Sunday, May 2, 2010

BSE / NSE weekly analysis 30 April 2010

The market edged lower in volatile trade as unease over euro zone sovereign debt levels weighed on world equities. However, expectations of a normal monsoon this year and optimism about fourth quarter corporate earnings capped the decline on the domestic bourses. The European debt crisis spread after S&P slashed its credit ratings on Greece and Portugal. The rating firm also lowered its credit rating on Spain amid concerns about the country's growth prospects following the collapse of a construction bubble. The downgrades escalated fears of a contagion that could raise borrowing costs for European countries and derail an economic recovery.

The BSE Sensex fell 135.49 points or 0.77% to 17558.71 in the week ended 30 April 2010. The S&P CNX Nifty declined 26.10 points or 0.49% to 5,278 in the week. The market gained in three out of five trading sessions in the week.

The BSE Mid-Cap index rose 0.74% and the BSE Small-Cap index gained 0.08%. Both the indices outperformed the Sensex.

The key benchmark indices edged higher for the fifth straight day on Monday, 26 April 2010 on firm global stocks and forecast of a normal monsoon this year. The BSE 30-share Sensex rose 51.08 points or 0.29% to 17,745.28.

The market edged lower on Tuesday, 27 April 2010, snapping gains in the preceding five trading sessions, on weak global stocks. The BSE 30-share Sensex lost 54.66 points or 0.31% to settle at 17,690.62.

The key benchmark indices extended losses for the second straight day on Wednesday, 28 April 2010 as world stocks reeled from rating downgrades on Greece and Portugal. The BSE 30-share Sensex fell 310.54 points or 1.76% to 17380.08.

The market rebounded after a two-day slide on Thursday, 29 April 2010, tracking gains in European stocks and higher US index. The BSE 30-share Sensex rose 123.39 points or 0.71% to 17,503.47.

Profit booking in the second half of the day's trading session capped gains in the key benchmark indices on Friday, 30 April 2010. The BSE 30-share Sensex rose 55.24 points or 0.32% to 17,558.71.

The Lok Sabha on Thursday, 29 April 2010, passed the Finance Minister Pranab Mukherjee's Budget for 2010-11 by a voice vote with some minor concessions. The concessions will reduce the incidence of service tax on housing and air travel, incentivise construction of big hospitals, keep cancer and anti-AIDs drugs cheap and provide relief to debt-ridden coffee growers. However, the government held firm not to roll back hike in prices of petrol and diesel. With the passage of the Bill by the Lok Sabha, the three-stage budgetary process stands completed.

On the macro front, the latest data showed infrastructure sector output jumped 7.2% in March 2010 from a year earlier, higher than an upwardly revised rise of 4.7% in February 2010.

The food price index rose 16.61% in the year to 17 April 2010, data released by the government on Thursday, 29 April 2010, showed. The rise in food prices inflation was slower than an annual rise of 17.65% in the previous week. But, fuel price inflation quickened. The fuel price index rose 12.69% in the year to 17 April 2010 a year ago, faster than the previous week's 12.45% rise. The primary articles index was up 13.55% in the year to 17 April 2010.

The Indian Meteorological department (IMD) expects normal rainfall in the June-September monsoon season this year. Rainfall is likely to be 98% of the long-term average, the IMD said on 23 April 2010. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation. The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season holds key.

The Reserve Bank of India expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand.

The RBI at its annual policy review, on 20 April 2010, said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted. A 25 basis points hike in the cash reserve ratio (CRR) with effective from 24 April 2010 will suck out excess liquidity of Rs 12500 crore from the banking system.

In its half-yearly World Economic Outlook, the International Monetary Fund (IMF) has pegged India's GDP growth at 8.75% in calendar 2010 and 8.5% in calendar 2011. According to the IMF, domestic demand in India will strengthen as the labour market improves, and investment is expected to be boosted by strong corporate profitability, rising business confidence and favourable financing conditions.

The Q4 March 2010 corporate earnings announced so far have been good. The combined net profit of a total of 660 companies rose 25.8% to Rs 33470 crore on 32.5% rise in sales to Rs 302678 crore in the quarter ended March 2010 over the quarter ended March 2009.

The government on Thursday, 29 April 2010, kicked off its disinvestment programme for the fiscal year March 2011 with the initial public offering (IPO) of the state-run SJVN. The government plans to raise Rs 1000 crore through the IPO, and is offloading 10% of its stake in the company. The IPO was subscribed 43% on day one.

The Congress-led United Progressive Alliance government sailed through a trial of strength in parliament on Tuesday, 27 April 2010, by defeating the cut motion demanded by opposition parties against an unpopular hike in fuel and fertiliser prices with smaller parties giving it a leg up to achieve a surprisingly strong victory for the government. However, major reforms may take a backseat for the some time to come as there is a stiff resistance by the opposition on fears it may hurt the poor.

Index heavyweight Reliance Industries (RIL) fell 5.04%. RIL reportedly plans to sell gas to retail consumers in the US and will use its newly built partnership with Atlas Energy to build a brand name in the US market.

RIL said on Wednesday 28 April 2010 it had discovered oil in one of its exploration blocks in the Cambay basin on India's western coast, the block in which it holds 100% controlling interest. This is its fourth oil discovery in the region.

Interest rate sensitive banking shares were mixed. India's second largest private sector bank by net profit HDFC Bank gained 2.43%. But, India's largest private sector bank by net profit ICICI Bank fell 2.59%.

India's biggest commercial bank in terms of branch network State Bank of India rose 1.18% on recent brokerage upgrades on the counter. A prominent foreign brokerage reportedly raised its rating on the stock to 'neutral' from 'sell'. Another foreign brokerage has reportedly predicted a re-rating of the counter on the back of an expected lending growth.

Most auto stocks advanced ahead of the release of April 2010 monthly sales data next week. India's largest commercial vehicle maker by sales Tata Motors surged 3.3% to Rs 872.85. The stock hit a 52 week high of Rs 877.90 on Friday, 30 April 2010. India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 1.07%. India's largest motorbike maker by sales Hero Honda Motors rose 1.13%. But, India's largest car maker by sales Maruti Suzuki India slumped 6.03%.

Sun Pharmaceutical Industries declined 6.99%. A US District Court for New Jersey on Friday, 23 April 2010, rejected claims by Teva Pharmaceutical Industries and Sun Pharmaceuticals Industries that the patent on Pfizer's Protonix acid reflux drug should be declared invalid. The original patent on Protonix, known chemically as pantoprazole, is held by Swiss drugmaker Nycomed and was licensed to Wyeth, which is now owned by Pfizer. Nycomed and Wyeth filed their patent infringement lawsuit against Teva Pharmaceutical Industries and Sun Pharma in May 2004.

Larsen & Toubro (down 0.59%), Tata Consultancy Services (down 1.77%), Wipro (down 2.81%), Tata Steel (down 4.57%) were the other losers from the Sensex pack.

Source : Capital Market

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