Bulls may continue journey

We don't receive wisdom; we must discover it for ourselves after a journey that no one can take for us or spare us - Marcel Proust.

At the moment it looks like India is out-performing the world. This week’s movement presents ample evidence of that trend. Whether this pattern continues or not only time will tell. We expect a positive start and the same could be extended, provided there are no further hiccups in world markets. Small-caps have been buzzing, but make sure your allocation is also small on these counters given the heightened risk associated with such counters.

The overall outlook in the near term is still not very bright, mostly owing to external concerns. But, the Indian market is likely to remain resilient and could continue the gradual move up, especially when global cues are supportive.

Valuations might become a bit of an issue going forward. Also keep an eye on fund flows, which have been good so far.

The big local events that could have a bearing on sentiment are: IIP data (on Friday), inflation (on Sept. 14) and RBI review (on Sept. 16). Next month we will get the latest update on India Inc.’s report card.

Economic statistics from around the world will continue to exert their influence across markets and asset classes. Uncertainty on the outlook for world markets is expected to prevail for some time to come. Which means that investors will continue to switch between risk aversion and risk tolerance intermittently. If economic data from the US was good last week, we have been hit this week by a few downbeat reports from the euro-zone (particularly from Germany).

Euro-zone banks have been in focus amid lingering worries over the region’s sovereign debt issues. Talk of proposed new capital rules for global banks have also pressured some of these financials. The markets will remain choppy in the remaining part of the week. So it wouldn't be a bad idea to take a neutral stance and await more clarity.

Shares of Gujarat Pipavav port Ltd. will list on the exchanges today. The Company has fixed the issue price for its Rs5bn public issue at Rs46 a share while price band was at Rs42-48. The issue, which opened for subscription between August 23-26, was subscribed 19.94 times. Qualified institutional investors' portion got subscribed 13.2 times. Non-institutional and retail investors subscribed 85.70 times & 9.15 times, respectively.
FIIs were net buyers of Rs2.82bn in the cash segment on Wednesday (provisionally), according to the NSE web site. Local funds were net sellers of Rs982.1mn. In the F&O segment, the foreign funds were net sellers at Rs5.43bn.

Important News Snippets For The Day:

IT companies may be in spotlight due to the news of Ohio banning outsourcing from India. Vindhya Tele Links is the stock to watch out for, after the Company, along with its consortium partners won a huge deal from BSNL.

Kale Consultants could attract attention as a report suggests that French company Accelya is looking at buying a majority stake.

Tata Power might also be in focus after chairman Ratan Tata said at the AGM that it is in talks to acquire a majority stake in UK-based InterGen from GMR Infra.
Wipro may hike client billing rates.

Royal Orchid Hotels acquires 74% in Amartala Hospitality.

HUL , P&G hikes prices of detergents.

REC plans SPV with a global bank for banking license.

NMDC will initiate talks with Australia’s Riversdale Mining for picking up a minority stake.

Tata Steel is in talks with banks to raise between US$4.5-US$5.5bn loan to refinance debt at its European unit Corus.

Tata Steel has raised Rs7bn by selling shares of Tata Motors and Tata Power to a group company, Tata Industries.

Tata Steel plans to buy a ferrochrome mine in South Africa for captive use of its ferrochrome processing unit, Tata Steel KZN in that country.