Market Analysis: Weekly roundup till Feb 28

Benchmark indices closed on positive gains in the last week. Sensex gained 1.5 pc and closed at 16429 during the week, while Nifty ended the week at 4922 gaining of 1.6 pc.

The reduction in income tax rates will directly or indirectly benefit the consumer related industries, including banks.

During the week BSE Mid-cap index and Small-cap index lost 0.5 pc and 1.7 pc respectively.

BSE Bankex and Auto were the top gainers for the week, up by 2.8 pc and 2.5 pc respectively. BSE FMCG and Consumer Durables were the top losers of the week, by 3.3 pc and1.9 pc respectively.

Going Forward

Markets may open firm on Tuesday, as Budget related uncertainties have passed with no negative conclusions.

According to technical Analyst, Sensex is finding Stiff resistance at 17,000 levels. Most of the market participants are optimistic on Infra sector, which includes engineering, and power equipment and construction companies, on the back of government proposal to invest 1.73 lakh crore on Infrastructure.

Corporate

Bharti lines up $9 billion from banks for Zain deal
Bharti has lined up the $9billion from foreign and domestic banks for its proposed acquisition of the African assets of Kuwait based Zain Telecom. It settles the entire deal with debt in the first phase.

The use of bank loans to fund the transaction would imply that Bharti may not have to look at any equity issuance in the near term.

Bankers attribute this to the fact that Bharti has low levels of debt and, therefore, do not see a compelling case for the company to raise fresh equity.

SBI may raise up to Rs 20,000 cr via rights
State Bank of India plans to raise Rs 10,000-20,000 crore in the next fiscal through a rights issue and is in discussion with the Government. Over the next five years the bank would require Rs.40,000-50,000 crore.

SBI would need funds for any acquisitions it may go in for in the future or to meet the requirements of its subsidiaries, including the insurance subsidiaries.

On spends to build IT infrastructure, Bank expects to spend 60-70 pc of its capital expenditure on IT. SBI is installing 1,000 ATMs every month. Necessary infrastructure has to be set up for mobile banking.

It is also undertaking a data warehousing project. It plans to establish a gateway to integrate all the payments process. According to the bank sources, expenditure will also be incurred to upgrade the bank's network and set up risk management practices.

Economy

India on track for double digit growth: Economic Survey
The economic survey for 2009-10 said India was well on its path to achieving double-digit growth and becoming the fastest-growing economy.

It pushed for a shift to higher saving and investment rates (well above 30 pc), close to those achieved by Asian economic tigers.

The policy also pointed out that the government needs to draw a fine balance between containing inflation expectations and ensuring growth.

Inflation above 17 pc for fifth week in a row
Annual food price inflation fell to 17.58 pc for the week ended Feb 13, partially lower than the 17.97 pc recorded in the previous week, according to data released by the commerce and industry ministry.

The figure remained above 17 pc for the fifth week in a row, fuelling worries that WPI inflation would breach the central bank"s upwardly revised annual forecast of 8.5 pc.

Prices of pulses, vegetables and sugar continued to remain high. Food grain production in India is estimated to decline 7.51 pc to 216.85 million tonne in the 2009-10 season. Meanwhile, fuel price inflation stood at 9.89 pc in the week under review.

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