It was an action-packed week at the bourses, with the bears going for the kill in the first half of the week as Lehman Brothers filed for bankruptcy, Merrill Lynch got bought out by Bank of America and AIG sought a $40 billion Federal Reserve aid.
Meanwhile, ICICI Bank reported an exposure of Rs 375 crore in the senior bonds of Lehman. But the bulls staged a smart comeback on the back of US government’s initiatives to infuse $85 billion in AIG, mop up toxic mortgage debt from banks and curb short selling.
Investors back home also took heart from P Chidambaram’s assurance that the health of Indian banks was sound.
The markets ended the week on a strong footing, with the BSE Sensex closing 726 points (or 5.46 per cent) higher at 14,042, while the Nifty gained 207 points (or 5.13 per cent) to 4,245.
During the month, FIIs have sold shares worth Rs 2,785.9 crore (till September 18) while mutual funds have bought shares worth Rs 1,031.20 crore (till September 17).
What to expect this week
With no major events scheduled in the forthcoming week, the market will closely watch the turn of events globally, especially in the US financial sector, to take cues on a future course.
Volatility could further heighten on account of expiry of September 2008 derivatives contracts. While traders admit that the US bailout plan could provide timely support to the equity markets globally, they point out the importance of a cautious stance as the subprime crisis is far from over.
India Inc’s top 20 taxpayers showed mixed signals, with almost 35 per cent paying lower advance tax in September this year. Shares of state-run oil marketing firms will be under pressure on a rebound in crude oil prices to $98 from recent lows of $90.51.
Stock to watch
Healthcare equipment manufacturer Opto Circuits India was in the news last Friday, with the acquisition of Europe-based medical devices maker. The acquisition size is over $100 million (about Rs 460 crore), which is close to Opto’s FY08 revenues. | ||||||||||||||||
Despite the mid-cap index increasing 3 per cent on Friday, the stock did not react much to this piece of news (up 1.83 per cent), probably because investors are waiting for further details about the acquisition.
Another reason why investors would have chosen a cautious stance towards the stock is the fact that one per cent of the company's shares were held by Morgan Stanley Mauritius (as on June 30), which has been on a selling spree last week. At Rs 295, the stock trades at 14.8 times its FY09 earnings and is close to half of its 52-week high of Rs 587.
