Indian Markets Friday Wrap-Up: Asian Markets in a Good Mood

Persistent buying activity during the day led the markets to end the week on a strong note. The BSE-Sensex ended higher by around 419 points, while the NSE-Nifty closed up by about 135 points. Stocks from the mid-cap and small-cap spaces ended the day on a positive note, recording gains of 2.4% and 1.9% respectively. Buying activity was witnessed in stocks from the banking, consumer goods and IT spaces, while stocks from healthcare ended on a negative note.

Most of the other Asian markets ended the day on a positive note today. The European indices are currently trading in the green. The Rupee was trading at 48.27 against the US Dollar at the time of writing.

As per a leading business daily, on account of poor natural gas offtake from the power plants, Reliance Industries (RIL) is forced to suppress the production at its D6 block in the KG basin fields. As per management reports, the company is currently producing around 28 m cubic meters a day (mcmd) gas from the above block as against a capacity of 37 mcmd. It may be noted that the government had prioritized consumers for the gas from D6 blocks, wherein the power sector was allocated 18 mcmd and fertilizers was given 15 mcmd. However, on account of lower demand, the fertilizers and power sectors are taking only 12 mcmd and 13.5 mcmd of gas respectively. Despite of all this RIL is targeting to achieve production of 80 mcmd by the end of December 2009.The stock of RIL closed the day in the green.

On the final day of the offer, the IPO, Mahindra Holidays & Resorts got fully subscribed raising a sum of Rs 3 bn for the company. The company will use the proceeds in setting up new projects to fuel its expansion plans. Full subscription of the issue signals a revival in investment appetite in the IPO market, which has lately had a dry spell on account of the credit crunch and risk aversion. The IPO got good response from institutional investors like Qualified Institutional Buyers (QIBs) and Foreign Institutional Investors (FIIs) and also from corporates and individuals. The enthusiasm from retail investors remained a little subdued. The parent company, Mahindra and Mahindra closed the day on a weaker note.

The World Bank is of the view that the emerging economies will see a 14% surge in foreign direct investment (FDI) in the next one year. This year, due to a credit crunch arising out of global recession, the FDI inflows to the emerging world fell by 34% to US $385 bn from US $580 bn in 2008. It is expected to rebound to US $ 440 bn in 2010. Significantly, emerging nations, led by the BRIC countries will increasingly invest in each other. According to Bloomberg, BRIC nations, together hold about US$ 2.8 trillion i.e. 41% of the world’s foreign currency reserves. This figure is all set to increase on account of revised confidence in the fundamentals of these countries and their potential of leading the world out of the recession.