MOSt Wealth– Detailed Report

AUGUST 2009

Dear Investor,

Our 5th Global Investor Conference was held in Mumbai. It was a grand gathering where

the crème-de-la-crème of corporate India met the most intelligent and smart investors

assembled from all over the globe. The undertone in the conference was distinctly bullish

both from the corporate as well as the investor’s side - however there were concerns that

monsoon could disappoint sentiments going forward.

Rural India became the buzzword and companies like Bharti Airtel, Godrej Consumer, Dabur,

Marico, Hero Honda, M&M, Shriram Transport all opined that incremental demand for

their products and services remained very strong from the rural side.

I was thoroughly impressed by the short and very powerful speech delivered by Mr. Brij

Mohan Lal Munjal, Chairman Hero Honda Motors Limited who in one stroke removed

all fears that investors had on the future of this company… whether be it the saturation

of the motorcycles market or the cannibalization of its products from Tata’s Nano or Honda

Motors Japan posing a threat to the company going forward or the company not venturing

out into new products … all were answered with grace and poise which left most convinced

that this was a company that would go places even from its current position. My conviction

in the stock stands reaffirmed after hearing Mr. Munjal.

Shriram Transport, Max India, BPCL, ICICI Bank, SBI and Great Eastern Shipping were other

companies which I liked based on the presentations which the respective companies made

or the discussions which I had with the company personnel.

Markets are at a crucial fulcrum level of 16000 level on the Sensex and could spend the

extreme near term within a +/- 5-7% band. However, I think sector churn would happen

and midcaps would outshine large caps in the interim period.

Happy investing

Sincerely yours,

From the desk of

Manish Sonthalia

“

If you

want to make

more money

than other

people,

you

cannot invest

like other

People

INDEX

MOSt Value

MOSt Momentum

MOSt Mutual

MOSt Insurance

MOSt PMS

MOSt Commodities

”

Manish Sonthalia

Fund Manager - PMS

1-6

7-9

10-14

17-19

1308 Business Locations

555 cities

www.motilaloswal.com

Equity Overview

Market roundup

INDEX

Index

July- 31

June- 30

Change (Pts)

Change (%)

High

Low

Global Market

Market Level

Index as on 31st-July-09

Nikkei

10356

Nasdaq

1978

Hang Sang

20573

Dow

9172

Sensex

15670

Nifty

4636

FTSE 100 Index

4608

Chg. (Pts) Chg. (%)

398

4.0

143

7.8

2194

11.9

725

8.6

1176

8.1

345

8.0

359

8.4

Sensex

15670

14494

1,176

8.11

15732

13219

Nifty

4636

4291

345

8.04

4669

3918

The market closed at 13-month high, gained of over 8% to close at 15670.

The corporate results for the first quarter have beaten the street expectation.

Global markets have also turned around after suffering huge setbacks in last

few months. All commodities too fared reasonably well strengthening to 8-

10 months high signalling the revival in the global economy and India is not

an exception, being one of the top three emerging markets in the world.

The companies domestically and globally have put an improved performance.

Some of the US financial majors such as Bank of America, Citi group, Google

have reported better than expected results. In Indian markets, FIIs have been

net buyers over $2bn, which is primarily driven by the stellar performance.

51 companies in MOSL research universe have reported June 2009 quarter

results, where sales were down by 4% (vs est decline of -4%), EBIDTA grew

by 7% (vs estimates of flat growth) and PAT was up by 3% (vs est of 3%

decline). Aggregate earnings growth would have been even more impressive

had for Reliance, ONGC and Metals contributed with better numbers.

Excluding these, PAT growth is at 22% vs est of 13%. Breadth of the earnings

has been very positive. 30 companies in our Universe have reported PAT

higher than estimate while 12 have reported below. On the EBIDTA front, 31

companies reported above est while 11 were below.

One factor may impact in the market is monsoon and rising crude oil prices.

Monsoon may temporary affect on the market and provide an opportunity to

enter at lower levels. Most of the parameters like Auto monthly sales, cement

sales and government's additional stimulus package of 1% cut in interest rate

for housing loan up to Rs.1mn have been positive. The government has also

taken an initiative on PSU disinvestment like NHPC, Oil India and planning

more divestments going forward.

High 15,733

BSE Sensex Monthly Movement in July

Close 15,670

FIIs and MFs fund flows for July 2009 (Rs. Cr)

Particulars

Gross Purchase

Gross Sales

Net Investment

FII’s

70,256

58,631

11,625

MF’s

22,560

20,734

1,826

Major event during the month of July 2009

•

Rains were more than forecast, weather office says

•

98% while expectation 93%

RBI credit policy : Unchanged reverse repo 3.25%,

repo rate 4.75% and CRR at 5%

Sensex closes nearly 13-month high at 15670

Government hikes petrol by Rs.4 and diesel price

by Rs.2 a litre

Industrial production (IIP - May) at 2.7% against

1.4% previous month

Sterlite Industries completed 123mn shares ADS

for $12.15 per share

Crisil has downgraded IDFC from AAA TO

AA+stable

US existing home sales better than expected at 3.6%

Major event to watch out in the next month

•

US major announcement (Aug 2009) – Initial

Open 14,560

jobless 6th, Unemployment rate 7th, FOMC rate

decision 12th, Industrial Production 14th, Existing

home sales 21st, GDP (QoQ) 27th, Personal income

and spending 28th

Low 13,220

MOSt

Wealth

New Research Reports

Mahindra lifespaces

24th July 09 / CMP: Rs.283

YEAR

END

NET SALES

(RS.MN)

PAT

(RS.MN)

EPS

(RS.)

EPS

GROWTH (%)

P/E

(X)

P/BV

(X)

ROE

( %)

ROCE

( %)

EV/

SALES

EV /

EBITDA

3/08A

3/09E

3/10E

3/11E

2,311

3,418

3,870

5,454

449

641

875

1,622

16.0

15.7

21.5

39.8

271.2

-3.5

36.7

85.3

17.4

18.0

13.2

7.1

1.4

1.2

1.0

7.8

6.9

8.7

13.8

8.0

7.8

12.1

18.0

6.0

3.9

2.9

1.6

21.3

18.5

7.7

3.6

Change in revenue accounting lowers PAT:

Mahindra Lifespaces (MLL) posted flat standalone revenues of

Rs.473mn in 1QFY10 (v/s Rs482m in 1QFY09). Net profit grew 7%

YoY to Rs.104mn. However, the performance is not comparable, as

the company has changed its norm for accounting of revenues. The

company now records revenues post receiving 10% of the sales

consideration v/s its earlier norm of 5% of sales consideration. Under

its earlier norm of revenue recognition, Q1FY10 revenues would have

been higher by Rs.35.5mn to Rs.508mn, up 5% YoY and net profit

would have been higher by Rs.10.9mn to Rs.115mn, up 18% YoY.

During Q1FY10, EBITDA margins expanded 740bp to 22% from

14.6% in Q1FY09. MLL has not provided details of its consolidated

results.

New launches picked momentum:

In Q1FY10, MLL launched two residential projects aggregating

~0.6msf (1) ~0.3msf, phase-II of Mahindra Eminente, Goregaon,

Mumbai, and (2) ~0.3msf, Mahindra Royale, Pune. The

management has indicated that these new launches have received

encouraging response. MLL has ~1.9sf under construction spread

across projects in Mumbai, Chennai, Faridabad and Pune. It has

planned new launches of ~5.3msf of residential projects in Chennai

(~2.3msf), Pune (~0.3msf), Nagpur (~1.3msf) and Gurgaon

(~1.4msf). We value the residential vertical at Rs.171/share

Strong progress in SEZs:

MLL has completed the development of the additional area of

~180acres acquired in FY09. In Q1FY10, two more companies

commenced operations in the Chennai SEZ, taking the total number

of operational companies in the SEZ to 24 out of the total customer

base of 48 companies. MLL has planned two new residential

launches in FY10, (1) a project of ~1msf, and (2) a project of

0.6msf through its JV with Ayala Land. MLL leased ~0.06msf of

area at the IT Park, Evolve in 1QFY10 increasing the area leased to

0.11msf.

