Market Outlook: All eyes on Nestle

All eyes are set on January 15 when the board of directors of Nestle India will meet to consider a scheme formulated under Sections 391 to 394 of the Companies Act, 1956 read with Sections 100 to 102 of the Companies Act, 1956.

Under this Act, the board will utilise part of the reserves of the company for distribution to shareholders.

This triggered speculation in the market that the company may offer a buyback to shareholders. The stock jumped 6.36% to close at Rs 1,245 during the week ended January 12 with volumes rising three-fold at 2.17 million shares.

For the current year thus far, the company has declared two interim dividends - Rs 2 per share on April 17 and Rs 18 a share on December 4.
Of the total equity capital of Rs 96.42 crore, the promoters hold 61.84%. Including profit for the current year ending December 2006, the company has reserves of around Rs 400 crore. The non-promoters' market capitalisation was at Rs 4,500 crore.

Stock of the week: IFCI

IFCI zoomed to its 52-week high of Rs 23.50 and closed at Rs 21.82, recording a gain of a 67 per cent in just a week with a phenomenal jump in volumes.

The spectacular run on the counter was on the company's decision to sell its 7 per cent stake of the total 12.44 per cent it holds in the NSE to Goldman Sachs, NYSE, General Atlantic and Soft Bank for about $161 million (or Rs 724 crore).

The company, which was reeling under bad loans and high cost of borrowings, is looking at ways to improve its business. Its stock price has almost doubled in the last one month after underperforming for most part of 2006.

Zandu: Bonus issue prop

The stock rose 33.7% after the company fixed January 20 as the record date for the bonus issue. The board had earlier approved a bonus issue in the ratio of 1:3.

The equity capital of Zandu Pharmaceutical, which has always been a thinly traded scrip, is 6.05 lakh shares, of which promoters hold 41.87%. There are 43 investors who hold 91,955 shares or 15.20%, and 7,488 investors holding 1.93 lakh shares or 31.87%. The company's book value per share was Rs 1,046.30, as on 31 March 2006.

The company manufactures a range of ayurvedic products, specialising in rheumatology, gynaecology and central nervous system. The company has more than 300 products in the form of ghritas, medical oils, churnas, quath, tablets and pills. It enjoys a very strong brand presence with products such as Zandu Balm, Zandu Pancharishta, Trisun and Zandu Kesri Jivan.

The company had reported 67.3 per cent rise in profit for the Q2 September 2006 to Rs 5.37 crore compared with Rs 3.21 crore in Q2 September 2005. Net sales rose 24.5 per cent to Rs 37.24 crore (Rs 29.90 crore).

Sensex Review

The Sensex, which began weak at 13,856, tumbled to a low of 13,303 in early Thursday trades. Unabated buying, thereafter, saw the index zoom to a new high of 14,071 before ending the week with a gain of 196 points at 14,057.

The bull run was so strong that the index, which shed 653 points in five sessions following a record close of 14,015 on January 3, gained 695 points in just two trading sessions.

Oil and gas, bank, consumer durable, FMCG and small cap stocks made healthy gains during the week ended January 12.

The FMCG sector bounced back after three consecutive weeks of underperformance, gaining 2.81%. ITC was up 5.85% at Rs 171.35, while Hindustan Lever was up 6.90% at Rs 219.60.

Nifty Snapshot

Nifty futures closed with a premium to spot Nifty - the first time in the last three weeks. After trading at a discount in the first three days, Nifty futures closed at a premium of 10.85 points on Thursday and 6.25 on Friday as bulls cornered bears after Nifty hit a low of 3830 on Wednesday. The Nifty had support and resistance at 4000 levels as Nifty calls and puts were bought at 4000 levels