Monthly Update From Mansukh (For Private Circulations Only) Issue: October 2012
The F&O September series expired with strong gains, supported by lots of policy reforms on the domestic front and announcement of stimulus measures by different countries on global front. Realty and banking stocks were sectors that garnered maximum gains of over 20%, late spurt came in power sector too that gained over 7% for the series. 51 stocks
monthly magzine
that were to be excluded from the F&O segment witnessed selling pressure, as once excluded these stocks will attract the circuit filter, which means their share price movement will be limited by the exchanges. Out of the shares to be excluded MTNL and Ruchi Soya

witnessed cut of over 20% each. Market registered rollovers of 62.66%, lower than the three month average of 64.47%, while Nifty rollovers were at 52.73%. Sectorally, power, capital goods and cement stocks witnessed high rollover while the technology, telecom and oil & gas observed relatively low rollovers into the October series. CNX Mid Cap gained 9.6% during the series, while BSE Small Cap index was up by 12%, BSE Realty index gained 21% and CNX PSU index was up by huge 23% for the series, while BSE Power and CD gained 7% and 9% respectively.

First day of a fresh futures and options series brought more cheer for the Indian stock markets as the benchmark indices not only climbed over a percent higher in the session but also hit their highest level in more than 14-1/2 months. After the gap-up

opening, the frontline gauges managed to capitalize on the momentum and kept garnering from strength to strength to reclaim the important psychological 18,750 (Sensex) and 5,700 (Nifty) bastions. The undertone remained upbeat on optimism that the government will carry on its reforms agenda forward in the coming days and weeks. Sentiment also got support on government's decision of no extra borrowing in the current year. The finance ministry asserted its commitment to containing fiscal deficit by

sticking to its borrowing target and said that government will borrow Rs 2 lakh crore in the remaining period of the current fiscal to stick to the target of 5.1 per cent of the GDP. The appreciation in rupee too buoyed the sentiments, rupee rose to a near five-month high on Friday after the government stuck to its fiscal second half borrowing and said it will not borrow more via bonds in the current year. The rupee rose to a high of 52.20, a level not seen since May 1. Conclusively we believe spot index would continue its cheerful performance for the upcoming series though 5880-5912 could be the near term resistance zone. Any break out above this level may further boost the trader's sentiment and we might see 6145-6170 in a short span of time where profit booking opportunities can't be rule out. On the flip side in case of profit booking from current levels 5360-5380 could be the crucial support zone where fresh long could be initiated. HAPPY TRADING…

or sms 'mansukh' to 56767
The global manufacturing PMI, posted on the first day of October 2012 rose from 48.1 in August to 48.9 in September. This put it to somebody conditions may have improved a little, following four consecutive monthly declines. But it is consistent on past form with world GDP growth of only 2%, or so on a quarter-on-quarter annualized basis. It is also well below trend growth of over 3%, and is disappointing for this stage in the recovery, when there is still so much slack in the world economy. Moreover, the indices for individual countries do not point to a significant recovery. For the US, the ISM manufacturing survey, at 51.5, is consistent with GDP growth of 1½-2%. The index is still below its average level in the first half of the year (53) or indeed last year (55.2). As a result, the US economy is still growing too slowly to make much of a dent in unemployment, mainly due to falling export demand and uncertainty about the fiscal outlook. Indeed, the US will grow by more than 2% on an annualized basis in second half of the year, and we anticipate no improvement next year either.

Hence, as far as equity markets are concerned, market participants are equally focused on the impact of QE3 on the real economy. As the resilience in the U.S. contrasted with data from abroad, which showed a slowdown in the euro zone service sector worsened last month, and China's services sector expansion slowed to nearly a two-year low. I am of the opinion that QE3 is best for the banking system as the Fed continues to pile on toxic assets in its books. For the real economy, QE3 does no real good as consumers refrain from leveraging. The de leveraging cycle for consumers is still underway, and is expected to continue in the near term. Further, the private banks have also tightened lending standards, and credit growth might not pick up meaningfully, even if consumers are willing to leverage. Over the next two to three months, market participants will realize that QE3 has been just a liquidity exercise, and that it will do nothing substantial for job creation or for boosting consumer spending. This is likely to negatively impact equity markets and act as a near-term downside trigger. Trading was choppy on Wall Street following the data, with U.S. stocks advancing moderately by


midday. The dollar hit a fresh two-week high against the yen, and Treasuries prices weakened. Separate data showed demand for mortgage financing surged more than 19% last week as interest rates tumbled to new record lows in the wake of the Fed's announcement of its latest stimulus plan.