Valuation and view:

MLL has a healthy balance sheet, with low leverage of ~0.1x as of

FY09 and no major land outstandings. This, coupled with its strong

management, differentiates the company from its peers. For FY09,

MLL’s gross debt increased by 16% to Rs.3.3bn from Rs.2.9bn in

FY08 while cash and cash equivalents decreased by 34% to Rs.2.3bn

from Rs.3.6bn in FY08. As a result, MLL’s net debt stood at Rs.977mn

v/s net cash of Rs.715mn in FY08. MLL is comfortably placed

compared to its industry peers as it has a low leverage of 0.1x. Our

SOTP value for MLL is Rs.518/share: (1) Chennai SEZ at Rs.96/share,

(2) Jaipur SEZ at Rs.174/share, (3) residential vertical at Rs.171/share,

and (4) cash/other rental assets at Rs.76/share. The stock trades at

1x FY11E adjusted book value of Rs.281 and at 0.6x its SOTP value of

Rs.518. Our target price for MLL is Rs.362 – 28% upside.

Maintain Buy.

STOCK PERFORMANCE (1 YEAR)

MOSt

Wealth

New Research Reports

SBI

31st July 09 / CMP: Rs.1,812

YEAR

END

NET INCOME

(RS. MN)

PAT

(RS. MN)

EPS

( RS. )

CONS.

EPS (RS.)

CONS.

P/E( X )

P/BV

(X)

CONS.

P/ABV( X)*

CAR

( %)

ROE

(%)

ROA

(%)

03/08A

03/09A

03/10E

03/11E

257,162

335,639

372,488

457,739

67,291

91,212

101,013

118,815

106.6

143.7

159.1

187.1

141.9

178.4

211.2

255.4

12.3

9.8

8.3

6.8

2.2

1.9

1.7

1.5

2.0

1.7

1.5

1.4

13.0

14.3

12.6

12.5

16.8

17.1

16.3

16.9

1.0

1.1

1.0

* Valuation multiples are adjusted for SBI Life's value

SBI Q1FY10: Above estimates; Exceptional incomes used

for NPA and staff cost provisions:

SBI’s (SBIN IN, Mkt Cap US$23b, CMP Rs.1723, BUY) Q1FY10

PAT grew 42% (vs est of 16%). Positive surprises were: a) NII

growth of 4% YoY/QoQ, b) fee income growth of 45% YoY, and

c) restructured loans contained at 3.8% of loan book. SBI has

rightly used: a) MTM reversal on investments of Rs.12bn in Q1FY10

to improve provision coverage to 45%; b) treasury and forex

income gains of Rs.11.8bn (YoY up by 200%) to make accelerated

wage hike provision of Rs.7.7bn (factoring in 17% wage hike).

Key highlights:

Out of pending applications of Rs.110bn (of which Rs.88bn was

standard loans and Rs.22bn was NPA), SBI restructured loans worth

Rs.81bn during the quarter (Rs.60bn standard loan and Rs.21bn is

NPA). The cumulative restructured standard loans stood at Rs.209bn

(~3.8% of loan book). Loans grew 23% YoY (flat QoQ) to Rs.5.5tn.

Deposit inflows remained strong with a growth of 36% YoY and

3% QoQ to Rs.7.6tn. Despite low incremental CD ratio of ~5%,

SBI could manage to keep margins stable QoQ at 2.3%. Benefit of

bulk deposits repricing helped to lower cost of deposits by 27bp

QoQ to 6.08% (calc.) while yield on loans declined by just 13bp

QoQ to 9% (calc.). CASA growth was strong 23% (remains highest

in the PSU space); CASA ratio stood at 38%. CAR remains strong

with Tier I at 9.7%.

Asset quality surprises positively:

Reported Gross NPAs in absolute terms declined 2% QoQ to Rs.153bn

and Net NPAs declined 12% QoQ to Rs.84bn. Provision coverage

improved to 45% from 39% (42% adjusted for Dabhol) a quarter

ago. Slippages during the quarter were Rs.30bn (2.2%). Dabhol

power project exposure of Rs.16.5bn has been upgraded as standard

loans (was classified as NPA in Q4FY09). Gross NPA ratio remained

stable QoQ at 2.8% and Net NPA ratio improved to 1.55% from

1.76% a quarter. Facility-wise restructured standard loans stand at

3.8% of the loan book. There is no change from the disclosures

made in annual report.

MOSt

Wealth

Surplus liquidity continues:

Deposits increased by 36% YoY and 3% QoQ to Rs.7.6tn. Loan

growth was 23% YoY (flat QoQ) to Rs.5.5tn..Surplus liquidity is evident

as CD ratio fell from 79% in Q1FY09 to 72% in Q1FY10. During the

quarter incremental CD ratio is just 5%. Margins have declined from

3.03% in Q1FY09 to 2.3% in Q1FY10. During last 1 year incremental

CD ratio for SBI is just 50% which is impacting margins.

Reported cost of deposits declined to 6.16% in Q1FY10 vs. 6.3% in

FY09 and yield on loans declined to 10.01% vs 10.15%. Yield on

resources deployed declined to 6.5% in Q1FY10 vs 7.3% in FY09.

SBI Consolidated PAT up 68% YoY:

For Q1FY10, NII grew 6% YoY to Rs.71.2bn and other income grew

2.4x to Rs.84.9bn. Opex has more than doubled to Rs.107bn.Provisions

are significantly lower at Rs.3.9bn vs Rs.26.4bn in Q1FY09. In Q1FY09,

SBI along with its subsidiaries had huge MTM hit which led to spike in

provisions. Consolidated PAT grew 68% vs SBI Standalone PAT growth

of 42%. Associate banks net profit grew by 159% YoY to Rs.6.9bn.

Valuation and view

We have upgraded our earnings estimates by 12% for FY10 and

2% for FY11. We expect SBI to report consol EPS of Rs.211 in

FY10 and Rs.264 in FY11.Consol BV would be Rs.1,316 in FY10

(ABV Rs.1,205) and Rs.1,527 in FY11 (ABV Rs.1391).Adjusted

for SBI Life’s value of Rs.100/share, stock trades at 1.2x FY11E.

Cons ABV. Maintain Buy with a target price of Rs.2,190

(1.5x FY11 Consol ABV + Rs.100 of SBI Life).

STOCK PERFORMANCE (1 YEAR)

State Bank of India

Model Portfolios

Select the portfolio that best suits your risk profile

Scrip

MBP*

Wtg.*

Date

First Reco.

Price

AGGRESSIVE - High Risk, High Returns

M&M

IVRCL

ICICI Bank

SBI

Sesa Goa

DLF

JSW Steel

IOC

Lupin

Rcom

Bombay Rayon

India Cement

Cash

Investment %

769

378

851

2,149

217

350

636

700

961

352

260

160

100

Apr-09

Nov-06

May-08

Jan-06

Jun-09

Apr-09

Dec-04

Aug-08

Mar-06

Sep-08

July-09

420

613

340

553

375

390

140

Our Aggressive Portfolio works on the principle of ‘no pain no gain’. The target returns are

high at 30%+. Portfolio includes commodity, cyclical and small-cap stocks.

Scrip

MBP*

Wtg.*

Date

First Reco.

Price

MODERATE - MEDIUM Risk, MEDIUM Returns

Hero Honda

IVRCL

SBI

Bank of Baroda

Sesa Goa

GSK Consumer

JSW Steel

IOC

GSK Pharma

Bharti

DLF

India Cement

Cash

Investment %

1,538

378

2,149

504

217

990

636

700

1,344

944

350

160

100

Oct-07

Nov-06

Jan-09

Apr-09

June-09

Apr-09

Dec-04

Mar-04

Aug-04

June-09

July-09

730

613

327

2,103

861

553

375

800

340

140

Some moderation is achieved in this portfolio by investing in large and growth stocks

available at value. The aim is to generate 20%+ annualized returns with less risk.

