Monthly Update From Mansukh (For Private Circulations Only) Issue: March 2013
Update Part-I
Update Part-II
Key equity benchmarks, after witnessing steep fall on Budget day, started the new F&O series on a positive note as traders kept them-self busy in buying beaten down fundamentally strong stocks. Market participants were seen piling up positions largely across the board as they hunted for
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undervalued but fundamentally strong bargains after the recent sell-off. The Indian markets slumped in the passing week as the high hopes of the Street from the Union and Rail Budget 2013-14 were dashed.

The government's reform measures to boost the economy were highly expected to be extended in the budget, but Finance Minister P Chidambram concentrated on fiscal prudence and achieved the fiscal deficit target for FY2013 at 5.2% instead of 5.3% targeted in the last budget, further setting a target of 4.8% for FY2014. Though, there were lots of announcements keeping in mind the FIIs but there was a language confusion that the proposed sub-Section (5) of Section 90 could mean that the Tax Residency Certificate (TRC) produced by a resident of a contracting State could be questioned by the Income Tax Authorities in India that spooked the markets , prompting investors to sell.
However, there was a clarification next day from the Finance Ministry that Income Tax Authorities will not question resident status after the TRC is produced by FIIs, but it could not do much and markets snapped the week with cut of over 2%. While, the rail budget turned out to be a non-event, the Union Budget was low on expectation. This was not enough, the real GDP growth

moderated further in the third quarter of the current fiscal to 4.5%, as compared to 5.3% in the previous quarter and 6% in the same quarter last fiscal due to the slowing pace of growth in agriculture, mining and manufacturing sectors.

However, marking a forty-seventh consecutive month of rise and the quickest rate in nine months, the seasonally adjusted HSBC manufacturing PMI rose to 54.2 in February, up from 53.2 in January, but the reason proved too little to cheer up the markets. The eight core sector industries grew by 3.9% in January 2013, up from 2.2% in the same month in 2012, mainly on the back of negative growth witnessed in the production of crude oil, natural gas, fertilizer and cement. However, the cumulative expansion of these industries in April-January period of 2012-13 slowed to 3.2% from 5% in the same period of the previous year. On the positive side, petroleum refinery production grew by 10.5% in Jan 2013. Apart from the capital market there will be a buzz in the debt market too with the government's 2013/14 gross borrowing target of Rs 6.29 trillion. There is a clarification expected next week by the government on its gross borrowing estimates that had sent bonds to their worst day in seven months. On the global front, investors will be eyeing Jobless Claims and finally Employment Situation data on March 8. Overall we are expecting quite a range bound scenario between 5550-5980 however 'Buy on Dips' strategy could be seriously eyed. HAPPY TRADING

or sms 'mansukh' to 56767
India's 82nd annual budget and the last one before 2014 general elections, Finance Minister P Chidambaram managed to deliver a realistic budget, though there was no big bang announcement on the reforms front. But, given the subdued global economic scenario, due precaution was taken by keeping the direct tax structure largely unchanged, only announcing a tax credit of Rs 2,000 for every person who has an annual income of up to Rs 5 lakh, but slapped a 10% surcharge on 'super-rich' individuals with taxable income of over Rs 1 crore and corporate, levied a new tax on land and house transfer and raised duties on mobile phones, cigarettes and luxury vehicles. On the fiscal consolidation front, setting fiscal deficit at 5.3% this year and 4.8% for the next fiscal, looked very much achievable. However, despite stating that the ballooning current account deficit is a bigger worry than fiscal deficit, FM did not further raise import duty on gold, even as Economic Survey reinstating that gold and oil were the main contributors to rising CAD. Moreover, the FM also unveiled a bigger-than-expected outlay for the coming fiscal year, despite expectations for cuts from current year levels, which are on track to hit Rs 14.3 lakh crore, or 96% of the Budget target.