In the last three months, the S&P 500 index has surged by 12.7% discounting something better in the foreseeable future. But In the second quarter of 2012, 64.5% of S&P 500 companies beat estimates, while 24.7% of the S&P 500 companies missed estimates. In the third quarter, more companies are likely to miss estimates due to a global slowdown, and this will dampen market sentiments. In addition to this As of August 31, 2012, the total public debt in the U.S. amounted to USD15.9 trillion. This is not far away from the USD16.4 trillion debt ceiling. The United States can face another potential debt ceiling issue and debate by early 2013. Again, the outcome is certain, and the debt limit will be increased with promises of spending cuts in the foreseeable future. However, markets will be edgy, and consumer confidence will slip again. Equity market nervousness might not impact the real economy. However, a dip in consumer confidence can stall already sluggish growth.

Source: Reuters India
Indian exports have continued their sluggish pace for the fourth month in a row and declined by 9.7% for the month of August from a year earlier to $22.3 billion, while imports dropped by 5.08% to $37.9 billion. As per the provisional data of Ministry of Commerce & Industry, total exports since beginning of this fiscal year till August fell by 5.96% to $119.9 billion, while imports declined by 6.2% to $191.1 billion. The decline in export has slightly widened the trade deficit to $15.6 billion from July's $15.5 billion. However, the trade deficit for April - August, 2012-13 was estimated at $71.17 billion, which was lower by 7.07% than the deficit of $76.20 billion during April - August, 2011-12. India's imports during August, 2012 were down by 5.08% to $37.95 billion over the level of imports valued at $39.98 billion in August, 2011. Cumulative value of imports for the period April-August, 2012-13 was $191.15 billion, down by 6.20% as against $203.79 billion in same period last year.

Meanwhile Oil imports in August rose by 2.96% to $12.8 billion, while non-oil imports dropped 8.74% to $25 billion. Oil imports during April-August, 2012-13 were valued at $66.69 billion, up by 2.80% than the oil imports of $64.87 billion in the corresponding period last year. On the same time, non-oil imports during April - August, 2012-13 declined by 10.41% to $124.46 billion compared

to $138.92 billion in April - August, 2011-12. Slowdown in western economies is impacting the Indian exports and going with the data of first five months of export, the task of achieving $360 billion target in the current fiscal looks difficult. Though, the decline in exports in August is lower than that of the previous month but the recently announced incentives by the government may take time to completely arrest the fall in export.

Amid the growing concern of rising fiscal deficit the government has retained its H2FY13 borrowing target and will borrow Rs 2 lakh crore in remaining period of the current fiscal. The government budgeted to borrow Rs 5.7 lakh crore this fiscal, or 5.1 per cent of the Gross Domestic Product (GDP), including repayments. In the first six months, it has already borrowed Rs 3.7 lakh crore. Though, the finance ministry admitted that the fiscal deficit could overshoot the target of 5.1 per cent of GDP but hoping that government's recent efforts to cut down spends would show results, it stick to its Budgeted borrowing plan of Rs 2 lakh crore for the second half of the fiscal. In the October-March period last financial year, it had borrowed Rs 2.6 lakh crore. Finance ministry is expecting the fiscal deficit to be maximum of 5.2 to 5.3 per cent, which according to it is doable, however the general expectation is that it may rise to 5.8 per cent of GDP and the government would have to announce extra borrowing to meet that, as the government is unlikely to cut further spending with slower tax revenue generation amid weaker domestic growth.

The RBI has allowed non-residents including NRI's to make investments in an Indian company at the face value of shares or debentures, subject to their eligibility to invest under the FDI scheme. Earlier, a person residing outside India was allowed to purchase shares or convertible debentures of an Indian company under FDI Scheme and only up to the extent and subject to terms and conditions set under the FDI scheme. Also, the person buying shares who proposes to be the collaborator or acquires the entire share holding of a new Indian enterprise is required to obtain prior permission from the government, in case he/she has a previous company or joint-venture in the country through investment in shares or debentures.

