Slowing China economy adds to mkt jitters

Sat, 1 Oct RoundUp

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Fears of a Greek default and gloomy outlook for the US economy continued to weigh on investor sentiments throughout the world. The after effects of the announcements of 'Operation Twist' could be seen across the global stock markets. Investors are also worried about the Chinese economy slowing down and are maintaining a cautious stance. Sentiments however improved towards the latter half of the week on expectations that European leaders and policy makers would take steps to tackle the crisis in Greece.

Indian stock markets were very volatile through this week on global cues. The Sensex finally closed up by 1.8%. Among the other world markets, there was mixed response. China (down by 3.2% and Brazil (down by 1.7%) were the biggest sufferers. Singapore and Hong Kong were also on the losing side. However, France and Germany were both up by 6% each.

Source: Yahoo Finance

Among the sectoral indices, there was a mixed performance with IT (up by 5.8%) and Oil & Gas (up by 2.8%) stocks leading the gains. However, Metal stocks were down by 4.5% on falling commodity prices globally and raw material shortages. The decision to introduce the new mining bill in the next session of the Parliament was also a cause for concern for the industry. Among the other top sectoral losers were Consumer Durables (down by 4.3%) and Capital Goods (down by 3.8%).

Source: BSE

Now, let's take a look at key economic developments during the week. The government is thinking of revising the targets for power generation. For the current 5 year plan, it had decided to generate power around 1 lakh megawatt. However, the target is far from being achieved. Only 60,000 megawatt has been generated so far. The size of the domestic market in generation equipment is expected to grow from US$ 5.7 bn to US$ 25-30 bn by 2012. The transmission and distribution segment was expected to increase to US$ 70-75 bn in the next 10 years. The industry at present is dependent on fuel availability and regulatory policies.

In news from the world of oil and gas, the prices of compressed natural gas (CNG) are set to rise. Indraprastha Gas is thinking of hiking the prices by 6-7% in the next week. This would effectively mean a rise of Rs 2 per kg. As per the company, the prices have to be risen because of higher share of imported gas Regasified Liquefied Natural Gas (RLNG) as also the depreciating rupee making the imports costlier. Other players like Mahanagar Gas and Adani Gas are expected to follow suit and raise prices too.

FMCG company Dabur is soon going to venture into Sri Lanka markets with its beverage manufacturing plant. Dabur makes fruit beverages under the brand "Real" and aims to make the most of the growing opportunities in this industry. In fact, the beverages business has been doing well for Dabur and hence there is a need for more production capacity. The new plant will help the consumer company in this. The new plant will be located at Gampaha which is north to Colombo, the capital of Sri Lanka. It will have a monthly capacity of producing 280,000 cases which will be mainly meant for exports. It will be commissioned in Aug-Sep 2012.

In the banking industry, a new development took place in the form of Axis bank launching a lifetime fixed rate home loan scheme named "Nishchint". The interest rates for this would be 11.75% and the loan will have tenure of 20 years. At present, this is the cheapest home loan in the market with other banks charging anywhere between 13-13.5% for such loans. We may note here that Axis Bank is a new entrant in this segment. This aggressive approach by Axis is being looked upon as its step towards garnering more market share.

Mahindra Insurance Brokers (MIBL), a 100% subsidiary Mahindra & Mahindra Financial Services has received approval for getting into the reinsurance broking business. Mahindra which has been in the direct broking business since May 2004 has got the necessary approval from the Insurance Regulatory and Development Authority (IRDA). Mahindra plans to expand into the insurance intermediation segment in India and overseas. The company sees India as a strong Asian Reinsurance hub in times to come and thus has decided to get into this new venture.

Movers and shakers during the week

Company	23-Sep-11	30-Sep-11	Change	52-wk High/Low
Top gainers during the week (BSE-A Group)
DLF Ltd	194	219	12.8%	394/177
Mundra Port & SEZ	146	164	12.5%	183/130
Jaiprakash Asso.	65	73	11.5%	140/56
Educomp Solutions	215	238	10.8%	639/194
Container Corp.	877	969	10.5%	1359/876
Top losers during the week (BSE-A Group)
Sun TV	290	232	-19.9%	550/242
Reliance Capital	391	315	-19.4%	867/348
Pantaloon	235	198	-16.0%	521/210
Reliance Infra	431	374	-13.3%	1122/395
ABB	793	693	-12.7%	929/615

Source: Equitymaster
The mining bill will soon be introduced in the Parliament in the next session. The bill proposes to regulate the mining sector and advises sharing of profits and royalty with the people who get affected by the projects. The new bill called Mines and Minerals (Development and Regulations) Bill 2011 seeks to introduce better governance in mining policies. However whether the new legislation has the desired impact on India's infrastructural bottlenecks remains to be seen.