Markets at a glance

Weak government data on industrial production and higher-than-expected inflation numbers halted a five-week rally.

The benchmark BSE Sensex declined by 443 points or 2.92 per cent to 14,724, while the Nifty lost 99 points or 2.2 per cent to 4,430, during the curtailed trading week. A slowdown in the manufacturing sector pulled down India's industrial growth in June 2008 to 5.4 per cent from 8.9 per cent a year ago.

Inflation zoomed to a 13-year high of 12.44 per cent, while car sales recorded a dip in sales for the first time in 33 months.

The sentiment turned bearish after the Prime Minister’s Economic Advisory Committee (EAC) trimmed its forecast for GDP growth in FY09 to 7.7 per cent. No decision was taken by the Sebi board on the issue of participatory notes.

What to expect this week

Sentiment is likely to remain edgy in the near term dampened by a series of negative news in the last week.

In the absence of any major domestic trigger, global markets and crude oil prices could decide the movement in the Indian bourses. Inflation is likely to move up to over 13 per cent before tapering off, since increase in sugar price, which has a significant weightage in the WPI is yet to be factored in.

FII activity in the coming week is very critical as it would give some indications as to how they read the recent developments. FIIs have bought shares worth Rs 986 crore (till August 13), while MFs have sold shares worth Rs 227 crore (till August 12). 

Stock to watch 

INDIAN HOTELS
Last week's close (Rs)	79.88
Prev. week's close (Rs)	81.82
Week's high (Rs)	84.13
Week's low (Rs)	79.00
Last week's ave. daily turnover (Rs cr)	15.96
Prev. week's ave. daily turnover (Rs cr)	11.61
Number of up/down move	2/2

Indian Hotels Company (IHCL) could witness some action on the bourses in the coming days, given the Rs 2,100 crore capex plans announced by the company at its AGM held on August 14 (Thursday).

The company intends to invest Rs 1,500 crore over the next three years to add about 1,900 rooms in the five-star and luxury category, and Rs 600 crore to add around 4,000 rooms in the premium and budget segments. New hotels will be built by the company in Mumbai, Hyderabad, Bangalore and Noida.

IHCL witnessed average room occupancy of 73 per cent last year and is expected to hike its room tariffs by 10-15 per cent from September 1. IHCL's net profit increased by 12 per cent y-o-y to Rs 61.2 crore over a 9 per cent y-o-y rise in net sales to Rs 376.9 crore in Q1 FY09. The stock currently trades at 11.9x FY09E earnings.