Market Analysis: Weekly roundup till Jun 24

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Markets
Sensex gained 1 per cent and closed at 18,130 during the week, while Nifty ended the week at 5,449 up by 1 per cent over its previous weekend"s close. During the week BSE Mid-cap index gained 0.5%. The BSE Metal and Capital Goods indices gained 4.1 oer cent and 2.1 per cent respectively during the week. BSE Healthcare and FMCG indices were down by 1.7 per cent and 0.9 per cent respectively.

Going Forward

As per the market experts, markets may correct after the credit policy meet, where the central bank, RBI, is expected to hike policy rates by 25 basis points. Investors will keenly watch the leading companies June quarter results. On global front, most of the European banks passed the government stress test.

Corporate

Sesa Goa"s revenues up by 140pc
Revenue of the Sesa Goa has increased by 140 per cent on YOY to Rs 2394.0 crore from Rs 998.6 crore. The sale has increased by Dempo acquisition and better realizations. On QOQ it has declined by 4 per cent from Rs 2403.5 crore. The EBITDA increased by 248 pc on YOY from Rs.440 crore to Rs.1531.6 crore, and on QOQ it has increased by 3 per cent from Rs 1497.6 crore. The PAT has increased by 207 pc to Rs 1304 crore from Rs.422 crore on YOY. The growth in profit is due to better realization. On QOQ it has increased by 7.4 pc from Rs 1215.1 crore.

On the realizations front, one of the company"s biggest markets, China has seen spot prices average around $160/tonne this quarter as compared to $70/tonne in the same period last year. The company exports 90 per cent of its production which 80% goes to the China market. Chinese economy is cooling off with correction in its real estate market, Purchase Manager Index numbers are lower and increasing iron ore stock piles in the ports could be the major concern over the medium term. Apart from that, realization of the high grade and medium grade iron ore has plunged down by 35 per cent from its highs in late Apr 2010.

On the expansion front, the company is expanding its pig iron plant to 625 kilo tonne per annum and its metallurgical coke plant capacity to 560 kilo tonne per annum. There is also a plan to build sintering plant to process iron ore fines and a 30 MW power plant by the first quarter of 2011-12.

ITC profits jumps 22pc at Rs 1070 crore
ITC has posted a revenue growth of 17 pc on YOY for the June quarter 2010, to Rs 4847 crore from Rs 4132 crore. The growth is driven by cigarettes, foods, personal care and agri business. On QOQ it has decreased by 6 per cent from Rs 5131 crore. The net profit increased by 22 pc on YOY to Rs.1070 crore from Rs 878 crore. On QOQ, it has decreased by 4 per cent from Rs 1028 crore.

As per the company sources, the non cigarette fast moving consumer goods businesses showed improved profitability. In the hotel segment, construction of new super luxury properties at Chennai and Kolkata.

Adani Enterprises to raise $850 million by selling equity
Adani Enterprises Ltd. plans to raise $850 million selling equity to institutional investors. Adani will offer the shares for about Rs 536 a share. Morgan Stanley, IDFC Capital Ltd. UBS AG, Citigroup Inc, ICICI Securities Pvt etc. are managing the offer. Adani is in advanced talks with Linc Energy Ltd. to acquire coking coal assets in Australia. The company will invest the proceeds in coal mining and Oil& Gas exploration businesses.

Nagarjuna Fertilizers plans urea plant in Nigeria
Nagarjuna Fertilizers and Chemicals Limited (NFCL) plans to set up a urea manufacturing facility in Nigeria. The Company is planning to set up a factory with an initial capacity of one million tonne. It might need an investment of Rs.5000 crore. The Company is looking a local partner there to form a joint venture.

The Company has recently signed an agreement with NMDC to jointly explore mining opportunities abroad with a particular focus on phosphate and Potash.
Economy

Exports in June rise 30 pc to $17.8 billion
Merchandise Exports rose to 30.4 per cent on YOY to $17.5 billion in June month. Imports grew by 23 per cent to $28.3 billion. Exports for June Quarter increased by 32 per cent to reach $51 billion as compared to $35.4 billion in the same period last year. Imports increased by 34 pc to $83 billion, as against $50.9 billion in the same period last year. The trade deficit in the first quarter of 2010 is at $32.2 billion as compared to $28.6 billion in Apr-Jun quarter, 2009-10. As per the Government sources, the growth in exports came from newer markets and not from the developed markets.

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

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