Market Analysis: Weekly roundup till Jun 10
During the week, markets continued to be driven by global news, such as encouraging US retail sales data and expectations of better results from US companies for June quarter lifted the global markets. Sensex gained 2.1 per cent and closed at 17833 during the week, while Nifty ended the week at 5352 were up by 2.2 pc over its previous weekend"s close.
During the week BSE Midcap and Smallcap indices gained 1.8 pc and 2.8 pc respectively. The BSE Consumer Durables and IT, indices gained 5.4 per cent and 4.6 per cent respectively during the week. BSE FMCG and Oil & Gas indices were down by 0.3 per cent and 0.8 per cent respectively.
Going Forward
A few economic readings and the Apr-Jun 2010 quarter numbers for some of the top companies over the week will drive the market. Among economic data, investors will closely watch the industrial production numbers of May 2010 and Jun 2010 wholesale price inflation.
We believe, these data will be the key indicator for RBI in determining policy at its meeting on July 27. On global front, the focus will be on the stress test, which is conducted to know healthy position of the European banks.
Corporate
M&M
plans
250
acre
aerospace
SEZ
near
BIA
Mahindra
&
Mahindra
plans
to
set
up
a
250
acre
special
economic
zone
(SEZ)
near
Bangalore
International
Airport.
The
SEZ
is
expected
to
be
built
under
public
and
private
partnership
model.
Karnataka
state
government
is
already
identified
close
to
1,200
acres
for
setting
up
aerospace
SEZ
at
Devanahalli.
Besides
Mahindra
other
companies
also
showed
interest
to
set
units.
BEML is planning to invest Rs 316 crore facility in the designated zone to provide design and manufacturing services in aircraft components, sub assemblies etc.
Dynamatic Technologies plans to invest Rs 450 crore to set up aerospace component unit and Starracheckt Machine Tools also plans to invest Rs 127 crore for aero space component unit.
Bajaj
rides
on
Discover
to
regain
market
share
Bajaj
Auto,
which
is
high
on
Discover
model,
has
taken
the
market
share
of
9
pc
from
Hero
Honda
during
the
June
quarter.
Bajaj market share went up from 25 pc to 34 pc in the Apr-Jun 2010 quarter, where Hero Honda lost 9 pc market share from 56 pc to 47 pc in the same period. Others such as TVS motors and Honda Motorcycles retain their market share.
Discover is the second largest selling brand in motorcycles, overtaking the Hero Honda Passion. If it sustains its momentum it may overtake the market leader Splendor in 3–6 months.
Bajaj is expanding motorcycle capacity by 3,00,000 per annum and from July it will be able to produce 1,70,000 a month of discover bikes. It has also launched a 150cc variant of the bike and hopes to sell 35,000 of these every month.
Economy
Government
grants
three-year
holiday
for
Oil
explorers
The
government
has
granted
an
additional
three
years"
time
to
energy
firms
for
exploring
oil
and
gas
in
30
deepwater
blocks
awarded
during
the
first
five
auction
rounds.
The
move
will
benefit
Reliance
Industries
(RIL),
Oil
&
Natural
Gas
Corp
(ONGC)
and
ENI
of
Italy.
The decision of cabinet committee on economic affairs (CCEA) will give energy explorers more time to complete their exploration commitment. The moratorium would apply to 30 blocks (16 of ONGC, 13 of RIL and one of Italy"s Eni) from Jan 1, 2008, to Dec 31, 2010.
The firms could not meet their contractual obligations due to global shortage of deepwater rigs. At the same CCEA meeting, the Cabinet approved ONGC Videsh"s decision to exit from a gas block in Trinidad and Tobago after its partner Mittal Investment Sarl walked out of the project.
RBI
under
pressure
to
up
policy
rates
Fuel
inflation
accelerated
sharply,
negating
a
moderation
in
food
prices
and
keeping
pressure
on
the
RBI
to
raise
rates
further
when
it
reviews
the
monetary
policy
on
July
27.
The recent increase in fuel prices spurred fuel inflation to an annual rate of 18 pc for the week ended Jun 26, up from 12.9 per cent in the previous week.
This could prop overall inflation to 11 pc in June, despite a marginal fall in food inflation to 12.63 per cent for the week under review from 12.92 per cent recorded in the previous week. Bonds yield did not react much to the inflation number as most market participants expect the RBI to lift policy rates by another 25 basis points in its July 27 review.
(An article by DAS CAPITAL MANAGEMENT & ADVISORS Pvt Ltd)