Jan 6, 2007|
'Bull'ish start to 2007!
The indices continued to edge higher for the second week in succession, although the gains were a lot muted as compared to the previous week. While the BSE-Sensex edged higher by 0.5% during the week, gains in NSE-Nifty were a tad lower at 0.4%.
Bulls and bears shared the spoils during the holiday-shortened week as while the markets edged higher for the first two days, they edged lower for the next two. However, in absolute terms, the gains in the first two days were enough to enable the benchmark indices to end the week on a high. The 14,000 mark seems to have become a new psychological barrier as everytime the bulls make an attempt to push the Sensex significantly beyond it, bears just about pull it back. This week was no different as while the Sensex just about edged past the 14k mark courtesy the gains on Monday and Tuesday, selling in the next two days pulled it back inside the coveted levels. The 3QFY07 results season that is about to kickstart towards the fag end of next week will hold the key to whether the Sensex finally manages to go significantly beyond the 14k barrier. Gains in indices this week were led by HPCL (up 7%), Bajaj Auto (up 6%), Ranbaxy (up 6%) and GAIL (up 6%).
As far as the institutional activity on the bourses was concerned, Foreign Institutional Investors (FIIs) were net buyers this week to the tune of nearly Rs 28 bn. Domestic mutual funds also turned out to be net buyers to the tune of Rs 3.9 bn.
As far as sectoral indices are concerned, last week's worst performer, the 'Oil and Gas index' emerged as the second best this week with gains of 3%. Reliance, ONGC and GAIL, which together account for nearly 90% of the total weightage, gained during the week and thus also helped the index to post gains. Further, HPCL, another index constituent emerged as the highest gainer on the Nifty during the week. The stock seems to have gained on the back of fall in global crude oil prices, which will help marketing companies like HPCL to cut their losses. BSE FMCG index continued to languish in the bottom three as it went further down during the week and lost 3%. The losses were on account of a sizeable 6% decline in ITC, the FMCG major that accounts for as much as 50% of the total weightage of the index. Investors dumped the stock on the back of news that the duties on cigarettes, ITC's mainstay, would be further hiked in the forthcoming budget, thus resulting into a revenue loss for the company.
||As on December 29
||As on January 5
|BSE OIL AND GAS
Having looked at the institutional activity and the movement in key indices in the last week, let us consider some sector/stock specific developments:
Auto majors like Tata Motors (up 4%) and Maruti (up 1%) ended the week on a high, presumably on the back of strong sales numbers for the month of December. The show stealer in the pack however was Bajaj Auto, the two-wheeler major that ended 6% higher for the week. The optimism was again on the back of robust sales numbers where the company continued to outperform the industry. The company sold 26% more motorcycles than December last year and in the process took its market share upto 36%. Further, at 7,38,000 two & three wheelers, Bajaj sales in October December 2006 were the highest ever in history. Gains in the share price could also be attributed to the news that the company may demerge its finance division soon, thus resulting into significant value unlocking for the investors.
Top gainers during the week (BSE A)
Pharma majors like Ranbaxy and Cipla also ended higher for the week. While the former gained an impressive 6% during the week, gains in latter stood at a modest 1%. Optimism with regards to Ranbaxy could be attributed to the fact that the company, in alliance with IPCA labs received US Food and Drug Administration approval to sell Atenelol tablets in the US. The total annual sales for the tablets stand at US$ 134 m. This was the second positive news for the company within a span of 30 days as last month the company, along with Aurobindo Pharma and Zydus Cadila got the US FDA approval to market Cholesterol lowering drug Simvastatin in strengths of 5 mg, 10 mg, 20 mg and 40 mg. Thus, the recent spate of positive news has enabled the stock to bounce back from recent lows.
Top losers during the week (BSE A)
Dec 29 (Rs)
Jan 5 (Rs)
||187 / 78
||213 / 140
||205 / 110
||1,119 / 260
Tanla Solutions, the telecom solutions provider made its debut on the BSE and NSE on Friday and listed with a huge 42% premium to its offer price. Considering the oversubscription of around 39 times, the gains has not come as much of a surprise. The stock finally ended the day close to its listing price. The company has presence in the non-voice segment of the mobile telecom segment. It is provider of integrated telecom infrastructure solutions and products. The company had said that it will utilise issue proceeds for expansion and upgradation of existing research and product development facilities, setting up an infrastructure facility for a development centre at Hyderabad and a backup and disaster recovery centre at Bangalore.
We would like to end by quoting Equitymaster's founder Ajit Dayal's outlook on the Indian markets:
"We are very optimistic on the long-term growth potential but with a few caveats. We think that interest rates will increase in India in 2007. Although I have little idea what the GDP growth rate will be in 2007, we believe that the GDP growth rate will be closer to 6.5% on a sustainable basis, unless we get power plants up and running very quickly. And we still think that the risk for India remains a lack of a "population improvement" policy, per se. While many others applaud India for its potential because of its large population, we feel there must be a concerted effort to create a sustainable living standard for many of the 300 million who are below the poverty line. At a more micro level, we have been extremely concerned about the lack of experienced people in many industries and what we term as the "execution risk" - can the jobs and projects get done on time and within budgets when there is little job-stability in most companies? Overall, we are strong believers in India's future but we also like to price risk before we make any investment decisions."
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 23, 2017
Mr Market lured investors into believing they'd bitten into a crash. Did you take the bait?
Aug 23, 2017
Nowhere was the darkness deeper than in the nation's capital. There, no light shone. No flicker of awareness...observation...learning...or reflection appeared.
Aug 22, 2017
It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.
Aug 22, 2017
Post demonetisation, a cut in bank savings deposits rates was in the offing.
More Views on News
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 16, 2017
The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407