India Equity Research: 01/01/12

01 January 2012

India Shares Post First Annual Fall in Three Years

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Indian shares finished in the red Friday, bringing to an end a season--and year--which has been far from festive for investors. The market posted its first annual fall in three years.

"Pessimism is at its peak. Everybody right now is a disbeliever in the market, and that will set the context for the next year, but it may not be all that bad," said Vikas Khemani, head of institutional equities at Edelweiss Securities.

Shares reversed early gains Friday to fall for a fourth straight session, ignoring advances in most Asian bourses on worries over slowing economic growth and that a weak Indian rupee will hurt corporate earnings.

The Bombay Stock Exchange's Sensitive Index fell to its lowest in more than a week. It lost 89.01 points, or 0.6%, to close at 15454.92. This was its lowest since finishing at 15175.08 on Dec. 20.

The Sensex fell 4.1% in December and 24.6% this year. Its worst monthly performance in 2011 was in January, when it dropped 10.6%

On the National Stock Exchange, the 50-stock S&P CNX Nifty lost 21.95 points, or 0.5%, Friday to close at 4624.30.

Trading volume in the BSE's cash segment was 14.81 billion rupees ($280 million), almost flat compared with Thursday's 14.18 billion rupees. Decliners outnumbered gainers 1,451 to 1,327, while 134 stocks were unchanged.

The Indian equity market has been one of the worst performing globally, down around 35% for 2011 in dollar terms, Dipen Shah, head of fundamental research at Kotak Securities, said in a note.

"The equity markets seem to have substantially priced in the worst. Thus, the downside seems limited to not more than a 10% fall from the current level," Shah said.

"Unless the macro-economic environment improves, inflows from foreign funds are unlikely to come by in a hurry," said Mr. Khemani.In 2011, foreign investors net sold $242.20 million worth of Indian shares, one of the main reasons for the market's weak performance. They bought a net $29.36 billion of shares in 2010, data from the Securities and Exchange Board of India showed.

Energy major Reliance Industries declined 2.8% to 692.90 rupees.

The BSE's bank index reversed early gains to end lower on concerns over asset quality and an anticipated rise in restructuring of loans.

Housing Development Finance fell 0.9% to 649.45 rupees, while HDFC Bank dropped 0.8% to 427.05 rupees.

Hindustan Unilever fell 1.3% to close at 407.80 rupees.

Infosys, which surpassed Reliance as the stock with the highest weight in the index, bucked the trend, rising 0.8% to 2,765.05 rupees.

India's Slowing Growth Will Test Banks' Resilience (WSJ)

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Part of the reason lies in past bad lending decisions. After the peak of the financial crisis in 2009, India's banks opened the floodgates with loans to already over-leveraged companies. Credit Suisse looked at loans to 3,550 non-financial services companies in India with aggregate borrowing of $385 billion at the end of March and found that nearly 30% had net debt more than six times current earnings before interest, taxes, depreciation and amortization. That's increased by about 50% in the past five years.

A weakening economy adds to the pressure. In October, India's industrial output contracted 5.1% from a year earlier. A slump in demand from Europe and a slow recovery in the U.S. don't help. As output and revenue growth decelerate, companies' ability to repay debt suffers. The risk is spread across several sectors. India's private airlines, construction companies, utilities and real estate developers are all notorious for generating non-performing loans. All those sectors will suffer from an economic downturn.

To compound the problem, many companies have borrowed in foreign currency from local banks, taking advantage of lower interest rates overseas. But an 18% fall in the rupee against the dollar since April means they now face significantly higher repayment costs. Struggling borrowers could try to convert foreign debt into rupee-denominated loans or restructuring high risk loans to ease repayment conditions. For lenders, that's better than outright defaults but it will hurt profits.

Goldman Sachs estimates banks' gross non-performing loans including restructured debt will rise to as much as 6% of total loans in the next financial year, up from 5% in March. The Reserve Bank of India's stress test report published earlier this month forecasts 5.8% of non-performing assets in the worst-case scenario, double the current level.

India's banks aren't doomed. The RBI says the banks' capital to risk-weighted assets ratio fell from 14.5% at the end of March 2010 to 13.5% at the end of the latest fiscal year. That's still quite conservative, but the downward trend is a concern. At the very least, profits will come under pressure. Banks seldom perform better than the economy they serve. With India's economy heading into a testing time, its banks will suffer too.

Goodwill Hospital IPO ; Muthoot Finance Bonds - Grey market premium/ discount

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*Company Name*	*Offer Price (Rs)*	*Expected Listing Price Premium*

Goodwill Hospital IPO	175-185	Discount
Muthoot Finance Bonds	Bonds	Discount

India opens stock market to foreign investors (HT)

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India will allow individual foreign investors direct access to its stock market from January 15, the government said on Sunday, the latest step to liberalise Asia's third-largest economy after a year of big losses on the benchmark Sensex index. Previously, foreign nationals were limited to investing in equity market through indirect routes such as mutual funds, or through institutional vehicles.
"The central government has decided to allow qualified foreign investors to directly invest in (the) Indian equity market in order to widen the class of investors, attract more foreign funds, and reduce market volatility," the government said in a statement.
In the past 20 years India has gradually opened its economy to foreign cash. The economy is now faltering after growing at an annual average of about 8% for several years.
The rupee shed 24% of its value against the dollar last year and the current account deficit is widening.
Many economists predict growth below seven % for the fiscal year that ends on March 30.
Indian shares posted their first annual fall in three years in 2011 as a combination of near double-digit inflation, high interest rates, slowing domestic growth and policy inaction turned off investors already shaken by global headwinds.
Foreign fund inflows, a major driver of stocks, dried up with net outflows of about $380 million as of Wednesday, a far cry from record inflows of more than $29 billion in 2010 that had powered a 17 % rise in the benchmark index, following an 81% surge in 2009.

HCL Technologies :UBS India – Least Preferred Stock Ideas for 2012

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HCL Technologies
Investment case: We remain negative on HCL Tech as we expect the stock to
be less defensive in a downturn given its lower margin resilience and relatively
weaker balance sheet compared to peers. In addition, we expect a period of
potential sluggishness in demand by early 2012, which could cause downgrades
to FY13 outlook. We expect HCL Tech’s operating margin to remain low, with
the senior management indicating increased expenditure on sales and marketing
in the next few quarters. We think the company needs to consistently spend
more on sales and marketing in order to sustain revenue growth. We remain
cautious given our concern about a potential tradeoff between margins and
revenue growth.
Valuation: We derive our price target from a DCF-based methodology and
explicitly forecast long-term valuation drivers using UBS’s VCAM tool,
assuming a WACC of 12.4% and a terminal growth rate of 3%. Our price target
implies a one-year forward PE multiple of 15.7x, which we believe is reasonable
given the lower margin profile.
2012 Catalysts: 1) Increased investment in client-facing activities that will
manifest itself in the form of higher SG&A is likely to impact margins; and 2)
continuing negative newsflow in developed economies is likely to impair 2012
IT services budgets and pose significant downside risk in the near term.

read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

LIC Housing Finance :UBS India – Least Preferred Stock Ideas for 2012

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LIC Housing Finance
Investment case: We are cautious on LIC Housing Finance (LICHF) as rising
risks do not seem to be priced in at 2.2x FY12E book. We think risks include: 1)
a slowdown in mortgage volumes due to the slowing economy, high interest
rates and high real estate prices; 2) likely pressure on NIMs as competition from
banks will remain high; 3) falling interest rates will not necessary benefit LICHF
as asset yields would also re-price downwards; and 4) continued regulatory risks
as capital requirements for housing finance companies remain more benign
compared to other NBFCs; LICHF has a low tier-1 capital at 9%, with leverage
at 12x.
Valuation: We value the stock using a residual income method. Our price target
implies 1.9x FY12E book and 8x FY12E earnings.
2012 Catalysts: The National Housing Bank could introduce higher
provisioning for developers at 1%.

read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Tata Motors :UBS India – Least Preferred Stock Ideas for 2012

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Tata Motors
Investment case: We remain negative on the domestic MHCV growth outlook
given weak industrial growth. In addition, Tata Motors continues to invest in
promotional and dealer support and expansion activities, mainly in its passenger
vehicle business. We therefore expect domestic margins to remain under
pressure. We see limited upside risk to JLR volume growth given the
challenging global macro environment. Volume growth ex-Evoque has
continued to slow. We continue to view the risk-reward profile as unfavourable.