Scrip

MBP*

Wtg.*

Date

First Reco.

Price

In the month of July, Sensex posted 13-month high to close at

15,670 gaining over 8% against June 2009 close. Auto, Cement

FMCG, Reality and Tech stocks witnessed biggest gains. Impressive

quarterly results, revived monsoon and rally in the global markets

boosted the market sentiment, with most of the global markets

reaching up to nearly 8-months high. Base metal prices on LME

surged nearly 10-15% and closed at nearly 10-month high. During

the impressive Q1FY10 results season, most of our portfolio

companies reported better than expected results. Hero Honda,

Colgate, SBI, JSW Steel and M&M reported excellent Q1 results.

We added Shriram Transport (SHFT) and exited IDFC in our

defensive portfolio, as Crisil has downgraded IDFC from 'AAA' to

'AA+ stable'. On the other hand Shriram Transport reported

impressive Q1FY10 PAT at Rs.1.64bn, a 15% growth YoY on the

back of 17% YoY growth in AUMs and 23% growth in total

income. While spreads on truck receivables increased QoQ and

YoY, average cash balance of Rs.45bn during the quarter led to

decline in overall spreads. NII grew strong at 31% YoY. We expect

SHTF to report EPS of Rs.34 in FY10 and Rs.42 in FY11.

We added India Cement in our aggressive, moderate and defensive

portfolio, as it is available at attractive valuation in mid-cap cement

space. The company reported Q1FY10 EBITDA of Rs.2.86bn (v/s

est Rs.2.84bn). The management gave positive outlook for the

industry for FY10. We expect marginal improvement in FY10

realizations over FY09. In Automobile space, we are bullish on

M&M after decent Q1 results. M&M's standalone Q1FY10

operational performance is significantly above our estimates driven

by RM cost savings and operating leverage. With the above

mentioned changes, we will be in cash to the extent of 15%,

20% & 30% in Aggressive, Moderate & Defensive portfolio.

respectively.

Allocation (%)

Sector

Agg.

Mod.

Def.

DEFENSIVE - LOW Risk, LOW Returns

Hero Honda

HDFC Bank

Bank of Baroda

GSK Consumer

Colgate Palmolive

BPCL

GSK Pharma

Bharti

Blue Star

Shriram Transport

India Cement

Cash

Investment %

1,538

1,662

327

990

544

535

1,344

944

330

160

100

Oct-07

Nov-08

Apr-09

Mar-09

Mar-04

Aug-04

Jan-09

July-09

730

861

473

465

800

305

140

Automobiles

Banking

Pharma

Telecom

Cement

Others

FMCG

Metals

Real Estate

Infrastructure

OMC

Textile

Cash

Total

100

Some moderation is achieved in this portfolio by investing in large and growth stocks

available at value. The aim is to generate 20%+ annualized returns with less risk.

MBP* :Maximum Buying Price. One should not buy the stock if Price is above MBP

Wtg.* :Weightage refers to the size of the position recommended. H-High, M-Medium, L-Low.

Additions or deletions of stocks are being communicated through our morning conference

calls, Most Market Action emails or on AWACS during market hours.

MOSt

Wealth

Indian Corporate Performance

Indian corporate performance Q1FY10 (June 2009): Heavyweights fail to impress;

breadth of earnings very positive

Summary: Sales down 4% (est -4%), EBIDTA up 7% (est flat), PAT up 3% (est -3%)

A) Aggregate performance has been above estimates

•

51 companies in our Universe have reported June 2009 quarter results. Sales were down by 4% (vs est decline of -4%), EBIDTA

grew by 7% (vs est flat growth) and PAT was up by 3% (vs est of 3% decline).

Aggregate earnings growth would have looked even more impressive but for Reliance, ONGC and Metals. Excluding these, PAT

growth is 22% vs est of 13%.

Breadth of the earnings has been very positive. 30 companies in our Universe have reported PAT higher than est while 12 have

reported below. On the EBIDTA front, 31 companies reported above est while 11 were below.

B) Sectoral performance: Autos, Cement, FMCG, IT have been the best performers

•

Except Infrastructure (Jaiprakash), all sectors have reported PAT above / inline with estimates.

•

Sectors which delivered very strong growth are Auto (PAT growth of 40% vs est of 10%), Cement (PAT grew 50% vs est of 38%)

and FMCG (PAT growth of 27% vs est of 18%). Other sector with strong growth is IT (EBIDTA grew by 23%). While Banking

reported above estimates PAT due to treasury gains, NII growth was disappointing.

Sectors where earnings growth are disappointing include Metals (PAT declined by 27%), Oil & Gas (PAT declined by 25%).

•

C) Sensex performance has been impressive

•

15 Sensex companies have reported June-09 quarter results. The aggregate performance of Sensex is above estimates with EBIDTA

•

growth of 6% (vs estimated flat growth) and PAT growth of 1% (vs estimated decline of 4%).

While 9 companies have surprised positively on EBIDTA, 2 have disappointed. On PAT front, 8 companies reported above estimates

while 2 reported below estimates.

D) Best and worst performers in Sensex

•

Few of the companies which reported significant better than our estimates were - Maruti (PAT grew by 25% vs est decline of 3%),

ACC (PAT grew by 85% Vs est of 54%), Wipro (PAT grew by 31% vs est of 11%). Other companies which reported strong earnings

growth were TCS, Infosys and L&T. Stocks outside Sensex with strong growth are Bajaj Auto, Axis Bank, UltraTech Cement,

Crompton and Dr Reddy’s.

•

Companies that reported below estimates were BHEL and Jaiprakash. Stocks where earnings growth remained weak were Reliance

and ONGC.

Net Profit

Actual

YoY

Chg (%)

23.2

11.2

23.2

11.7

10.0

45.9

9.6

-12.2

2.1

-24.3

12.7

21.2

3.3

12.9

Var

(%)

6.4

-3.6

4.9

-4.1

1.2

2.2

-4.2

8.4

-1.9

10.0

-2.4

-1.6

4.0

Actual

June 09

8.9

45.7

16.5

13.8

12.9

2.5

42.6

1.0

8.9

95.1

5.7

28.1

0.9

2.2

Actual

QoQ

Chg (%)

107.7

-3.6

17.1

-55.6

15.7

-33.0

5.7

23.9

52.7

29.2

11.9

-0.5

-21.4

Est.

YoY

Chg (%)

9.8

37.6

13.9

18.2

81.7

4.1

-31.9

-26.6

-25.8

-6.1

26.0

1.2

15.0

Actual

YoY

Chg (%)

39.5

54.8

49.6

10.2

27.1

67.5

19.8

-10.3

-26.8

-24.7

38.5

23.0

13.3

6.2

Var

(%)

27.0

12.5

8.7

-3.2

7.5

-7.8

15.0

31.7

-0.4

1.5

47.4

-2.4

11.9

-7.6

Actual

No. of

Expectation Cos

Above

In Line

Above

Below

Above

In Line

Above

In Line

Above

Below

SECTORAL ACTUAL Vs EXPECTED - MOSL UNIVERSE

Rs Billion

Actual

Sector

Automobiles

Banking

Cement

Engineering

FMCG

Infrastructure

Media

Metals

Oil & Gas

Pharma

Telecom

Utilities

Others

June 09

88.3

96.4

77.6

165.9

72.0

29.4

201.1

4.8

54.3

591.3

61.8

129.2

8.1

23.1

Actual

QoQ

Chg (%)

6.2

-3.4

4.0

-35.5

7.2

-4.1

-1.4

-7.4

18.2

8.1

5.9

1.2

9.2

2.4

Sales

Est.

