Market Analysis: Weekly roundup till Jun 17

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Markets
Sensex gained 0.7 per cent and closed at 17,955 during the week, while Nifty ended the week at 5,393 up by 0.8 per cent over its previous weekend"s closing values.

During the week BSE Mid-cap and Small-cap indices outperformed the benchmark indices gaining 1.1 per cent and 1.9 per cent respectively. The BSE Realty and Consumer Durables indices gained 5.4 per cent and 4.6 per cent respectively during the week.

BSE Oil & Gas and PSU indices were down by 1 per cent and 0.8 per cent respectively.

Going Forward

On Friday US indices fell more than 2.5 per cent after report showed that country"s consumer sentiment dropped to low levels since March 2009, increased the fears of recovery of economy.

Disappointing results from Bank of America and Citi Group increased the fears about country"s financial system. Investors keenly watch US economic readings such as National Association of Home Builders (NAHB) Housing Market Index etc, On Domestic front June quarterly results by some companies would be watched closely.

Corporate

Infy net profit falls 2.4pc in June 2010 quarter
Infosys net profit fell 2.4 per cent to Rs.1,488 crore for the Apr-Jun 2010 quarter, while revenues increased by 13.3 per

cent to Rs 6,198 crore. Infosys results raised the concerns over the strength of industry from the past years slump.

Increasing salaries, sliding prices and turmoil in the key markets of Europe could be the reasons to decline in profits.

The Company expected revenue of around 28% from the European region for the June quarter but it dropped to 25% and is

expected to be at 20 per cent. The Company revised its earnings forecast for March 2011 to Rs.26,441 crore-Rs.26885 crore. It will increase the head count of 36,000, during the financial year 2011.

RIL looks at third shale gas deal in North America
RIL is looking at another shale gas acquisition in North America. This could be the third acquisition in three months. In

April, RIL acquired 40 per cent stake in Atlas Energy Marcellus Shale acerage for 1.7 billion dollars, committing a capital expenditure of 3.5 billion dollars over 10 years.

RIL picked up 45 per cent stake in Pioneer Natural Resources Eagle Ford shale acerage for 1.3 billion dollars in Jun 2010. Reliance had agreed to make an upfront payment of 266 million dollars in cash and contributes another 879 million dollarstowards Pioneer"s share of future drilling costs in the next 4-6 years.

L&T on track to bag Rs 12K-crore Hyderabad metro project
L&T outbid the GVK group and Reliance Infrastructure to win the rights for implementing a metro rail system in Hyderabad. The

Company will spend Rs 12000 crore to set up a 71.6km-long network. The Company will raise 30 per cent of the project cost as equity and the remaining as debt.

It has also asked Rs.1458 crore as viability gap funding (VGF) which is the lowest among all the bidders. VGF is the amount the central and state governments pay to an infrastructure project in the forms of grants to make it commercially viable.

Economy

Center plans VC fund for drug research
The Central Government plans to set up a Rs 10,000 crore venture-capital fund for supporting drug discovery and research

infrastructure development projects in the country. The fund to be managed by an independent asset management company will

come up under public and private partnership model, with government contributing 15 per cent of the total fund size. The funds will be made available to companies that are into drug discovery and research.

Industrial growth slows to 11.5pc
The Industrial output rose at its slowest pace in seven months, in May 2010 at 11.5 per cent as compared to 16.5 per cent in April 2010.

As per the industry experts, the manufacturing sector is showing the signs of average secular growth which continues to be good and would be favorable for the economy.

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

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