Markets managed to post modest gains after witnessing bouts of volatility throughout the week driven by global factors. The US Fed raised the discount rate from 0.5 per cent to 0.75 per cent to encourage financial institutions lend more amongst themselves. Overall, markets closed lower in three out of five sessions.
What to expect this week
The current week could see wild swings ahead of the Union Budget on Friday. Expectations are ripe that excise duty and service tax might be increased; Budget could also provide some direction on pending pension and insurance bills.
The week will also see the Railway Budget being tabled on 24 February, wherein the Railway Minister is likely to present a populist Budget leaving passenger fares untouched, while rationalising freight rates for certain commodities like iron ore, coal and cement. Also, the expiry of February 2010 derivatives contracts could add to the volatility on the bourses.
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| Stock to watch Nestle India Last week's close (Rs) 2,641.20 Prev. week's close (Rs) 2,737.70 Week's high (Rs) 2,801.00 Week's low (Rs) 2,607.00 Last week's ave. daily turnover (Rs cr) 4.30 Prev. week's ave. daily turnover (Rs cr) 16.34 Number of up/down move 0/5 Shares of Nestle India could come into play after the company reported a decline in profits for the fourth quarter ended December 2009. On Friday evening, Nestle announced a 6.7 per cent year-on-year fall in net profit at Rs 113 crore for the quarter, due to increase in raw material costs. However, net sales rose 24 per cent to Rs 1,351.8 crore helped by a lower base of last year. Exports were down by 2.9 per cent on account of lower sales to Russia and Bangladesh this quarter. |
For the full year, the picture looked better, as net profits were up 23 per cent and net sales higher by19 per cent. At Rs 2,642.25, the stock is trading at 38 times its EPS of Rs 69 for year ended December 2009.