Market Ends Flat

The market ended almost flat during the week, amidst sessions marked by volatility, with the Sensex and Nifty ending marginally higher by 0.02% and 0.1%, respectively. However, BSE mid-cap and small-cap indices outperformed their large-cap counterparts by further extending gains during the week by 1.5% and 1.6%, respectively. Factors such as partial decontrol of Chinese currency against USD, negative cues from global markets, decontrol of oil prices in India and rolling over of positions in the derivatives segment on the eve of the monthly expiry contributed to the volatility during the week. Most of the sectoral indices ended in green, with the oil and gas index and healthcare index gaining the most by 3% each.

BSE Oil and Gas Index - Oil PSUs Shine
The BSE oil and gas index gained 3% during the week, outperforming the Sensex. The major spurt and relief was seen in OMC stocks and upstream oil companies following EGoM's decision to fully decontrol petrol price and hike diesel price. Prices of kerosene and domestic LPG were also increased. Following this, HPCL, BPCL and IOC gained 18%, 19.1% and 12.9%, respectively. ONGC, Oil India and GAIL gained 5.9%, 7.4% and 2.2%, respectively. Cairn declined 2% during the week, mirroring the 1.9% fall in crude price. RNRL gained 5.1% and RIL gained 0.8%. We have a positive view on the sector and our top pick is RIL.

Sun TV Network (Initiating Coverage): Sun TV Networks (STNL) is a leader in three out of the four lucrative southern TV markets through its bouquet of 20 channels across genres. We have modeled in 23.5%, 24.9% and 25.3% CAGRs in top line, core EBIT (post amortisation) and earnings, respectively, for STNL over FY2010–12E. We estimate STNL's cash balance to swell to a whopping Rs10bn (~Rs33 per share) in FY2012E. We initiate coverage on STNL with Buy and a Target Price of Rs497 based on 24x P/E FY2012E.

Indraprastha Gas - Company Update: The CNG price hike has eliminated key headwinds for IGL. We revise our target price on the stock to Rs301 (Rs210) owing to the upward revision in earnings estimates and lower WACC estimates. We upgrade the stock to Buy from Reduce earlier.

Reliance Industries - Event Update: RIL acquired 45% stake in Eagleford shale acreage. RIL will pay US $1.3bn to Pioneer and Newpek for its implied share of 118,000 net acres. The deal is valued at US $11,144/acre. We maintain a Buy view on RIL with a target price of Rs1,260.

Container Corporation of India - Management Meet Note: The management in its recent meeting has given volume guidance of 10–12% for EXIM and 12–15% for the domestic segment in FY2011E with operating margins expected to be rangebound. We maintain Reduce on the stock with a target price of Rs1,194.