The broader indices continued their forward march, with the Sensex and Nifty ending higher by 2.0% and 2.1%, respectively. The BSE mid-and small-cap indices underperformed their large cap counterparts yet again. The BSE mid-cap index ended the week 1.2% higher, while the BSE small-cap index moved up 1.3%. The week began on a cautious note given the mixed cues from the global markets. However, towards end of the week, markets staged a strong rally backed by strong foreign inflows and firm global markets. Almost all the sectoral indices ended the week in the green, with the BSE Metals index gaining the most by 5.2% followed by the BSE Realty index, which gained 4.9%. BSE Metal index outperforms the Sensex The BSE Metal Index gained 5.2% over the previous week, outperforming the Sensex by 3.2% on the back of increase in metal prices. As per media reports, the domestic steel companies hiked the steel prices by 2-3% effective October 1, 2010. Tata Steel outperformed by 4.0% as the company executed the agreement for refinancing its debt in Europe. SAIL, JSW Steel and Jindal Steel outperformed the Sensex by 6.6%, 5.4% and 3.6%, respectively. Among the non-ferrous pack, Hindalco and Hindustan Zinc outperformed the indices by 4.9% and 0.3% respectively, as the base metals prices on the LME remained firm. However, Sterlite gained 1.7% in absolute terms but underperformed the Sensex by 0.3% as the High Court ordered closure of the company's copper smelter at Tuticorin. However, later the Supreme Court stayed the order till October 18, 2010. Nalco gained 0.9% during the week, but underperformed the indices by 1.1%.
Buy Tech Mahindra; Recommend Neutral on Satyam - (Switch Strategy): Mahindra Satyam reported its FY2009 and FY2010 numbers, which underperformed the market's expectations. The company reported revenue of US $1.1bn for FY2010, which was in line with our estimates. Mahindra Satyam has rallied by over 23% in the past month in anticipation of revenue run rate of over US $1.2bn and EBITDA margin of 15-18% for FY2010. The stock is currently trading at 16.0x FY2012E EPS of Rs6.2, which is on a higher side. On risk-reward basis, we recommend a switch from Mahindra Satyam to Tech Mahindra for an upside of 19%.
Bayer CropScience India - AGM Note: Currently, the company is exclusively focus on food grains, going ahead it plans to increase it focus on fruits & vegetables. We maintain our Neutral view on Bayer.
CEBBCO - IPO Note: CEBBCO is one of the leading designers and manufacturers in India of vehicle bodies for goods CVs. To justify the implied market capital at upper price band, the company's wagon manufacturing plant would have to operate at 100% utilization within a year and generate profitability in line with existing players, which we believe at the current juncture appears stretched. We recommend an Avoid on the IPO.
