Market Analysis: Weekly roundup till Oct 10

Markets touched a new 17 month highs on the back of better than expected Q2 results announced by a few companies and strong Index of Industrial Production numbers for Aug 2009 and positive global news lead the markets to continue the rally. The net inflows from FII"s have invested around USD 1 billion this month (Oct 2009) so far.

During the week Sensex gained 683 points and closed at 17326 against last week end"s close. Nifty gained 196 points and closed at 5141.

During the week BSE Mid-cap index gained 356 points, while Small-cap index gained 399 points. BSE Metal and the Bankex indices were the top gainers by 8.8% and 8.1% respectively.

Going Forward

It is expected that, Sep Quarter results will dictate the trend. Several companies are expected to raise funds through IPO and QIP in the calendar year. Investors will keenly watch Q2 results, which are expected to announce in this week by a few companies like Larsen & Tourbo, BHEL, Hero Honda, Sail, and ITC etc.

Corporate

Settlement between Ambani brothers with Peace: Anil
Reliance Industries responded positively to Anil Ambani"s call to settle all outstanding disputes between them through dialogue and discussion.

RIL said that, there is no contentious issue in the world that cannot be resolved satisfactorily through dialogue. The move comes Just days before the Supreme Court is taking up the hearing on the gas dispute between RNRL and RIL on October 20.

Axis Bank posted 32 per cent growth in net profits
Axis Bank posted 32 per cent increase in its net profit to Rs.531.6 crore for the quarter ended Sep 30, 2009, as against Rs 402.9 crore for the same period last year.

Net interest income grew 26 per cent on YOY to Rs 1149 crore in the September quarter. Trading Profits is at Rs.224 crore as compared to the year-ago quarter.

Net Interest Margin improved to 3.52 per cent for the Sep quarter, as compared to 3.34% in the June quarter, 2009. The current account-savings account deposits (CASA) has increased to 39 per cent from 37 per cent a year-ago period.

On QOQ, gross non-performing assets are at 1.21 per cent as against 1.01 per cent, while on YOY, it has increased from 0.91 per cent to 1.21 per cent. Axis Banks"s net Advances in the September quarter grew by 4% as compared to the Jun quarter, 2009.

United Spirits set to raise up to $350 million via QIP
United Spirits (USL) is planning to raise funds around $250-350 million through QIP route. The floor pricing is at Rs.913, which is marginally discount to the scrip price that closed at Rs.921. This free issue of shares will see USL diluting 11-13% stake, and bring down the promoters stake to 29%.

According to the company sources, the proceedings will be used to reduce the part of the debt which is on books of $1.1billion brought for the acquisition of Whyte and Mackay in 2007.

Economy

Strong IIP numbers
The industrial output index recorded a 10.4 percent year-on-year growth for the month of August. Improvement in IIP numbers is partially attributed to the lower base effect of last year and a good recovery in May and June this year. It is expected that growth is more broad-based and quite evenly spread. Manufacturing, power, mining etc showed a double-digit growth.

Commodities rally
The crude oil price has gone up to USD 75 per barrel last week and gold touched a new high of USD 1,070 per ounce. It is expected that the rise in commodity prices is due to weakening of the dollar as many large investors and funds are putting their money in commodities as a hedge against inflation. The expected rise in demand due to the current festival season also sentimentally added to the rise in the prices of commodities.

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