Market Bolstered By CSO’s Growth Forecast Of GDP - Feb 9, 2009

Expectations as interim budget will strengthen sagging growth and US stimulus package will be approved, supported the momentum of the market. Further, the ruling government will unveil an interim railway budget on February 13, 2009 followed by a mini general budget on February 16, 2009. It is expected that the government will take measures to boost growth, especially in sectors where jobs are at stake. Hopes of a recovery in Chinese economy added fuel to momentum.

On the sectoral front, traders on-loaded position across sectors. Metal stocks rose on speculation that the stimulus packages proposed by the governments of the US and China will boost demand for commodities. Banking stocks advanced on expectation that the interim budget will provide Rs. 2,000 crore for bank recapitalization and also on hopes that lower interest rates will boost lending growth. IT stocks rose on hopes for US stimulus measures to take action sooner.

The Market breadth, indicating the overall strength of the market, was strong. On BSE, out of 2,308 stocks traded so far, 1,357 shares advanced while 868 shares declined. Nearly 83 shares are unchanged.

At 1.30PM, the BSE Sensex is trading higher by 133.69 points at 9,434.55 and NSE Nifty is up by 34.05 points at 2,877.15.

The BSE Mid Cap is trading higher by 29.96 points at 2,912.77 and Small cap is trading up by 45.91 points at 3,325.15.

Gainers from the BSE Sensex pack are Sterlite Ind advanced by 5.04% to Rs. 278.10 along with Jaiprakash Associates by 4.93% to Rs. 72.35, Tata Steel by 4.32% to Rs. 194.20, Housing Development Finance Corp by 3.92% to Rs. 1,468.10, Hindalco Ind by 3.29% to Rs. 45.55, ONGC by 2.96% to Rs. 701.20, and Reliance Infra by 2.34% to Rs. 553.30 among others.

Losers from the BSE Sensex Pack are Wipro Ltd by 1.00% to Rs. 221.70 along with ITC Ltd by 0.82% to Rs. 181.00, Mahindra & Mahindra by 0.60% to Rs. 272.50 and Grasim Indus by 0.31% to Rs. 1,409.00.

The BSE Metal index is higher by 181.19 points or 3.55% at 5,283.83. Stocks trading in green are JSW Steel advanced by 6.67% to Rs. 224.60, NMDC by 6.44% to Rs. 169.30, Welspun Gujarat by 5.65% to Rs. 69.15 and Sterlite Ind by 5.04% to Rs. 278.10 among others.

Reliance Industries Ltd rose 1.83% to Rs. 1,368.15 on reports the petroleum ministry is seeking re-introduction of the seven-year income-tax holiday for natural gas producers in an attempt to make the next round of NELP (New Exploration and Licensing Policy) bidding attractive.

Dr Reddy''s Laboratories gained by 0.78% to Rs. 462.90, after the company said its promoters have pledged more than one crore shares or 6.19% stake.

Tata Steel rose 5.08% to Rs. 195.60 after the company said its steel sales rose 26% to 5,11,000 tons in January 2009 over January 2008.

Piramal Healthcare rose 1.67% to Rs. 197.65 on reports British pharma company GlaxoSmithKline Plc is in discussions to acquire the company for around $1.5 billion.

Nagarjuna Construction Company jumped 5.71% to Rs. 49.10, on bagging orders aggregating to Rs. 712 crore.

Subex Ltd advanced by 4.92% to Rs. 27.70 as it entered into partnership with Swisscom, to co-operate in the field of management in order to improve fraud protection for next generation fraud management.

Stock Mkt May Remain Volatile For 6-12 Months

Nilesh Shah, Deputy MD, ICICI Prudential Asset Management Co Ltd talks to Gopal Modi the sidelines of launch of company's new fund 'Focused Equity Fund'. Shah shares his views on Indian stock markets and India's growth rate.

Where is the Indian market heading in the FY2008-09?

Indian markets are fairly priced at 16,000 mark and we expect a growth of around 15-20% for the FY 2008-09 and the same can be expected for the next three to five years. In FY09 earnings along with strong fundamentals, increase in direct tax collections leading to GDP growth, domestic savings of around $350 billion and seventh largest foreign exchange reserves will drive the markets in spite of odds like higher fiscal deficit and inflations.

Which important events will affect Indian market in next six months to a year?

Indian stock market may remain volatile for next six months to a year as many important events are likely to come by. Events such as credit policy announcement by RBI may lead to hike in interest rates, which may affect stock markets. In the monsoon report which will be announced in May, it is estimated that global banks will further write off around USD $150-200 bn in coming quarters result of sub prime. With elections to follow, it will necessarily affect market and movement will be more sideways rather than one way.

Which sectors are likely to outperform and underperform market returns?

Indian markets are expected to be a consumption driven market and with disposable incomes on rise it will help outperform sectors like infrastructure, power, FMCG, while sectors like financial sector and export oriented sectors such as information technology, textile are likely to underperform.

What per cent of GDP growth rate is expected in current and coming financial years?

India also will be impacted as developed economies are going through bad phase. India is expected to manage a growth rate of around 7% to 7.5%. Global research houses have also lowered estimates for growth of Indian economy to 7% to 8.5% from earlier 9% to 9.5%.

Tell us more about your new fund offering and scheme objective.

'ICICI Prudential focused equity fund' is an open ended equity scheme which aims to invest in large cap stocks. Up to Rs 1,000 crore of total asset under management under this scheme will be invested in top 20 market capitalisation companies picked from all over the world from National Stock Exchange (NSE). When market bounce back after correction, it is the large cap stocks who lead the market so our scheme objective is restricted to large cap companies. If company manages over Rs 1,000 crore it may increase number of companies from 20.


Performance of company's schemes vis-à-vis markets and other schemes in the FY 2007-08?

The Company has underperformed market returns of 30% in FY2007-08 as company's growth and power sector schemes did not perform well. We expect to give our investors 15-20% returns at least for the next three to five years. Company manages around Rs 54,321 crore of asset under management.