Market Analysis: Weekly roundup till Jan 9

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Market Analysis: Weekly roundup till Jan 9
Markets ended the first week of 2010 with posting gains. Key benchmark indices touched a 22 month high on the back Prime Ministers comments on returning of India"s economic growth to 9 to 10 per cent by couple of years.

Stocks kicked off on Monday, Jan 4 on an upbeat note of strong auto sales numbers for Dec 2009 month, jump in manufacturing activity in Dec 2009 and also surge in exports in Nov 2009.

Sensex gained 75 points and closed at 17540 over its previous weekend"s close, while Nifty ended the week at 5244 netting a gain of 43 points over its previous weekends close.

During the week BSE Mid-cap index outperformed the BSE Sensex by gaining 228 points. The Small-cap index also gained 340 points over the previous weekend"s close.

Week"s top gainers were BSE Auto and Consumer Good indices by 1.1 per cent and 0.7 per cent respectively.

Going Forward
Earnings from Infosys Technologies, TCS, Bajaj Auto, HDFC Bank and few others are expected to decide the mood of the market.

Investors are hoping Dec 2009 quarter results will give them an insight of what to expect from domestic companies in the next few quarters.

Investors will closely watch comments of IT budgets from US companies, pricing scenario and outlook on rupee.

Corporate

Godrej close to buying Indonesia"s Megasari
Godrej Consumer Products (GCPL) is close to acquiring Indonesian household products company Megasari in a deal estimated to be worth Rs.1200-1400 crore.

The funding for the Indonesian acquisition is through a combination of internal accruals and debt. The portfolio of Megasari, with annual sales of over Rs.600 crore, includes HIT insecticide, Stella air freshener and instant foods.

It has also placed an 'attractive' bid for the global pesticides business of Sara Lee Corp with which it has a joint venture in India.

The Godrej group is expected to buy out the US-based Sara Lee"s 51 per cent stake in the joint venture in March or April.

Godrej Sara Lee brands include Good Knight mosquito repellents, Kiwi shoe care products and the Brylcreem hair grooming range.

The Godrej group is also looking at further acquisitions in the home and personal care space in countries such as China, Mexico, Egypt, the Philippines and Brazil.

Telenor ups stake in Unitech Wireless, pays Rs 1,493 cr
Telenor has acquired additional 11.1 per cent stake in Unitech Wireless, a subsidiary of Unitech, for about Rs 1493 crore through a fresh issue of shares.

Considering its existing investment of Rs 2,620 crores, Telenor's total investment in Unitech Wireless now stands at Rs 4,113 crores and shareholding in the latter's total issued and paid-up equity share capital will increase from 49 per cent to 60.1 per cent.

Ashok Leyland JV to produce die castings
Ashok Leyland"s associate company, Ashley Alteams India Pvt Ltd (AAIPL) will commence manufacturing high pressure die castings.

The production of the castings, which will primarily be for the telecommunications and automotive sector, will begin next month at the company"s new facility in Chennai.

AAIPL is a joint venture that was formed in 2007 between Finland"s Alteam Group and Ashok Leyland, which is owned by the Hinduja Automotive Ltd (HML).

Alteam is a major telecommunication component supplier to Nokia.

HML has committed an investment of Rs.75 crore in the first phase of the new plant, entailing a work force of 1,000 employees engaged both directly and indirectly in the company"s operations.

The new business will cater to the strong demand for high pressure die castings in the telecommunication industry and also for the automotive industry.

Economy

Government hints stimulus rollback
India may be looking to withdraw the measures it took to boost the economy during the global financial crisis, as it seeks to put its fiscal situation in order following an improvement in the economy.

Finance secretary Ashok Chawla hinted that the government may be looking at an exit from the stimulus.

Finance secretary"s statement assumes significance as the government has begun the annual budget exercise and will be finalizing the taxation and expenditure proposals and came just a day after the industry had asked the finance minister Pranab Mukherjee to continue the stimulus packages till at least the first half in the next financial year.

India had taken several measures such as cut in cenvat (the median excise duty rate) and service tax rates and borrowings finances higher spending to stimulate the economy hit by the global recession.

Food price inflation cools off
The inflation in food articles dropped to 18.22 per cent for the week ended Dec 26, 2009, from 19.83pc the week before, as per the data released by the commerce ministry.

However, inflation in fuel segment increased to 4.85 per cent from 4.45 per cent in the week before as decontrolled industrial fuels became dearer following a rally in crude prices.

Though food inflation has started to moderate, the increase in commodity prices following a recovery in global economy could now lead to prices of manufactured products going up.

Carmakers and consumer durable manufacturers could increase prices as cost of key inputs such as fuel, copper, aluminum and steel is on the rise.

Prices of most are near 12-month highs.

The easing trend in food prices may keep headline inflation below their earlier projection of 8 to 8.5 per cent by end of Mar 2010 and does not see high fuel and commodity prices causing too much concern.

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

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