Market Analysis: Weekly roundup till Jan 15

Markets ended on a positive note for the fourth consecutive week. IT Index surged on the back of higher earnings reported by Infosys. Public sector stocks ended with gains following talks on stake sale in some of them.

Sensex gained 14 points and closed at 17554 over its previous weekend"s close, while Nifty ended the week at 5252 netting a gain of 7 points over its previous weekends close.

During the week BSE Mid-cap index outperformed the BSE Sensex by gaining 1.2 per cent. The Small-cap index also gained 2.7pc points over the previous weekend"s close.

Week"s top gainers were BSE IT and PSU indices by 9.0 per cent and 2.1 per cent respectively.

BSE Bankex was the top loser down by 2.3 per cent over the previous weekend"s close due to fears that RBI may tighten monetary policy on the back of surge in Inflation.

Going Forward

Expectations of strong Dec quarter results and global liquidity flows may decide the mood of the market. Foreign investors pumped around Rs 4400 crore in the last week taking their total investments to Rs 8200 crore, in Jan.

The investors will keep an eye on any move from RBI to squeeze liquidity to control the Inflation.

Corporate

Wipro to float USD 1bn sponsored ADR issue
Wipro Limited, India"s third-largest software exporter, is set to launch a sponsored American Depository Receipts (ADR) offering that could possibly see the promoters and promoter group led by Azim Premji offloading some of their stake in the company.

The company has been in active discussions with investment banks Goldman Sachs, Morgan Stanley, Credit Suisse and Citi to manage the proposed offering. The size of the issue could be above USD 1 billion.

Post the issue, it is expected that over 5 per cent of Wipro"s shares in the Indian market will get converted into ADRs.

The move is seen as a huge upside for its shareholders, as they will be able to sell their shares at a premium in the US market. The Wipro scrip surged to its 10-year high of Rs 752 on Thursday, Jan 14.

Bharti to buy 70 per cent stake in Warid
SUNIL Mittal-owned Bharti Airtel will acquire 70pc stake in Warid Telecom of Bangladesh for USD 300 mn (about Rs.1,363 crore).

Warid Telecom, a wholly owned subsidiary of the Dhabi Group, offers mobile telecom services with a user base of over 2.9 million in Bangladesh.

This is Bharti"s first international buyout after it failed to clinch multi-billion dollar deal with South Africa"s MTN in 2009.

Economy

Wholesale inflation inches up to 7.3 pc
STEEL and zinc joined sugar and potatoes to take inflation for December 2009 past RBI"s target for the fiscal year, raising the odds that the central bank could resort to some form of monetary tightening as concerned policymakers try to curb rising prices.

Government data on Thursday showed inflation, as measured by the Wholesale Price Index, rose the most in more than 12 months to 7.31 per cent from a year earlier.

The inflation rate is ahead of RBI"s revised target of 6.5pc for the fiscal year. It was 6.15 per cent in 2009.

The acceleration in price rise, which began with rising food costs due to a poor monsoon, is spreading to industrial products as economic growth on the back of an easy money policy and low taxes lifts demand for cement, cars and steel.

IIP at two year high of 11.7pc
Industrial production grew at a two year high 11.7pc in Nov 2009, putting India on track to achieve an 8pc economic growth in the current financial year and strengthening the calls for a hike in interest rates to tame rising prices.

The better-than-expected industrial output growth, boosted by a massive 37.3pc jump in consumer durables and 12.2pc increase in capital goods, however, failed to lift the market that ended in the negative territory.

Industrial growth in Nov 2008 was a lowly 2.5pc, exaggerating the rate of expansion in Nov 2009. Output grew 10.3pc in October 2009.

The stellar output growth figure for November, however, is dwarfed by the 19.2pc growth reported by China for the same month.

Industrial output grew at its fastest pace since Oct 2007 as the economy began to consume and invest more, suggesting that it may no longer need the stimulus offered in the form of low interest rates and high government spending.

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