Market Analysis: Weekly roundup till Sep 11

After touching a 31 month high of 18,823 levels, Sensex continues to trade at same levels. This is fuelled by sustained foreign fund inflows and steady stream of positive economic data.

Sensex gained 3.2 per cent and closed at 18,799 during the week, while Nifty ended the week at 5,640 were up by 2.9 per cent over its previous weekend"s close.

During the week BSE Mid-cap and Small-cap indices were up by 2.4 per cent and 1.7 per cent respectively. All the BSE sector indices closed in Green during the week. The BSE Metal and Bankex indices were the top gainers among sector indices by 5.1 per cent and 4.1 per cent respectively.

Going Forward

Strong liquidity, ie sizeable chunk of money had been coming from exchange traded funds. As per the Industry experts, more money from Hedge funds in coming days may capitalize the uptrend. Better than expected IIP data for the July month could raise the possibility of RBI increasing benchmark interest rates to control the inflation.

On Global front US economic data and announcement of Europe"s Basel III norms for banks on Sunday, which were not as harsh as expected may help the markets to rally further.

Corporate

Hero-Lemforder JV to set up unit for car parts
ZF Hero Chassis Systems a 50:50 joint venture of ZF Lemforder and the Hero group, has planned to set up a new facility in National Capital Region to manufacture chassis frames, axle systems and sheet metal components for the domestic car market.

The company is investing around Rs 100 crore in the proposed venture. The first phase is likely to become operational by end of the financial year.

ZF Hero is in talks with some original equipment manufacturers to supply sheet metal chassis assemblies. ZF Hero already supplies Chassis systems to General Motors in India for all their car platforms. The Company manufacturers the products at its plants in Halol in Gujarat and Talegaon in Pune.

The purpose of the JV is to provide European Technologies to manufacture components for the Indian car market. It also plans of establishing a base in India for exporting components to markets overseas.

Renuka Sugars, HPCL plan ethanol unit in Maharashtra
Shree Renuka Sugars is looking to set up an integrated sugar-cum-ethanol plant with Oil marketing company Hindustan Petroleum Corporation (HPCL) in Maharastra.

This is the first such tie-up between a sugar and a petroleum company. Renuka will hold 76 per cent in the joint venture, while state owned HPCL will hold the rest. It is the flexible unit, where we can produce up to 50 per cent ethanol and the rest can be sugar.

In Sep 2008 Renuka Sugars had signed a MoU with HPCL for setting up of an integrated plant. It has offered to supply 120 million liters ethanol, the biggest round of bidding, to oil marketing companies for blending it with petrol. HPCL, which has invested in reviving two sugar mills in Bihar, is looking to take over more such units in some of the southern states to expand its ethanol capacity.

In 2008, the company had acquired two sick mills from the Bihar government on a 60 year lease, extendable by another 30 years. The Company had paid about Rs 95 crore for these two mills.

Along with sugar and Power the two mills will produce about 60 kiloliters of ethanol per day. HPCL is investing over Rs 600 crore in reviving these mills and setting up new facilities.

NMDC likely to buy 30 pc stake in Zimbabwe rock phosphate venture
NMDC is considering its maiden investment in the fertilizer sector by acquiring about 30 per cent in a rock phosphate venture in Zimbabwe.

It is also in talks with another South African fertilizer company to buy a stake in the phosphate mine to become a fully-integrated entity in the metals and mining space. The Company has earmarked close to Rs 450 crore for their foray into the fertilizer sector.

The company has also setup its foreign division NMDC Global to look after the acquisition of iron-ore interests in overseas markets. It also plans to form JV to undertake mining activities for rock phosphate and potash, both in India and abroad.

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