Market Analysis: Weekly roundup till Mar 6

Benchmark indices closed on positive gains in the last week. Sharp rally after last Friday"s Union Budget Proposals which offered to progressively cut fiscal deficit over the next fiscal years, enhance personal tax slabs and reduce surcharge on corporate tax continued sentiments to keep high.

Sensex gained 3.4 per cent and closed at 16994 during the week, while Nifty ended the week at 5088 gaining of 3.4 per cent over its previous weekends close.

Foreign funds had bought 791 million dollars of Indian equities in the last three sessions, which was sign of renewed interest. We believe this scenario may reverse if any global news turned negative.

During the week BSE Mid-cap index and Small-cap index gained 5.3 per cent and 5.4 per cent respectively. All the BSE sector indices closed in green. BSE Metal and Realty were the top gainers for the week, up by 7.1 per cent and 6.9 per cent respectively.

Going Forward

Markets could watch the global events in the absence of major domestic triggers as markets enter a consolidation phase after a good post budget rally.

Better than expected job data and confidence that Greece"s debt problems can be contained are positives. The markets will keenly watch NMDC"s FPO. Going ahead, new follow-on –offerings over the next few months could put pressure on liquidity.

Corporate

RIL may lose Lyondell bid, eye Canada Company
Reliance Industries (RIL) is on the verge to lose its bid for LyondellBasell, due to rising valuation on the back of global economic recovery. But this may help it to focus on the possible acquisition of Canada"s Value Creation. Reliance has raised 21 per cent to about 14.5 billion dollars from the initial 12 billion dollars in Nov 2009.

The New York Post reported on its website, the plan to be filed is set to favour the merger of Lyondell with Hexion Specialty Chemicals controlled by Apollo Management.

M&M in global tie-up talks for premium bikes for Indian mkt
Mahindra & Mahindra (M&M) is in discussions with Italian and British two-wheeler players to develop premium bikes for the Indian market.

According to top officials close to the development, Triumph and Moto Guzzi are some of the companies that M&M has held talks. M&M had recently moved into the two-wheeler space by acquiring Pune based Kinetic and is planning to launch products on its own in the mid-segment of the motorcycle market.

The two-wheeler arm of M&M which started retailing gearless scooters from September last year sold around 10,000 units in January after averaging sales of around 7000 units a month. The company targets sales of 15,000 units\month by Apr 2010.

The 80:20 joint venture between M&M and the Kinetic group is getting ready to launch a mid segment motorcycle followed by the hi-end bike this year. The mid segment motorcycle to have an engine size of 110-125cc will be made at the company"s Pithampur plant.

The mass motorcycle is being developed ground up by M&M together with Italy based Engines Engineering and Taiwan"s Sanyang Industry Co Ltd (SYM).

Economy

Exports maintain positive trend, up 11.5pc in Jan 2010
Exports remained in the positive territory for the third consecutive month with shipments in January growing by 11.5 per cent to 14.34 billion dollars from 12.9 billion dollars during Jan 2009. This is due to the continued revival in major markets such as the US and European countries. Significantly, this is an indication of industrial pick-up, non-oil imports, including capital goods grew by 28.8% during January to 17.65 billion dollars from 13.7 billion dollars in Jan 2009.

Exports had declined for 13 successive months following the global financial crisis and the consequent demand slowdown in most of the overseas markets. But owing to the economic revival, growth in exports turned positive in Nov 2009 (18.2 per cent) and continued in Dec 2009 (9.3 per cent). According to commerce ministry sources, total exports for 2009-10 will be around 162-164 billion dollars, as against around 186 billion dollars in 2008-09.

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