Valuation: We have a Sell rating. We value the domestic business (and other
subsidiaries) at 8x FY13E EV/EBITDA and JLR at 3x FY13E EV/EBITDA. We
adjust our EBITDA for R&D capitalisation.
2012 Catalysts: IIP growth could continue to disappoint in the near term, acting
as a negative catalyst for MHCV growth. Strong Evoque sales could act as a
positive catalyst in early 2012.

read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Bank of India :UBS India – Least Preferred Stock Ideas for 2012

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Bank of India
Investment case: We are cautious on Bank of India as the bank’s exposure to
potentially stressed sectors is high compared to the other banks under our
coverage. Its volatile loan recovery trends and provisioning coverage of around
59% do not provide comfort on its ability to manage the potential stress ahead.
We expect loan loss provisioning to increase from 66bp in FY11 to 95bp in
FY12-13. We forecast an earnings CAGR of 5.6% in FY11-13.
Valuation: We value the stock using a residual income method. Our price target
implies 0.9x FY12E book and 6.7x FY12E earnings.

2012 Catalysts: We believe a sustained economic slowdown and higher loan
restructuring could pose further downside risk to the share price.

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UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Mahindra & Mahindra :UBS India – Most Preferred Stock Ideas for 2012

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Mahindra & Mahindra
Investment case: Given its high exposure to the rural segment, we believe
M&M will continue to benefit from the strong government focus on improving
rural income levels and rural infrastructure. The stock remains one of our
preferred picks in the Indian auto sector.
Valuation: We have a Buy rating, based on a sum-of-the-parts methodology.
We value the standalone business at Rs732 per share, based on 8x 2013E
EV/EBITDA, and its subsidiaries (including Ssangyong) at Rs208 per share.
2012 Catalysts: New product launches including Rexton and Korando from
Ssangyong in the India market by mid-2012 and a compact model of the Verito
to be launched in the next six to eight months. Additional levies on diesel could
act as a negative catalyst as M&M has an all-diesel product line-up that has
benefited from the increasing cost differential between petrol and diesel.

read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Idea Cellular :UBS India – Most Preferred Stock Ideas for 2012

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Idea Cellular
Investment case: Idea is one of our top picks in the telecom sector as: 1) we
expect the company to benefit the most from the improving pricing environment
and regulatory outlook since it is a pure play on the Indian mobile sector; 2) the
company continues to outperform its peers in terms of revenue and earnings
growth and we expect the outperformance to continue given its high operating
leverage; and 3) Idea management has demonstrated its ability to run an efficient
mobile business harnessing its spectrum advantage. Given its strong 900 Mhz
footprint, we think Idea could also be an M&A candidate as and when
consolidation plays out in the sector.
Valuation: Our price target is SOTP based. We value Idea at Rs123 and its
share in Indus at Rs20, we also incorporate a charge of Rs23 towards one time
spectrum fees, spectrum renewal fees and savings from uniform licence fees.
We use a WACC of 11.0% in our DCF to value Idea.
2012 Catalysts: 1) The NTP 2011 is likely to be announced in 2012; 2) BWA
companies are likely to launch data services during H112; and 3) greater clarity
on issues pertaining to 2G spectrum pricing and allocation.

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UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Federal Bank :UBS India – Most Preferred Stock Ideas for 2012

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Federal Bank
Investment case: We like Federal Bank as we believe it is at the brink of an
operational turnaround brought about by a change in leadership and a structural
improvement in asset quality. Under the new management we expect the bank to
focus on improving the contribution of fee-based income (which is one of the
lowest in the industry) to offset the cyclical decline in NIMs, while we expect
pickup in asset growth and a decline in credit costs to support earnings growth
of 27% over FY11-13E, which is one of the highest rates in the industry.
Valuation: We derive our price target using a residual income model which
implies 1.5x FY13E book and 10x FY13E earnings. At 0.9x FY13E book and
6.4x FY13E earnings, FB is one of the cheapest private sector banks in India
with the potential to re-rate to new generation private sector bank peers, in our
view.

2012 Catalysts: We expect a fall in slippages to a sustainable level to lead to a
decline in credit costs; coupled with growth in fee income this should result in
ROE expansion from the current 12% to 16% in FY13.

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UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Coal India :UBS India – Most Preferred Stock Ideas for 2012

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Coal India
Investment case: We have a Buy rating on Coal India (CIL), because we
believe the recent share price correction is overdone. We believe the correction
has been led by negative newsflow on: 1) the proposed mining tax; 2) concerns
about wage negotiations; 3) a production miss in H1 FY12; and 4) concerns over
delays in getting environmental/forest clearances and approvals needed to drive
volume growth. However, we believe the structural theme is intact and that these
concerns do not impact the structural positives, ie: 1) strong domestic coal
demand; 2) a virtual monopoly; 3) ASPs significantly below global prices—
leaving the potential for price hikes; 4) low earnings volatility; and 4) the
company’s status as one of the lowest cost producers globally.
Valuation: Our FY13 PAT estimate of Rs169bn is marginally above the
consensus estimate. We continue to value CIL on 15x FY13E PE. We have a
Buy rating on the stock with a price target of Rs400.00.
2012 Catalysts: We believe markets have reconciled themselves to the fact that
CIL will struggle to meet its production/despatch targets. We believe
expectations on the stock are currently very low. We believe key triggers would
be: 1) any favourable buy back scheme by CIL; 2) environmental and forest
clearances for the new mines; 3) progress in ordering activity for washeries; and
4) if e-auction volumes remain approximately 11% of total volumes.

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UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Bharti Airtel :UBS India – Most Preferred Stock Ideas for 2012

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Bharti Airtel
Investment case: Bharti is the leading mobile operator in India in terms of both
revenue and subscriber market share. It is one of our preferred stocks in the
sector as: 1) we remain positive on the outlook for the sector as we see
increasing evidence of an improving regulatory and pricing environment. Given
its dominant position in the sector, we expect Bharti to emerge as one of the
beneficiaries of the improving outlook; 2) we believe India is at an inflexion
point of mobile data growth post the 3G launch, and we expect the company to
benefit from uptake of data usage. We expect to see some evidence of data pickup
in 2012; and 3) we think the Zain acquisition is likely to be positive in the
medium term. We expect the transaction to be EPS-accretive from FY13.

Valuation: Our price target of Rs530.00 is SOTP-based. We value India/South
Africa operations at Rs453, Bharti Infratel at Rs45, the stake in Indus Towers at
Rs54 and Africa operations at Rs10. We also incorporate a charge of Rs32
towards one time spectrum fees, spectrum renewal fees and savings from
uniform license fees. We used a WACC of 10.7% in our DCF to value Bharti’s
India/South Africa operations.
2012 Catalysts: 1) The new telecom policy (NTP 2011) is likely to be
announced during the year; 2) broadband wireless access (BWA) companies are
likely to launch data services in H112; 3) strong operating performance in
Bharti’s Africa operations; and 4) clarity likely to emerge on issues pertaining to
2G spectrum pricing and allocation.

