Market Analysis: Weekly roundup till Sep 12th

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Market Analysis
Both the benchmark Indices Sensex and Nifty hit 15 month high during the week. On the back of FII"s inflows of Rs.3275 crore in the week, revival of monsoon and positive global news also make the markets to touch new highs. Further, a survey conducted by Federation of Indian Chambers of Commerce has suggested that the confidence level of economic recovery in Indian companies is increasing. Oil India initial public offer also boosted the market sentiment.

The BSE Sensex gained 575 points in the week and closed at 16264 as against the last weekend"s close of 15689. The Nifty gained 149 points and closed at 4829 as against previous weekends close.

On global front, US markets hit 2009 new highs on the back of hopes on economic recovery.

The BSE Metal index was the top gainer for the week by 7.71 per cent on the back of rise in steel prices in London Stock Exchange, Bankex gained 6.78 per cent. FMCG was the top loser by 3.0 per cent followed by Reality lost 1.2 per cent.

Going forward

After the last week"s rally, we advise investors to be cautious. We believe Stock market indices could see some corrections and extreme volatility on the back of current over-bought condition.

Corporate

Maruti to expand Manesar factory capacity by 40 per cent in two years

Maruti Suzuki plans to increase its passenger vehicle production capacity at Manesar by around 2,00,000 units over the next two years.

Currently, the company produces A-star, Ritz and Swift models with a capacity of 3, 00,000 units. According to company sources, the cost of setting up for the 1,00,000 vehicle capacity could be around Rs.1500 crore.

The company has taken a decision to stop the production in the Plant-I at its Gurgaon factory. Plant-I has annual capacity of 1,60,000 units. This is the oldest manufacturing plant and all production equipments are almost fully depreciated.

Coal India will sell only 10 per cent equity says Government

Coal India (CIL) will not be allowed to issue fresh equity as apart of the disinvestment programme. It will sell only 10 per cent of governments" equity in the proposed public offer.

It is expected to hit the market in the next 18 months. According to the company sources, CIL is not in need to raise fresh equity from the market due to its healthy cash position. CIL is sitting with a cash position of Rs.30000 crore.

The government shares will be largely be disinvested in favor of families displaced due to coal mining activities and for its four lakh employees. CIL plans to take up its coal production capacity from present 400 million tonne to over 520 million tonne by 2011-12.

L&T ready for power biz push eyes 300 mn dollars coal assets

Larsen & Turbo (L&T) has initiated talks to buy out a thermal coal asset in Australian Mining firm. The mine is in Queensland, Australia, has estimated coal reserves of 250 million tonne and could cost the Indian company 250-300 million dollars.

The company plans to make a major entry into the power generation space. The negotiations between L&T and the Australian firm are being facilitated by Hindustan Global resources (HGR), Australian company engaged in exploration, mining and consulting.

(An article by DAS CAPITAL MANAGEMENT & ADVISORS Pvt Ltd)

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