Market Analysis: Weekly roundup till Sep 25

Foreign funds have pumped in $17.3 billion into Indian shares, helping the index gain 14.8 per cent, so far this year. Of this, $4.4 billion inflows were received in the current month, driving the benchmark indices up by 11.5 per cent.

The sentiment is positive as India is outperforming its peers and is therefore, attracting huge foreign money. Sensex gained 2.3 per cent and closed at 20,045 during the week, while Nifty ended the week at 5,884 were up by 4.3 per cent over its previous weekend"s close. During the week BSE Mid-cap gained 0.1 per cent and Small-cap indices gained 0.3 per cent respectively.

The BSE FMCG and Consumer Durables indices were the top gainers among sector indices by 5.3 per cent and 2.7 per cent respectively.

Going Forward

On renewed signs of recovery in the US economy are likely to lift the mood in world markets. US stocks rose on Friday, posting their fourth consecutive weekly gain, as investors were heartned by improving demand for capital goods, technology products and consumer items. The momentum has been very strong.

So, even if valuations may seem expensive, the underlying positive tone will help the market to make new highs. However, most of the investors are cautious at current levels and have increased their exposure to defensive sectors like Pharma and fast moving consumer goods, as these stocks traditionally lesser extent during the market correction.

Corporate

Indian Oil to invest Rs 47,000 crore

State-run oil marketing major Indian Oil Corporation (Indian Oil Corporation) is investing Rs 47,000 crore in new and additional refining capacity, pipeline infrastructure and fuel outlets.

The Company is expanding its total refining capacity from 61 million tonne a year to 80.7 million tonne.

The company's new Paradip refinery project has the capacity of 15 million tonne a year. Meanwhile, the Company is going ahead with its plan for follow-on public offering (FPO) to the extent of 10 per cent of the existing paid-up capital of the company. This goes along with the Government's disinvestment of 10pc equity in the Company. The Government currently holds 79 pc in IOC.

IOC has taken up 26 per cent stake in the 14,000-MW nuclear power project at Kota in Rajasthan, which is being jointly set up with Nuclear Power Corporation India.

It is looking for partners for the Ennore LNG project and major infrastructure and power companies have shown interest in the project. IOC is also looking for exploration and production opportunities abroad. The Company has earmarked $1 billion for this purpose. As regards, the blending of ethanol with petrol, the Company sought expression of interest from various companies and an order will be placed in a month's time. The Company would need 100 crore liters of ethanol.

JSPL to invest Rs 44,000 crore in two steel plants

Jindal Steel and Power Ltd (JSPL) is investing Rs 44,000 crore as part of its expansion plans for setting up two 6- million-tonne-per-annum steel plants in Orissa and Jharkhand. The first phase of JSPL's 6-million-tonne steel plant in Angul, Orissa, will be commissioned by the end of 2011, but it is still awaiting the allocation of iron ore mines in the State.

For the Rs 21,000-crore steel plant in Jharkhand, JSPL has been given a small iron ore mine in the State. The first phase of the Jharkhand project with a capacity of 3 million tonne per annum is expected to be completed by the middle of 2012.

Land acquisition for both the projects has been completed with 5,000 acre of land at Angul in Orissa and 3,000 acre of land in Jharkhand. The company also plans to build a 6-million-tonne-per-annum sponge iron plant and 10-million-tonne-per-annum pellet plant in Bolivia.

Last month, the Company said it has been allocated 3,000 acre more land in Bolivia, which will allow it to proceed with its steel and pellet projects. Also on the international front, JSPL is looking at raw material resources.

Suzlon expects Rs 7,000 crore investments in Vadodara SEZ

Leading integrated infrastructure solutions provider Synefra Engineering and Construction Ltd is expected investments of Rs 5,000-7,000 crore and to generate 10,000 direct jobs at its hi-tech engineering park at the Vadodara SEZ in the next three years. Originally established as Suzlon Infrastructure Ltd in 1998, the Tanti Group Company that assumed its new nomenclature of Synefra E&C Ltd last year has developed the Vadodara SEZ on 386 acres.

It has a single window for approval and clearances and has developed other infrastructure necessary for an industrial park, it is the only SEZ in India to provide gas-based fuel supply to manufacturing units. It has an agreement with Gujarat State Petroleum Corporation (GSPC) for the supply of 500 kilo liters of natural gas and has set up a 25-km-long pipeline for the purpose.

The SEZ has an operational unit of SE Forge Ltd, Asia's largest forging plant, with investments of over $ 125 million (Rs.550 crore). The industrial park has dedicated water supply from Sardar Sarovar Narmada Nigam Ltd and power supply from Gujarat Energy Transmission Company Ltd. While inviting the small-scale units as well to set up shop at the Vadodara SEZ. The company is in advanced stage of talks with half a dozen enterprises which have evinced interest in the SEZ.

EIH rights offer may help RIL up stake

EIH would issue rights shares. This would help the promoters and RIL could buy the unsubscribed portion of the issue to raise their holdings. The Company board will meet on Thursday, Sep 30 and decided the size and ratio of the rights offer.

As per the industry experts, this will help in minimizing the possible risk of any hostile takeover bid by ITC which currently owns a 14.8% stake in the Company. The rights issue could be designed to take the Ambani-Oberoi holding to more than 51 per cent.

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