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UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

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Most Preferred Stock Ideas for 2012

Bharti Airtel

Coal India

Federal Bank

Idea Cellular

Mahindra & Mahindra

Least Preferred Stock Ideas for 2012

Bank of India

HCL Technologies

LIC Housing Finance

Tata Motors

Headwinds provide buying opportunity
�� Summary
India is in the midst of a cyclical slowdown that is further complicated by stubborn
inflation and a rapidly depreciating currency. Corporate earnings growth is likely
to slow to about 10% YoY as earnings momentum continues to be negative. In the
event of large-scale foreign institutional investment (FII) outflows, we estimate
20% further downside to Indian equity markets. However, we would view this as
an attractive buying opportunity as India’s structural story is strong and
underpinned by demographic advantages.
�� Inflation, policy and rates in 2012
We expect inflation to slow to 7% by March 2012 and remain in the 6-7% range
thereafter. In 2012, we expect cuts of 100bp in the official repo rate starting in the
March quarter. We expect the USD-INR rate to weaken to 55 by end-2011 and
appreciate in stages to 51 by end-2012 as it prices in ‘inflation-stabilisation’ then
‘growth recovery’.
�� Key Catalysts
We think falling inflation followed by a loosening monetary policy that revives
economic growth is likely to be the key catalyst to watch out for. Other potential
catalysts include the government making progress on reforms and fiscal discipline
in the February 2012 budget. Potential negative catalysts include stubborn
inflation, higher crude oil prices, further rupee depreciation and continuing policy
paralysis.
�� Most & Least Preferred Stock Ideas for 2012
Most preferred: Bharti Airtel, Coal India, Federal Bank, Idea Cellular and
Mahindra & Mahindra. Least preferred: Bank of India, HCL Technologies, LIC
Housing Finance and Tata Motors.

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Shree Renuka Sugars: Not the right time ::Kotak Sec,

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Shree Renuka Sugars (SHRS)
Sugar
Not the right time. SHRS corrected by ~50% after its 4QFY11 results. We are still
cautious as: (1) Estimated net debt/EBITDA of 5.4X for FY2012 (September year ending)
is high, considering strained cash flow on weak profitability in Brazil and projected cash
outflow of at least Real300 mn (consol) next year, (2) Interest rates for working capital
finance (company specific) have risen (by ~150 bps) after the 4QFY11 results, which is a
risk to our estimates and (3) There is risk of the Brazilian government regulating sugar
exports (favoring ethanol) as we see a shortage of ethanol (fuel) in Brazil in the offseason
(January-March). We have reduced our earnings estimate and multiple (5.7X
versus 6X earlier). Retain REDUCE with a revised target price of Rs24.

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Strategy: Looking beyond the current impact ::Kotak Securities

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GameChanger
Food Security Bill
Looking beyond the current impact. We focus our analysis on (1) the crowding out
of private players in the grain market, (2) implications on global and local prices, (3) the
issues in creating infrastructure to store and move grain, (4) balancing the fiscal and
(5) the prospect of increased savings in rural India and its impact on urbanization. We
draw on the learning of the intended and unintended long-term consequences of other
government interventions in the agricultural produce and rural wage markets: we
believe all these markets now require significant productivity enhancing reforms.

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Technology: Revised currency assumptions drive EPS upgrades ::Kotak Securities

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Technology
India
Revised currency assumptions drive EPS upgrades. We raise FY2012-14E EPS
estimates for the Tier-I Indian IT names by 1.5-5.5% while reducing USD revenue
growth forecasts for these names. Both the changes are currency-led – (1) changes in
cross-currency (EUR/USD, GBP/USD, etc.) assumptions drive cuts in USD revenue
forecasts, and (2) changes in Re/USD assumptions drive increase in EPS estimates. Sector
view (attractive) and preference within Tier-Is (Infosys/ TCS) remain unchanged.

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Economy: Food Security Bill: Additional pressures on the government ::Kotak Securities

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Economy
Food Security Bill
Food Security Bill: Additional pressures on the government. In light of the
cabinet’s approval to the draft Food Security Bill, we estimate that the food subsidy bill
in FY2013E will be around Rs250 bn more than the budget estimates of Rs606 bn in
FY2012E. We had already factored in Rs850 bn as food subsidy for FY2013E fiscal
estimates. The additional subsidy will put added pressure on the fiscal that we now
estimate could go up to 5.8% of GDP.

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ITC: Signs of ‘predictable taxation regime’, probably::

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ITC (ITC)
Consumer products
Signs of ‘predictable taxation regime’, probably. There is near-consensus that the
central budget could potentially see significant excise increase for cigarettes. We agree.
However, we differ on the potential impact on ITC. Considering the addictive nature of
cigarettes and the associated consumer behavior, predictability in taxation (and hence
calibrated price increases) is the key for industry volumes. Channel sources indicate that
price of Gold Flake Kings (GFK) is likely hiked by ~15% (to Rs55/pack of ten). We
highlight that after the price hikes in Classic (premium) and Wills (mid-segment), price
increase in GFK is in line with our expectations. Through these price hikes, ITC is likely
creating ‘buffers’ before the budget, in our view. Retain estimates and ADD rating.

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Tata Consultancy (TCS) Outlook :: Deutsche Bank

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Tata Consultancy
Outlook
While near-term demand for the top-tier vendors is intact, uncertain global
macroeconomic outlook could weigh on the CY12E IT budgets of clients. This, in our
view, will only accelerate the need to cut costs and hence Indian IT services companies
should benefit from the increase in offshoring by clients. We expect TCS, India's largest
offshore services provider, to be the key beneficiary of clients’ increased focus on using
offshore delivery. For FY13, we forecast earnings to grow 18% in rupee EPS. We believe
our target P/E of 20x FY13E is fair given an earnings CAGR of 20% over FY12-14E. The
company has an estimated long-term earnings growth potential of at least 15%-20%
given a likely increase in focus on cost control and outsourcing in developed
economies. As such, we rate TCS Buy and name it our top pick.
Valuation
We value Indian IT services firms on a P/E basis relative to their historical trading range,
compared with peers as well as growth rates. We value TCS at a target P/E of 20x
FY13E to factor in its consistent outperformance over Infosys on revenues and profits.
Although our target P/E multiple is at a PEG of 1, we believe this adequately factors in
the downside potential from growing global macroeconomic concerns. On a one-year
forward basis, TCS currently trades at a 10% premium to Infosys and we believe this
will likely continue in the short term.

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Mahindra Satyam Outlook ::Deutsche Bank

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Mahindra Satyam
Outlook
We rate Mahindra Satyam (MSat) Hold with a target price of INR90. We believe the
announcement of the revised financials has gone a long way to rebuild client
confidence in the company. With the prospect of strong improvement in new client
wins and broad-based exposure to existing clients, we expect the company to report a
15.5% revenue CAGR over FY12-14E. This should improve employee utilisation and help
Satyam substantially raise its very low margin. We thus expect the company to report
an earnings CAGR of 27% over the same period. In spite of the near resolution of the
most cases pending against the company and no perceived incremental adverse impact
on its financial health, we retain our Hold rating since the stock has outperformed the
Sensex by 25% ytd and we believe our target price adequately reflects the lowered risk
profile of the company.
Valuation
With MSat’s announcement of its audited and re-stated financials, thereby making it
current with respect to financial reporting, we believe it is appropriate to value the
company. In line with peers, we value MSat on a one-year forward P/E basis. Although
it has better capability, Satyam's current revenue profile puts it in line with the valuation
of other mid-cap companies, in our opinion. Thus, disregarding the company's high
earnings potential and taking cognizance of the overhang from contingent liabilities, we
value the company at 10x FY13E. Our target P/E multiple is based on the average of
FY13E P/E multiples at which comparable mid-cap IT services companies are trading in
the Indian market.
Risks
Key upside risks to our Hold rating include: (1) A better-than-expected turnaround in
revenue growth and margin trajectory, (2) amicable resolution of the outstanding
disputes with minimum damage to the financial health of the company and (3) a sharp
pickup in discretionary spending in the package implementation segment, in which the
company has a dominant presence. Key downside risks to our Hold rating include: (1)
pressure on billing due to lower rates negotiated during the re-building period, (2)
continuation of client attrition and poaching of the highly skilled package
implementation resources, (3) significantly higher liability from lawsuits and (4) extreme
volatility in currency-denting margins and a longer-than-expected global downturn
prolonging the recovery for the industry in general and the company in particular.

