Market Analysis: Review on Thursday, Nov 25

Mumbai, Nov 25: On Wednesday, Nov 24 markets were concerned more about domestic developments. Still the 2G scam worries casting their shadow, another scam came involving top officials of top institutions of the country.

BSE Sensex lost 231 points and closed at 19,459, while Nifty lost 69 points and closed at 5,865. BSE FMCG and Auto indices gained 0.2 percent and 0.05 percent respectively. BSE Realty and Bankex indices lost by 2.9 percent and 2.8 percent respectively.

Corporate

Maruti Suzuki rules our price rise

Maruti Suzuki India Ltd (MSIL) is not planning to increase any price hike despite a 20-30 percent surge in raw material prices in recent months. Despite pressure on margins, the country's largest car maker, which sells nearly three out of every five compact cars in the domestic market wants to maintain its pricing edge by absorbing the rise in input costs, as rivals prepare to expand sales operations and launch new models.

Maruti rivals like General Motors and Tata Motors had earlier signaled that a rise in car prices. As per the industry experts, prices of key raw materials like auto grade steel, rubber and copper have risen sharply over the last 8-9 months as compared to the same period last year. MSIL is collectively investing more than 3,600 crore for adding an annual capacity of half a million units, which would take its total capacity1.7 million units.

Abbott India set to merge Solvay Pharma with itself

Abbott India is set to merge Solvay Pharma India with itself, with the board of directors of both companies giving their approvals. The development follows US drug-maker Abbott's $6.6-billion global acquisition of Belgium-based Solvay's pharmaceutical business.

When the merger is complete, the US parent Abbott will hold about 75 percent in the combined entity. Abbott held about 69 percent in its Indian arm. Following the global acquisition of Solvay's pharma business, Abbott's stake in Solvay's Indian arm went up to about 89 percent after the tender-offer.

The transaction is expected to be completed early 2011 and is subject to court approvals of the scheme and approval from shareholders and creditors, among other things. The swap ratio for the merger would allow shareholders of Solvay India to receive three shares of Abbott India for every two shares held in Solvay India, in the all-stock transaction.

Cairn plans phase-II exploration in KG onshore block next year

Cairn India Ltd and its partner ONGC plan to enter the second phase of exploration in the discovered Krishna Godavari basin onshore block early 2011. Cairn had discovered oil and gas in its East Coast block in Aug 2011.

The Phase-1 exploration period for the KG-ONN-2003/1 block has ended, where the joint venture has elected to enter Phase-II of the exploration period. Further exploratory and appraisal drilling will be taken up on completion of necessary approvals. The initial discovery in the block had shown a flow of 75 barrels a day of oil and 0.27 million cubic feet a day of gas.

It is a light crude oil. Light crude oil flows freely at room temperature and receives a higher price on the commodity markets because it can produce a higher percentage of petrol and diesel. This discovery was established in the Nagayalanka-1z well which was the fifth exploration well drilled in the Phase-I.

CBI busts mega real estate loan racket

The central Bureau of investigation (CBI) arrested 8 people including senior executives of banks and housing finance companies for giving loans after taking bribes. As per CBI, these officials colluded with realty firms to sanction huge loans, without mandatory conditions for such approvals.

CBI has conducted the searches at various locations in Mumbai, Delhi, Chennai, Jaipur, Kolkatta and Jalandar. Those arrested include LIC Housing Finance CEO R R Nair, Life Insurance Corporation Secretary (Investments) Naresh K Chopra, Central Bank of India Director Maninder Singh Johar, Bank of India General Manager R N Tayal and Punjab National Bank of India General Manger Venkoba Gujjal.

CBI also arrested Rajesh Sharma, the chairman & MD of Money Matters Financial Services (MMFSL) non-banking finance company specializing in debt syndication. The FIR filed by the CBI in Bombay High court named over 20 corporate houses, but not as accused. They include Lavasa, Emaar MGF, Oberei Realty and DB Realty.

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