  • Tax credit of Rs 2000 to be provided to every person to having     income of up to Rs 5 lakh, this will benefit 1.8 crore people.
  • 5 to 10 per cent surcharge on domestic companies whose     taxable income exceeds Rs 10 crore while Surcharge of 10%     for individuals whose taxable income is over Rs 1 crore.
  • Commodities transaction tax levied on non-agriculture     commodities futures contracts at 0.01% and Securities     Transaction Tax (STT) reduced on equity future, mutual fund.
  • Modified GAAR norms to be introduced from April 1, 2016. No     change in peak rate of customs duty for non-agriculture     products.
  • Import duty raised on set-top boxes from 5% to 10%. 10%     customs duty to be levied on unprocessed illuminate. Import     duty raised from 75% to 100% on luxury vehicles. Duty free     limit on Gold rose to Rs 50,000 in case of male and Rs     100,000 in case of female. Specific excise duty on cigarettes     and cigars raised by 18%.
  • Excise duty on SUVs to be increased to 30% from 27%,     SUVs registered as taxis exempted. Vocational courses     offered by state-affiliated institutes to be exempted from     services tax. Duty on mobiles above Rs 2,000 raised from 1%     to 6%, based on their maximum retail prices.
  • TDS of 1% on value of properties above Rs 50 lakh. Agriculture     land exempted.
  • Tax free bonds issue to be allowed up to Rs 50,000 crore in     2013-14 strictly on capacity to raise funds from the market.
  • A company investing Rs 100 crore or more in plant and     machinery in April 1, 2013 to March 31, 2015 will be allowed     15 per cent investment deduction allowance apart from     depreciation.
  • First housing loan up to Rs 25 lakh would get additional     deduction of interest of up to Rs 1 lakh in 2013-14.
  • Rajiv Gandhi Equity Scheme will be liberalized to allow first     time investor to invest in Mutal Fund and equity.
Source: Reuters India
FMCG:- FMCG sector which has a consumption-driven growth, hardly gets any direct announcement in the budget, but the general expectation of the sector was announcement of a clear roadmap for Goods and Services Tax (GST) from the FM, as the GST will bring down the distribution costs of the FMCG companies, which are currently in the range of 2 to 7 per cent of their turnover.

AUTOMOBILE:- Budget 2013-14 was a mixed bag for the Indian automobile Industry, as there was a proposal of rise in excise duty on Sports utility vehicles' (SUVs), Finance Minister has increased the excise duty on SUVs to 30% from 27%, which will negatively impact the industry, as currently SUV segment is growing faster than any other segment of the industry. Though, buyers may search for some local brands as all luxury vehicles will attract 100% import duty as against 75% earlier. Also, the basic customs duty on motorcycle with engine capacity of 800cc or more has been proposed to be increased from 60% to 75%.

CAPITAL GOODS:- The government in the union budget 2013-14 proposed that state governments should prepare the financial restructuring plans for state power distribution companies, though there were no specifications about any allocation. The government also proposed the investment allowance of 15% on investment of Rs 100 crore or more during 1/4/2013 to 31/3/2015 in plant and machinery (additional) apart from depreciation. Also, there was declaration of providing Rs 1,400 crore for setting up of water purification plants in 2000 arsenic-and 12000 fluoride-affected rural habitations. However, the government also lowered the basic customs duty to 5% from 7.5% on 20 specified machinery for use in leather and footwear industry.

TEXTILE INDUSTRY:- The Union Budget 2013-14, presented by the India's Finance Minister P Chidambaram, was positive

one for the textile industry as there was proposal of continuing the Technology Up gradation Fund (TUF) scheme for this fiscal. TUF scheme is a blue-chip programme of the Ministry of Textile, which is operational since April 1999, and has helped the industry to become globally competitive. Moreover, the government has also allocated Rs 2,400 crore under TUF scheme for the 2013-14 fiscal, in order to facilitate the industry to grow and improve its export performance largely.

POWER:- Finance Minister proposed fresh incentives for the power industry, which is struggling to cope with fuel constraints as well as poor financial conditions of distribution utilities. Chidambaram has announced public-private partnership (PPP) projects in the coal sector to boost the fuel's production and price pooling would soon be a reality. Earlier, the government had proposed to average prices of domestic and imported coal to get a uniform price of the commodity. Section 80-IA of the Income Tax Act has been extended to new investments in the sector and emphasized on debt restructuring for companies.

On broader view FM tries to showcase more of a fiscal consolidation picture but it was not an austere or something ugly that everyone would have expected. Whopping 17% cut in Plan expenditure for the current fiscal in the Budget over the original estimate hid the rise in non-plan expenditure for this financial year, and helped the finance minister make the total outlay for the next financial year look much higher. For 2013-14, expenditure is pegged at Rs16.65 lakh crore, 16 per cent higher than the Revised Estimates (RE) of Rs14.31 lakh crore. However, when compared to Budget Estimates (BE) of Rs 14.91lakh crore, it is an 11 per cent rise. Conclusively this budget neither have any negativity that shattered the investors sentiment nor it can restore any faith that growth will soon revive in a huge way.