YoY

Chg (%)

15.8

15.4

17.4

16.4

8.7

44.2

7.2

-8.3

-5.8

-22.8

2.5

24.1

5.0

8.6

MOSt

Wealth

Market Outlook

A breakout

Nifty continued correction in the first half of the July month, but in

the mid of the month it took support near to 38.20% retracement

level of the rally from 2539 to 4693 and made a low of 3918, after

that it gave a sharp recovery and Nifty started making “Higher Tops

and Higher Bottom, which is a sign of a bull run according to basic

“Dow Theory”. The month of August has opened with a breakout

and Nifty broke an important resistance of 4700 with this it has

broken the neckline of “Inverse Head & Should” pattern. Many

global indices like Dow Jones, S&P 500, FTSE and CAC has also

broken the neckline of “Inverse Head & Shoulder” pattern and they

are comfortably trading above the neckline thus rally will continue

in global markets and these indices can give 24% to 28% upside

move in the coming days.

Now Nifty is trading above the 50% retracement level of entire fall

from 6357 to 2252. thus going forward, if Nifty sustains above the

neckline then one can make from long positions or even old long

positions can be held with stop-loss of 4474, now the target of this

breakout comes at 5080 for immediate term and 5467 for short

term. However the 4789 will play as a minor resistance, which is

61.80% retracement level of the entire fall from 2539 to 4693,

once Nifty manages to breach 4789, the stop-loss can be revised to

4570 from 4474.

In the case of Downside, the level of 4474 will play as an short

term support; if it breaches 4570 then it may find support in the

range of 4420 to 4380. A breach of 4380 may drag Nifty to its

June’09 low of 3918.

ACTIONABLES:

At current situation of Nifty, the strategy for Nifty as follows:

1. The existing as well as fresh long positions can be held with a

stop-loss of 4474.

2. Once Nifty manages to breach 4789, the stop-loss can be

revised to 4570 with a target of 5080.

3. If Nifty is able to cross 5080, then by using the trailing stop-

loss method, the trading buying positions can be continued

for the target of 5467.

4. Trading Selling positions can be created only if Nifty breaches

the recent low of 4380 with a stop-loss of 4535 for a target

of 3918.

Second Target 5465

1st Target 5080

Neckline

Stop Loss 4474

The above views are based on Technical analysis and could differ from our fundamental views.

For further ideas on Technicals contact:Tel.: +91 22 30896632

MOSt

Wealth

MOSt on Dot

Derivatives & options trading

Nifty started July expiry in optimism, however the disappointing budget took its toll to drag it down by over 10% from the peak. The rally

in the second half put Nifty back on track negating the entire fall posting 7% gain for the expiry. July series ended with Stock rollover of 81%

(6-m avg. 76%) and Nifty roll over at 68% (6-m avg. 67%). Stock futures managed to maintain 1bn mark in open interest through July

expiry as well. Rolling a little higher on relatively lower base stock futures opens the August expiry too with 975mn (prev.975mn) shares,

where as Nifty futures adds 2mn shares to start with 23mn shares in open interest. Interestingly more than 75% stocks rolled at a faster

pace with positive rollover cost indicating willingness to hang on post increments.

Nifty options July series opened with a neutral standing. Before the budget early on, the Implied Volatility too went onto cross 50% out of

anxiety. The fall post the event deteriorated Open Interest Put Call Ratio below 1. Although lowering IVs and over pessimistic OIPCR mid

month created a perfect case for a bounce. Post breach of first hurdle of 4200 Nifty took support near 3900-4000 levels. Once again on the

way up in the second half of the month the congestion in 4300-4400, held Nifty till the last week.

July rollovers show that Nifty futures rolled tad bit higher than six month average; however Nifty enters the august expiry as well with

lowered attention adding a little to the open interest. As far as stock futures are concerned, the buoyancy is seen across sectors rolling

higher than average. Adding more longs than shorts; Auto, Engineering and smaller IT stocks rolls higher on top of notable additions MoM.

August option composition stands moderately bullish at 1.08 OIPCR, portraying a broader range of 4000 to 4700 to start with. However

a bit discomfort upon sudden increments is visible in 100-200 bps higher IVs in August puts compared to calls.

We recommend following option strategy viz. : Nifty Bull Call Spread.

INDEX: NIFTY

View

Rationale

Moderately Bullish

1. Nifty options are light post crossover of 4700, leaving a lot of head room.

2. Nifty Aug OIPCR is too indicating moderately bullish view.

3. The spread gives comfort on the downside in case of negative surprise.

Premium Inflow

Approx Margin

Rs.200.00 (per spread)

Rs. 24,000.00 (Approx)

Strategy: Bull Call Spread

Buy/Sell

BUY

SELL

Scrip

NIFTY

Series

Aug

Option Type

Strike Price

4600

4700

5000

LOT SIZE: 50

Reco Price

Rs.207

Rs.156

Rs.55

Pay Off Profile at Expiry

Break Even

Point

N.A.

Maximum

Profit

Rs.5200 between

4700-5000.

Maximum

Loss

Unlimited

above 5101

6000

4000

2000

-2000

-4000

-6000

Pay off Profile

Nifty at e xpriry

MOSt

Wealth

Performance of Short-Term Ideas

Monthly performance statement

Type of Calls

Derivative Desk

Pivot/Nifty Calls

Technical Calls

News Based Calls

BTST

Total (Average)

Total

Calls

176

Positive

Calls

107

Negative

Calls

Strike Rate

(%)

1st week (7th July 09)

3rd week (18th July 09)

3rd week (25th July 09)

Large Cap

Bharti Airtel

Grasim

M&M

CMP(Rs.)

817

2,408

737

620

359

241

Large Cap

DLF

IOC

SBI

CMP(Rs.)

333

548

1,675

148

280

310

Large Cap

CMP(Rs.)

831

653

1,699

142

283

297

M&M(*)

Sterlite Industries(*)

SBI

Mid Cap

Colgate

IVRCL Infrastructure

Sintex Industries

Mid Cap

India Cements

Mahindra Lifespace

Shriram Transport

Mid Cap

India Cements

Mahindra Lifespace

Shriram Transport

CMP: current market price

Blue Colour:

New entry in MOSt 3x3

Red Colour:

Re - entry in MOSt 3x3

LONG TERM FUNDAMENTAL RESEARCH IDEAS

Scrip Name

India Cements

Mahindra Lifespace

Shriram Transport

BoB

Canara Bank

Grasim

JP Associates

IVRCL

BEL

RCOM

MBP: Maximum buying price

MBP (Rs)

160

310

330

505

330

2,420

240

380

1,540

350

Scrip Name

Sintex Industries

Piramal Healthcare

GSK consumer

BPCL

Maruti

Nagarjuna Construction

GSK Pharma

Indian Oil

HDFC Bank

RIL

MBP (Rs)

265

300

990

535

1,180

160

1,344

700

1,660

2,610

Scrip Name

Bombay Rayon

Sterlite Industries

Lupin Ltd

JSPL

ICICI Bank

TCS

Hero Honda

SBI

Bharti Tele

M&M

MBP (Rs)

260

720

960

2,400

850

810

1,540

2.150

945

770

MOSt

Wealth

MOSt

Wealth

Debt Overview

Market roundup

The bond market went into the policy review with a negative outlook

on the back of worries of RBI looking to turn neutral on its policy

stance and on the back of worries of inflation expectations. The 10

year benchmark bond yields had moved up 03bps from 6.97%

levels to 7.00% levels over the month leading up to the policy.

Given the RBI's softer than expected policy stance, bond yields are

likely to stabilize at higher levels with a positive bias. The RBI in the

first quarter review of the annual monetary policy 2009-10 has

clearly indicated that they will maintain an accommodative policy

stance until they see signs of sustainable economic growth and on

the government going back to fiscal consolidation. The RBI has also

sounded caution on the impact of loose monetary policies on

inflation. Policy stance also indicate that the rates will be kept low

in the economy and liquidity will be maintained at high levels until

there are definite signs of sustainable economic growth along with

low inflation expectations. Given that short end rates cannot fall

further as no rate cuts are envisaged in the near future, the market

will look at the long end of the curve for opportunities.