Source: Reuters India

Hexaware Technologies has been selected for the International Association of Outsourcing Providers (IAOP) Global Outsourcing 100 list. The company was recognized for its global expertise in specialized IT services overall and for its work in key areas such as Human Resources Services, Transaction Processing Services and Air Transportation. In addition to being listed in the IAOP Global Outsourcing 100 list, Hexaware achieved recognition on sub lists including Best 10 Leaders - Human Resources Services, Best 20 Leaders - Transaction Processing Services and Best Companies - Air Transportation. The turnover is pegged at Rs. 2443.80 millions for the June 2012 quarter. The mentioned figure indicates a rise of about 59.89% as against Rs. 1528.42 millions during the year-ago period. The company has announced a 42.79% increase in its profits to Rs. 746.54 millions for the quarter ended June 2012 compared to Rs. 522.82 millions in the corresponding quarter in the previous year. Operating profit for the quarter ended June 2012 rose to 999.29 millions as compared to 635.60 millions of corresponding quarter ended June 2011.

On technical perspective, after taking significant correction from the highs of Rs 140, scrip has shown crucial resistance below Rs 110 level. At current juncture we believe scrip has the potential to recover from the current level as its technical indicators i.e. RSI and MACD also suggest some technical pull back in near term. Hence we recommended 'Buy' in this stock.



monthly research report
HEXAWARE 112-115 105 130 145 1 Months

Divis Laboratories, together with its subsidiaries, engaged in the manufacture and sale of active pharma ingredients (APIs) and intermediates for the pharmaceutical industry in India and worldwide .Divis is actively involved in developing alternate, patent non-infringing processes for APIs, for the inventors to manage late life cycle and leading generic drug manufacturers. Apart from this, Divis supplies advanced intermediates for generic APIs that are already out of patent, as also for APIs which are about to enter generic status shortly. Here again, Divis has tie-ups with both original inventors and generic API manufacturers. Divis Laboratories has reported results for first quarter ended June 30, 2012. The company has registered a rise of 63.15% in its net profit at Rs 167.38 crore for the quarter under review as compared to Rs 102.59 crore for the same quarter in the previous year. The total income from operation of the company has increased by 36.13% at Rs 510.17 crore for Q1FY13 as compared Rs 374.78 crore for the corresponding quarter previous year.

On technical viewpoint, stock has shown consolidation pattern around Rs 1100 and currently in upward bias. Moreover it's RSI and other technical indicators also displaying some buying opportunities in near term. Hence investors are advised to BUY this stock for a price target of Rs 1200-1230 in near term.



monthly report
DIVISLAB 1080-1100 1025 1200 1230 1 Months
  GATI Ltd Target Price:` 57

GATI LIMITED is pioneer and leader in Express Distribution and Supply Chain Solutions in India. Gati has more than 3500 employees and covering 622 out of total 626 districts in India. Gati has over 4500 vehicles on the road excluding their fleet of refrigerated vehicles, container shipping vessels and world class warehousing facilities across India. Furthermore, Gati has a strong market presence in the Asia. Pacific region and SAARC countries. Today, GATI has edge over others as it has connectivity across air, road, ocean and rail providing a quality services to customers.

Financials: During (FY07-FY12), GATI has shown annual CAGR growth of 64% in Net Sales, operating profit and PAT both also grew around 10% and 14% during the same period respectively. In June ended FY12, the consolidated Net Sales of GATI marginally slipped by 1.9% to Rs 1180.18 crore over FY11, Operating Profit declined 23% to Rs 71.26 crore while because of higher other income the PAT of the company has jumped 194% to Rs 41.51 crore for the same period. In Q4FY12, due to separating its express distribution and supply chain business the standalone Net Sales of the company sharply declined by 93% and company born operating loss of Rs -6.23 crore but due to high other income PAT jumped by 1895% to Rs 63.82 crore during the same quarter.

