Market Analysis, Weekly round up till Jul 3

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Market analysis weekly roundup
During the week, markets continued to be driven by global news, where Sensex lost 0.6% and closed at 17460 during the week, while Nifty ended the week at 5237 down by 0.6% over its previous weekend"s close.

Action in the market was more stock specific with Small-Cap and Mid-Cap indices outperforming the broader indices. During the week BSE Mid-cap and Small-cap indices gained 0.5% and 1.3% respectively. The BSE Consumer Durables and Oil& Gas, indices gained 2.8% and 1.1% respectively during the week. BSE Metal and Health Care indices, down by 3.4% and 1.1% respectively.

On Global front, US markets fell on Friday, Jul 2 as the first decline in monthly non-farm payrolls this year for Jun 2010 and biggest drop in factory orders in 14 months for May month, increase the fears of a slowing demand.

Going Forward

Domestic markets may decide the future course of action based on rate hike by RBI, monsoon data and corporate results. RBI has increased Repo and Reverse repo rates are increased by 25 basis points on late Friday evening to combat the inflation. It is expected that RBI may go for further hike in policy rates during its upcoming review on Jul 27.

Corporate

Apollo Hospitals plans to invest Rs 1,500 crore

Apollo Hospitals plans to invest around Rs 1500 crore to add another 3000 beds in the next 4 years. The funding will be done through, 25% internal accruals, 25% equity and the remaining 50% is from debt. The hospital chain is expecting to add 50 hospitals in the next 10 years and 10 super specialty hospitals in tier-II and III towns.

It is also looking to roll out 1,000 telemedicine centers in the next 3 years, where the patient growth is expected at 40% per year. As per Confederation of Indian Industry, the health care industry in India is expected to grow from $35 billion at present to $ 75 billion by 2012. The hospital industry is valued at $12 billion at present and is growing at 20%.

Tata Power raises $300 m via coal SPVs

Tata Power has signed an agreement to raise $300 million in two coal Special Purpose Vehicles (SPVs), through issue of differential rights to Olympus Capital Holdings Asia. Tata power holds stake in the KPC and Arutmin coal mines through these SPVs. The instrument will be in the form of differential rights (Class B) shares with no dividend rights which are the subject of a capital protection arrangement at the end of five years from the date of closing the transaction, unless converted. The Class B shares are fully convertible into ordinary shares through the end of the fifth year from the date of closing at the option of the Class B shareholders. The proceeds could also be utilized to secure further long term coal supplies by investing in coal mines or to reduce the outstanding debt in the SPVs.
Economy

SBI sets base rate at 7.5%

SBI fixed its base rate or the minimum rate at which bank can lend to its borrowers at 7.5%. The rate announced by SBI will be the bench mark rate for other banks and the base rate will replace the benchmark prime lending rate (BPLR) from Jul 1.

Four other public sector banks are also set their base rate at 8%. SBI has taken the six month average cost of deposits to arrive the base rate. Increasing share of low cost deposits helped the Bank to reduce the base rate as compared to BPLR, which is at 11.75%. The base rate will not apply to concessional loans for agriculture, export credit, and small borrowers.

IndusInd to raise Rs 1K crore via equity route

INDUSIND bank, which has received RBI approval to open 127 branches in the current fiscal, plans to mobilize up to Rs 1000 crore through equity route. The proceeds are use to strengthen the balance sheet and to meet its proposed expansion plans. The bank is looking aggressive organic growth by expanding its branches to 700 from 210 within 3 years. The equity issue is likely through qualified institutional placement or issue of Global Depository receipts in overseas markets by the end of the current fiscal.

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

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