Markets at a glance

Despite a see-saw movement through the week, markets ended in the green, in anticipation of the second stimulus package and a further reduction in interest rates. A Fed rate cut for interbank lending from one per cent to between 0-0.25 per cent and expectations of auto bailout were positive for the global markets.

Inflation dipped sharply to 6.84 per cent (8 per cent in the earlier week), while the rupee strengthened to around Rs 47 to the dollar during the week. Despite the OPEC supply cut, oil tanked to $36 levels, indicating a slump in demand. The BSE Sensex ended 410 points (4.2 per cent) higher to close at 10,100 during the week. On the other hand, NSE Nifty rose 156 points (5.3 per cent) to 3,078 in the week.

What to expect this week

The markets are likely to tread upward, with the second government stimulus expected to be announced anytime soon. Falling fuel prices have pushed down inflation to a nine-month low, creating room for the Reserve Bank of India (RBI) to pursue more aggressive monetary policies to tide over the slowdown. A lending rate cut of 75 basis points by SBI and 50 basis points by HDFC over the weekend, is a positive for the markets.

In the Christmas-led truncated week, markets are expected to be choppy in the expiry week for December contracts. Marketmen are bound to keenly track some important data coming on Tuesday like the UK and US third quarter GDP numbers, US new home sales numbers and the US Retail Sales Index.

 

Stock to watch
Indian Oil Corporation
Last week's close (Rs) 422.63 Prev. week's close (Rs) 386.33 Week's high (Rs) 426.70 Week's low (Rs) 374.73 Last week's ave. daily turnover (Rs cr) 40.12 Prev. week's ave. daily turnover (Rs cr) 20.78 Number of up/down move 2/3

Indian Oil Corporation (IOC) is likely to attract investor attention, with the crude oil prices tumbling to $33 per barrel. In line, the Indian crude oil basket has also fallen to $40 levels.

The projected total under-recoveries on the sale of petroleum products for oil marketing companies (OMC) like IOC, HPCL, and BPCL are to the tune of Rs 1,10,000 crore during 2008-09. Lower crude oil prices, would reduce under-recoveries for OMCs on petrol, diesel, LPG and kerosene.

IOC accounts for 40 per cent of India's total refining capacity and operates 10 of India's 19 refineries. The stock is currently trading at around eight times its FY08 earnings. The scrip is up by 8.9 per cent in the last one week.