The week that was !

This being my first post has to have my favorite topic - Indian Stock Market.

The week ending May-18 was a momentous week in the history of BSE. It had a rally of around 500 odd points and more importantly it for the first time looks to create a new high without the usual fear of market overheating. This is primarily due to the fact that the week's huge rally was a very broad based one as against the previous ones which are predominantly sectoral surges. There has been an upswing in all the asset class viz FMCG, media, telecom, energy et al . The real estate sector which I feel is in for a correction(of around 30-35 %) also helped the rally.
The week saw one of the smartest deal fructifying that of United Spirits acquiring Scottish distiller Whyte and Mackay. The deal is of strategic importance to Vijay Mallya who is among the smartest business men India has produced. With this acquisition, he has got access to the 168 m liters of 100 years old wine which itself is valued at around 350 m GBP. This inventory will be used to mix with the IMFL and the output will be the master stroke! This should be priced between the high end single malt Scottish whiskey and lower end IMFL (Indian Made Foreign Liquor). The other advantage for Mallya is the strong distribution network of Wyte and Mackay of approx 180 DC. These can be used to market United Spirits’ own brand (which will be relatively cheap compared to the traditional whiskeys sold abroad). The deal has also helped Mallya to strengthen his position against SWA. The high-handed SWA will have to now do some serious thinking to do in terms of negotiations with Mallya on the matter of reducing import duties. The way I see it, Mallya is in a envious position of being a winner in the either side of the import duty issue. The perfect icing on the cake was UB's announcement of foraying into China with its pilot 5 brands. In the event of the entry being successful in addition to the logistics involved from the W&M deal United spirits is expected to see a tremendous surge in its volume in the coming years. The sheer increase in the top line is going to help the bottom-line which will be helped by the increasing price rise of premium scotch whiskey. All in all this is the second cheer to Mallya (the first being Shaw Wallace acquisition)...yes I feel there is a third cheer yet to come !
One sector which I feel should be gradually exited is the large cap technology stock involved in service sector. ....but more to come on that in the following blogs..... i.e If I am enthusiastic enough to write.....till then adios....and cheers :-)

The week that was.

Disclaimer: I am not a regular blogger though I have had some first hand experience of writing my thoughts and memoirs off-line in the form of my DJ (Diary - Journal). Hence whatever I write may/will be having all the possible grammatical and language errors possible. My main purpose for taking up blogging online is to get views on certain topics which I may write on. If you find what I have written as making sense and of being any interest to you please get in touch with me for further thoughts & knowledge sharing.