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Markets this week
The much awaited NSG-waiver for India coming through and the US Government decision to bail out mortgage finance companies Fannie Mae and Freddie Mac gave a boost to Indian stocks on Monday. The former lifted the power and capital goods stocks, while the latter gave a fillip to bank stocks. At opening, the index rose over 494 points; and gained further 625 points intra-day at 15,100. The Sensex closed 3.18 per cent up or 460 points at 14945, after a mild profit-booking spree.
NSG clearance, a first step towards nuclear commerce, made investors rush for power stocks. Shares of BHEL, ABB and Crompton came into the investors radar. The BSE Power index closed 3.36 per cent up.
With the Gujarat Government requesting State-owned companies to contribute up to 30 per cent of their PBT towards welfare activities, sentiment turned negative for these PSU stocks and received heavy drubbing on Dalal Street.
Sugar company stocks hogged the limelight on bourses on the back of the Supreme Court interim order directing UP sugar companies to pay Rs 110 a quintal against the State advised price of Rs 125 a quintal for the sugarcane procured in the season ending September 30.
Idea Cellular on Tuesday announced a revised schedule for its open offer for acquiring 20 per cent equity shares in Spice Communications. The offer now commences on September 17 instead of August 22, and closes on October 6.
The economic slowdown in North America and Europe has made 40 per cent of the large businesses cut their overall IT budgets, according to a survey by Forrester. Analysts, which foresees a negative outlook for IT stocks in the near-term.
The sharp fall in gold prices, prior to the upcoming festive season, has led to a steep rise in imports which had been on the decline from April onwards. Gold imports in August rose 47 per cent to 100 tonnes against 68 tonnes logged in July.
Tea stocks of late have come into focus, as domestic and export prices of the commodity are going up steadily. "Tea prices are increasing year-on-year by 16-20 per cent. If prices remain at this level, operating margins may double for the whole of this financial year for a number of tea companies," said an analyst.
The Sterlite group has announced a restructuring of its key businesses, including the listed Sterlite Industries and Madras Aluminium Company (MALCO), intended to reduce cross-holdings of equity stakes and enabling better focus on the three main lines of copper, aluminium and iron ore.
The rupee depreciated by 26 paise against the dollar on Wednesday, to levels last seen in November 2006. It crossed the psychologically important level of 45 to the dollar, on account of large-scale dollar buying by gold and oil importers. The Rupee opened weaker at 44.92/94, but strengthened to 44.87. It then depreciated to 45.17 before recovering marginally to close at 45.10/11, against the previous close of 44.84.
Metal stocks slid on talk in the bourses of a cut in steel prices. The BSE-Metal index slumped by 5.48 per cent and was the biggest loser amongst the sectoral indices. Another factor that pulled down metal stocks was the restructuring plans of Vedanta Group. The stock was the biggest loser on the bourses, shedding 11.78 per cent. It carries a weight of 12.94 per cent in the BSE-Metal index.
FIIs are moving out of the top 50 Indian stocks and looking at the mid-cap section to be a part of the Indian growth story, according to an official at Noble India, the Indian operations of a UK-based research-led investment bank that has recently set up shop here. Shrewd investors could take a cue from this development.
SEBI has given a go ahead to the proposal of realty major DLF Ltd to buy back shares of the company worth Rs 1,110 crore from the capital market at a price not exceeding Rs 600 a share. The stock is showing signs of gathering steam with increased volumes.
For the first time since April, growth in the six core infrastructure industries has crossed 4 per cent, clocking 4.3 per cent in July. Though the growth on a month-on-month basis has given some reasons to cheer, a comparison with the 7.2 per cent growth achieved in July 2007 substantiates a slowdown afflicting the economy in the past few months, say analysts.
Reliance Industries fell more than four per cent on Thursday breaching the Rs 2,000 level as crude continued to fall, leading to bearish sentiments on Dalal Street too. The stock opened at Rs 2,071 and touched an intraday low of Rs 1,983 before closing at Rs 1,997, losing over 4 per cent.
The annual WPI-based inflation fell to 12.10 per cent during the week ended August 30, below the previous week's 12.34 per cent in the backdrop of moderation in oil and food items, the Government said on Thursday.
"There were large buildups in the power sector counters, which began before the last weekend and culminated in Monday's spurt - all in expectation of the opening up of a new opportunity for the players after the NSG waiver. Profit booking followed and weaker hands, which had entered the arena had no stomach for the fluctuations in valuation and this further depressed the prices," explains an analyst.
Industrial production growth recovered to 7.1 per cent in July from the dismal performance in previous two months of the current fiscal, even though it moderated compared with the 8.3 per cent recorded a year ago, Government data showed on Friday.
To end the week, barring a brief spurt on Monday with a gain of 500 points on NSG-waiver, the Sensex was caught in the maelstrom of selling pressure all through the week. Profit-booking in power stocks, rupee breaching the 45-level, FIIs selling spree and a steep fall in crude which pulled down the market-mover Reliance to its year low of Rs. 1920. The markets did not react to positives such as weakening inflation and better IIP numbers, as the Sensex wilted under bear pressure and sacrificed 480 points on weekly basis to close at 14000. On Friday, it saw a steep fall of 320 points.
Compiled by B.L. Sudarsan
Podcast by S. Vasudevan
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