FDI in Retail will boost up the Logistics industry in India...
Govt has recently introduced the new FDI policy for the retail sector in India, which will help to modernise the distribution and logistic supply chain management especially in organized retail sector. Currently Organized Retail market in India is merely around 5-7 percent compare to 80-85% of US and 30-35% of China. In India, due to lack of proper transportation & storage services more than 33% of fruit and vegetables waste and perishes during the journey from the farm to the fridge. Presently India has only 5,300 cold storages, a figure that sits uneasily when placed against the 12 million small and medium retail outlets in the country. Hence, this presents a big opportunity for companies to expand their services who manage warehouses and logistics like GATI.

New JV helped to leverage its debts& will expand its business…

Company has significant amount of debts and to share the burden of debts & technical know-how company has formed a new JV in the name of Gati-Kintetsu Express (GATI-KWE) with one of the worlds leading logistic & supply chain group Kintetsu World Express (KWE) of Japan. As per JV agreement, Gati holds 70% stake and remaining 30% by KWE. After this JV Company has transferred the debt of Rs 330 crore to GATI-KWE, out of which Rs 267 crore invested by KWE has been used mainly for repaying debt and remaining for the for expansion of new company. This significant affiliation will help to cut down the interest outlay gradually and will bring together the strengths of Gati's local expertise in Express Distribution with KWE.


De-merging of unprofitable business help to improve margin…
The shipping business of GATI, which is not doing well since last many quarters has been hived off into a separate subsidiary (Gati Ship) in March. The Shipping Industry itself is not doing well and GATI's shipping business took away significant profits of the company. However, company is also looking some opportunities in this business, which can returns to normalcy this year and possibly at break-even. Therefore, its 100% subsidiary has outlined a dedicated shipping route service between Chennai-Yangon (Myanmar)- Chennai to help businesses maximize trade potential between the two countries. GATI Ship is the only licensed operator making several voyages a month between India and Myanmar via Port Blair.

Focusing to expand its core business will add volume growth ...
Company is now focusing on its most profitable (cold storage & chain supply) segment. GATI has planned to increase the fleet capacity up to 350 from 162 trucks by the end of 2015. Further as a part of its capex plan GATI has decided to invest around Rs 185 over the next three years, out of which Rs 110 crore will be invested to develop infrastructure facilities like warehousing & cold storages and remaining amount will be invested partially Rs 57 & Rs 17.5 to expand the fleet size & E-Solutions respectively. Additionally, GATI has significant portion of land bank, which is partially used for its new JV while the major portion would be utilized only to develop warehouses & cold storage facilities.

In the directory of corporate security investor, equity investors do not have the first opportunity at operating profits. Common shareholders get whatever is left over after the corporation pays its creditors, preferred shareholders and the taxman. But in the world of investing, being last in line can often be the best place to be, and the common shareholder's lot can be the biggest piece of the profit pie. Book value is the theoretical value of what a company's net assets are worth. It is also referred to as equity. In theory, book value is equivalent to the amount of cash shareholders would receive if all of the company's debts, both short-term and long-term, were paid off and all remaining assets were sold. Its compelling use as a measure of valuation can be explained in one statement:

What is Book Value?
Book Value is the value at which an asset is carried on a balance sheet. A good measure of the value of a stockholder's residual claim at any given point in time is the book value of equity per share (BVPS). Book value is the accounting value of the company's assets less all claims senior to common equity (such as the company's liabilities). In simplified terms, it's also the original value of the common stock issued plus retained earnings, minus dividends and stock buybacks. BVPS is the book value of the company divided by the corporation's issued and outstanding common shares.

Importance & Use of Book Value
The book value is usually used in the form of price to book value ratio (PB) which compares a stock's market value to its book value. A lower PB could mean that a company's stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. Book value can be use with the combination of P/E ratio and other analysis, which can help identify bargains and help investors avoid over-priced stocks. All serious investors should understand the Price to book Value Ratio and its implications. Apart from this, there is an noteworthy use of Book value, actually book value per share can be used to generate a measure of comprehensive earnings, when the opening and closing values are reconciled.

It measures the Value of Claim for an Investor
Equity investors often compare book value of equity per share (BVPS) to the market price of the stock in the form of the market price/BVPS ratio to attribute a measure of relative value to the shares. For a momentary look, it would be an attractive tool to compare the current valuation of company but it should be always


keep in mind that book value and BVPS do not consider the future prospects of the firm, they are only snapshots of the common equity claim at any given point of time. A going concern company should always trade at a price/BVPS ratio in excess of 1x if the market properly reflects the future prospects of the corporation and the upside potential of the stock.

