Market Analysis: Weekly roundup till Mar 20

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Market Analysis: Weekly roundup till Mar 20
Benchmark indices closed on positive gains in the last week. Sensex gained 2.4 per cent and closed at 17578 during the week, while Nifty ended the week at 5262 gaining of 2.4 per cent over its previous weekends close.

Standard & Poor"s (S&P) revision of the outlook for India from negative to stable; was a major confidence booster for markets.

During the week BSE Mid-cap index and Small-cap index gained 0.9 per cent and 0.4 per cent respectively. BSE Metal and Oil & Gas indices were the top gainers for the week, up by 3.6 per cent and 3.5 per cent respectively.

BSE Realty was the sole loser in BSE indices, down by 1.4 per cent during the week.

Going Forward

RBI increased and the Repo and Reverse repo rates by 25 basis points each on Friday, Mar 19 after the market hours. This may impact the markets on Monday, Mar 22.

However, markets could be volatile on the back of March derivatives expiry in the week. We believe, global markets still continue to remain crucial for the domestic markets. FII"s inflows during Mar 2010 worth Rs.14021.0 crore. These inflows may also decide the market direction.

Corporate

Yash Birla Group to invest Rs 5,500 cr in power, lifestyle
The Yash Birla Group is planning an investment of over Rs 5,500 crore over the next three years in emerging business segments like thermal and solar power, wellness and lifestyle, garments and education. Birla Urja and Birla Energy Infra, are new subsidiaries of Birla Power Solutions, will foray into thermal and renewable energy.

Initially, Birla Urja will set up a 600-megawatt (Mw) coal-fired power plant at Dhule district in Maharashtra, with an investment of about Rs 3,000 crore and 20 Mw of grid connected solar power through three projects in Rajasthan, Haryana and Uttarkhand, and 50 Mw in Andhra Pradesh.

As per the company sources, the company is planning 125 Mw of solar power with an investment of Rs 2,000 crore, utilizing the incentives offered by the government to promote solar power.

The group will invest 30 per cent of the total investment as equity portion and is already talking to private equity players for investments in the two new subsidiaries.

As per company sources, It will retain majority stake in the subsidiaries and at a later stage can approach the capital market for raising funds.

Birla Power is now raising Rs 100 crore through American depository receipts (ADRs) to initiate work on the power plant.

Hindustan Construction buys 66pc stake in Swiss firm
HCC acquired a 66 per cent stake in Swiss real estate firm Karl Steiner AG in an all-cash deal for around Rs 150 crore (Swiss Francs 35 million), a move that will pave way for the company to enter the European and Gulf markets.

The acquisition, help Hindustan Construction Company (HCC) to enter the high-rise building construction segment. It expects to close the deal by the first quarter of next financial year.

As a part of the deal, HCC would acquire the remaining 34 per cent stake in KSAG from its sole owner, Peter Steiner in 2014. Until that time, he would remain a minority shareholder and fully support HCC's management of KSAG as vice-chairman.

Post-acquisition, KSAG would use the funds raised by capital increase for its Swiss operations, and the growth of the company's core business in India's growing residential and commercial construction market.

Economy

Govt approves ONGC Venezuelan oil block
The Cabinet Committee on Economic Affairs (CCEA) cleared Oil & Natural Gas Corp"s (ONGC) 2.181 billion dollar investment in a Venezuelan oil block.

ONGC"s investment along with that of other Indian partners Indian Oil Corporation (IOC) and Oil India will give the energy deficient country access to 5.5 million tons a year of crude oil at peak level of production.

A group of secretaries had earlier approved ONGC"s proposal to acquire 40 per cent stake in the Carabobo-1 block through a consortium (including both Indian and overseas partners).

The company"s foreign arm OVL will pick up an 11 per cent stake in the Venezuelan field, while IOC and OIL will have 3.5 per cent interest each.

Other members of the consortium are Repsol YPF of Spain and Petroleum National Bdh of Malaysia. Both will hold 11 per cent stake each in the block.

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

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