The Hindu Business Line : Markets this Week

Markets belied expectations of a strong opening after the US markets' hefty gains on Friday. The pessimistic outlook continued as some more skeletons were expected to be tumbled out of the US financial crisis. Being the F&O expiry week, investors feared the markets volatility would be intense and hence shied away. The Sensex opened Monday with a mild bull opening with a gain of around 200 points at 14215, and traded in a narrow range before finishing the day at 13995 with a slender loss.

"Believe in Desi story" has gone down well with the Indian mutual fund houses whose schemes with a global theme have fared worse than equity diversified schemes with negative returns averaging 14.8 per cent.

The decision by cement major ACC to pass on the rise in input cost to consumers boosted cement company stocks in BSE. Cement stocks were on a roll after this announcement.

Daiichi's open offer for acquiring an additional 20 per cent in Ranbaxy has been over -subscribed. Since the number of shares tendered have exceeded the offer size, excess would be returned to the beneficiaries, on Monday, ICICI Securities informed the stock exchanges.

The trouble on Wall Street has started to take a toll of Indian BPO/KPO players, with KPO services provider - eClerx Services reporting $1 million of receivables from a beleaguered US investment bank. The exit of one of its top five clients may dent the company's $40-million revenue guidance for 2008-09.

Shares of Ranbaxy Laboratories dived 11 per cent to hit an 18-month low on Tuesday at Rs. 308, even as drug authorities in Canada and Germany have now begun to put the company's products under scanner. The shares are reeling under pressure ever since the US FDA blocked imports of over 30 products for allegedly not meeting US manufacturing standards.

More companies seem to be announcing buybacks or delisting plans as the crisis in the international financial markets deepens, and this dampened the domestic markets too. "Most of the shares are trading below their intrinsic value now, which is why we are seeing more buyback and delistings now" said an analyst.

It appears that while US-based FIIs are selling Indian equities, a large proportion of what they are offloading is being picked up by non-USbased FIs, like Deutsche Securities, Swiss Finance Corporation, Credit Suisse, and some UK-based firms. According to the BSE data, while FIIs had bought equities of Rs 48,110 crore, they sold equities worth Rs 57,961.61 crore.

Vedanta's decision to drop its restructuring plan resulted in a sharp jump in the stock of Sterlite Industries on Wednesday. The company said that the decision was made on the back of global financial turmoil and investor feedback; it may be noted that the restructuring announcement was followed by a series of analyst downgrades and a sharp de-rating of the stock.

Zandu Pharmaceutical Works has appealed against SEBI's clearance of the open offer by Emami for an additional 20 per cent of Zandu's shares. And the issue comes up for hearing before SAT, on September 25. Zandu had approached SEBI, the CLB and the Bombay High Court to stave off Emami's proposal. The share price of Zandu has dipped seven per cent in the last week, whereas, Emami has gained two per cent.

South Indian Bank has fixed October 17, as the record date for the purpose of issue of bonus shares. The bonus issue will be in the ratio of 1:4. Since this seems unattractive, the stock has received muted response in the bourses.

Inflation remained unchanged at 12.14 per cent for the week ended September 13 even as the Finance Ministry said prices of essential items like cereals, pulses, sugar and edible oils declined on a weekly basis.

Emami's open offer for Zandu Pharma's shares will open as per schedule on Friday, after the SAT decided not to pass any order restraining the process.

The number of HNIs, with investible surplus of more than $1 million, in India has gone up by 23 per cent to 1.23 lakh as of December 2007, according to a DSP Merrill Lynch and Capgemini report. The average net worth of the Indian HNIs has gone up to $3.6 million, while the global average is $4 million.

As the markets remain choppy, investors seem to be taking cover in sturdy FMCG and pharma stocks. While the Sensex has tanked close to 7 per cent in the past month, the FMCG index has slipped just 0.74 per cent.

Suzlon Energy board will consider a rights issue to raise Rs 1,800 crore, at its meeting scheduled Saturday.

Tata Motors on Thursday sold shares of Tata Steel Ltd in two separate block deals, according to BSE data. More than one crore Tata Steel shares were sold to Tata Sons in two different block deals, at Rs 485.40 and Rs 485.70 respectively.

On Friday, meeting of Senate leaders and senior Congressmen with President George Bush failed to reach a compromise on the $ 700-billion bail-out package. Further, major developments like JPMorgan Chase acquiring the banking arm of 119-year old Washington Mutual for $ 1.9 billion and serious concerns over Morgan Stanley's financial woes shook the Dow Jones futures, which shed 150 points. This led the global equity markets including that in India switch to a sell mode. The Sensex lost a whopping 950 points on weekly, and recorded a 450 slide to finish the week at 13100.

Compiled by B.L. Sudarsan
Podcast by M.J. Madhavan

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