The government borrowing program is going through smoothly

without disrupting banks balance sheets. The total SLR (Statutory

Liquidity Ratio) of the banking system stands at 26.9% of NDTL

(Net Demand and Time Liabilities), against the statutory ratio of

24%. The levels are close to historically low levels with the banking

system traditionally running SLR at around 30% of NDTL. The RBI

has helped the borrowing along by purchasing bonds worth

Rs.33,000 crs. The RBI has indicated that they can purchase of total

of Rs.80,000 crs of bonds in the first half of fiscal 2009-10. The

government has targeted a borrowing of Rs.299,000 crs for

the first half of fiscal 2009-10 of which they have completed

Rs.200,000 crs of borrowings. The balance left for the next two

months is Rs.99,000 crs.

RBI expected WPI might turn positive by October 2009 and be 5%

by March 2010. The market however estimates 8% inflation and

4.5% in the medium term. The CPI is more than 10% because of

the higher weightage of food grains in the index. The supply

constraint of food grains will however be countered by the buffer

stock of food.

On the fiscal side, the tax receipts to GDP ratio is less than 11%

compared to 12.6% in 2007 - 2008. The combined fiscal deficit

(central, state and off balance sheet) was 10.9% for FY09 with the

borrowing of the government on an increasing trend. The challenge

for RBI is to deal with high liquidity at the same time conduct the

government borrowing in a reasonable manner. It is managing

through open market operations and desequestering of the MSS.

The yields have hardened despite the rate reduction.

First Quarter Review of Statement on Monetary Policy

for the Year 2009-10

• The RBI quarterly review has largely been as per market expectations

and all the key rates have remained unchanged.

• The contribution of government expenditure in the GDP has

increased from 8% in FY08 to 32% in FY09, where as the private

expenditure has come down from 53% to 27%.

• The expected GDP has been revised from around 6% with an

upward bias. The expected inflation has been revised from 4% to

5% for March 2010.

Corporate Bond Spreads* as on 31st -July-09(bps)

Tenor

1 Yr

3 Yr

5 Yr

10 Yr

T BILL

91 Days

364 Days

3.22%

3.75%

AAA

147.80

116.10

126.10

156.20

AA+

175.80

144.10

161.10

184.20

205.80

174.10

191.10

214.20

Over G-secs of comparable Maturity

1 0 -y e a r (2 0 1 9 ) B e n ch m a rk y ie ld

7 .1 0%

7 .0 5%

7 .0 0%

6 .9 5%

6 .9 0%

6 .8 5%

6 .8 0%

6 .7 5%

6 .7 0%

6 .6 5%

2,350,000

1,850,000

1,350,000

850,000

350,000

(150,000)

M onth-end System ic Liquidity

(Rs. in crore)

MOSt

Wealth

Mutual Fund Overview

Overview of equity funds

The month of July 2009, Indian equity markets outperformed

strongly. Corporate earning reports continued to be a better than

expectation- bottomline was helped by better cost control, reversal

in forex losses & fall in the input prices. Revenue growth was

muted, but given the pick up in demand in latter part of the

quarter there could be improvement in the coming quarter. A

sign of economic stabilisation and positive earning flow has resulted

in increased risk appetite, leading to reallocation away from safer

asset and deployment in surplus liquidity that was on the sideline.

In addition to domestic enthusiasm the extended gains were mainly

driven by strong buying activity recorded by Foreign Institutional

Investors (FII) to the tune of Rs.11066.6 crs (net investment). In

the month Sensex gained its position from 14645.47 to 15670.31

over 1024.84 points (7.00%) & Nifty gained from 4340.9 to

4636.45 over 295.55 points (6.81%).

Among the BSE sectoral indices, the BSE AUTO sector was the

top performer with 23.79%, followed by BSE FMGC by 19.97%.

On the other hand BSE Capital Goods have lost their position

12900.57 to 12595.94 over a point of -304.63 points (-2.38%).

During the month, Domestic Mutual Funds were net buyer of

1154.50Crs.

In the Equity Diversified category Birla Sun Life Dividend Yield

Plus again topped the chart with 1-year absolute returns of

(31.75%) whereas Religare Contra Fund stood second with

1-year absolute returns of (30.08%). Among the Index funds ICICI

Prudential Index Fund & Canara Robeco Nifty Index Fund stood

first & second generating 1-year absolute returns of (8.62%) &

(7.38%) respectively. Sector Funds showed diversity in returns

with UTI Thematic Transportation and Logistics Fund 1-year

absolute of (38.29%) topping the charts. In the ELSS category

Canara Robeco Equity Tax saver fund topped the charts with

1-year absolute returns of (30.14%) respectively.

Category

Liquid

Liquid Plus

Income Funds

Debt MIP

Debt - Short Term

Gilt - Long Term

1 Mth

SAGR

3.92

4.70

0.17

1.95

0.49

0.16

6 Mths

SAGR

4.91

5.68

2.26

11.92

3.99

-1.32

1 Yr

CAGR

6.62

7.31

12.76

12.77

11.00

13.48

6 Mths

Absolute

68.89

61.41

59.30

62.49

61.10

1 Yr

Absolute

5.64

11.22

5.98

6.63

6.75

3 Yrs

CAGR

10.90

13.59

11.95

10.25

11.79

Category Average - Equity Fund

14.00

12.00

10.00

8.00

6.00

4.00

2.00

0.00

-2.00

Category Average - Debt Fund

1 Month

Liquid

Debt MIP

6 Months

Liquid Plus

Debt - Short Term

1 Year

Income Funds

Gilt - Long Term

<1 yrs Absolute, >1 CAGR

<1 yrs simple annualised, >1 CAGR

MOSt

Wealth

Mutual Fund Returns

PERFORMANCE OF KEY SCHEMES AS ON 31ST JULY 2009

Returns (P2P %)

Scheme Name

Mths

1 Yr

2 yrs

3 Yrs

5 Yrs

Daily Rolling

returns (1 Yr)

3Yrs SIP

Returns (%)

