Market Analysis: Weekly roundup till May 15

Benchmark indices closed below their psychological levels of 17000 and 5,100 respectively on Friday, May 14 after gaining spectacular gains on Monday, May 10.

Sensex gained 1.3 per cent and closed at 16994 during the week, while Nifty ended the week at 5093 gaining by 1.5 per cent over its previous weekends close.

During the week BSE Mid-cap and Small-cap indices gained 1.6 per cent and 1.2 per cent respectively. BSE Realty and Auto indices were the top gainers, up by 4.1 per cent and 3.7 per cent respectively during the week.

US stock-index futures maintained losses even after retail sales topped estimates, as concern the European debt crisis will threaten global growth overshadowed more signs of improvement in the world"s largest economy.

Asia stocks fell after Sony Corp forecast profit that missed analyst estimates. The copper and aluminum dropped on concern of Europe"s debt-cutting measures will hurt economic growth.

Going Forward

Investors will be keenly eyeing the unfolding situation in Europe. Most of the players in the market are bearish in the near term outlook on concerns of Europe debt crisis. Foreign funds have not sold Indian shares.

But markets may fall further on the back of heavy selling pressure from foreign Institutional investors. As per technical analysis, if Nifty falls below 4950, that could be a sign of short-term bearishness.

Corporate

Cognizant buys London-based Company PIPC Group
Cognizant Technologies, acquired a London based global programme management consulting firm.

PIPC helps leading global companies drive business transformation by providing programme management services, methods and tools, including its PMO (Project Management Office) and its PhD (Project Health Diagnostic) tools, used in over 800 engagements. The company has 200 professionals working in UK , Australia, Newzland and the US.

PIPC will extend and complement Cognizant"s existing project management and consulting capabilities and further Cognizant"s ability to provide integrated services across consulting, technology, and business process outsourcing.

The acquisition builds long-standing strategy of adding sharply focused business capabilities Godrej to buy out Sara Lee in JV Godrej Consumer Products Ltd., (GCPL) has agreed to buy out Sara Lee in their joint venture Godrej Sara Lee for 234 million dollars (Rs 1055 crore). The buyout will make Godrej the biggest home-grown consumer goods maker.

Sara Lee is selling its stake in JV to Godrej to focus on food business. Ever since Sara Lee started selling its consumer care businesses in pieces, the joint venture has been under question.

It sold its air fresheners brand Ambi Pur to P&G, while Unilever bought the household businesses, including the Brylcreem.

GCPL is valuing the joint venture at 15 times earnings for the trailing year. GCPL is expected to dilute its equity and raise funds from private equity firms to part-fund the deal. Some funds would come from its reserves.

GCPL has been expanding its global business of late as competition was becoming intense in the domestic market. It bought personal care Company Tura in Nigeria and Megasari Makmur in Indonesia recently.

Economy

Industrial output grows by 13.5 pc
India's industrial output in Mar 2010, has grown by 13.5 per cent despite monetary tightening and a partial roll back of stimulus measures.

The growth is largely driven by manufacturing; this was the sixth straight month of double-digit expansion.

Industrial output, as measured by the Index of Industrial Production (IIP) for the financial year 2009 to 10, stood at 10.4 per cent as against 2.8 per cent in 2008 to 09.

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