Markets end flat

The Indian stock market ended almost flat during the week, amidst sessions marked by volatility, with the BSE Sensex and the NSE Nifty ending marginally higher by 0.1% and 0.2%, respectively. However, BSE mid-cap and BSE small-cap indices outperformed their large-cap counterparts by further extending gains by 1.5% and 1.6%, respectively, during the week. Factors such as strong numbers reported by Tata Motors and State Bank of India during 1QFY2011, lower-than-expected IIP growth at 7.1%, concerns over the pace and sustainability of the global economic recovery leading to mixed cues from global markets weighed on investor sentiments during the week. On the sectoral front, majority of the sectoral indices ended in green, with the BSE realty index and BSE Bankex gaining the maximum by 6.6% and 3.4%, respectively. However, the BSE IT index lost the maximum during the week, ending lower by 2.2%.

Realty index outperforms the Sensex
The realty index gained 6.6% during the week, outperforming the Sensex. The top gainers in the real estate space were Anant Raj (up 19.2%), Omaxe Ltd. (up 12%), Sobha Developers (up 8.8%), HDIL (up 7.5%) and Akruti City Ltd. (up 6.1%). The rally can be attributed to the firm trend witnessed in stability in residential volumes over last 2-3 quarters across markets, with improvement in leasing activity. We expect realty stocks to outperform on the back of a strong project pipeline, well-capitalised balance sheet and decent execution skills.

Nestle - Event Update: For 1HCY2010, Nestle registered robust overall top-line growth of 19% yoy. We recommend a Neutral view on the stock (post weak 2QCY2010 results, Nestle’s stock has corrected ~7%) with a fair value of Rs2,804 (based on P/E multiple of 29x FY2012E earnings and in line with its five-year historical average valuations).

State Bank of India - 1QFY2011 Result Update: For 1QFY2011, State Bank of India's standalone net profit grew 25.1% yoy and 56.1% qoq, which exceeded our estimates on account of better-than-estimated NII and lower operating expenses. Robust operating performance, with reasonable asset quality, was the key highlight of the result. We maintain an Accumulate view on the stock with a Target Price of Rs3,185.

Tata Steel -1QFY2011 Result Update: Consolidated net revenue increased by 16.8% yoy, down 1.1% qoq, to Rs27,195cr. Group deliveries increased by 8.9% yoy to 6mn tonnes; however, they declined by 7.5% on a sequential basis. EBITDA/tonne for TSE increased to US $79 as compared to a loss of US $117 in 1QFY2010. Consolidated EBITDA stood at Rs4,433cr as compared to a loss of Rs30cr in 1QFY2010. Consolidated net profit stood at Rs1,825cr as compared to a loss of 2,209cr in 1QFY2010. We maintain a Buy view on the stock with an SOTP-based Target Price of Rs702.