche filings and sustainable FTF pipeline with 10-12 ANDA launches annually, improve US market revenue visibility

n    Domestic market to sustain growth momentum and outperform industry by 200bps

n    Higher securitized receivables, huge intangibles and R&D capitalization remain key concerns 

n    Maintain earning estimates with a Hold rating

Emkaynomics; September 10, 2010; Fortnightly round up of key banking and economic indicators

n    The growth in the non food credit increased marginally to 19.9% for the week ended Sept. 10, 2010 and deposit mobilization marginally improved to 14.7%

n    As a result the CD ratio moved upwards to 72.1% for the week ended Sept. 10, 2010

n    Money supply growth remained unchanged at 15.6% and the money multiplier inched down to 4.86

n    Call money rates as on Sept. 27, 2010 have dropped 7 bps from last fortnight to 5.6%

n    The spread between call money and reverse repo rates as on Sept. 27, 2010 stands at 60 bps

n    Excess liquidity in the system dropped to `34 bn.  The repo balances stood at ~ `183 bn. and reverse repo at ~ `15 bn. for the week ended Sept. 10, 2010

n    The spread between the long and short end OIS is trending downwards and stands at 53 bps

Bajaj Auto Management Meet Update; Positive surprises to continue, Maintain ACCUMULATE; Target: Rs 1,630

n    Demand outlook remains strong. Current scenario also indicates a good FY12. Exports can grow by 20% for FY12. A large part of FY12E exports also  hedged at Rs 47 to USD

n    Cost pressures are increasing due to higher conversion cost. Steel contracts are quarterly (QoQ prices are down in 2Q, to rise in 3Q). Margins for FY11 to be around 20%

n    We maintain our bullish stance on the industry volume for FY12. The recent est of khariff crop (+10% YoY) give further impetus to our view. Expect upgrades in volumes for FY12

n    Upgrading FY12 EPS estimates by 10% to Rs 105 for FY12 due to volume upgrades (+8%). Maintain ACCUMULATE rating with a revised TP of Rs 1630 (+13%)

n        Technical Comments

Above the hourly averages

After a gap up opening the index managed to hold the bullish gap all through the day, which indicates that the upside momentum still holds precedence. Moreover, Nifty is still holding its streak of rising tops and rising bottoms meaning that the road to 6250 is still not cracked. Also Nifty is trading above the key hourly average with both daily and hourly momentum cycles holding on to their buy signals. Hence buy on dips is the call for the coming session.

BSE Metal:

After a gap up opening the metal index managed to hold the bullish gap all through the day, which indicates that the upside momentum is still dominant. Since, our short term target of 17000 was met today; we are now revising up our targets to 17500 level.