Mahindra Satyam Outlook ::Deutsche Bank

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HCL Technologies Outlook :: Deutsche Bank

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HCL Technologies
Outlook
HCL Tech's improving growth expectations have been led by impressive deal wins. This
strategy will be tested again in a deteriorating macroeconomic environment. However,
given HCL Tech’s strong revenue growth performance during the last downturn, we
estimate the company to report 15% yoy (versus an estimated12% yoy for Infosys) USD
revenue growth in FY13. Our key concerns in the medium term continue to be a decline
in margins on account of wage hikes, higher reliance on lateral recruits and BPO
business losses. HCL Tech has the most comprehensive SAP practice, in our view, and
could thus be hardest hit if demand for software and services declines in CY12E. The
stock has outperformed the Sensex by 7% ytd. At 13x FY13E P/E, we believe it is fairly
valued. We reiterate our Hold rating on HCL Tech.
Valuation
We value Indian IT service firms on a P/E basis relative to their historical trading range
in relation to peers as well as growth rates. We value HCL Tech at 13x FY13E P/E. Our
target P/E multiple for HCL Tech is at about a 25% discount to Infosys' target P/E
multiple based on FY13E. The reduced discount to Infosys (vs. 35% in the past) is to
account for sector-leading growth in revenues reported by the company over the last
two years, its relatively higher exposure to key revenue drivers for the next two years,
namely Europe and exposure to spending in package implementation.

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Wipro Outlook :: Deutsche Bank

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Wipro
Outlook
The three key reasons behind our conviction are a) rising customer satisfaction with
Wipro’s service quality after the organization restructuring, (b) the appreciable fall in
attrition not only at the overall company level but also at individual projects and (c) bold
inorganic initiatives to consolidate position with large clients. Moreover, with best-inpack
forecast earnings of 21% over FY12-14E, Wipro trades at relatively inexpensive
valuation of 14x FY13E (18% discount to TCS. Based on improving business traction
and attractive valuations, we rate the shares Buy.
Valuation
We value Indian IT services firms on a P/E basis relative to their historical trading range,
compared with peers as well as growth rates. Our 12-month target price is based on
19x FY13E P/E (vs 15x earlier) and is now valued at a slight premium to Infosys' target
P/E multiple. Wipro is likely to report earnings CAGR of 21% over FY12-14E. We value
Wipro at a premium to Infosys given its better near-term growth. We believe our target
P/E is well supported by its earnings CAGR of 21% over FY12-14E.

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Infosys Outlook :: Deutsche Bank

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Infosys
Outlook
While near-term demand for the top-tier vendors is intact, uncertain global
macroeconomic outlook could weigh on clients’ CY12E IT budgets. This, in our view,
will only accelerate the need to cut costs and hence Indian IT services companies
should benefit from the increase in offshoring by clients. For the long term, we expect
Indian IT services companies to benefit structurally from increased outsourcing. We
believe that incremental demand should largely flow from 1) European geography, 2) an
increase in adoption of cloud computing and 3) improvement in discretionary spending
(revenue productivity is also set to improve further). Infosys, India’s No.2 offshore
services provider, is now a strategic partner to most of its large clients. With a high ROE
(+30%) and a strong balance sheet (+USD3.8bn cash balance), the company could gain
market share and/or in theory make EPS- and/or ROE-accretive acquisitions. We value
Infosys at 18x FY13E, given its earnings CAGR of 16% over FY12-14E. This translates to
a PEG of 1.1. We maintain our Buy rating.
Valuation
We value Indian IT services firms on a P/E basis relative to their historical trading range,
compared with both peers and growth rates. We value Infosys at 18x FY13E. The
lowered multiple factors in the increased macroeconomic uncertainty. We believe the
multiple is justified since the company should report an earnings CAGR of 16% over
FY12-14E and is better positioned than in 2003 on such key factors as revenue size, net
worth, dependence on the US and client concentration. We believe our use of the
stock’s recent average PEG of 1.1 captures the potential upside.

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Indian IT Services :Continental Europe – opportunity in adversity: Deutsche Bank

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TCS and Wipro poised to gain as Europe strives to stretch its IT spends

Our conversations with 55 key IT decision makers in European companies
suggest that Indian vendors are on track to become strategic partners for their
key clients. TCS and Wipro were cited as the best positioned to deliver value as
European CTOs face budget constraints on ‘run-the-business’ spends. A key
challenge for Indian vendors is domain expertise – 60% of European IT spend is
on project-based services with a skew toward manufacturing, which is
different from the US where BFSI dominates in IT spends.
Key takeaways from our conversations with CTO for CY12E IT budgets
(a) Overall budgets will be flat to marginally lower, but share of offshoring
would increase to manage cost pressures. (b) ‘More-for-less‘ is the mantra for
IT spends on run-the-business so that companies do not compromise their
‘change-the-business’ spends. (c) Vendor consolidation is accelerating and
companies are partnering with their larger vendors in a more strategic manner.
Gaining domain expertise is key challenge for Indian vendors
Sixty percent of European IT spend is on higher-margin project-based services
such as system integration and package implementation, skewed toward
manufacturing companies. This compares to 45% spend on ADM, skewed
toward BFSI space – Indian vendors’ current stronghold. Nearshoring should
alleviate the issue in the medium term but in the long run, Indian vendors
should cultivate domain knowledge through their ranks. Skill shortages in
Europe are a structural positive factor, which should aid this transition.
TCS – Emerging as the most preferred offshore vendor in Europe
TCS featured most frequently among the top three IT vendors according to
most European customers we spoke with. It is likely to gain wallet share as its
clients consolidate spending. We believe this is the primary reason for TCS’
above-average revenue growth, which we believe will be sustained due to the
structural shift in client spending patterns.
Wipro – Clients recognize improvement in quality of its service delivery
Based on our conversations, we note (a) rising customer satisfaction with the
quality of Wipro’s service after the organization restructuring, (b) appreciable
decline in attrition at the individual project level – a key performance metric for
clients and (c) recognition of its inorganic initiatives to gain wallet share with
marquee clients.
TCS and Wipro are our preferred sector picks
TCS trades at 17x FY13E earnings (10% discount to its average trading multiple
for the last two years). Given its forecast earnings growth of 20% over FY12-
14, we believe the stock is attractively priced. We value the company at 20x
FY13E P/E and increase our target price marginally from INR1,280 to INR1,320.
We expect Wipro to deliver earnings CAGR of 21% over FY12-14. At 14x FY13E
P/E, the stock trades at an inexpensive valuation. We value Wipro at 19x FY13E
P/E and raise its target price from INR400 to INR510. We also marginally
increase our FY13E EPS for Infosys and raise its target price marginally from
INR2,950 to INR3,000. We retain our Hold rating on HCL Tech with no changes
to estimates or target price. Key risks: US and Europe recession impacting
technology spend and a higher-than-expected rupee appreciation.

