Market Analysis: Weekly roundup till Oct 31

Sensex plunged 10 pc in two weeks and fall below psychological mark of 16000 points. Markets showed signs of further slide ahead on growing concerns of interest rate hikes after RBI raised inflation projection.

The BSE Sensex lost 914 points against previous week"s close, and closed at 15896. The Nifty lost by 285 points and closed at 4711 from its previous weekends close.

Markets registered a heavy losses on October 27 as the RBI raised statutory liquidity ratio (SLR) by 1pc to 25 pc, which is expected to suck the liquidity of Rs 30,000 crore from the system.

During the week BSE Mid-cap index lost 7.6 pc, while Small-cap index 8.0 pc. Week"s top losers were BSE Realty and Metal indices by 15.4 pc and 9.6 pc respectively.

Going Forward
Market is expected to take direction from global markets and capital inflows from FII"s. They were the net buyers for the first three days of the week.

Corporate

Bajaj Hindustan may buy Balrampur
BAJAJ Hindustan plans to buy Ballarpur Chini Mills, in a deal valued at about Rs 2,400 crore, partly using assets of the target company.

Bajaj is negotiating to buy the 36.5pc stake held by Kolkata-based Saraogi family in Balrampur and is preparing to buy another 20pc from minority holders to meet regulatory requirements, said the people who did not want to be identified.

The deal, if it happens, will make debt-laden Bajaj Hindustan the biggest sugar manufacturer in the world after Brazil"s Cosan SA, in a market where product prices are set to rise due to increasing demand and falling sugarcane output.

Pfizer eyes Wockhardt biotech biz
The world"s largest drug company, Pfizer, is going ahead with its plans to buy the biotech business of Wockhardt, but the Mumbai-based drug maker has not shown any inclination for a sellout.

The $48 billion US firm has completed the second round of due diligence.

Pfizer prefers a buyout and is expected to pay for Rs 100-crore for Wockhardt"s biotech business.

Vishal Retail to raise Rs 150 crore
Vishal Retail is in talks with investors that may see the exit of current promoter RC Agrawal from the Company.

Vishal retail which faces a debt liability of Rs 730 crore, is working to bring a strategic investor as part of pre-conditions laid down by lenders for corporate debt restructuring (CDR).

According to Company"s senior executive, the retailer is looking to raise around 100-150 crore from a strategic investor to save the Company.

He further added, anyone bringing in an equity infusion of Rs.100-150 crore can virtually own the entire company.

Economy

Core industries grow at 4 pc in Sep 2009
Six core sector industries— crude oil, petroleum refinery products, coal, electricity, cement and finished steel (carbon) clocked a 4 pc growth in September, sharply lower than the 7.8 pc in the month before.

None of these six core industries captured by the index showed a month-on-month uptick in production. On a cumulative basis, the core sector index was up 4.8 pc during first six months of the year, outpacing the 3.4 pc growth seen during the same period last year.

Growth in coal and cement in the first six months of the current fiscal outperformed growth in same period last year.

Crude oil and petroleum refinery products were the only two segments that showed a higher annual growth rate in Sep 2009.

Inflation at 1.51 pc
Inflation based on wholesale price index continued to inch up, hitting 1.51 pc for the week ended Oct 17, vindicating the Reserve Bank of India"s move to cap its liquidity-boosting measures announced at the peak of the financial slowdown.

The food price inflation is close to 13 pc, fuel price index is still in negative territory on account of the high base effect, high inflation numbers at an year ago period.

Economists and policy makers are of the opinion that a revival in demand will further fuel the inflationary pressures.

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