Despite the rate cut announced by the RBI and falling inflation numbers, the broader markets closed higher on Friday. For the week, while the Sensex shed 6.36 per cent, Nifty lost 5.19 per cent.
The correction was equally large in the mid cap and small cap counters with the BSE Small Cap index declining by 6.25 per cent. The overall correction in the international markets and worsening global economic outlook were the reasons for the poor performance.
During the week, Dow Jones and S&P 500 made a 12-year low. The depreciating rupee added to FII woes. They remained sellers during the week, offloading stocks worth Rs 1,500 crore.
What to expect this week
Analysts expect markets to remain bearish with selling in large cap counters. Investors need to watch global events closely for negative news flow. The latest US unemployment data announced on Friday hit 8.1 per cent suggesting that the recession in the US could be long and deep.
Additionally, flow of FII investments in the coming weeks will be crucial given the expectations that the rupee might slide further and continued redemption pressure on account of shifting from the riskier assets into cash. Markets will be shut on Tuesday and Wednesday due to Id-E-Milad and Holi.
| STOCK TO WATCH STERLITE IND Last week's close (Rs) 250.13 Prev. week's close (Rs) 244.93 Week's high (Rs) 254.55 Week's low (Rs) 224.60 Last week's ave. daily turnover (Rs cr) 77.73 Prev. week's ave. daily turnover (Rs cr) 89.72 Number of up/down move 3/2 On Saturday Sterlite Industries announced the purchase of the operating assets of US-based copper company, Asarco LLC. The long-awaited deal includes a cash payment of $1.1 billion on completion of the deal along with non-interest bearing promissory notes worth $600 million payable over a period of nine years. Asarco, formerly known as American Smelting and Refining Company, is a 110-year-old company and the third largest copper producer in the US. It sold about 2,37,000 tonnes of refined copper in 2008 and reported revenues of $1.9 billion and pre-tax profit of $393 million. |
Asarco's mines currently have estimated reserves of 5 million tonnes of contained copper. In light of this agreement, Sterlite's stock could be in the limelight for two reasons. Firstly, the acquisition adds to the strengths of Sterlite’s integrated metal portfolio. Secondly, the new purchase price of $1.7 billion is far lower than the earlier price of $2.6 billion.
