Market: Its better than an Esselworld ride !

What a week it was.. Sentiments turned from negative to positive and this is for the nth time that this has happened. Certainly this beats Esselworld in terms of the volatility and investors with a weak heart really would have felt the jerks. The common part is that the ride at both places ended with a smile on the faces of the investors.

The week started off on a very weak note with global cues negative. There was no reason to be positive as stocks across the globe collapsed. There were worries of increasing interest rates in Japan and to add to that Emerging markets saw a selloff on back of developments in Venezuela. Venezuelan President announced that they would be nationalising the oil and Telecom companies. This was bad enough to snuff out the strength in equities. The impact was felt in India too. There was a surprise rate hike by the Bank of England has overnight rate now at 5.25%, matching that of the Fed funds rate but really markets finally ignored this. Metal prices crashed in the beginning of the week and the impact was felt across board with Hindalco, Nalco, Hindustan Zinc, Sterlite

Crude had a major selloff this week touching 20 month lows. Cut threats by OPEC dont seem to be taken seriously. Open had decided on a cut of 1.2 mn barrels per day in November and is expected to cut a further half a mln barrels per day starting February. The refineries had a ball and they surged. The airlines stocks also flew with Jet doing extremely well on the bourses. Reliance rallied too after many days of ranged action. Lower crude prices helps its profitability of the refined products. However the gains are limited as it exports 30% of its refined products. Also there is a risk that the Government may consider to reduce fuel prices further. But Reliance has the benefit of now being a play on retail and also SEZs where its expected to get huge value.

Mid caps were in action on Tuesday though the large caps saw selling. Investors were waiting for the results season. Infosys officially kicked it off well. Infosys results on Thursday was awaited with baited breath. The fact that they did not positively surprise was what was a disappointment. However Markets then rallied strongly on Thursday even though Infosys numbers were not as exciting as they normally are. TCS and Wipro were big gainers. TCS is expected to post the best ever numbers. Results are expected on the 15th that is Monday evening. The reason for the rally on Thursday was known only on Friday and that was the big trigger from the FM who gave a big boost to the banks. Seems like smart people knew about it in advance. The RBI has been given the power to change SLR floor and ceiling rates of 25% and 40%. Banks have been strugglng to raise resources and what this does at one shot is that it would help release funds for the banks. ICICI also has raised $2 bn for lending into the Indian markets and that led the Sensex on to an all time new high. Weighing this week for the initial part of the week were global cues but domestic policy coupled with global recovery brought back the glory of last week.

Sensex ended the week up almost 200 points closing at 14056 which is the highest ever weekly close.

The gainers in the Nifty were MTNL +10%, Mah +4%, TCS + 5%, Wipro +4%, Bharat Petroleum + 4%. Bharti Airtel + 4%, ICICI bank +6%, ITC + 4%, Jet +6%, Reliance +4%, Sun Pharma +4%. There were a few large losers including Suzlon -3.7%, Rel Com - 3%. topnew.gif (1104 bytes)

IFCI moved up sharply, Zee babies got listed.. Results season got of to a good start.. !

IFCI rallied strongly this week. IFCI sold off 5% stake in NSE which managed to sell 20% stake to strategic investors including New York Stock exchange. However the big kicker was the talk that the company had land which was under sale and that would be a big kicker to its bottomline as per valuation. The stock had a surge of over 66% this week. We are not enthused though. There is no continuing business for the company.

Zee babies got listed this week. This was the Wire and Wireless ltd and Zee News Ltd. The split was done so as to bring in clarity and also meet the norms with regards to foreign ownership in a News channel. We have been positive on this stock for quite some time and the demerger did create value. Zee will further demerge with the DTH business at the end of the month. The results however are unlikely to be exciting.

The power ministry has announced ultra mega transmission projects for private sector participation on a build-own-operate basis. The ministry has identified 14 such projects entailing a total investment of over Rs 22,000 crore. They are likely to be commissioned by 2011-12. Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) have been appointed as the nodal agencies to oversee implementation of these projects. A bidders' conference is in progress from January 10, 2007. The Ministry, PFC and REC have already invited expressions of interest (EoIs) for the Rs 4,200-crore evacuation system for the Maithon (1,000 mw), Kodarma (1,000 mw) and Bokaro extension (500 mw) projects. They have also invited EoIs for a project to bring surplus power from the east and northeast to the northern region, entailing an investment of Rs 1,800 crore. Besides, EoIs have also been invited for the evacuation system for North Karanpura (1,980 mw) costing Rs 4,100 crore. Other transmission projects include the southern-western region synchronous inter-connector (Rs 800 crore), as well as evacuation systems for Barh II (1,320 mw, Rs 1,200 crore), Nabinagar (1,000 mw, Rs 800 crore) and Daripally (3,200 mw, of which 800 mw in the 11th plan, Rs 4,000 crore).

The first two Ultra Mega Power projects of 4,000 Mw each at Sasan (Madhya Pradesh) and Mundra (Gujarat) were awarded last month to Lanco and Tata Power, respectively. The next two will be Krishnapatnam in Andhra Pradesh to be awarded by March and Tilaiya in Jharkhand by July-end.

Thus the scene for the power sector remains extremely robust. Bhel, Siemens, ABB rallied at the end of the week.

HDFC bank posted decent growth numbers in a crunch scenario Infosys numbers were quite good. UTI bank also surged on the back of decent numbers. It has been a fair start for the results season and more will be known as results unfold.

Technically Speaking: We had mentioned in our Technical Analysis that the Sensex was ready to make a new high with support at 13180 and surprise surprise it did that. Going ahead 14180 - 14380 is an expected range and then some correctives could be expected.

Fundamentally: The results have yet to come in and that certainly does not portend well. Experience tells us that results of the large caps normally leads to profit taking. Next week is the interest rate meeting for Japan and that could be a dampener. Mid caps is where the action is more likely to shift as the performance is expected to be good but it will be selective action. The FIIs who have been sellers so far will be keenly watched. Its very much possible that FII buying will be selective and sombre at these kind of levels. So its more likely to be a choppy market.