EQUITY DIVERSIFIED - LARGE CAP

DSP BlackRock Top 100 Equity Fund - Growth

DWS Alpha Equity Fund - Growth

HDFC Top 200 - Growth

IDFC Imperial Equity Fund - Plan A - Growth

Kotak 30 - Growth

Sundaram BNP Paribas Select Focus - Growth

EQUITY DIVERSIFY FUNDS

Birla Sun Life Frontline Equity Fund - Growth

DSP BlackRock Equity Fund - Growth

HDFC Growth Fund - Growth

ICICI Prudential Dynamic Plan - Growth

Reliance Growth - Growth

Tata Pure Equity Fund - Growth

UTI Dividend Yield Fund - Growth

THEMETIC-INFRASTRUCTURE

DSP BlackRock India Tiger Fund - Growth

ICICI Prudential Infrastructure Fund - Growth

Tata Infrastructure Fund - Growth

ELSS

Fidelity Tax Advantage Fund - Growth

Reliance Tax Saver Fund - Growth

Sundaram BNP Paribas Taxsaver - Growth

INDEX FUND

Franklin India Index Fund - Nifty Plan - Growth

ICICI Prudential Index Fund

UTI Nifty Fund - Growth

BALANCED

Birla Sun Life Freedom Fund - Growth

DSP BlackRock Balanced Fund - Growth

Reliance RSF - Balanced - Growth

ARBITRAGE DERIVATIVE EQUITY FUND

HDFC Arbitrage Fund - Retail - Growth

Kotak Equity Arbitrage Fund - Growth

<1 yr Absolute, >1 CAGR •

Source: MFI Explorer

54.97

48.69

77.81

53.85

51.22

51.89

16.73

2.93

23.63

18.95

3.70

2.22

10.53

5.60

12.90

11.36

3.88

6.91

21.63

15.73

21.51

18.85

15.65

16.89

31.00

26.32

32.28

28.21

28.19

0.0313

0.0224

0.0367

0.0332

0.0192

0.0240

17.95

11.97

21.80

17.50

11.02

12.50

66.04

58.28

60.66

54.26

73.34

60.33

53.48

19.86

12.71

6.58

7.35

8.95

12.33

19.09

8.05

7.98

4.37

2.92

6.21

5.24

12.46

20.98

18.30

16.52

22.08

16.61

21.23

29.86

29.01

33.02

35.72

28.35

0.0250

0.0320

0.0123

0.0159

0.0234

0.0179

0.0478

18.44

13.49

11.82

16.69

14.33

18.79

64.97

52.74

67.67

7.81

2.61

1.76

1.08

8.07

1.99

18.51

24.37

18.79

30.21

0.0136

0.0336

0.0087

12.21

15.57

12.19

62.46

60.52

58.07

13.31

17.47

17.07

3.64

0.09

11.79

17.32

12.23

21.31

25.67

0.0185

0.0092

0.0372

14.02

11.10

18.29

61.02

61.81

60.16

4.63

6.59

4.49

2.63

5.25

2.16

13.44

15.31

13.19

23.56

25.54

23.17

0.0092

0.0176

0.0090

11.07

13.14

10.68

21.51

42.60

65.36

7.10

11.82

30.25

0.96

9.00

16.92

10.64

17.20

16.27

16.53

22.81

0.0035

0.0298

0.0505

6.39

14.41

23.09

2.28

2.94

7.08

7.36

7.24

7.84

0.0206

0.0207

7.41

“ – “ means no history

MOSt

Wealth

Mutual Fund Returns

PERFORMANCE OF KEY SCHEMES AS ON 31ST JULY 2009

Returns (P2P %)

Scheme Name

2 Wks

1 Mth

3 Mths

6 Mths

1 Yr

Daily Rolling

Return (1 Yr)

MIP AGGRESSIVE

PRINCIPAL M I P Plus - Growth

Reliance MIP - Growth

MIP CONSERVATIVE

Birla Sun Life MIP - Savings 5 - Growth

PRINCIPAL M I P - Growth

INCOME FUND

Birla Sun Life Income Plus - Growth

ICICI Prudential Income Fund -Growth

Reliance Income Fund - Retail - G P - Growth

GILT FUND

Birla Sun Life GPRP - Growth

DSP BlackRock Government Securities Fund - Growth

ICICI Prudential GFIP - Growth

SHORT TERM

ICICI Prudential STP - Growth

Reliance Short Term Fund - Growth

Tata Short Term Bond Fund - Growth

LIQUID PLUS FUND

ICICI Prudential Flexible Income Plan - Premium - Growth 4.96

Tata Floater Fund - Growth

LIQUID FUND

HDFC Cash Mgmt Fund - Savings Plan - Growth

Tata Liquid Fund - RIP - Growth

LIQUID IP FUND

Birla Sun Life Cash Plus - I P - Growth

Tata Liquid Fund - SHIP - Growth

4.49

4.07

4.66

4.27

4.80

4.68

5.60

5.52

7.43

7.54

0.0209

0.0211

4.89

3.72

4.92

3.92

5.00

4.31

5.82

5.15

7.54

7.15

0.0210

0.0202

4.69

5.18

5.07

5.38

5.13

6.17

6.12

8.00

7.97

0.0221

-0.20

0.07

0.01

0.31

0.71

0.30

0.83

1.34

0.66

4.38

5.99

2.88

16.37

14.81

12.05

0.0347

0.0302

0.0287

-0.74

-0.61

-0.59

-0.81

-0.12

0.09

-2.29

-1.97

0.26

-0.62

-3.37

1.29

16.03

28.05

31.18

0.0400

0.0425

0.0534

-0.32

-0.41

-0.49

-0.10

0.01

0.71

-0.60

-0.05

-0.59

2.16

4.45

2.44

17.57

25.34

19.43

0.0414

0.0437

0.0354

0.39

1.37

1.56

1.75

4.60

5.18

6.39

13.77

21.28

13.82

0.0395

0.0326

2.18

2.00

2.75

3.01

8.73

6.70

17.31

17.04

13.96

27.42

0.0357

0.0454

MIP Aggressive,MIP Conservative,Income Fund ,Gilt Fund, Short Term < 1 year Absolute,> 1 Year CAGR

Liquid Fund,Liquid plus Fund,Liquid IP Fund < 1 year Simple Annualised,> 1 Year CAGR .

Source: MFI Explorer

“ – “ means no history

MOSt

Wealth

NFO Focus

Franklin Build India Fund:

NFO Period

Schemes Reopening on

July 10th, 2009 till August 08th, 2009.

: September 07th 2009

Franklin Build India Fund is an open ended thematic equity Fund offering single point access to multiple themes emanating out

of India's Economic growth & Spending

Minimum Investment

Option

Load Entry

Benchmark

Fund Manger

Cheque Favoring

Asset Allocation:

Instruments

Equity and Equity linked instrument

Infrastructure - related Companies

other Companies

Debt * and Money market securities

% Of Net Assets

70% -100%

65%-100%

0% - 30%

Low Medium

risk Profile

Medium to High

: Rs.5000 & in multiples of Re1.thereafter,

: Growth & Dividend (Payout & Reinvestment)

: < 5 Crs: 2.25%, => 5 Crs: Nil & Exit Load: < 5 Crs: 1% for redemption with in 1 Year of allotment,

=> 5 Crs: 1% for redemption with in 6 Months of allotment.

S& P CNX 500 ,

Anand Radhakrishnan,

: Franklin Build India Fund

Key Features:

1. Access to multiple themes through one Investment - Infrastructure, resources, financial services, social development & agricultural

2. A fund with a clear focus on companies benefiting from the multiple themes is likely to provide a meaningful exposure to India's

medium to long term growth potential.

3. Provides adequate diversification compared to a single sector fund.

4. Fund's investment focus will be on structural themes (against cyclical), thereby the potential for good risk-adjusted returns over

market cycles.

5. Fundamental research focused on sustainable profits (not momentum) using primarily bottom up analysis with a top-down

overlay.

Bottom Line:

India is one of the fastest growing economy in the world in the past few years & is expected to emerge as one of the top global economy

in the coming decades. However, to realise the potential, substantial investment (both public & private) are required in the key building

block of the economy.

We strongly recommend this fund to be a part of your portfolio. Franklin Build India Fund can help you in accessing a portfolio of the

companies taking advantage of multiple themes through the single investment & benefit from the potential superior risk- adjusted retunes

over the long term.

MOSt

Wealth

Plan for Retirement

Snapshot on insurance

10 Reasons why you need to plan for retirement!

If you are in your late twenties or early thirties, the thought of

retirement planning might seem a bit far fetched at first. But,

the idea itself is not so strange. Here is why:

Collapse of the joint family system:

A joint family with one source of income did not really bother

too much about the effort-reward ratio. There was a common

business in the form of a farm or a shop and all the monies were

treated as a joint property. So the fact that one person did not

earn did not matter - non earning widows, a few old aunts and

uncles could all be accommodated in a big joint family. Alas, it is

all history now. Face it - today's reality is that most of us live in a

nuclear family and will have to fend for ourselves in our old age.

Longevity:

Medical sciences have improved by leaps and bounds over the

last few years. As a result, people today tend to live longer

compared to the earlier generations. The average lifespan for an

Indian today stands at around 77 years. Early retirement is fast

becoming a trend today which means non-working years would

be even longer. So the earlier you start with your retirement

planning, the richer will be your golden years.

No Defined Pensions:

Gone are the days when most of the salaried class was employed

with the Government very well defined pension packages. This

meant that the earlier set of retirees could live long without

worrying too much about outliving their money. But, the private

sector, where the majority of us are employed does not generally

offer such benefits. Hence, the onus is on each of us to build our

corpus for retirement.

