Markets at a glance

The bears started the week with a bang, forcing the Sensex and Nifty below the crucial levels of 8,000 and 2,300 points respectively. But a combination of short-covering, positive global sentiments on account of rate cut by various central banks globally and lower inflation (10.68 per cent compared with 11.07 per cent a week earlier) meant that the bulls would have the last laugh.

The proposal to increase the FDI cap in private sector insurance companies from 26 per cent to 49 per cent also added to the positive sentiment. Benchmark indices ended the week positive after five consecutive weekly losses with Sensex gaining 1,087 points or 12.5 per cent to close at 9,788 and the Nifty rising 301 points or 11.7 per cent to 2,885. Reliance Industries jumped 35 per cent to Rs 1,370.75 in a week that was truncated on account of Diwali holidays.

What to expect this week

While the markets covered a fair bit of ground from the lows made last Monday, experts feel that there could be resistance going forward on account of profit-booking and sustained negative news flow from the US. Spending by US consumers dropped 0.3 per cent in September, capping the weakest quarter in three decades and indicating that the economic slump is deepening.

On the domestic front, while the decline in inflation and crude oil would come as a relief to investors, corporate results have been disappointing. Aggregate results of 1,259 companies suggest a 35.5 per cent drop in net profits despite a 39 per cent rise in net sales, largely on account of higher interest burden. FIIs finally turned net buyers after a fortnight of relentless selling. They bought Indian equities worth Rs 1,237 crore on Friday. A 0.5 per cent cut in repo rates could be viewed as a positive step by the markets. 

Stock to watch
ABG SHIPYARD
Last week's close (Rs) 115.40 Prev. week's close (Rs) 137.05 Week's high (Rs) 136.45 Week's low (Rs) 109.30 Last week's ave. daily turnover (Rs cr) 0.57 Prev. week's ave. daily turnover (Rs cr) 0.94 Number of up/down move 1/3

ABG Shipyard (ABG) could see renewed activity on the bourses after the company bagged its first rig order worth $480 million (Rs 2,370 crore) from Essar Oilfields Services.

The order will allow ABG to build two self elevating jackup rigs with operating capacity of up to 350 feet water depth and a drilling capacity of 30,000 feet. At Rs 117, the stock is trading at 3.7x its trailing EPS of Rs 31.6. ABG's total income increased 35.5 per cent year-on-year to Rs 280 crore in Q1FY09 whereas its net profit grew by 40.7 per cent y-o-y to Rs 47 crore in the same period.

The total order book now stands at around $2.91 billion to be executed over the next five years. The stock made a 52-week high of Rs 1,045 on November 30, 2007 and a low of Rs 108.6 on October 27, 2008.