Market Analysis: Weekly roundup till Nov 21

Indian Bourses touched 17000 psychological mark over the week on the back of positive liquidity situation and a strong build-up in the derivatives series indicated bullish trend in the short term.

Sensex gained 173 points and closed at 17,021 over its previous weekend"s close, while Nifty ended the week above 5000 level at 5052.4 by gaining 53 points over previous weekends close.

During the week BSE Mid-cap index gained 0.7 per cent, while Small-cap index gained 1.6 per cent. Week"s top gainers were Metal and Auto indices by 3.6 per cent and 2.2 per cent respectively.

Going Forward

Markets remain volatile in this week due to settlement of contracts.

Markets may touch new highs in the coming days on the back of ongoing recovery phase as well as government hinted against any tax to curb capital inflows into equity or withdrawal of the stimulus package in the current fiscal year.

Investors may also look at on reform bills such as State Bank of India Amendment bill, the Pension Fund Regulatory and Development Authority Bill.

This is likely to be tabled in the winter session of Parliament as government has set priority for financial sector.

Corporate

Ultra Tech board Okays merger
Samruddhi Cement, a wholly owned subsidiary of Grasim Industries is all set to merge with Ultra Tech Cement. Samruddhi shareholders will get four shares of UltraTech for every seven shares of Samruddhi.

Ultra Tech will issue 149.5 million new shares, increasing its equity capital to Rs.274.20 crore.

After the completion of merger, Grasim holds a 60.3 per cent stake in Ultra Techs expanded equity and 39.7 per cent will be held directly by the other share holders of UltraTech and Samruddhi.

The merged entity will have capacity of 48.8 million tonnes per annum, with 22 plants.

The captive generation capacity will be 504 MW and the ready mix concrete plants will be 68, with an overall capacity of 11.7 million cubic meters.

With Samruddhi assets, UltraTech will add the specialty products of white cement and wall care putty in its product mix, apart from its existing grey cement.

Ruchi Soya amalgamates associate firms
Ruchi Soya has amalgamated a promoter group company Mac Oil Palm Ltd, with itself to expand its presence in palm oil plantation in India.

The amalgamation will allow Ruchi to access Mac Oil"s exclusive procurement rights of palm oil plantation on around 8300 hectares of land in Andra Pradesh.

Twenty equity shares of Ruchi Soya would be issued for every 67 shares of Mac Oil. The promoters holding on a fully diluted basis will increase from 51.2 per cent to 53.6 per cent.

Further, the company is planning to expand the potential area of oil palm plantation from 89,000 hectare, to 110,000 hec. at an expenditure of Rs 200 crore.

Shipping firms back to making profit
Shipping companies are back on making profits after a gap of almost a year, as the freight rates for dry bulk carriers surge on import of iron ore China and food grain by India, helping freight rates to surge.

The demand for bulk carriers has also increased at Australian and Brazilian ports.

The Baltic Dry Index, the benchmark index for such ships, touched 4,381 on Tuesday, a 14-month high.

The Baltic Dry index reached a 22-year-low of 663 in Dec 2008, sliding nearly 95 per cent in about seven months from an all-time high of 11,793 in May 2008.

The rates had collapsed as steel producers cut output, with recession hitting global consumption

Economy

Rising Re may derail export recovery
Indian exporters have been struggling to make the best of the turnaround in the global economy with the rising rupee taking toll on the demand for their products.

Last week official figures showed that exports falling by 11.4 per cent to 12.5 billion dollars.

Apart of rising rupee, exporters are also facing problems due to rise in raw materials.

Cotton yarn and fibre have risen by 10 to 12 per cent in the recent past and gold has touched a new high.

The rupee has surged 14 per cent from its record low of 52.20 in Mar 2009 against dollar.

India talking to other nations for rice import.
According to Commerce and Industry Minister Anand Sharma, India is reaching other nations for import of rice to overcome shortage in the domestic market.

Thailand is one of the countries India is talking to in this regard.

Indian PSUs have already floated global tenders for rice import, but the prices quoted in some of the bids are not what the government is looking.

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