Market Analysis: Weekly roundup till Oct 9

Last week, benchmark indices paused after three weeks of upsides on the concern that stock valuations are pricey after recent run up.

Sensex lost 1.0 per cent and closed at 20,250 during the week, while Nifty ended the week at 6,103 were down by 0.7 per cent over its previous weekend"s close. During the week BSE Mid-cap and Small-cap indices gained 1.4 per cent and 1.0 per cent respectively.

The BSE Healthcare and Oil & Gas indices were the top gainers among sector indices by 3.2 per cent and 1.9 per cent respectively, the top losers during the week were BSE FMCG and Capital Goods indices down by 3.1 per cent and 1.1 per cent respectively.

Going Forward

Benchmark indices, may open firm this week, on the back of strong US markets, which rallied after lower than expected job data, raised hopes that the Federal Reserve may take additional steps to help boost the world"s largest economy.

Investors focus may shift July-September quarter results of Indian companies and are looking forward to comments from the company on business outlook in the US and impact of rupee appreciation against the dollar on guidance.

Corporate

Tata Comm gets govt nod for buying Lankan telco
Tata Communications Ltd. (TCL) is set to acquire Sri Lanka"s Suntel. It received the approval from government for proposed acquisition, where government owns 26pc stake in TCL.

It has submitted the bid last month and is advanced negotiations with Suntel. The acquisition will be routed through wholly owned subsidiary Tata Communications Lanka.

TCL intends to acquire 100pc of Suntel Sri Lanka to provide domestic data services, wireless network and to access local customer business.

Even in 2008, TCL has attempted to buy Suntel for $90 million but was out bid by the other players. As per the Industry experts, the deal size would be lower than the previous bid amounts as the Suntel has not grown according to the projection in the last two years. It has market share of 20%, where it caters to nearly 5,50,000 homes and offices in Sri Lanka. Its services includes a range of voice, data, dedicated packet solutions, and internet services.

Prestige plans public offer this month

Prestige Estates is planning to tap the capital markets with an initial public offer (IPO) this month. Prestige had earlier planned to raise Rs 1200 crore through the IPO route. It has filed the red herring prospectus with SEBI in Nov 2010 for divesting 15 to 20 per cent stake. The IPO will open before the Coal India public issue on Oct 18.

The Company has identified anchor investors to which it would be diluting upto 20 per cent ahead of the opening of the IPO.

Prestige share carry a price band of Rs.200-250 per share. The pre-money valuation of the privately owned Prestige group is between Rs.4,500 crore to Rs.5000 crore. For the issue, the group has appointed Enam Securities, UBS, JP Morgan and Kotak Mahindra Capital as its book running lead managers.

Economy

IMF says Indian economy will grow by 9.7 pc in 2010, 8.4 pc in 2011

The International Monetary Fund (IMF) raised its Indian economy growth forecast to 9.7 per cent for 2010, up from the July,2010 forecast of 9.4 per cent. It projected the growth will slowdown to 8.4 per cent in 2011.

Indian official"s growth estimate for 2010-11 is well below that of IMF at 8.5 per cent. The IMF estimates are based on market prices whereas Indian official agencies calculate GDP growth at factor cost. Some differences are also due to IMF estimates being for calendar year while India follows April-March fiscal.

The world economy, led by emerging markets, is forecast to grow by 4.8 per cent in 2010 before falling back to 4.2 per cent in 2011.

The global recovery remains fragile, because strong policies to foster internal rebalancing of demand from public to private sources and external rebalancing from deficit to surplus economies are not yet in place. China is expected to grow at 10.5 per cent in 2010 and 9.6 per cent in 2011, while lowering its US forecast for the year to 2.6 per cent from 3.3 per cent projected in July.

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