Markets at a glance

Markets started the new year on a positive note, on the back of positive global cues and expectations of second stimulus package by the government along with further rate cuts by the RBI. Crude oil prices jumped nearly 20 per cent to $45 per barrel, amid concerns that Israeli attacks on Hamas could disrupt West Asia crude oil supplies.

While a drop in inflation to 6.38 per cent (from 6.61 per cent in the previous week) was hardly surprising, a decline in India’s exports (down 9.9 per cent y-o-y in November) was worrisome. The BSE Sensex added 629 points (6.7 per cent) during the week to close at 9,958, while the NSE Nifty rose 189 points (6.6 per cent) to end the week at 3,046. FIIs bought equities worth Rs 202.8 crore during the week (until January 1, 2009).

What to expect this week

Markets are likely to react positively to the much-awaited second stimulus package unveiled on Friday evening, coupled with rate cuts by the RBI. While the government has not revealed the quantum of the package, it includes liberalisation of ECB policy, increase in FII investment ceiling in corporate bonds and duty drawbacks for exporters.

The 50 basis points cut in CRR by RBI would lead to an infusion of Rs 20,000 crore into the system, over and above Rs 3,00,000 crore worth of liquidity easing since October 2008. Analysts feel that the twin measures would help in reviving the ailing real estate, infrastructure, automobile and export sectors. The third quarter results will start rolling out this week (Axis Bank, Mastek, Prism Cement), which could provide vital cues about the extent of slowdown.

 

Stock to watch
Indian Oil Corporation
Last week's close (Rs) 64.08 
Prev. week's close (Rs) 64.10 
Week's high (Rs) 65.20 
Week's low (Rs) 57.55 Last week's ave. 
daily turnover (Rs cr) 0.02 
Prev. week's ave. daily turnover (Rs cr) 0.03
Number of up/down move 2/3

The Motherson Sumi System scrip could see an upmove following an approval by its board to acquire the UK-based Visiocorp’s global rear view mirror business.

The acquisition is being made in collaboration with sister concern Samvardhana Motherson Finance, through a special purpose vehicle (SPV) in which Motherson Sumi will hold 51 percent and Samvardhana the rest. While the financial details of the deal are awaited, the acquisition would be completed by end of February 2009.

After the acquisition, the company will emerge as the largest player globally with clients such as GM, Volkswagen, Renault and BMW. At Rs 64, the stock is trading at 18 times of its 12-months trailing earnings.