Source: Reuters India

Aditya Birla Nuvo has reported results for third quarter ended December 31, 2012. The company has reported 11.03% fall in its net profit at Rs 85.13 crore for the quarter as compared to Rs 95.68 crore for the same quarter in the previous year. However, total income from operation of the company has increased by 14.37% at Rs 2747.37 crore for quarter under review as compared to Rs 2402.08 crore for the quarter ended December 31, 2011. The company, on consolidated basis, posted a rise of 28.06% in its net profit at Rs 323.21 crore for the quarter as compared to Rs 252.39 crore for the same quarter in the previous year. Total income of the company increased by 10.24% at Rs 6396.17 crore for quarter under review as compared to Rs 5802.07 crore for the quarter ended December 31, 2011. Meanwhile Aditya Birla Nuvo has received an approval for brownfield expansion of urea capacity by 3,850 tonnes per day (TPD) at existing fertilizer complex at Jagdishpur in Uttar Pradesh. Such expansion is envisaged at a capex of around Rs 4,000 crores.

On technical perspective, after taking significant correction from the highs of Rs 1180, scrip has shown crucial resistance below Rs 980 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
ABIRLA NUVO 1020-1030 980 1100 1130 1 Months

Elder Pharmaceuticals, (EPL), one of the fastest growing Pharmaceutical major in the country has signed a MoU with Russia's holding Pharma Eco, which works in all major segments of pharmaceutical industry for bilateral cooperation in the field of healthcare. The MoU between the two companies was signed as part of the Russian 1 President visit for the 13th annual Indo-Russian bilateral summit. EPL has around six manufacturing units in India, all as per international standards. Post increasing its stake in Elder Biomeda AD and Neutrahealth PLC, EPL also has access to the manufacturing units of these companies in Bulgaria and Birmingham, UK respectively coupled with distribution network and brands of the same. The revenue for the Dec 2012 quarter is pegged at Rs. 2507.86 millions against Rs. 2569.62 millions recorded during the year-ago period. The Company's Net profit for the Dec 2012 quarter have declined marginally to Rs. 196.65 millions as against Rs. 227.11 millions reported during the corresponding quarter ended. Operating profit surged to 591.93 millions from the corresponding previous quarter of 580.86 millions.

On technical viewpoint, stock has shown consolidation pattern around Rs 300 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 350-370 in near term.



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ELDERPHARM 290-300 270 350 370 1 Months
   Raymond Ltd Target Price:` 422

Raymond Ltd, with over 60% market share in India, is one of the largest integrated manufacturer of worsted fabric in the world. Raymond produces high-value pure-wool, wool-blended and premium polyester viscose worsted suiting in addition to half a million blankets and shawls. Raymond is the company in the world to have a diverse product range of nearly 20,000 design and colors of suiting fabric, it exports products to over 55 countries. Company is also diversified in engineering and aviation sector and is a leader in the engineering files segment in India and largest producer of files in the world.

Financials: The top line of Raymond has grown at CAGR of 8% during FY07-12, Operating Profit grew at 7.5% while owing to significant increase in interest cost company has bared some losses during that period. In FY12, the Net Sales of company grew 25% to Rs 1871.87 crore over FY11, Operating Profit grew 8.25% to Rs 255.10 crore while due to loss in FY11, PAT is not comparable but again reported profit of Rs 56.35 crore in FY12. In Q3FY13, The Net Sales of the company rose 8% from Q3FY12 while owing to higher raw material cost & expenses Operating Profit & PAT of the company turned down 37.40% & 86% respectively compare to Q3FY12. OPM of the company for the same period declined by 757bps to 10.44% and PAT margin squeezed 531bps at 0.76%.

Rollback of Excise Duty will revive the Textile Industry ....
In Union Budget 2013, Govt has proposed to rollback of 12% excise duty on readymade garments. Earlier a net of 3.6% excise duty was payable on readymade garments which was actually adjusting for the 70% abatement on 12% duty. In the past quarters, industry's volume growth has been subdued at 5%. However, owing to this relaxation, garment-manufacturing companies can now save close to 2% of their sales, which would be helpful to translate into the net earnings of the companies. Eventually, garment companies can reduce the prices to attract the customers in the coming quarters. If garments companies partially share it with customers then the demand in the entire value chain in garment industry may go up by 3-4%, which would boost the earnings.

