Allegro Capital Advisors

Wealth Advisory
EQUITY INDICES MARKET COMMENTARY AND OUTLOOK
NAME CLOSE 1 week 1 month • Global equities were quite upbeat last week,
despite weak Industrial Production data from the

Investment Newsletter— Aug 09, 2010

SENSEX 18143.99 1.5% 1.7%
NIFTY 5439.25 1.3% 1.6%
Eurozone and the UK as companies that reported
their earnings last week largely beat market
BSE 100 9674.09 1.2% 1.7%
expectations.
BSE Midcap 7534.45 1.7% 3.0% • Indian equities continued their upward journey and
BSE Small Cap 9584.21 2.5% 3.4% breached new 52-week highs, although trading
DOW(PREV) 10653.56 1.8% 4.5% volumes were on the lower side. IT stocks registered
FTSE(PREV) 5332.39 1.4% 3.9% the maximum gains after Cognizant Technology
Solutions reported strong quarterly results.
NIKKEI 9642.12 1.1% 0.6%
MSCI Emerging markets 1010.96 2.0% 6.2% ASSET ALLOCATION STANCE
MARKET VALUATIONS • The benchmark continues to trade within our
Sensex P/E 18.524 18.2553 18.2056 expected price band of 17400-20200, and we
Sensex P/B 3.2206 3.1717 3.1652 believe that equities may not correct substantially
from here. We therefore recommend maintaining
COMMODITIES (USD)
the marginally higher exposure to equities, as
CRUDE 80.70 2.2% 6.06% recommended in our previous Asset Allocation
GOLD 1205.40 2.1% -0.52% report (dated 23 July). We continue to advise our
ALUMI 2181.75 0.9% 9.99% aggressive clients to maintain a small amount of
Zinc 2100.25 5.1% 12.00% mid and small cap exposure to benefit from the
consistent outperformance of this segment.
Copper 7344.75 1.0% 8.95%
• We remain less bearish on long term fixed income
INTEREST & EXCHANGE RATES funds, post the policy rate hikes by the RBI, as we
10Y US 2.82% 2.91% 3.05% think that government bond yields have already
10Y INDIA 7.83% 7.82% 7.65% priced in the hikes and have risen by around 20 bps
RS/USD 46.17 46.48 46.67 in the last two weeks. We continue to maintain our
bias towards government bonds, given the low
RS/GBP 73.32 72.81 70.30
corporate bond spreads. We think that the RBI is
Debt Market Details* likely to hike rates further either during or before
Call Money Rate(%) 4.78% 4.90% 5.68% the next policy meet and we continue to
3M CP Spread (Bps) 132 144 132 recommend investing in medium term debt
instruments (3-6 months) in line with our Asset
1Y Corp Bond Spread (Bps) 111 116 128
Allocation recommendation.
5Y Corp Bond Spread (Bps) 79 91 81
• We remain bullish on Gold over the medium term,
* Spreads on AAA rated Instruments as a hedge against inflation and recommend that
FUND FLOWS (Rs Cr) investors use dips to buy into Gold. Further, we
1 Week YTD continue to recommend not to make any fresh
FIIs 2450.6 50352.7 investments in Commodities until the global
economy becomes more stable.
MFs -307.1 -12838.5

Weekly Inflation Data Latest 1 Week 1 year SECTOR VIEWS

• We retain our Overweight stance on Oil Upstream,
Primary Articles 14.50% 16.25% 8.18%
Power, Real Estate, Consumer durables and
Fuel 14.29% 14.27% -10.63% Television media Sectors as we believe that the
KEY EVENTS IN THE WEEK AHEAD sectors will benefit from the growing domestic
demand and economic revival. We have
9-Aug China, Business Climate Index downgraded Retail sector to Market Weight due to
9-Aug rich valuation and ferrous metals to Underweight,
US Wholesale Inventories
given the decreasing steel prices.
12-Aug UK GDP (YoY and QoQ)
12-Aug India Industrial Production

©ALLEGRO CAPITAL ADVISORS PVT LTD FOR PRIVATE CIRCULATION ONLY

 Investment Newsletter
KEY EVENTS Corporate News
• BGR Plans Boiler unit: BGR energy systems has
DOMESTIC EQUITY MARKETS signed a MOU with Hitachi Ltd of Japan for setting

Investment Newsletter— Aug 09, 2010

Favorable
Foreign Institutional Investors bought more than Rs.
2,400 cr of equities during the week.
DEBT, COMMODITIES & CURRENCY MARKETS
Favorable
Corporate bond spreads declined last week. The
spread on AAA rated 5 year bond declined by 12 bps
to 79 bps whereas that on the 1 year bond declined
5 bps to 111 bps.
Unfavorable
The 10-year government bond yield continued to
rise and is now at 7.83%, following the rate hike by
the RBI.
INTERNATIONAL MARKETS
Favorable
Eurozone retail sales were better than expected in
June.
Unfavorable
Pending home sales in the US declined unexpectedly
in June.
Consumer confidence in the US was lower than
expected in August.
Industrial Production in the UK declined by 0.5% in
June as against expectations of a 0.1% rise. German
Industrial Production also witnessed an unexpected
decline in June.
up a boiler and turbine manufacturing facility in
Tamil Nadu at investment of Rs. 4400cr.
• Reliance to buy Shale Gas venture: Reliance
Industries will buy a 60% stake in a shale gas
venture of Carrizo Oil and Gas Inc in the US for
$392million with $340million being the cash
component and $52million as drilling costs.
• Adani Power to borrow $1.5billion: Adani power
plans to borrow $1.5bn oversees in the next 2
years to build power plants.
• L&T Bags Order: L&T Material Handling and
water operating company has bagged EPC
contracts totaling Rs. 1749cr from SAIL and Bharat
Aluminum Company.
• Allcargo to expand CFS: Allcargo Global logistics
has decided to upgrade the Mundra CFS by
doubling its export loaded volume. With the
commissioning of the second warehouse the
export handling capacity would go to 4000TEU.
• JFE invests $1bn for JSW steel stake: JFE
holdings, worlds No 5 steelmaker will spend
$1billion for a 14.9% stake in JSW steel in order to
gain a foothold in fast-growing Indian market.
• TRAI signals phase out of analog cable: TRAI has
suggested that by December 2013, analog TV
should be completely phased out. Nearly
68million households receive television signals in
the analog mode. The four metros should be
covered by March 2011, urban areas by 2012 and
the rest by December 2013.