Indian Power Utilities :Pressing buttons for quick fixes: Deutsche Bank

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A good petition to start with, but a long way to go

TANGEDCO, the Tamil Nadu power distribution company, has recently
submitted a petition to raise power tariffs by 37% for FY13. To recap, there has
been relentless pressure from Indian financial institutions requesting tariff hikes
as many felt that it would be a panacea to their problems. However, a look at
some of the details, especially incremental debt at 80-100% of sales, and the
inexplicable gap in volume data between the CEA and the distribution
company, suggests long-term gains can largely be met by efficiency
improvements. We prefer low-cost gencos such as JSPL and a grid-co like
Power Grid.
TANGEDCO’s key assumptions are based on high tariffs and lower costs
A look at the details of the petition suggests that revenues are assumed to rise
by 45% in FY13 driven by a 37% blended increase in tariffs and an 8.5%
increase in volumes. The forecast cost for FY12 is expected to rise by 6% in
FY13 – largely driven by higher fuel costs for own generation, while assuming a
sharp 57% reduction in merchant power purchases to 5.3BU, which accounted
for >15% power bought by the state. What is interesting to note is that the
petition has urged the regulator to give tariff increases of 42% to domestic
users, 19% to industrial users and 589% to agricultural users. On the cost side
the company’s assumptions suggest that cost escalation would now no longer
be driven either by higher debt or employee costs.
Our worry stems from progress on key efficiency parameters
In the absence of filings of annual statements of balance sheet and cash flow,
we struggle to figure out the stresses in the balance sheet. Our calculations
suggest that for an INR15bn incremental rise in interest for FY12, the debt
burden could have more than doubled to INR530bn. Looking at the petition
and seeing that actual cost increases for purchases reached INR229bn (+19%
yoy) in FY12, it is possible that a major part of the debt was used to fund the
payables on an expected revenue shortfall of INR145bn. Moreover, we still
cannot reconcile the volume data from the CEA (ministry of power) and those
used by TANGEDCO, suggesting that perhaps the difference could be system
losses over and above those reported by the company. Lastly, the company is
continuing to capitalize some of its labor costs, thus understating the actual
cost. While it is clear that the government will partly bear the increased costs
for the needy, the quantum of the subsidy burden has still not been specified,
making it difficult for the regulator to approve tariffs.
Prefer low-cost gencos like JSPL and a grid-co like Power Grid
While policy makers are trying to address manageable issues like SEB
finances, the coal shortfall cannot be plugged as easily, in our view. We
continue to prefer low-cost gencos like JSPL, which have the ability to leverage
access to low-cost coal assets; and Power Grid, which is building a monopoly
transmission network in India, where a bottleneck is emerging

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Where to find the cash :: Business Line

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Buy stocks; Invest in bank deposits; Add tax-free bonds; Don't forget gold.

But where is the cash for all this?

Good question, but the market mayhem of 2011 has created such a unique set of opportunities across assets that it would be a pity to let them go waste.

Here are a few suggestions that can help you free up cash for those investments.

REVIEW AND RE-BALANCE

To take advantage of the opportunities outlined in the accompanying article, you need not necessarily raise fresh money. You can, instead, re-balance your existing portfolio to an ideal asset allocation.

If you own a portfolio of long-term investments, you should ideally be following a fixed asset allocation strategy. That is, deciding on a preferred mix of debt, equity and gold in your portfolio and staying with it, irrespective of how markets move.

Suppose you started out with Rs 100 shared 40:50:10 between equity, debt and gold at the beginning of the year.

Take stock of the market value of your current investments and work out allocations to each asset. You may find that your portfolio is now worth Rs 97.5, (a 2.5 per cent loss) with the equity portion trimmed to Rs 30 (roughly 31 per cent of the total now), debt growing to Rs 54.5 (56 per cent) and gold to Rs 13 (roughly 13 per cent).

This is assuming your stock portfolio lost 25 per cent in value, while debt earned 9 per cent and gold 30 per cent, in line with the actual performance of these assets.

To reset your asset allocation and get back to your preferred mix, you need to top up on equities and partly cash out of debt and gold holdings. Liquidating your debt and gold at a profit will give you the cash necessary to buy the equity funds we recommend.

SWITCH WITHIN ASSETS

You can also switch between products within an asset. In equities, if you hold several mid- and small-cap stocks, you can opt for an equity fund focussed on such stocks instead (IDFC Premier Equity, HDFC Midcap Opportunities, Goldman Sachs Nifty Junior Exchange traded fund).

If you want to invest directly in stocks but reduce risk, replace the mid- and small-cap picks with blue-chips.

In debt, consider pre-closing bank deposits you opened a year ago and opening a new one. The higher interest rates may more than make up for the pre-closure penalty. You can also switch proceeds to tax-free bonds, provided you can lock in the money. In every asset class, switch out of dud products (that didn't beat their benchmark or inflation) and buy ones that have fared better.

Finally, you could raise fresh cash by using up idle savings account balances and curtailing spending in favour of saving — the new Honda Brio or LCD television you planned to buy for New Year will still be around a few months later. The same cannot be said of tax-free NHAI bonds, bank deposits that offer 10 per cent, or stocks at bargain-basement prices.

It's happy new year for hiring; over 5 lakh new jobs; double-digit salary hikes during 2012 (ET)

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The new year may bring in loads of cheers for job-seekers, as the experts expect the companies to hire more than five lakh new employees during 2012 despite the uncertainties prevailing about the overall economic scenario.

Adding to the cheers of the job market, the employees could expect double-digit salary hikes during 2012.

"If all goes well, and depending on policies of the government and market situation, more than 5 lakh jobs will be created across all segments," executive search firm GlobalHunt's Director Sunil Goel said.

The Indian job market in 2011, felt the ripple effects of the global economic uncertainty, but emerged out of it rather strong, as companies adopted a "cautiously optimistic" approach and experts believe in the new year jobs will continue to be added, albeit at a slower pace.

As per Monika Tripathi, Vice President (Heading the IT, ITeS, Telecom and Research practices) at recruitment process outsourcing firm Elixir Consulting, "The IT/ITeS sector alone will generate as many as around 3 lakh jobs in 2012."

Elixir expects the hiring activities to increase by 7-8 per cent in 2012, from the levels seen in 2011.

As the companies would increase their technology investments and entities from abroad look at India-based service providers or development centres, there is a bright prospect for both domestic as well as multinational companies based in India, in the IT/ITES segment.

In the coming months job, opportunities are expected to grow exponentially in sectors like retail, healthcare and IT & ITeS, defence, hospitality and consumer durable.

"Since the interest rates have hardened to all times high, they are bound to come down giving much needed respite to banking, this should give boost to real estate and automobile and hence these sectors are likely to see some hiring," executive search firm Symbiosis Management Consultants' CEO and Founder Vinay Grover said.

Echoing similar sentiments, Richie Madan, Executive Director at Elixir Consulting, "there is a great demand for talent across industries in India. The Retail, BFSI, FMCG, Hotels and Hospitality sectors would pick up pace and would improve in 2012."

FMCG, Pharma are insulated from recession and will remain constant, Grover said, while adding that E-Commerce being a new kid on the block will emerge as a saviour and will compensate for rather dull scenario.

As far as compensations are concerned, there is reason to cheer, the average salary increase would increase to at least 12 per cent, from 11 per cent in 2011.

2012: Happy New Year ::IndiaER.blogspot.com

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New_Year_291211_(Layout2).jpg

