MosT - Technicals- 6 Sept

View-Point:

- Lack-luster cues from Asian peers will see native markets trading in a range with an eye on outcome from impending ECB meet

Buy Divis Labs (DIVI IN)

- Company is entering a high growth phase led by increased customer order-flow for CRAMS business and launch of new APIs in generics business. We expect 24% topline and 25% EPS CAGR for FY12-14.

- Despite conservative approach on capital allocation, targeting a fresh capex of Rs. 1.5-2bn for FY13 reflects management confidence in future growth.

-Co. earns strong margins due to its global cost and market leadership in some APIs (global market share of 50-70%), pricing power and strong backward integration.

- We estimate 36-37% RoCE and 29% RoE for the next two years, led by traction in the high-margin CRAMS business, sustained profitability in the Generics business and increased contribution from the new SEZ

- The stock trades at 21.7x FY13E and 18x FY14E earnings. Reiterate Buy with target of Rs. 1,253 (20x FY14E EPS).

News:

- SBI cut interest rates on deposits by as much as 100 basis points across maturities to maintain profitability after lowering lending rates recently.

- Jindal Steel and Power has bought CIC Energy Corp of Canada for Rs 6.50bn. Deal was concluded through Jindal BVI Ltd, a subsidiary of JSPL, which will now be merged with CIC and de-listed from the Canadian stock exchange in a month’s time.

- As per media report, Videcon Indust. is considering selling its 10% stake in Mozambique’s Rovuma basin for $3bn, scrapping an earlier plan to transport gas from Mozambique to India.

- As per media report, US based International Paper is in talks to buy West Coast Paper in a deal likely to be valued at Rs. 8-12bn.

Derivatives:

- Nifty Futures OI decreased by 0.1m shs to 20m shs. Nifty Sep futures settled at a premium of 28 as against a premium of 25 in the previous session.

- Banking Stocks: Axis Bank has witnessed delivery of 3.1m shs (10d-avg 1m shs) along with 12% rise in Fut OI to 7m shs and ICICI Bank has witnessed delivery of 3.9m shs (10d-avg 1.7m shs) along with 4% rise in Fut OI to 8.6m shs indicating creation of short positions.

- In Sep series for Nifty, Highest Call OI is at 5500 strike with 7.3m shs up 1m shs and highest Put OI is at 5200 strike with 6.9m shs up 0.3m shs.

Corporate Actions:

- BEML (Rs.5), BHEL (Rs.3.68), Coal India (Re.0.50), NTPC (Re.0.50), Oil India (Rs.5), Sintex India (Re.0.65) and Titagrah Wagon (Rs.8) to trade ex-dividend today.

Key Statistics:

Market                       Sensex 17,313 down 127 & Nifty 5,226 down 48

Advance:Decline     1235 : 1558

F&O data     (5th)     Index Rs. (3.87)bn & Stock Rs (5.14)bn

Cash   (Prov 5th)     FIIs Rs (1.89)bn & DIIs Rs. (1.66)bn

Cash           (4th)      FIIs Rs. 3.03bn & MFs Rs. (0.64)b           

Others                       Brent Oil $113.09 v 114.18 & INR 55.91 v 55.66

��