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MARKET VIEW : POSITIVE

Fed funds futures indicate a 100% probability of a 1% cut in fed funds rates and 22% probability of a 125bps cut in rates .

Prudential plc report a 12% margin for their life insurance business for the year ended CY07 v/s 23% in CY06. The fall in reported margins by Prudential UK is partly due to decreased margins (by ~400bp) on ULIP products due to revised IRDA guidelines during FY08. The balance fall is attributable to conservative assumptions (booking costs up-front) made by Prudential UK during CY07. . We have lowered our NBAP margin assumption from 19% to 18% for Prudential ICICI life insurance venture for the next 3 yeras. We have also lowered our target multiple for life insurance business from 22xNBAP to 15xNBAP. Consequently, the valuations of the subsidiaries come down to Rs 339 from Rs 461 earlier. Our modified target price stands revised at Rs 1182 per share. Given the price correction on the stock, it remains an attractive investment buy.

Siemens AG announced a €900m hit to in the second quarter. Estimates for full-year operating profit seem set to fall by about 15 per cent, and further charges, The group has not finished assessing
its contracts in its transportation unit or in the power generation division. Some impact of it
could be felt in its India operations . The stock is trading at 28.4xFY08 EPS and 22xFY09 EPs.
Maintain neutral