Market Analysis: Weekly roundup till Nov 7

Sensex and Nifty bounced back by nearly 2 per cent over the week. The BSE Sensex gained 262 points against previous week"s close, and finished at 16158. The Nifty gained by 84 points and closed at 4796 from its previous weekends close.

The governments statements on disinvest of PSU"s resulted sharp pull back in the markets. According to SEBI data FII"s made investments more than USD 69 billion, so far in the current calendar year.

During the week BSE Mid-cap index gained 1.7 per cent, while Small-cap index lost -0.6 per cent. Week"s top gainers were PSU and BSE Realty indices by 4.7 per cent and 4.4 per cent respectively.

Going Forward

According to a few market watchers, investors are expected to book profits, while traders will likely to create short positions on further upsides. Technically, Nifty is likely to face resistance at 4850-4900 levels and once again may test the 4300 levels, which coincides 200- day moving average.

Corporate

NMDC stake sale in two phases to fetch Rs 18000 crore
The government is looking to divest a significant portion of equity in NMDC in two phases. In first phase, the government proposes to offload 8 to 10 per cent equity stake in the company.

In the second phase, it would divest 5 per cent and company will issue fresh shares of equity. In two phases the government raise Rs 18000 crore and Rs.6000 crore for its 5 per cent fresh equity.

Wipro acquires Yardley"s biz for Rs 210 crore
Wipro has acquired the business of consumer care and lighting of Yardley in Asia, west Asia, Australia, and certain African markets from UK based Lornamed Group for 45.5 million dollar. The transaction is expected to be completed in December quarter and revenues will flow from March quarter.

Yardley is the premium brand in the consumer care segment. 70 per cent of Yardley"s revenues come from West Asia, while India accounts for 20 per cent. Yardley is profitable brand and its operating margins were higher than Wipro consumer Care"s operating margin at about 12 to 13 per cent.

GVK Power acquires 12pc in BIAL
GVK Power and Infrastructure Ltd (GKPHIL) has acquired 12 per cent stake in Bangalore international Airport Ltd (BIAL) for Rs 485 crore from Flughafen Zuerich AG. It is the operator of the Zurich airport in Switzerland, held 17 per cent stake in BIAL.

GVK has entered into a Strategic Alliance Agreement (SAA) with Unique Airports Worldwide AG to collaborate for new airport Projects in the Indian Sub-continent.

The company raised Rs 750 crore in June and would divert Rs 485 crore for BIAL. The remaining proceeds are expected to use in power plants.

Economy

SBI call on special home loan soon
SBI which launched a special home loan schemes in Feb 2009 by offering the lowest interest rates, will take a call on to extend the scheme which is set to expire on Nov 7.

Bank offered a fixed rate of 8 per cent for loans up to Rs 5 lakh for five years, while loans up to 50 lakh were priced at 8 per cent for the first year, 8.5 per cent for the second year and third and subsequent years would be linked to prime lending rate.

Banks has seen good demand for housing loans in second quarter of Rs 30000 crore against Rs 1200 crore in the Jun quarter. Banks home loan book has grown 40 per cent in the first half of 2009 as compared to 2008.

Agri commodity prices to surge
All agricultural commodities except rice and wheat have shot up over 20 per cent in the last one month on lower production estimates for the current kharif season and uncertainty over the ensuing of rabi season.

Due to bad monsoon this year, the kharif grain output is projected to fall by 18% to seven year low of 96.63 million tonne against last year"s 117.7 million tonne.

Low inventory levels, lower production during last year, and poor output estimates for the current season has increased the prices of agro-commodities including pulses, spices and sugar etc.

Disinvestment on back track
Prime Minister Manmohan Singh approved a plan to part sell shares in public sector companies that may help the cash strapped government raise at least Rs 60,000 crore and reduce its dependence on market borrowings to fund the building of roads, hospitals and schools.

The Cabinet Committee on Economic Affairs, chaired by Mr Singh, decided that the government will lower its stake in all listed PSUs to at least 90 per cent. There are 12 PSUs such as MMTC in which its stake is more than 90 per cent.

At Thursday, Nov 5 closing prices, disinvestment in these firms could fetch the government over Rs 28,000 crore. All unlisted state firms making profits in the past three years will also be listed, home minister P Chidambaram said after the Cabinet meeting.

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