Accumulate HAVELLS ; TARGET: RS.395 :: Kotak Sec

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HAVELLS INDIA LTD (HIL)
PRICE: RS.374 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.395 FY13E P/E: 12.9X
q Company has been observing resilient demand in the domestic business
across all verticals driven primarily by tier II cities.
q Our channel checks and interaction with various industry players indicates that there has been a slowdown in demand for higher value consumer goods like Ac's, LED's, refrigerators etc; demand for smaller consumer appliances primarily home appliances remain intact.
q Management has concluded successful restructuring at Sylvania in the
last fiscal and expects to report consistency in performance going ahead.
Management expects to maintain Sylvania's margins in FY12.
q We believe that company's stock is reasonably priced at current levels. In
view of limited upside from current levels we maintain our 'Accumulate'
rating on company's stock with a one year DCF based unchanged price
target of Rs.395.
Price hike across various product categories and higher interest
rates hits Indian consumer market in high value products like
AC's, refrigerators etc; demand for lower value home appliances
products remain intact
n We have interacted with various industry players including Voltas, Blue Star and
Havells in order to get a sense of consumer demand in various product categories. We have also interacted with various dealers operating in different regions
in consumer durable space to understand the ongoing market trend.
n The major products that constitute Indian consumer appliances market are ACs,
TVs, Refrigerators, washing machines, mixers, grinders, irons, water heaters or
geysers, electric fans and exhausts.
n We highlight that there has been a reasonable growth in demand for lower
range product categories like television sets, semi-automatic washing machines,
medium range mobile sets, lighting products etc.
n However demand for higher value consumer goods like Ac's, LED's, refrigerators,
washing machines etc is bleak. This has mainly been on account of successive
price hikes taken by several companies like Voltas, Bluestar etc and overall increase in interest rates.
n Increase in interest rates has been negatively affecting the sales of high value
consumer goods costing over Rs 15000. This is due to the fact that majority of
customers in suburbs and tier II cities prefer availing loans for buying such products.
n Among various product categories, air conditioner market has been experiencing
the highest hold up in demand. We believe that sales have been negatively impacted by lighter summer this year. Successive price hikes taken by several domestic companies like Voltas in order to pass on the raw material pressure and
increase in interest rates have also played role in sluggish demand scenario (refer
to our note on Voltas dated 11/11/11).
n Demand for home appliances has remained more or less intact over 1HFY12. We
believe that this has been mainly on back of 1) growing disposable income
within Indian households (urban & rural) 2) evolving lifestyle patterns in India
leading to a peculiar shift in preference for premium products offered by organized players like HIL 3) shortening of product cycle due to higher rate of technological obsolescence 4) increasing electricity supply in urban and rural India.

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Buy Axis Bank:: Target: RS.1230 :: Kotak Sec

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AXIS BANK
PRICE: RS.854 RECOMMENDATION: BUY
TARGET PRICE: RS.1230 FY13E P/E: 7.5x, P/ABV: 1.4X
Key takeaways: Modeling lower loan growth but NIM for FY12 is
likely to come near upper band of the management guidance.
Concerns on asset quality might impact the stock performance in
near-term, but it is currently available at a significant discount to
its historical average. Hence, we advise our clients to look at this
opportunity with medium to long term horizon.
q Modeling lower loan growth (19-20% during FY12/13 on slowing
economy and increase in the risk of asset quality deterioration as against
the management guidance of 22-23%); NIM for FY12 is likely to come
near upper band of the management guidance (3.25-3.5%). We are modeling NIM at 3.39% and 3.28% during FY12 & FY13, respectively, as compared to 3.65% witnessed during FY11.
q Although asset quality remained healthy till Q2FY12, perceived risk has
amplified with high exposure to infrastructure and other stressed sectors; key things to watch would be restructuring of infra book or MFI exposure.
q Axis bank has inflated contingent liability (187% of assets) at the end of
FY11, another area of concern, in our view. For FY11, after applying CCF
at 75% (average of 50% CCF applied on "Transaction and Performance
Guarantee" and 100% CCF applied on "Direct Credit Substitute Guarantees"), CEA comes at Rs.405.5 bn (16.7% of assets at the end of FY11), a
higher number by any standard.
q Lower net profit growth during FY12/13E along with higher risk on asset
quality might warrant some kind of de-rating; hence, we are cutting the
P/ABV multiple from 2.5x to 2.0x. We maintain BUY rating on the stock
with revised TP of Rs.1230 (Rs.1500 earlier) based on P/ABV of 2.0x its
FY13E adjusted book value.

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IndiaER.blogspot.com :: HAPPY NEW YEAR 2012

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:: New Year Wish ::

�

Another year unfolds;

New path we have to tread.

We wonder what life holds

In the brand new year ahead.

�

My special wish for you

Is blessing from God above.

To make this your happiest year,

Filled with joy, peace and love.

RECAP 2011: India in the year gone by (rediff)

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In 2011 protests seemed to be the buzzword. Led by Anna Hazare there were anti-corruption protests across the country. The Lokpall Bill was introduced in Parliament but protests on its scope continued as the year drew to a close.

Kudankulam nuclear power plant and Mullaperiyar dam were the other issues that prompted protests. Issues like the 2G telecom, corruption in Commonweatlh Games dominated headlines throughout the year.

A stampede killed 102 people in Sabrimala in the beginning of the year, a train mishap in Uttar Pradesh killed 38 passengers whereas towards the end tragedy struck a Kolkata hospital when a major fire killed over 90 people.

Mamata Banerjee stormed the Red bastion terminating the Left Front's 34-year stranglehold on West Bengal, while Jayalalithaa knocked Dravida Munnetra Kazhagam out of power in Tamil Nadu with a landslide victory in the assembly polls.

Also, the killing of Maoists' top leader Kishenji in a gunbattle with security forces were other events in the year.

Following is the diary of events during 2011:

Jan 1: New Delhi: India and Pakistan exchange lists of their nuke installations for 20th consecutive year under an agreement which prohibits any attack on such facilities.

Jan 1: Guwahati: ULFA chairman Arabinda Rajkhowa walks free from jail on bail and declares his readiness for an "unconditional" peace dialogue with Assam Government.

Jan 4: New Delhi: A petition is filed in Supreme Court seeking initiation of contempt proceedings against former Telecom Minister A Raja and advocate R K Chandramohan for allegedly trying to influence the then Madras HC judge Justice S Reghupathi in a criminal case.

Jan 6: New Delhi: Delhi Court questions CBI's decision to drop the case against Italian businessman Ottavio Quattrocchi in the over two-decade old Bofors pay-off scam, saying there were "certain malafide intentions".

Jan 10: Bangalore: India joins a select group of nations manufacturing warplanes with home-grown Light Combat Aircraft 'Tejas' moving a step closer to its induction into the IAF after getting its Initial Operational Clearance.

Jan 12: Itanagar: China begun issuing visas to residents of Arunachal Pradesh, over which it lays claim, but they are stapled to passports as in case of people from Jammu-Kashmir.

Jan 13: Mumbai: A special court grants permission to CBI for reinvestigating the 2006 Malegaon blast probe case in wake of "confession" statements made by Swami Aseemanand linking Hindu groups to terror acts.

Jan 20, Kochi/Thiruvananthapuram: The Kerala high court asks whether or not 'Makara Jyoti' is man-made amid a renewed debate on authenticity of the celestial light visible from Sabarimala after the stampede that killed 102 pilgrims.

Jan 21: New Delhi: Sonia Gandhi-led National Advisory Council unveils the first part of the draft food bill that seeks to provide legal food entitlements to 75 pc households.

Jan 22: Shillong: Lt Gen P K Rath, the senior-most serving officer to be convicted for corruption, has been given a sentence of severe reprimand and two-year loss of seniority by an Army Court Martial.

Jan 29: New Delhi: India reacts sharply to the action of the US authorities to tie a tracker on Indian students duped by a California-based "sham" university, terming it as "unwarranted" and demanded its removal.

Feb 2: New Delhi: A Raja, who as telecom minister had allegedly manipulated procedures in allocation of 2G spectrum is arrested along with two officials by CBI, a week before it has to file its final investigation report in Supreme Court.

Feb 5: Kolkata: Finance Minister Pranab Mukherjee rules out disclosing names of those who have stashed away money in tax havens abroad but discloses that notices have been sent to 17 of 18 names of account holders in a bank in Liechtenstein.

Feb 9: Ghaziabad: Parents of slain teenager Aarushi Talwar--Rajesh and Nupur--have been ordered to face trial in the murder of their daughter and servant Hemraj more than two years ago after local court rejected agency's closure report.

Feb 14: New Delhi: CBI brings fresh charges of forgery and cheating against former Telecom Minister A Raja and Swan Telecom promoter Shahid Usman Balwa who have been arrested in connection with 2G spectrum allocation scam case.

Feb 15: New Delhi: Supreme Court upholds death sentence to Nithari serial killer Surinder Koli for murdering 14-year-old Rimpa Haldar, one of his first victims in the serial rape-cum-killing episode six years back.

Feb 18: New Delhi: CBI moves Supreme Court challenging an Allahabad High Court order that dropped charges of criminal conspiracy against top BJP leaders including L K Advani and Murli Manohar Joshi in the Babri Masjid demolition case.

