Our China minds align to see copper higher .:Macquarie Research

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Our China minds align to see copper
higher
Quick Takes
 China is buying copper now, and as a result Bonnie Liu is removing her
short-term trading sell from copper. She is now more comfortable about the
copper price moving up from current levels, and highlights the upside risk
given her copper price forecasts for the rest of the year are more than 25%
above current sport prices. >> Read Report
 The key factors driving Bonnie’s more bullish view on copper are a gradual
pick-up of Chinese copper fabricators’ utilisation rates, solid order books over
the year to date and the end of consumer destocking.
 The prospect of sharp declines in copper stocks in global warehouses in the
second half, and a pickup of Chinese copper imports from mid-2011 are set to
be the catalysts for the next move higher.
 Paul Cavey continues to believe China is ahead of the curve on inflation, with
policy tightening over recent months expected to result in softer macro data
over the second quarter.
 This should result in the current tightening phase reversing course in the
second half as growth slows.
 Because of the tightening that has already occurred, Paul is more concerned
about downside risks to growth than upside risks to inflation.
 By the way, in this week’s China Diviner Paul reminds us that the purpose of
the recent increase in the Reserve Requirement Ratio (RRR) was to soak up
liquidity caused by currency inflows. The increase should not be seen as
further tightening. >> Read Report
 Turning to the outlook for the US, our global economics team believes the
recovery should continue to gain momentum, driven by exports and business
investment. Exports should also be encouraged by the weaker US dollar.
Highlight Reel
 Daniel McCormack sees European companies with exposure to Asia, such
as BMW, Adidas, HSBC, Prudential and Xstrata, as one of the best long-term
investment ideas in the market.
 A two-day tour of the tier 2/3 cities of Nanjing, Yangzhou and Wuxi reinforced
Linda Huang’s positive view on China department stores.
 After a successful copper hunt, Polina Diyachkina emphasises her
Outperform on Sumitomo Metal, an Asia Marquee Buy Idea.
 Amit Kumar likes Travellers at current levels as it has an established
franchise and has consistently outperformed the industry and peers.

India Financials Uncertain outlook but valuations have corrected:: Standard Chartered Research,

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Lowering earnings and price targets
 Bank stocks have corrected sharply following the credit policy, mixed 4Q earnings and
concerns of a likely slowdown in loan growth and increase in NPLs in response to rising
rates.
 After the steep correction, we see downside support to bank valuations. However,
macro and regulatory newsflow will likely remain negative in 1H FY12, capping upside
to stock prices.
 ICICI Bank, HDFC Bank, BoB and IndusInd Bank are our key picks. We expect Union
Bank to outperform other PSU banks due to its high earnings visibility. SBI, BoI and
PNB are likely to underperform other state banks. Axis Bank has corrected sharply but
incremental profitability remains under pressure, in our view.
 Among NBFCs, LIC Housing is likely to outperform after the withdrawal of the risky
Advantage 5 loans. Regulatory uncertainty will continue to weigh on transport finance
companies in the short term till there is clarity in June 2011. Between M&M and
Shriram, we prefer Shriram at current valuations

NALCO - Buy :: Can money

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Fundamental Reasons:-
Nalco is a public sector mining behemoth which was incorporated in 1981, as a public sector enterprise of the
Government of India. Over the years, on account of its rapid expansion and proven processes, company catapult into
the big league of “ Navratna”. NALCO is having Asia’s largest integrated Aluminum complex, which encompassing
bauxite mining, alumina refining, Aluminum smelting and casting, power generation, rail and port operations. Since
its inception, Nalco zeroed upon the coveted field of Aluminum & various allied products. In India, Company is
having the largest aluminum manufacturing capacity in government sector, while second largest on overall basis.(
HINDALCO is the largest aluminum manufacturing company in India).
NALCO has reported its’ Q-3;FY2011 result, very much inline with the market expectations. Mainly on account of
the all round performance by its all verticals(processing, mining etc) and higher realization, NALCO has reported an
excellent surge in the bottom-line and moderate rise in the topline. Based on the improving economic conditions,
higher export and good margins, company have registered a good performance after countering the net impact of
surging cost. Total revenue of the company rose to Rs.1443.12 Crore as compared to Rs.1417.61 Crore in DEC’09,
showing a YoY growth of 1.79%, while total profit during the said period recorded at Rs 255.95 Crore against a figure
of Rs 155.18 Crore on Y/Y basis a rise of 14.93%. During the said period , Earning per share of the company also
has improved significantly and recorded to Rs 1.99 from a average value of Rs 1.20 as on 31st DEC; 2009. Apart
from higher realization, effective cost management helped the company in recording this good performance.
NALCO is expected to garner good revenue and profit in coming quarters because of following facts: - 1. Nalco's Rs
4,402 crore expansion plan to raise alumina refinery capacity from 1.575 million tonnes to 2.1 million tonnes are at
advance stages of commissioning. 2. In order to save its EBDITA margins, Nalco raised aluminum prices by Rs. 5000
a tonne. 3. National Aluminum Company has planned Rs 700 crore capital expenditure in 2011-12 for expansion of
refinery in Orissa and setting up a nuclear power project in Gujarat. This may add visibility to the growth of top line
& Bottomline in future. 4. Global production of Aluminum currently stands at 39-40 million tonnes per annum.
Demand also stands at around the same level. Meanwhile, some smelters have been closed in China in the recent
past, leading to firming up of the price. 5. National Aluminum Company Limited is likely to set up its refinery near
Makavarapalem in Visakhapatnam district. The 1.4 million metric tonne capacity green field refinery at an estimated
investment of more than Rs 4000 crore is expected to be commissioned in next three years. All these will augment
the value of shareholders.
Metal & Mining sector is associated with other industrial verticals in our Country. Though, NALCO owing to its
dominant position and higher reach may be the highest beneficiary of any uptrend in the sector. Yet Cyclical nature
of the industry & insalubrious working condition may continue to be a concern. Higher volatility in the currency
market may continue to add jitter in the Metal & Mining stocks. Rupee likely to be volatile with FII inflows expected
to determine the medium term movements. Recovery issues in US and Euro Zone economies and in case of any
abrupt withdrawal by FIIs, NALCO may witness some temporary corrections before moving up