Markets at a glance

The expectation of a recovery in the domestic and global economies has supported the markets which posted positive gains for the eighth consecutive week. Additionally, better then expected results for Q4 FY09, along with expectations of near normal monsoon, have helped the broader indices. The Sensex registered a weekly gain of 74.2 points or 0.65 per cent to close at 11,403.25. During the week, FIIs were net buyers to the tune of Rs 2,664.8 crore. Mutual funds sold stocks worth Rs 396 crore. As against the gains seen in large caps, the BSE mid and small cap indices fell by 2.14 per cent and 3.1 per cent respectively last week.

Markets this week

The political uncertainty will continue to be an overhang on the markets and thus cap any significant upside. Support comes in the form of foreign funds that continue to invest in the Indian markets. Also, global news flow, relating to the economic recovery particularly the US economy, will be crucial. In this context, investors also need to watch stocks in the IT sector which will directly benefit from the recovery. Analysts have now started to predict and factor in the recovery in the Indian economy which is good news for the markets and may help arrest a big fall in the markets. Market participants expect a high degree of volatility during the week.

 

STOCK TO WATCH

Nestle India
Last week’s close (Rs) 1,704.85
Prev. week’s close (Rs) 1,723.55
Week’s high (Rs) 1,734.70
Week’s low (Rs) 1,670.00
Last week’s ave. daily turnover (Rs cr) 5.68
Prev. week’s ave. daily turnover (Rs cr) 12.57
Number of up/down move 2/1


With a net profit growth of 23 per cent in the March 2009 quarter, Nestle India is expected to be in the limelight as its results have beaten estimates.

The net profit grew 23.19 per cent to Rs 197.30 crore. The increase is attributed to a favourable sales mix, lower petroleum prices, higher other operating income and improved realisations.

Consequently, operating margins have seen a growth of around 200 bps y-o-y to 24 per cent. Total income at Rs 1,276 crore was up 16 per cent year-on-year. However, exports have trended down compared to domestic operations with sales coming in lower by 15.1 per cent due to slower exports to Russia. The stock is trading at 28.5 times its 12-month trailing EPS.