Disadvantages of using Book Value
Usually book value is used with the market price of the company, which is called price/BVPS, so there are certain drawbacks while using the same in valuation process. First disadvantage is that, values of intangibles are not considered in assets, such as the brand value of a renowned company or the human capital of service companies. P/BV can also mislead when there are significant differences in the asset intensity of production methods among the firms. Apart from these economical factors like Inflation and technological change can also cause the book and market value of assets to differ significantly.

Book Value helps to indicate the accurate guidance when the company is a mature company that has earnings. Your main valuation decision should be based on earnings, cash flow, and growth per share outlook. However, a Price to Book Value ratio that is within a reasonable range can add a fair amount of comfort to your decision. Book Value is also of more relevance when the company is not extremely leveraged. Like other approaches, book value examines the equity holders' portion of the profit pie. Unlike earnings or cash flow approaches, which are directly related to profitability, the book value method measures the value of the stockholders' claim at a given point of time.


U.S. fuel demand fell in the past four weeks, an Energy Department report showed. U.S. total fuel use decreased 1.1% to 18.4 million barrels a day, the lowest level since April 6, in the four weeks ended Sept. 21 and crude stockpiles last week were at the highest level for this time of the year since 1990, according to the Energy Department report. U.S. Crude Oil Output rose by 3.7% to 6.509 million barrels a day in the week ended Sept. 21, the Energy Department said. EUROPE is in a critical condition as there is no job, money flow in the market by the government due to short comings of the Banks. But,now Europe got relief as there was a 'ECB' meeting held in Spain in which 'European Central Bank' released the Spain from he debt crisis. German is the most financial approved country in Europe and also every functions of German is followed by all. German said to slow down the expenses to make easy flow of money. Euro, realized that last week the Dollar was 4.4% but know it fell 0.4% to$2860 on September 28. It fell to $1.2846 at 8.36 am in Frankfurt, due to this all crises or fall in dollar crude oil demand lowers and support is 4685 and resistance 5025.There is full stock inventory available for crude oil but less demand even the winters are just arriving and people consume more quantity.

GOLD: In round numbers, the Fed conjures about 55 million fresh Dollars into existence every hour. By contrast, the entire world's gold mines only manage to extract about $15 million worth of gold from the earth every hour and US mines only extract $2 million worth of gold per hour. In other words, Ben Bernanke creates US "money" about 27 times faster than US gold mines. Wild stuff. It is hard to fathom a readjustment of gold to keep up with the amount of money created. But that readjustment seems inevitable. Obviously, inevitable is not the same thing as imminent. But there is good reason to think the Gold Price will top $2000 fairly soon. The Deutsche Bank report shows how the

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Gold Price has pretty much marched in step with the Federal Reserve Bank's money printing since 2000. Gold & Silver Futures rose sharply higher on a technical Bounce after hitting their 20-day moving averages earlier & also on the news that Spain's Government announced its new budget plan will meet deficit targets this year, which cheered the markets. A big central bank infusion of liquidity into China's financial system also helped to give Gold Futures & Commodity Markets a boost. MCX Gold Futures for December delivery had shot up to Rs.32,783 per 10 grams when Comex Gold Dec Futures hit $1790 recently after the Fed announced the much awaited QE3. Since then, Comex Gold has declined to $1740, a decline of around $50, whereas MCX Gold Prices have slumped to Rs.31,431, a decline of Rs.1,352 (over $130) on the back of a stronger INR Indian Rupee. A trend alerted of well in advance, this may continue with the US Dollar weakening further against a basket of major traded currencies globally. Gold price in India may have limited potential further on however its crucial support could be around 30665 and 30200 respectively.

NSE: INB/INF230781431, NSDL: IN-DP-NSDL-140-2000
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Safe Harbor Statement :Some forward looking statements on projections, estimates, expectation, outlook etc are included in this update ot help investors / analysts get a better comprehension of the Company's products and make informed investment decisions. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Investors are advised to consult their certified financial advisor before making any investments to meet their financial goals.