Expanding Retail Network & Optimizing Cost …

Raymond has more than 3,000 retailers and 650 exclusive retail shops spread over 400 towns in India. Company has further planned to expand its retail network across the country. In the last quarter, the company added 21 new stores and also increased its retail space by 9% to 1.75 square feet. The company planned to add around 100 stores every year especially in smaller towns. Company has already owes 50% of its exclusive retail shop in smaller towns. Apart from this expansion plan, company is also focusing to optimize the cost and improve the operational margins.


Monetisation of land will help to reduce Debts ...
Raymond has over 120 acres of land in Thane, and company is looking diverse options to sale it completely or partially at different stages. Actually, Raymond has consolidated net debt of ~Rs 9 billion and the sale of this prime land could generate huge cash of ~Rs 15 billion for the company, this much of cash can completely reduce the whole debt of the company which is positive for the company from the cash flow point of view. After reducing the debts, company can invest remaining amount to expand the network of its retail shops or in auto segment business.

Considering Investment to expand Auto segment business
The auto component business of Raymond, which is represented by its subsidiaries, Ring Plus Aqua (RPA) and a recently acquired Trinity India. Raymond is further planning to expand its auto parts business. The company aims to be a one-stop shop for vehicle manufacturers in the specialized category such as power trains (engine, transmission, drive shaft), while being present in other segments. The company is considering investment of Rs 1,000-1,500 crore to fund its growth plans in the coming years. The company is also looking to acquire another forged machine parts maker of medium size in India, while it is planning to acquire engineering technology firms abroad.

Every year the central or state governments have several policies to implement in the overall task of performing its functions to meet the objectives of social & economic growth of a country. For implementing these policies, it has to spend huge amount of funds on defence, administration, and development, welfare projects & various other relief operations. It is therefore necessary to find out all possible sources of getting funds so that sufficient revenue can be generated to meet the mounting expenditure. The term budget is derived from the French word "Budgette" which means a "leather bag" or a "wallet". It is a statement of the financial plan of the government. It shows the income & expenditure of the government during a financial year, which runs generally from 1stApril to 31st March. Budget is most important information document of the government. One part of the government's budget is similar to company's annual report. This part presents the overall picture of the financial performance of the government. The second part of the budget presents government's financial plans for the period upto its next budget.
Components of Budget

The revenue budget includes the financial statement of revenue receipts of the government i.e. revenue collected by way of taxes & other receipts. It also contains the items of expenditure met from such revenue.

Revenue Receipts & Expenditure: In Revenue Receipts, all the incomes which are received by the government from various sources in its ordinary course of governance. These receipts do not create a liability or lead to a reduction in assets. At the same time as Revenue Exp is the main supply of revenue expenditure, which is generally incurred for the routine, usual and normal day-to-day running of government departments and provision of various services to citizens. It includes both development and non-development expenditure of the Central government. Usually expenditures that do not result in the creations of assets are considered revenue expenditure.

This part of the budget includes receipts & expenditure on capital account projected for the next financial year. Capital budget consists of capital receipts & Capital expenditure.

Capital Receipts & Capital Expenditure: Receipts, which create a liability or result in a reduction in assets are called capital receipts. The government obtains them by raising funds


through borrowings, recovery of loans and disposing of assets. Any projected expenditure, which is incurred for creating asset with a long life, is capital expenditure. Thus, expenditure on land, machines, equipment, irrigation projects, oil exploration and expenditure by way of investment in long term physical or financial assets are capital expenditure.

What is Fiscal Deficit?
Fiscal deficit is an economic phenomenon, where the Government's total expenditure surpasses the revenue generated. It is the difference between the government's total receipts (excluding borrowing) and total expenditure. Fiscal deficit gives the signal to the government about the total borrowing requirements from all sources. The primary component of fiscal deficit includes revenue deficit and capital expenditure.

Revenue Deficit & Capital Expenditure: It is an economic phenomenon, where the net amount received fails to meet the predicted net amount to be received. It is the fund used by an establishment to produce physical assets like property, equipments or industrial buildings. Capital expenditure is made by the establishment to consistently maintain the operational activities.

What is Current Account Deficit (CAD)?
A CAD is when a country's government, businesses and individuals imports more goods, services and capital than it exports. Actually, it is the sum of the balance of trade (i.e., net revenue on exports minus payments for imports), factor income (earnings on foreign investments minus payments made to foreign investors) and cash transfers. A substantial CAD is not necessarily a bad thing for certain countries, but widening of CAD could be a negative sign that the country is a credit risk.


