Markets re-bound during the week

The Indian stock market gained some ground during the current week of trade, amidst sessions marked by high volatility, with both the benchmark indices, the BSE Sensex and the NSE Nifty, ending higher by 2.5% and 2.7%, respectively. BSE mid-cap and small-cap indices were up during the week, gaining 1.0% and 0.9%, respectively, though they underperformed their large-cap counterparts. Gains extended during the latter half of the week as world stocks rose after China signaled its support for the euro zone. The volatility in the market was immense, as traders rolled over positions in the derivatives segment from May 2010 series to June 2010 series. On the sectoral front, most of the major sectoral indices ended in green, with the BSE Realty index gaining the maximum of 4.1%, followed by the Oil and Gas index rising 3.4%.

BSE Oil and Gas Index - RIL leads the way

The week witnessed the BSE Oil and Gas index gaining 3.4%, outperforming the benchmark BSE Sensex, which gained 2.5%. RIL gained 5.0% post the scraping of the non-compete agreement with ADAG. RNRL also gained 17.8% on the announcement and was the largest gainer in the index. ONGC gained 3.5% during the week post the increase in APM gas price. Pegging some hopes on fuel price reforms, IOC and HPCL gained 3.3% and 2.8%, respectively. However, BPCL underperformed, gaining mere 0.7%. Crude prices continued to be volatile during the week, gaining 5.6%. Cairn India gained 4.1% during the week, largely mirroring the increase in crude oil prices. We have a positive view on the sector and our Top Pick is RIL.

Bhushan Steel - Initiating Coverage: We expect Bhushan Steel to register 26.2% CAGR in volumes over FY2010-15E, the highest in the industry, with the completion of Phase-III of the expansion plan. This will be further sweetened by EBITDA/tonne rising to US $331 in FY2011E, which is at the higher end of the industry curve. Further, its strong relationships with OEMs and growing investments by foreign OEMs will help mitigate demand risks. We Initiate Coverage on the stock with a Buy and Target Price of Rs1,634.

Piramal Healthcare - Event Update: Piramal Healthcare (PHL) has sold its Domestic Formulation business for US $3.72bn. This landmark deal signifies the growing interest of global MNCs in the Indian Domestic Formulation business and signals increasing likelihood of further consolidation in the Industry going ahead. We recommend Neutral on the stock.

Jagran Prakashan - 4QFY2010 Result Update : JPL reported strong results on both Revenues and Earnings front, reporting yoy growth of 17.4% and 66.8%, respectively. After the results we have marginally revised our estimates to take into account flat circulation revenues posted by Jagran this quarter. While we have not factored the Mid-Day deal in JPL's numbers, we believe that the deal is likely to be Earnings accretive by ~2% in FY2011E. We maintain a Buy, with a Target Price of Rs160.