Feb 20: New Delhi: The birdflu outbreak in Agartala in Tripura gets confirmed to be the highly virulent H5 strain which if transmitted to humans can be deadly.

Feb 21: Mumbai: Bombay HC upholds sentence of Pakistani terrorist Ajmal Amir Kasab for "brutal and diabolical" 26/11 Mumbai attacks aimed at "destabilising" the government.

Feb 22: New Delhi: Prime Minister announces government's decision to set up a JPC into the 2G spectrum scam.

Feb 22: Ahmedabad: 31 people are convicted and 63 others, including the main accused Maulvi Umarji, are acquitted by a special court here in the 2002 Godhra train burning incident that left 59 people dead and triggered violence in Gujarat that had claimed the lives of over 1200 people.

Feb 23: New Delhi: Former Commonwealth Games Organising Committee Secretary General Lalit Bhanot and OC Director General V K Verma arrested by the CBI in connection with alleged irregularities in the Rs 107 crore deal inked with a Swiss timing firm.

Mar 1: Ahmedabad: Eleven convicts in Godhra train burning case get death sentence while 20 others get lifers by a special court in 2002 incident that left 59 'karsevaks' dead and triggered riots which claimed over 1200 lives in Gujarat.

Mar 12: New Delhi: Former CVC P J Thomas decides to move Supreme Court seeking review by a Constitution bench of its March 3 judgement quashing his appointment, claiming that judiciary has no right to decide his eligibility for the post without prior reference from the President.

Mar 15: New Delhi: Suspended Commonwealth Games Organising Committee Chairman Suresh Kalmadi is questioned by the CBI for the second time in connection with alleged scams related to the conduct of the sporting extravaganza.

Mar 24: New Delhi: Shunglu committee finds procedural violations in construction of over 1,000 flats inside CWG village by real estate developer Emmar MGF, and indicts Delhi Lt Governor Tejinder Khanna for alleged inadequacies.

Mar 26: Ghaziabad: The wife of Hemraj, who was killed along with teenaged girl Aarushi in Noida, moves a local court, trying the double murder case, seeking recording of her statement about a purported conversation with her husband who had talked of "threat" to his life and said she suspected the hands of Talwars in the killings.

Mar 28: New Delhi: Parliament's Public Accounts Committee calls leading industrialists, including Ratan Tata and Anil Ambani, and corporate lobbyist Niira Radia to appear before the panel in connection with 2G spectrum scam.

Apr 8: New Delhi: Government blinks in war of attrition with Anna Hazare by agreeing to issue a formal order to set up a 10-member joint committee for drafting a strong Lokpal Bill and the Gandhian will end his fast.

Apr 13: New Delhi: China drops broad hints at reversing its 2-year-old practice of issuing stapled visas to people from Jammu-Kashmir, saying it was willing to work with India resolve issues relating to people to people exchanges.

Apr 7: New Delhi: The war over an alleged CD involving eminent lawyer Shanti Bhushan intensifies with his son Prashant claiming the disc was "doctored" using 2006 conversations of Mulayam Singh Yadav and says he will move Supreme Court on the ground it was intended to influence judgements in 2G and Amar Singh tape cases.

Apr 18: Raipur: Rights activist Binayak Sen, who was behind bars for nearly four months serving a life term for sedition and Maoists links, is released from Chattisgarh's central prison, 3 days after Supreme Court granted him bail.

Apr 24: Puttaparthi: Godman Sathya Sai Baba, a cult like figure who had a phenomenal following, including the high and mighty, across the globe dies battling illness caused by a multi-organ failure for nearly a month.

Apr 27: New Delhi: About 800 pilots from erstwhile Indian Airlines go on a strike demanding pay parity with Air India pilots and better working conditions, leading to cancellation of over 20 flights and disruption of many others.

Apr 27: Dharamsala: Harvard scholar Lobsang Sangay is elected Prime Minister of Tibetan Government-in-Exile and would take over the political duties relinquished by spiritual leader the Dalai Lama.

May 4:Itanagar: Arunachal Pradesh Chief Minister Dorji Khandu, who went missing on a flight from Tawang, is dead along with four others after their helicopter crashed in bad weather in the mountains and their bodies and the wreckage are located.

May 6: New Delhi: Air India pilots call off their 10-day-old strike that resulted in an estimated loss of over Rs 150 crore as Government agrees to reinstate sacked and suspended pilots and look into their demands within a time-frame.

Maria Susairaj walks out of Byculla jail

May 8: New Delhi: Suspense continues over arrest of DMK MP Kanimozhi with a special court reserving for May 14 its orders on her bail application after CBI strongly objected to it saying her "complicity" in the alleged bribe given to Kalaignar TV in the 2G scam was clear.

May 11: Greater Noida: Rahul Gandhi is arrested and later released by UP police after he slips in unnoticed in pre-dawn hours to support farmers agitating against state's land acquisition process for a expressway project.

May 13: Kolkata/Chennai: Mamata Banerjee storms the Red bastion terminating the Left Front's 34-year stranglehold on West Bengal, while Jayalalithaa knocked DMK out of power in Tamil Nadu with a landslide victory in the assembly elections.

May 21: New Delhi: Kanimozhi, DMK MP and daughter of M Karunanidhi, arrested in connection with the 2G spectrum case, is set to move Delhi High Court for bail.

May 30: New Delhi: India and Pakistan discuss demilitarisation of Siachen, a mountainous region where borderline is not demarcated, in a "constructive framework", picking up the threads of the issue after gap of 3 years.

June 1: New Delhi: Government deputes its four senior Cabinet ministers to the Delhi airport in a bid to persuade Baba Ramdev to give up his indefinite fast on corruption but yoga guru insists that he would go ahead with it from June 4.

June 5: New Delhi/Haridwar: The dramatic eviction of Baba Ramdev in the middle of night in a swoop by Delhi police set off a slugfest between the UPA and the Sangh Parivar and the yoga guru who announced that he would continue his agitation against black money.

June10: Chennai: Ending days of uncertainty, the DMK decides not to pull out of the UPA Government over the 2G spectrum scam, but accused the CBI of adopting "double standards" by arresting party MP Kanimozhi in the case.

June 11: Mumbai: A senior journalist with an English tabloid 'Mid-Day', who extensively covered underworld and crime for over two decades, was shot dead in broad daylight by four unidentified bike-borne persons who pumped five bullets on him from behind in suburban Powai.

June 12: Dehradun: Yoga guru Baba Ramdev breaks his nine-day-old fast that sparked a political slugfest heeding appeals of spiritual and religious leaders but vows to continue his campaign against corruption.

June 20: Panchkula (Haryana): After a four-year-long probe, the National Investigation Agency charges suspected right-wing extremist Swami Aseemanand and four others with triggering explosions in the cross-border Samjhauta Express in 2007 that left 68 people dead.

July 1: Mumbai: Kannada actress Maria Susairaj gets a maximum three years' imprisonment while her boyfriend and former Navy officer Emile Jerome gets 10-year jail in brutal killing of Neeraj Grover.

July 8: New Delhi: The Supreme Court restrains the seven-member committee from opening vaults of the Sree Padmanabhaswamy Temple in Thiruvananthapuram, which according to estimates contains wealth worth over Rs one lakh crore.

July 10: Fatehpur (UP): At least 38 passengers were killed and about 210 injured when 15 bogies of a speeding Delhi-bound Kalka Mail derailed here -- the second major train mishap in a week in Uttar Pradesh.

July 21: Bangalore: Lokayukta indicts Karnataka Chief Minister B S Yeddyurappa and his ministers in a "huge racket" of illegal mining and finds that his sons got kickbacks of Rs 30 crores from a mining firm.

July 22: Mumbai: The Enforcement Directorate issues a showcause notice to BCCI and suspends IPL commissioner Lalit Modi for transfer of Rs 90 crore to UK, in connection with its probe in the alleged financial irregularities in the T20 cricket tournament.