Gold slides more than 5% in February on the back of dollar potency, reasonably affirmative economic data, belligerent selling of paper gold on the COMEX, and poor sentiment. Even though so much negative sentiment, gold has shown tremendous resiliency as in euros and pounds, gold only fell by 1.1% and 0.7% respectively. On technical; charts Gold is in oversold territory as we believe short covering is due at any moment. The socialization of credit in the U.S. may well work the miracles as its proponents claim, but not without stiff costs. We suspect that two inescapable costs will be inflation and negative real interest rates as far as the eye can see. Both of these outcomes are friendly to gold. According to the recently published Congressional Budget Office (CBO) ten year base line projections, the budget deficit will shrink to 2.5% of GDP in just three years from the current 7%. Stated in dollar terms, the $1.15 trillion deficit of 2012 will become only $433 billion in 2015. The economy will grow at 3.1%, 3.5%, and 5.9% in nominal terms. Tax receipts will rise and spending will be held in check. Interest on ten year treasuries will not rise above 3.5% by 2015. Interest on 90 day treasuries will not rise above 20 bps, as promised by the Fed. Inflation will remain tame and the interest component of the consolidated budget will rise from $223 billion to only $273 billion. Adding all these factors Gold has the strong potential to rebound from $ 1520-1540 to $ 1640-1650 in near term.

Similarly Silver also shown some destructive sentiment in the last month, crush the traders sentiment with huge short positions from the highs of Rs 60000 though we expect it is nearing to its bottom and massive short covering rally well be hang about just around the corner, as the professional traders may cover their Gold shorts and the big authorities controlling the paper market rush for the exits to cover their Silver shorts in a panic. Nevertheless, manipulation to keep the price of physical silver Artificially low has resulted in a situation where the actual value of silver is much

monthly report

higher than its current price in paper currency terms. Basically, for positional traders Silver emerges as an excellent opportunity to accumulate near Rs 50000 level for a manifold rise with tenure of more than 8-10 years. In near term as per our belief Silver may find some materialistic cushions around $ 26-27 where traders are advised to create long.

Imposition of Commodities Transaction Tax (CTT)
The Finance Minister in his latest announcements proposes to introduce CTT in a limited way, which is expected to deliver Rs.5000 crores in government revenue. Acording to Budget 2013-14 CTT shall be levied on non-agricultural commodities future contracts at the same rate as on equity futures that is at 0.01% of the price of the trade. Gold, Silver, non-ferrous metals and Crude Oil will attract a 0.01% duty in CTT. The tax applies to buy side and sell side. The trading in commodity derivatives will not be considered as a 'speculative transaction' and CTT shall be allowed as deduction if the income from such transaction forms part of business income.

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Disclaimer : :This report is for informational purposes only and contains information, opinion, material obtained from reliable sources and every effort has been made to avoid errors and omissions and is not to be construed as an advice or an offer to act on views expressed therein or an offer to buy and/or sell any securities or related financial instruments. Mansukh, its employees and its group companies shall not be responsible and/or liable to anyone for any direct or consequential use of the contents thereof. Reproduction of the contents of this report in any form or by any means without prior written permission of the Mansukh is prohibited. Please note that we and our affiliate, officers, directors and employees, including persons involved in the preparation of issuance of this material may; (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) may trade in these securities in ways different from those discussed in this report or (c) be engaged any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments or the company(ies) discussed herein or may perform or seek to perform investment banking services for such Company(ies) or act as advisor or lender / borrower to such Company(ies) or have other potential conflict of interest with respect to any recommendation and related information and opinions. All disputes shall be subject to the exclusive jurisdiction of Delhi High Court.
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.


Mansukh Institute of Financial Markets (MIFM) is an advanced research institute established by Mr. J U Mansukhani, an ex-IES Officer, who has decades of experience in financial markets and research, is the founder of Mansukh Institute of Financial Markets. MIFM is specializes in Financial Market Education and Services. MIFM is pioneers in introducing short-term job-oriented diploma programme for providing state-of-the art facilities in the field of financial markets. Specifically, it caters to the need of training and placement for the personnel engaged in financial markets like Marketing Personnel, Dealers/Arbitrageurs, Research Analysts and Managers.

To be world class Training & Education Institute shaping careers through our eminent faculty & cutting edge research & becoming a shining example of achieving such high standards as to make the alumni proud of its pedigree.

To enhance the glow of knowledge through quality educational programmes resulting in improvement of the intellectual & practical skills of individuals for their overall growth & growth of society.

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