Smaller families:

Parents in the earlier generation generally had 3-4 children and

they could fall back on one of them to be looked after during

their golden years. Today, things have changed. Most of us have

1 or 2 children. And while your children are busy pursuing their

own dreams, you wouldn't want to burden them financially by

looking after you in your old age.

Financial independence in your golden years:

Most people of the earlier generation earned small amounts and

lived as a joint family. Even those 2 or 3 incomes in the family

put together were not enough to allow them to live separately.

This was true even after the parents' retirement. So the sons and

To know more about Plan for Retirement

Email: insurance @motilaloswal.com

Call: 022 39804256

SMS: MOSL INS to 575753

parents lived together - the parents owned the house and the

children provided the cash flow. Now things are changing - children

are earning enough and prefer to live separately. You would of

course want to live rather, enjoy your retirement with complete

financial independence.

Inflation:

Inflation, the monster, makes all accumulated money and income

from saving instruments look small! Over a long period of time

(your retirement years could well exceed 30 years) you will need

more and more money just to maintain the same lifestyle.

Increasing medical expenses:

The impact of increasing non-insurable and out of pocket medical

expenses is there for all of us to see. Doctors, dentists, medicines,

nurses, rent for hospital beds are all getting more and more

expensive. These are not the luxuries where you will have a choice

whether to incur them or not !

Traditional savings instruments offer modest returns:

As the earlier generation had a short post retirement life they

could afford to put all their money in savings instruments like

National Savings Certificate, Provident Funds, Public Provident Fund,

etc. However, with increasing standards of living and longevity

you will have to explore other savings instruments.

Inadequate social security system:

Indians are in a peculiar situation: there are few government run

schools and hospitals; and other social security systems are almost

non-existent. The subsidies on most essential items are vanishing

or vastly reducing. So, this generation has to learn to live with no

subsidies or social security!

Safeguarding assets:

Self-sufficiency and financial independence are a direct result of a

perfect retirement plan. Without a well planned retirement, you

may be forced to sell off your assets such as land, real estate, etc

to finance your expenses during your retirement. Thus, a perfect

retirement plan will help you in financing your expenses from

your income rather than your capital.

MOSt

Wealth

Portfolios Overview

Overview

July month started with Union Budget 2009-10 which came in backdrop

of a very positive political mandate, leading to expectations of some big-

bang reforms like hike in FDI limit ,tax exemption for Infrastructure projects

leading to increased capital flows from foreign, to boost consumer demand

for higher GDP growth and disinvestment for fiscal prudence.

The key task was to maintain a balance between stimulating growth and

curbing fiscal deficit.

However, the budget turned out to be a shocker to financial markets as

there were neither any big bang reforms nor any road map for reform.

Markets gave thumbs down and corrected by 10% to 13,400 in a week.

On the backdrop of negative reaction by corporate & financial market, the

government announced series of reforms like recapitalization of weaker

banks. Also the Ministry of Finance is working on 7 bills to present in

parliament, including pension & banking reform proposals, roadmap for

disinvestment etc. Road ministry headed by Mr. Kamal Nath has announced

investment to the tune of $70 bn would be required in the road sector

in next 3 years. Markets have taken all announcements positively.

FIIs were strong buyers of Indian equities in Q1FY10, pushing markets up

~50%. FIIs bought ~USD 6bn across sectors (highest in BFSI and real

estate) after five consecutive quarters of net outflows. Domestic institutions

were net buyers at ~USD 0.4bn

Many companies have begun 1st quarter FY10 on pleasant note with better

than expected results thus surprising the street. Robust performance in

some sectors was due to pick up in demand while in other sectors it was

driven by lower commodity prices resulting in improvement in profitability

margins. Few of the companies that reported better profits than our

estimates were Maruti (PAT grew by 25% vs est decline of 3%), ACC (PAT

grew by 85% Vs est of 54%), Wipro (PAT grew by 31% vs est of 11%).

Other companies which reported strong earnings growth were TCS, Infosys

& L&T. Stocks outside Sensex with strong earnings growth are Bajaj Auto,

Axis Bank, UltraTech Cement, Crompton, Dr Reddy's. Companies that

reported below estimate results were BHEL and Jaiprakash Associates.

Stocks exhibiting weak earnings growth were Reliance and ONGC.

July 2009 Strategy wise Summary:

Value Strategy:

During the month, there was no transaction in this

strategy.

Bulls Eye:

Due to over heated markets, we prefer to be in cash and take

the opportunity to enter at lower levels. We have sold stocks across sectors

and cash stands at 67%. During the month we sold Canara bank, JP

associates, McLeod Russel, Satyam, South Indian Bank, Bharti Airtel, Reliance

Communication.

Focused I :

During the month, we exited 3i Infotech and introduced CEAT

in the strategy.

Focused II :

During the month, there was no transaction in this strategy.

TDOS :

During the month we booked profits in IRB Infrastructure, Hero

Honda (partial), Asian Paints and Glaxo Consumers. We have added new

stocks to our portfolio namely UltraTech Cement, Birla Corporation and

CEAT (as a part of the Infrastructure theme) and we have increased our

stake in Page Industries.

Optima Strategy :

We have sold stocks across sectors and cash levels

stands at 76%. During the month we booked profits in Bosch, Canara bank,

GSK Consumer, Hero Honda, JP associates, Marico, McLeod Russel, Repro,

Satyam, South Indian Bank, Welspun, and Sterlite.

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Wealth

Snapshot on Commodities

Market Roundup

Review and outlook

Gold:

Related News

•

The rally in commodity prices drove gold price higher during the

month after dollar weakness which recorded the lowest in 2009 on

Friday. The benchmark contract for the yellow metal rose 3% to

close at $955.8. While price was largely flat on weekly basis, gold's

movement was volatile with prices plunging sharply, as both

commodities and stocks fell while USD rebounded, before recovering

above 950 levels on Friday

•

Looking at a bigger picture, gold continued within a range of 900

and 960 over the past 2 weeks. While the strongest price driver in

the near-term remains USD, some other factors have resulted in

gold's recent sideways movement. The investors concern about the

IMF'S gold sales may weigh heavily on gold prices. The IMF will

probably sell 200 metric tons of gold annually starting next year to

provide loans to developing countries

•

The inflation expectations have diminished as global CPI data remained

in downtrend and policymakers continue to reiterate that inflationary

pressure is subdued despite the massive stimulus policies. The

expansionary monetary policy in major central banks seems to be

approaching the end. While the Fed, BOE, ECB, BOJ, RBA, etc will

maintain their policy rates at unprecedentedly low levels throughout

2009 and at least early 2010, the market has already speculated rate

hike in some countries

•

The investment demand as seen from SPDR Gold shares the biggest

exchange traded fund backed by bullion fell by 46.8 metric tons to

1,072.87 metric tons (MOM) as investors drew investments into

the equities for making larger share of benefits due to recovery

optimism sentiments. This can trigger slight caution to the bullion.

