Market Analysis: Weekly roundup till Sep 26

Benchmark indices went for correction after hit of fresh 16 month highs, on the back of caution on stretched valuations. The Bombay stock exchange lost 48 points and closed at 16693 from its last weekend"s close. While Nifty finished the week by losing 17 points at 4958 from its previous weekend"s close.

Sensex touched 17K mark, while Nifty touched 5K psychological level on September 22 on the back of sustained capital inflows. FII"s were the heavy buyers in the market during the week. They pumped in about Rs.4397 crore during the week.

The Healthcare index gained 7.1 per cent on the back of report prepared by Federation of Chambers of commerce and Industry, which the Indian Pharmaceutical market will treble to USD 20 billion in the next 6 to 7 years.

Going Forward

We believe technically market is strong, but investors are preferred to be cautious due to stretched valuations. Most of the companies are choosing equity related instruments to raise funds may cause concerns, which will suck the liquidity in the secondary market.

We further believe, markets, however well supported by growing optimism about second quarter results prompted by positive growth in advance corporate tax payments in September quarter.

Corporate

Jai Prakash raises Rs 1190 crore
Infrastructure major Jaiprakash Associates raised around Rs.1190 crore through sale of 5 crore treasury share in bulk deals. The money was raised to finance its proposed captive power plants, to keep cash ready for possible acquisition and to set up a cement capacity in Maharashtra and Overseas. The company will not use the fund for debt repayment. It has a debt of Rs.9500 crore.

TechM, IBM, TCS in race for 400 million dollar-SSTL contract
Tech Mahindra, IBM and TCS are in the race to bag an IT outsourcing contract worth of Rs 400 million dollars from Sistema Shyam Tele Services (SSTL).

Negotiations are with these companies for 10 years, but the contract will contain a clause that SSTL exist after 5 years. Final decision on the deal is expected to be taken by the year end.

The proposed deal will not include BPO operations, it has already outsourced to Essar group"s Aegis BPO. The firm that bags the deal will manage SSTL"s IT systems across the 22 telecom circles in the country.

Raymond may dilute stake in apparel and engineering subsidiaries
Raymond is planning to sell stakes in its apparel and Engineering subsidiaries to private equity funds. The proceeds will be used to fund the expansion plans of the two subsidiaries.

Raymond apparel is planning to set up 88 small-format stores in the next one year, and it is also looking at repositiong of its brands. Raymond is working on are structuring plan to boost the revenues and improve the profits.

Inflation inches up to 0.37 per cent
Inflation rose to 0.37 per cent in the week ended September 12. Inflation on food articles soared to 15.64 per cent, the highest in more than a decade, largely increased by 75 per cent rise in potato and 45 per cent increase in the prices of vegetables and sugar.

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