A Big Move Coming

The market’s trading band has narrowed. It will not stay that way and will be resolved with a massive move. Will it be up or down?

The Sensex edged higher in early trading on Friday, tracking the rise in Asian stocks. However, it pared off early gains very soon and was mostly flat for the rest of the day. It closed at 17,554 points, 30 points lower than the previous day’s close.

The market’s trading band has narrowed down to an extreme. This usually presages a major move. We can’t say at this moment whether the market will end higher or lower, but a big move is certainly coming. 

Through the day, it touched a high of 17,639 and a low of 17,529 points. The Nifty ended the day down 9 points. The bullish sentiment was subdued as inflation in December 2009 touched a one-year high, reinforcing fears that the RBI will be forced to tighten monetary policy. The wholesale price index rose 7.3% in December 2009 from a year earlier, its highest level since November 2008 and accelerating from a 4.8% gain in November 2009. This is largely because of a 20% rise in food prices following a weak monsoon and flooding in parts of the nation.

Reliance Communications gained 4.76% after it got a nod from the market regulator to launch an IPO for its telecom tower unit. Power Grid Corporation of India (up 1.11%) has received its board’s approval for the participation in a joint venture with Nepal Electricity Authority and IL&FS for a 400KV Indo-Nepal transmission project. Tata Consultancy Services (up 1.48%) rose ahead of its quarterly result. Some of the banks have announced their results today. Axis Bank (up 1.52%) posted a growth of 4% and 51% in total income and operating profit in the December quarter over the same period last year. HDFC Bank (up 0.61%) reported a declining income (down 10%). However its operating profit grew by 11% over the same period. IDBI Bank (up 0.72%) posted a growth of 26% and 64% in income and operating profit for the December quarter over the year-ago period.

In the US markets on Thursday, the Dow gained 29.78 points, the broader Standard & Poor's 500 index rose 2.78 points and the Nasdaq Composite Index was up 8.84 points. 

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    HUL losing money in the water-purifier business

    HUL has lost Rs140 crore over the last six quarters in the water-purifier business and is facing tough competition from Tata’s water-purifier brand ‘Swach’

    The water-purifier business is now a hot battlefield with the Tata group recently launching its ‘Tata Swach’. However, Hindustan Unilever Ltd (HUL), which also sells a non-electrical purifier ‘Pureit’ is going through a tough time. Over the past six quarters, HUL has lost about Rs140 crore in the water-purifier category, according to an industry report.

    “Only a miniscule fraction of the population in India uses purifiers today. Pureit therefore sees its role as one of educating consumers, getting them to appreciate the benefits of safe water, and then adopting Pureit. In a sense, we see ourselves as helping build the water-purifier market in India. This task is very different from the task of competing with other brands for a share of an existing product market,” said an HUL company spokesperson.

    The price of Tata’s purifier is likely to throw up a challenge for HUL. ‘Tata Swach’ has a price tag of Rs749-Rs999 and its filter system refill that costs Rs299, has a lifespan of 3,000 litres. On the other hand, HUL’s Pureit costs about Rs2,000 with a filter system lifespan of 1,500 litres. The Pureit filter system costs Rs350.

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    The MobileStore to open independent, large-format consumer durables stores

    The MobileStore, which recently acquired consumer durables electronic retail chain X-Cite, will be coming up with new stores in Chennai, Mumbai and Kolkata

    Essar group company The MobileStore (TMS) has said that it is planning to launch independent, large-format stores for consumer durables and electronics in Chennai, Mumbai and Kolkata over the next three months.

    “Currently we are present in New Delhi, Gurgaon, Bengaluru, Hyderabad, Ahmedabad and Pune and now we have plans to enter Chennai, Mumbai and Kolkata with independent large stores,” said Rajiv Agarwal, chief executive officer and director, TMS.

    Last month, TMS bought large-format electronics chain, X-Cite, from Impact Retail—a franchisee of Kuwait-based Alghanim Industries for an undisclosed sum.

    The Essar group company is looking at opening 50 such consumer durables electronic stores in the next one year and adding 5,000 TMS retail outlets by the next two years. At present, TMS has 1,300 stores in about 200 cities across India.

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