After starting the week on a positive note on Monday (up 460 points) on account of the NSG waiver and bailout of Fannie Mae and Freddie Mac, the markets lost ground throughout the week on weak global cues. The rupee crossed the psychologically important level of 45 to the dollar, on account of large-scale dollar buying by gold and oil importers.
The Sensex wilted under selling pressure and sacrificed 480 points or 3.3 per cent on weekly basis to close at 14,000, while the Nifty fell by 62 points or 2.8 per cent to close at 4,228. FIIs have sold shares worth Rs 1,525.40 crore while mutual funds have bought shares worth Rs 61.70 crore during the month (till September 10).
What to expect this week
The market is likely to be on tenterhooks as weak global cues continue to weigh on the investor sentiments. Fears about the survival of America’s fourth largest investment bank Lehman Brothers and the possibility of more mortgage-related losses at AIG have raised further doubts about the US financial sector.
The steep correction in crude oil prices ($101/barrel), moderation in inflation (12.1 per cent) and better IIP numbers (7.1 per cent) witnessed last week have come as a sign of relief for the bulls and has raised hopes that markets may soon find a bottom.
Marketmen will closely track the progress on Indo-US nuclear deal, as it still needs to be ratified by the US Congress, which will be adjourned in late September. If that does not happen, the deal could be left to an uncertain fate under a new US administration that takes office next year.
Stock to watch
Indian Hotels (IHL) is likely to attract the attention of investors in the coming days after its subsidiary, Roots Corporation (Roots) has expressed its intentions to raise $75-100 million through the PE route by selling 20 per cent stake. Besides, IHL has launched The Gateway Hotel brand, positioning it between its economy brand-Ginger and premium brands-Residency and Taj. Gateway hopes to have a pan-India network with average room price varying between Rs 3,000 to Rs 6,000. Gateway has 26 hotels under its fold now and is targeting 50 in the near future. | ||||||||||||||||
IHL has a robust expansion pipeline and expects to increase its room count by 30 per cent to 13,767 by FY10. The stock has corrected over 50 per cent since January 2008 and is trading at 13x and 10.5x its FY09E and FY10E earnings.
