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India misses out on the global surge - Views on News from Equitymaster
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  • May 9, 2009

    India misses out on the global surge

    The Asian markets put up a good performance during the past week. It is believed that a variety of factors such as regional bank earnings, stress test results of US banks, and an expansion in Chinese manufacturing activity boosted optimism amongst investors. The Indian indices, on the others hand, remained the lowest gainers as the BSE-Sensex rose by only around 4% as compared to last week. Other Asian indices such as Singapore (up 17%), Hong Kong (up 12%), China (up 6%) and Japan (up 5%) ended the week on a stronger note. As far as other global markets are concerned, they ended the week on a firm note as well, with Brazil (up 9%), UK (5%), and France (5%) leading the pack of gainers. These were followed by the US (up 4%) and Germany (up 3%).

    Coming to the performance of sectoral indices in India, stocks forming part of the metal, consumer durables, realty and capital goods spaces emerged as the top gainers during the week. The BSE-Metal and BSE-Realty indices recorded gains of almost 16% and 11% respectively. FMCG stocks, on the other hand recorded losses as the BSE-FMCG index ended marginally lower. Further, the BSE-Smallcap index and the BSE-Midcap index continued their upward journey as they recorded gains of around 9% and 7% respectively.

    Data stating the institutional activity shows that that, both mutual funds and FIIs (foreign institutional investors) pumped money into the markets during the week gone by. In fact, there was not even a single day when the net figure was negative. While the FIIs invested nearly Rs 36 bn during the week, domestic mutual funds invested about Rs 3.7 bn during the first three days of the week (data for rest of the week was not available at the time of writing).

    Coming to the performance of India Inc., the quarterly results of index heavyweights continued to trickle in during the week. HDFC recorded an interest income growth by 35% YoY in FY09. This was on the back of a 16% YoY growth in loan book and 21% YoY growth in disbursements. In addition, higher returns on investments led to an 82% YoY growth in other income. Net profit (excluding extraordinary item) jumped up by 35% YoY in FY09. Gross NPA (non-performing assets) levels remained at 0.8% at the end of FY09. HDFC's capital adequacy ratio (CAR) stood at 15%, as against the minimum requirement of 12%.

    Auto sales numbers for the month of April 2009 were announced during the week. While Maruti Suzuki recorded a growth of 15% YoY during the month, Tata Motors recorded a 2% YoY decline. The main reason behind the latter's slump in volumes was a 45% YoY decline in exports. The company's passenger vehicle segment also witnessed a decline during the month. On the other hand, Maruti recorded higher volumes due to higher sales in both domestic and export markets. In addition the company has stated that it plans to increase its production capacity by an additional 200,000 cars in the next two financial years to cater to the buoyant small car market. Its current small car capacity stands at 900,000 cars a year. The company will invest Rs 18 bn to increase the capacity by 100,000 units during the current fiscal. In addition, a leading business daily reported that the auto major is expecting a 5% YoY increase in sales during FY10. This is on account of increased demand from rural areas and overseas markets. According to the company's management, the demand for the company's vehicles remained strong in FY09 and as such expects the trend to continue in the current fiscal.

    Source: Yahoo Finance
    *Last week's closing as on April 30
    Source: Yahoo Finance
    *Last week's closing as on April 30
    # Last week's closing as on April 29

    Source: BSE Source: BSE

    Movers and shakers during the week
    Company 4-May-09 8-May-09 Change 52-wk High/Low Change from 52-wk High
    Top gainers during the week (BSE-A Group)
    Bhushan Steel 428 683 59.6% 956 / 260 -28.6%
    Godrej Industries 77 100 30.6% 305 / 46 -67.2%
    GMDC 55 71 29.6% 160 / 25 -55.8%
    Jubilant Organosys 117 144 22.9% 389 / 85 -62.9%
    Tulip Telecom 473 570 20.4% 1,130 / 258 -49.6%
    Top losers during the week (BSE-A Group)
    HDFC 1,958 1,740 -11.1% 2,800 / 1,116 -37.9%
    IOB 68 61 -10.4% 150 / 38 -59.4%
    M&M 550 494 -10.1% 672 / 236 -26.5%
    Federal Bank 190 172 -9.7% 251 / 111 -31.5%
    United Spirits 732 667 -8.9% 1,698 / 426 -60.7%
    Source: Equitymaster

    Inflation, as measured by the wholesale price index or WPI, was reported at 0.7% for the week ended April 25. This is higher than the previous week's number of 0.57%. The same has edged up for the third consecutive week mainly on account of food items and manufactured products. In the corresponding period in the previous year, the inflation stood at 8.27%.

    In international news, the International Monetary Fund (IMF) has downgraded its growth outlook for Asia, predicting a long and severe recession for the region's wealthier but export-reliant economies. It expects growth to slow down to 1.3% this year as compared to its initial forecast of 2.7%. For emerging nations in Asia (which excludes Japan), the IMF lowered the growth forecast to 3.3% from 4.4%. It expects China to grow at the rate of 6.5% in 2009 as aggressive policy response is expected to boost domestic demand, while India is forecasted to grow at the rate of 4.5%. According to the agency, the Indian economic growth will slow down as global credit conditions and inadequate investments are likely to arrest the growth of the economy.



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