July 31: Bangalore: Karnataka Chief Minister B S Yeddyurappa, resigns ending three days of defiance and favours sitting Lok Sabha MP D V Sadananda Gowda as his successor.

Aug 4: Bangalore: Lok Sabha member D V Sadananda Gowda is sworn-in as chief minister of Karnataka, succeeding B S Yeddyurappa, who quit in the wake of the Lokayukta report on illegal mining that indicted him.

Aug 8: New Delhi: US hands over to India documents related to Pakistani-Canadian Tahawwur Hussain Rana, accused of offering support to 26/11 Mumbai terror attack, and his confessional statements that will help NIA to file a charge sheet against him.

Aug 12: New Delhi: President Pratibha Patil rejects the clemency petitions of three killers of Rajiv Gandhi whose death sentences were confirmed by the Supreme Court in 2000.

Aug 17: New Delhi: Rajya Sabha takes up impeachment proceedings against Calcutta High Court judge Justice Soumitra Sen, who claimed he was being victimised and made "sacrificial lamb" to cleanse the judiciary.

Aug 28: New Delhi: Anna Hazare breaks 12-day-old fast declaring that poll reforms will be top of his agenda next so that corruption can come down.

Aug 30: Chennai: Ten days before their hanging, three Rajiv Gandhi killers get a reprieve from Madras HC which stayed their execution for eight weeks even as Tamil Nadu assembly in an unprecedented unanimous resolution appealed to the President to reconsider their mercy pleas.

Sept 5: New Delhi: The much-talked about Land Acquisition Bill, which provides for enhanced compensation to land owners and other benefits, approved by Union Cabinet notwithstanding reservations from some senior ministers on some aspects.

Sept 6: New Delhi: MP Amar Singh is arrested and lodged in Tihar Jail in sensational twist in cash-for-vote scam that rocked Parliament three years ago after he made a dramatic appearance in a local court within hours of claiming to be ill.

Sept 7: New Delhi: A high intensity briefcase bomb rocks the crowded reception area in the Delhi High Court killing 11 people and injuring 76 in a major terror attack that struck the Capital after a gap of three years.

Sept 12: Supreme Court declines to pass any order on Gujarat Chief Minister Narendra Modi's alleged inaction to contain riots in 2002 and leaves it to the trial court to decide course of action against him on basis of SIT report.

Sept 18: Gangtok: A powerful earthquake with a 6.8 magnitude hit Sikkim and several areas in the eastern part of the country and neighbouring Nepal, leaving 18 dead and over 100 injured besides causing damage to buildings and roads.

Sept 22: The Supreme Court says the vault 'B' of Sree Padmanabhaswamy Temple will be opened only after substantial work regarding documentation and preservation of assets unearthed from other vaults of the shrine is completed.

Sept 27: Ahmedabad: Suspended IPS officer Sanjeev Bhatt, who had implicated Gujarat Chief Minister Narendra Modi in 2002 post- Godhra riots, is arrested after a police constable filed an FIR against him.

Balasore (Orissa): After perfect trial of 'Shourya' and 'Prithvi-II', India successfully test fired nuclear capable 'Agni-II' ballistic missile with a strike range of 2,000 km as part of user trial by armed forces from Wheeler Island off Orissa coast.

Oct 1: Ahmedabad: A day after suspended IPS officer Sanjiv Bhatt is arrested, his family says they fear for his life and have written to Gujarat Commissioner of Police demanding justice.

Oct 2: New Delhi/Hyderabad: Bringing his fight for a separate Telangana to the national capital, TRS chief K Chandrasekhar Rao stages a sit-in at Rajghat, rejecting Centre's decision to hold "further consultations".

New Delhi: The world's cheapest tablet PC, priced at around Rs 1,200, will now be available to students in the country as part of the government's programme to expand education through information technology.

Oct 9: New Delhi: Supreme Court stays the death sentence of Pakistani terrorist Ajmal Kasab, the lone surviving gunman from the 2008 Mumbai attack, on his petition that he does not deserve to be hanged because of his young age but it wonders whether he deserved to be heard.

Sitabdiara/Chapra: BJP stalwart L K Advani sets off on his sixth yatra in 21 years to focus on rash of scams and black money issues, giving a clarion call for not just 'change' in leadership but also change in the system.

Oct 16: Jaipur: Rajasthan Minister Mahipal Maderna, suspected to be involved in the case of disappearance of nurse Bhanwari Devi, is sacked by Chief Minister Ashok Gehlot.

Oct 17: Hisar: Kuldeep Bishnoi, HJC-BJP combine nominee, wins the battle for the prestigious Hisar Lok Sabha by-election in Haryana in a tight race in which Team Anna vigorously campaigned against the Congress which lost deposit.

Oct 20: New Delhi: Team Anna plunges into yet another controversy with allegations against Kiran Bedi that she over charged companies and institutions by inflating her travel expenses, evoking a strong attack from Congress and former colleagues in the anti-corruption campaign.

Oct 28: New Delhi: In a u-turn, Anna Hazare declares that he will campaign against Congress in five states where Assembly elections are due next year if the UPA government fails to get the Jan Lokpal Bill passed in Winter Session of Parliament.

Anna Hazare on fast at Ramlila Maidan in New Delhi

Nov 5: Mumbai: Legendary singer-composer Bhupen Hazarika, who wove a magical tapestry out of traditional Assamese music and lyrics, dies following a prolonged illness.

New Delhi: Former Telecom Minister Sukh Ram, is sentenced to five years imprisonment by a Delhi court in a 1996 corruption case and arrested and sent to Tihar jail.

Nov 21: New Delhi: At least 14 eunuchs are killed and over 40 others injured when a major fire sweeps through an east Delhi community hall where a congregation was taking place.

Nov 22: Lucknow: Chief Minister Mayawati pushes through resolution to split Uttar Pradesh into four parts in the state Assembly in less than 10 minutes ignoring stiff opposition after which the House was adjourned sine die.

Ahmedabad: In a blow to the Narendra Modi government, the Gujarat High Court-appointed SIT concludes police encounter with college girl Ishrat Jehan and three others was fake as they were killed prior to the incident.

Nov 25: Kolkata: Maoists top leader Kishenji is killed in gunbattle with security forces in a forest in West Midnapore district of West Bengal, a day after he narrowly escaped jail.

Nov 26: New Delhi: Border talks between India and China scheduled to commence here have been indefinitely postponed.

Nov 28: Imphal: United Naga Council lifts its 100-day economic blockade on the Manipur side of two national highways without any condition but with a caveat that agitation would be re-launched if the government did not make an 'alternative arrangement' for Nagas in the state.

Dec 1: New Delhi: Union Cabinet finalises and approves India's stand at the ongoing UN Climate Conference in Durban.

Dec 19: New Delhi: RLD, with five members in Lok Sabha, formally joins the UPA amid speculation that its chief Ajit Singh would be included in Cabinet as Civil Aviation Minister.

Dec 19: New Delhi: Delhi, the political and cultural capital of several empires including the Mughals, adds yet another chapter to its glorious history as it marks 100 years of its re-emergence as modern India's capital.

New Delhi: US-born terrorist David Headley, founder of Lashker-e-Taiba terror group Hafiz Saeed and two serving Pakistani Army officers were among the nine people chargesheeted by NIA for planning and execution of terror strikes in India.

Dec 27: New Delhi: Anna Hazare faces a low turnout as he launches his three-day fast against a "weak" Lokpal Bill asking people to be ready for fight to finish to stamp out corruption and ensure that "goondas" do not enter Parliament.

Dec 28: Mumbai: Anna Hazare makes a surprise announcement of calling off his campaign to fill jails ended his fast.

Dec 28: New Delhi: India termed as "sensible resolution" of a sensitive issue the rejection of a petition seeking a ban on Bhagavad Gita by a Russian court and said it was glad to "put this episode behind us."