RESULTS THIS WEEK Mutual Fund News

Date Company • SBI Mutual Fund has declared dividend of Rs. 3.5/
unit under its scheme SBI Magnum Sector
09-Aug Britannia, Dalmia Cement, Fi- Umbrella—Contra Fund.
nolex Cables • IDFC Mutual Fund has revised exit load under its
10-Aug Adani Enterprise, Amtek Auto, scheme, IDFC Money Manager Fund—Investment
IVRCL Assets, IVRCL Infra plan. As per the revision, the scheme will charge
an exit load of 1%, if investments are redeemed
11-Aug Bharti Shipyard, Bharti Airtel before 60 days. The revision will be effective
12-Aug Cummins,SBI, Tata Power from 9th august 2010.

©ALLEGRO CAPITAL ADVISORS PVT LTD 2 FOR PRIVATE CIRCULATION ONLY

 Investment Newsletter

APPENDICES

©ALLEGRO CAPITAL ADVISORS PVT LTD 3 FOR PRIVATE CIRCULATION ONLY

 Appendix 1

1-week Asset Perf. 1-month Asset Perf.

3.5% Commodities 8.1% Commodities

1.8% India Equity L.Cap 5.1% EM Equities
1.7% India Equity M&S.Cap 3.3% Dev. Mkt Equities
1.4% EM Equities 3.1% India Equity M&S.Cap
1.2% Dev. Mkt Equities 2.7% India Equity L.Cap
0.7% Gold 0.6% Arb Funds
0.5% Others 0.4% ST Floating rate debt
0.1% Arb Funds 0.4% Money Market LT
0.1% ST Floating rate debt 0.4% Money Market MT
0.1% Money Market MT 0.4% LT Floating rate debt
0.1% Money Market LT 0.4% Money Market ST
0.1% LT Floating rate debt 0.3% ST Fixed rate debt
0.1% Money Market ST -0.1% LT Fixed rate debt
0.1% ST Fixed rate debt

Asset Performance
-0.1% Others
0.1% Gilt Funds Gilt Funds
-0.3%
0.0% on the top three funds in each category
Based LT Fixed rate debt
-1.6% Gold

1-week sector outperf. v/s BSE 100 1-month Sector Outperf. v/s BSE 100

6.8% TRS 6.5% TRS

2.2% MED 5.2% CHE

1.8% ITE 5.1% RLT
1.7% RLT 4.5% FIN
1.7% TEL 2.7% MET
1.4% CHE 1.8% ITE
1.1% FIN 1.5% FMC
0.6% CAP 1.3% CAP
0.4% AUT 0.4% MED
0.1% FMC 0.1% AUT
-1.1% CON -0.5% TEL
-1.2% AGR -1.7% AGR
-1.2% COD -1.7% COD
-1.2% RET -1.7% RET
-1.5% MET -3.5% CON
-1.6% PHA -3.6% CEM
-1.7% OGA -3.8% POW
-1.8% POW -5.2% PHA
-2.1% CEM -6.6% OGA

19 SensexTTM*PE Sensex TTM* P/B

3.5

18.5 3.4

3.3
18
3.2
17.5
3.1
17
3
16.5 2.9

16 2.8
Apr-10 May-10 Jul-10 Aug-10 Apr-10 May-10 Jul-10 Aug-10

*TTM = Trailing Twelve Months

©ALLEGRO CAPITAL ADVISORS PVT LTD 4 FOR PRIVATE CIRCULATION ONLY

 Appendix 2

Equity Fund Offers

SL Plan Name Launch Closing Scheme Min Inv. Objective Recom-

No. Date Date Category (Rs) mendation

NO NEW EQUITY FUND OFFERS ARE OPEN CURRENTLY

New Fund Offers

Debt Fund Offers

SL Plan Name Launch Closing Scheme Min Objective Recom-

No. Date Date Category Inv. mendation

NO NEW DEBT FUND OFFERS ARE OPEN CURRENTLY

©ALLEGRO CAPITAL ADVISORS PVT LTD 5 FOR PRIVATE CIRCULATION ONLY

 Appendix 3

NSE Volataility Index NSE Value/Volume

40
5500 18000
Nifty Volumes Nifty Values
35
16000
5400
30
14000
5300
25 12000
5200
20 10000

15 5100 8000
0-Jan 25-May 8-Jun 22-Jun 6-Jul 21-Jul 5-Jul-10 15-Jul-10 25-Jul-10 4-Aug-10

Market Activity
Put-Call Ratio 21 DM A PCR Nifty 100000
LAF Amount Outstanding in crores
90000
Reverse R epo Outstanding Repo Amt Out standing
80000
1.70
6200 70000
1.50
60000
1.30 5200
50000
R1.10
C 4200 40000
P
0.90 30000
3200 20000
0.70
10000
0.50 2200
0
Jul-08 Feb-09 Jul-09 Jan-10 Jul-10
5-Jul 19-Jul 2-Aug

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