But right now the run up in the rally is extensively supported by

dollar weakness and performances of the equities which is due to

better performing economic numbers. This led to shift in concern

towards higher yielding assets taking gold as the safer asset for any

kind of uncertainty

•

Amongst other news the Anglo Gold Ashanti Ltd. Africa's largest

producer of the metal, posted on a better than expected profit in the

second quarter and said it is reducing forward sales at a faster rate

than originally planned

Outlook for this month

•

In view for precious metals, the real interest rate remains low

and budget deficits stay high, gold price still has potential to

break recent range and surge above 1000 level. The economic

data's will be a watch on and the equities performance would

be the major factor followed by the surging Crude oil prices

and dollar weakness

MOSt

Wealth

Copper:

Related News

•

Copper "king of base metals" surged to the highest level in 10

months and headed its biggest monthly gain on back of positive

economic data's and on hopes of recovery. The metal traded

higher by more than 11% giving close of Rs.272.9

•

Copper which is largely used in power and construction has nearly

doubled in Shanghai and London Exchanges this year. The

momentum in the metal is very strong due to upbeat in economic

recovery in the key consuming countries of the world. Further

the inventory levels are below 500,000 tons as compared to

February levels

•

The International Monetary Fund raised its global growth forecast

to be positive for the metal. The fund gave its expectation that;

world economy will grow by 2.5% for the year 2010 from its

previous projections of 1.9% in April where as the growth in

2009 will be 1.4% then the prior execution of 1.3%

•

China was the major driver for base metals complex due to its

metal stockpiling. It was expected that the Chinese stockpiling

has been done and not much of the imports demand is expected

in the coming months. But if we look at the June months imports

figures, the imports of refined copper have increased by 6.70%

or 21,423 tons to 679,140 tons from its previous month and in

the first 6 months of June it rose to 3,684,379 tons

•

The Chinese economy which is a major consumer of metal

expanded 7.9% in the second quarter of 2009 and is expected to

continue its growth in the coming months. The only concern

would be the Japan economy whose unemployment rate rose to

5.4% and retail sales also fell by 0.3% marking the 10th straight

month of falls

•

Economic indicators gave a positive signs for the major economies

in past couple of weeks. The GDP figure for the second quarter of

U.S came much better from its expectation and the continuous

claims also stabilized. Continued positive economic figures will

be supportive factor for the metal to trade upwards

•

According to Commodities Future Trading Commission (CFTC),

Copper net short position has been decreased by 7203 contracts

to 13398 contracts as compared to the previous month

Outlook for this month

•

Copper looks to move in tandem with the economic recovery

as we have seen in the previous couple of trading session's

further demand from major consuming countries and

economic indicators will be the major driver for copper futures

MOSt

Wealth

Snapshot on Commodities

Market Roundup

Review and outlook

Crude:

Related News

•

Crude oil prices reached to its high of Rs.3440 for the month of

Pepper:

Related News

•

Pepper futures were lower initially as sufficient rains in the growing

July but the rally was against fundamentals of supply and demand.

Investors uncared for weak fundamentals and moved in tandem

with the hopes of global economic recovery

•

Crude oil prices at the start of the month were firmly supportive

areas and weak overseas demand dented investor sentiment.

Indian pepper exports in FY09 fell 28% in volume to 25,250

tonnes on the back of falling demand from main consumers

such as the U.S. and European Union

•

The exports in the first 2 months of the current fiscal fell 46 % to

due the concerns on going in the Niger delta region which disrupted

crude oil supply. The attacks were continued despite of proposed

amnesty. The violence has caused a shutdown of around 300,000

barrels per day of oil production but later, the Nigeria's militant

group has accepted 60-days of ceasefire which capped oil prices

to rally further

•

In month the major industrial nations and developing countries

3,000 tonnes compared to the year ago. The price was lower

dwindling export demand and reports of sufficient rains in the

key producing areas weighed on sentiment

•

The overseas demand is poor as Indian rates are still at a premium

"G8" had a meet where the purpose was to take supportive decisions

for the financial markets. The market was expecting some positive

outcome, but no results were supportive for weakening economy.

But it's the global economic recovery optimism which halted crude

oil prices from falling further

•

In the third week the oil and commodities futures got pressurized

compared to Vietnam, Sri Lanka and Indonesia, due to a crop

shortage in the country

•

The price pared gains in the second half as the near-term outlook

for the spice is bullish due to concerns regarding supplies to

meet the upcoming festive demand

•

The export demand is likely to pick up as selling pressure from

as the Commodities Future Trading Commission is looking for

position limits to rein in excessive speculation on commodity markets.

The agency had a meet on 29th July and will later meet on 5th of

August and the outcome of the meet will be major concern for the

big players

•

U.S which is a major consumer of energy is on the way of recovery

Vietnam is seen moderating further as it is not left with much

stocks, which is expected to benefit Indian exports

•

The price witnessed some choppy sessions but Losses, however

where as imports from China in the month of June rose by 14.05%

compared to the same period earlier and in the first 6 months it

rose by 0.26%. The only concern would be Japan's recovery where

the imports have plunged in the month of June by 19.01% from a

year earlier

•

The members of OPEC are going to meet in the month of September

were limited on firm sentiments as Vietnamese stocks are

depleting, which would ease selling pressure in the coming weeks,

benefiting Indian exports. Demand expected in the upcoming

festival season will keep the spot market firm

•

Continuous buying by domestic stockiest on back of firm internal

demand due to upcoming festival season and a supply shortage

from Kerala, the largest producer, is expected to support the

upswing

•

The demand which was lower due to monsoon also started picking

where we might expect a production cut if crude oil prices trade

below $60. The current available stock of crude oil is of 62 day's

which should be of 52 days

Outlook for this month

•

Recent rally in crude oil have neglected the weak fundamentals

up with the lowering of the monsoon estimates. The prices of

spices plunged during the monsoon season as traders refuse to

stock huge quantities fearing damage

Outlook for this month

•

The outlook for the price is bullish in near term as firm internal

of supply and demand and it seems that a change can be seen

in coming months where we will see a rise in demand. We

expect that crude oil may give some correction in the first

week but dips should be used as buying opportunity as the

positive economic outlook will boost oil prices

demand due to the upcoming festive season is expected to

trigger renewed buying interest in the spot market and the

international buyers are also expected to turn to India as

Vietnamese stocks are depleting, which would ease selling

pressure in the coming weeks, benefiting Indian exports

MOSt

Wealth

Snapshot on Commodities

Market Roundup

Technical snapshot:

Gold:

Gold MCX futures reversed the previous months loses and closed

on a positive note. The trading of the price above the pennant

Crude oil:

Crude oil MCX futures are consolidating below the 38.2% of

Fibonacci level from the contract high to contract low. A

is a bullish sign and is also supported by the close above the

moving average. A successive move above the pennant shall pull

the price towards the Bollinger band on a move above Rs.15000

mark. A dip towards Rs.14600 - 14500 levels can be used as

a buying opportunity targeting Rs.15100 - 15250 levels.

Copper:

Copper MCX futures extended their weekly gains for the fourth

straight week and are trending in the rising upward channel. The

successive close above the same is bullish for the market and

shall test the 50% level, and an inability of the same shall leave

the price consolidating at 3500 to 3000 levels. The price has

been trading at the supports of both the trend line support below

and a dip towards the same can be used as a buying opportunity

targeting little above the 38.2% level. We look to buy in the

range of Rs.3150 - 3050 Stop loss below Rs.2950 Target Rs.3500

-3600.

Pepper:

Pepper NCDEX futures have just edged up above the long

consolidation phase and are trading just below the upper band

price is also just below the 61.8% of the Fibonacci form the 2008

high and low. It is expected to be resisted by the trend line resistance

of the rising channel which is a caution of the bulls and can trigger

some profit booking as the rally has been steep. We look to sell

around Rs.293 - 298 Stop loss above Rs.305 Target Rs.270 - 265.

of Bollinger bands. The close above the moving averages and

the ascending triangle is a positive sign which is also supported

by MACD which has just moved above the zero supporting

positive momentum. We look to buy in dips towards Rs.13100

– 13000 Stop loss below Rs.12600 Target Rs.14000 – 14300.

MOSt

Wealth

Sight

pportunity

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Disclosure of Interest Statement: The MOSt group and its Directors own shares in the following companies covered in this report: Bharat Electronics, Bharti Airtel, Birla Corporation,

GSK Pharma,

Hero Honda, Hindalco, IOC, Marico, Oriental Bank, Siemens and State Bank.

MOSt has broking relationships with a few of the companies covered in this report.

MOSt is engaged in providing investment-banking services in the following companies covered in this report: Sintex Industries

This information is subject to change without any prior notice. MOSt reserves the right to make modifications and alternations to this statement as may be required from time to time.

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