Market Analysis: Weekly roundup till Apr 17

Benchmark indices closed on negative note in the last week on the back of lower-than expected industrial production data for February month. Sensex lost 1.9 per cent and closed at 17591 during the week, while Nifty ended the week at 5262 losing by 1.8 per cent over its previous weekends close.

During the week BSE Mid-cap and Small-cap indices lost 0.9 per cent and 0.5 per cent respectively. BSE IT and Consumer Durables indices were the top gainers for the week, up by 3.2 per cent and 2.3 per cent respectively.

BSE Oil & GAS and Consume Goods indices were the top loser, down by 3.3 per cent each during the week.

On global front, US markets has seen sell of in the last week, on the back of an SEC law suit against Goldman Sachs on fraud charges related to one of their Collateralized Debt Obligation (CDOs).

Going Forward

The out come of the Reserve Bank of India"s Monetary policy review meeting on Tuesday, Apr 20 could set the tone for equity markets in the week ahead. A 25 to 50 basis points hike in key policy rates by the central bank is anticipated, but if the rate hikes are higher than anticipated we may see profit booking. Investors will also watch Jan-Mar quarter results of the Indian Companies this week.

Corporate

GAIL to invest Rs 15,000 cr in new pipelines by 2013
GAIL India, will invest about Rs 15,000 crore over the next two-three years in expanding its pipeline network to connect consumption centres.

The company was laying new pipelines to connect cities in the Northern states of Uttar Pradesh, Uttarakhand, Punjab and Haryana. Gas demand in northern India is expected to grow at the rate of 20 to 25 per cent over the next two-three years. To meet this demand, company is investing Rs.15,000 crore in laying new lines.

GAIL is expanding its 10,700 km of cross-country pipeline network. It is laying 5,000 km of pipeline to connect gas sources on the western coast to consumption centres in the north by 2013. Of this, about 1,000 km of pipelines would be commissioned by year-end and 1,500 km would be added every year over the next two years.

GAIL is also laying pipelines to connect to Bangalore, Mangalore and Kochi in next the three-four years

Infosys heralds optimistic FY11
Infosys Technologies signaled the return of optimism for India"s 60-billion dollars outsourcing sector with a high-teens revenue growth forecast for this fiscal year. Infosys hoped to grow revenues by 16 to 18 per cent in dollar terms this fiscal year 9 to 11 per cent in rupee terms as it posted a 0.9 per cent drop in net profit for the fourth quarter to end-March to Rs 1,600 crore, hit hard by the rising rupee.

Infosys forecast revenues of between Rs.24,796 crore and Rs 25,239 crore for the year to end-March 2011, but warned that an appreciating rupee and higher wage costs could drag its operating margin down by 1.5 per cent.

Economy

Inflation touches 17 month high
Annual inflation touched a 17-month high of 9.9% in March spurred by an all round increase in prices, mounting pressure on the central bank to raise key policy rates in the monetary policy review next week.

A spurt in global demand due to a remarkable recovery by China and positive signals from the US will allow the Reserve Bank of India to target inflation aggressively without worrying about derailing growth momentum. Annual year-on-year inflation based on the wholesale price index stayed above the central banks year end projection for the third straight month.

In Jan 2010, the Reserve Bank of India (RBI) raised its wholesale price inflation forecast to 8.5 pc from 6.5 pc. The food price inflation eased in March as winter crops started entering the market.

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