Market Analysis: Weekly roundup till Jan 23

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Weekly market roundup till Jan 23
Markets ended on a negative note in the last week and BSE Sensex close below the psychological 17000 mark on all-round selling pressure following disappointment from key corporate earnings and weak trend in the global markets.

Global stocks tumbled after US President Barack Obama on Thursday, Jan 21 proposed new restrictions on banks, which would prevent banks or financial institutions (that own banks) from investing in, owning or sponsoring a hedge fund or private equity fund.

Global markets had already recoiled in recent weeks on fears that demand from China would slowdown as Beijing taps the brakes on its roaring growth to stave-off inflation and to keep the economy from overheating.

Sensex lost 695 points and closed at 16859 over its previous weekend"s close, while Nifty ended the week at 5036 losing of 216 points over its previous weekends close.

During the week BSE Mid-cap index and Small-cap index lost 3.5pc and 3.1pc respectively. Week"s top gainers were BSE IT and PSU indices by 4.7 per cent and 0.4 per cent respectively. BSE Consumer good index was the top loser down by 6.7% over the previous weekend"s close.

Going Forward

Proposed controls on the investment operations of US banks and fears that China may hike rates sooner than expected may push Indian markets lower. Volatility is expected in the markets on the back of credit and monetary policy review in this week.

Corporate

Carrefour looks to forging ventures in foods category with Future Group
Mr Kishore Biyani is expected to engage in two different business models with the French retailer Carrefour.

While at the front end it will be a franchise arrangement, the back end sourcing operations, especially in the foods category, is likely to end in a JV arrangement.

According to sources within the Future Group, “Mr Biyani is serious about Carrefour and will be announcing his deal with the French retailer within the next one month.

The deal is expected to be much along the like of the Wal-Mart-Bharti deal where both a franchise and a JV arrangement have been forged.

Considering the Future Group is relatively weak in the foods business and continues to source from other players, Carrefour would help in setting up the supply chain and sourcing infrastructure, akin to what it has been doing in other countries.

“It is possible that Carrefour will set up its cash and carry operations independently and at the same time also forge a JV with the Future Group for the foods category.

HDFC net rises 23pc in Q3 on higher loan sanctions
HDFC Ltd's net profit increased by 23% to Rs 671 crore for the Dec 2009 ended quarter, against Rs 547 crore in the corresponding 2008 quarter.

HDFC Ltd said that demand for low-cost housing will aid loan growth. The company is targeting 20 per cent loan growth this fiscal.

As on Dec 31, 2009, the loan book stood at Rs.90,410 crore as against Rs.82,896 crore in 2008. Retail loans grew by 65 per cent and wholesale loans grew by 35 per cent. The non-performing loans stood at 0.94 per cent as against 1.01 per cent in the same period last year.

Deposits stood at Rs.21,979 crore as against Rs.17,551 crore in the same period in 2008.

Wipro"s Q3 profit up 21 pc, headcount crosses 1 lakh
Wipro reported a 21 per cent rise in its net profit to Rs 1,217 crore for the third quarter, joining larger rivals TCS and Infosys in providing an upbeat assessment of its prospects for the Jan-Mar quarter.

The company added 31 new customers and reported a 5 per cent rise in third quarter revenue of Rs 6,966 crore.

The management has given guidance for its revenues from the IT business for the quarter ending March this year would rise by 3 to 5 per cent to USD 1.16 to USD 1.18 billion.

According to the company sources, it has seen a positive demand environment and broad-based sequential growth across all our verticals, service lines and geographies.

In 2010, management expects IT budgets to be flat to marginally positive. Our expectations are IT budgets are going to be flat to marginally stronger with greater emphasis on off-shoring.

Economy

Govt gives go ahead to Alstom-Bharat Forge JVs
The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Manmohan Singh on Thursday, Jan 21 approved French power equipment maker Alstom"s proposal to invest Rs 490 crore in two joint ventures with Kalyani Group flagship company Bharat Forge for setting up manufacturing facility in the country.

The Alstom-Bharat Forge JVs will set up manufacturing facilities for supercritical and sub-critical power equipment in India, an official statement said. Joint ventures will result in foreign direct investment of 70.5 million euro (Rs 490 crore approximately) in the country.

The CCEA also approved the implementation of a scheme which aims at bridging the rural-urban divide by introducing urban amenities in rural parts of the country and also accorded an in principle approval for the establishment of the National Knowledge Network (NKN).

The Cabinet Committee on Economic Affairs (CCEA) further approved 'Provision of Urban Amenities in Rural Areas" (PURA) scheme, which is aimed at providing better opportunities to rural people and help reduce migration from rural to urban areas.

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

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