Bears show no mercy! - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Bears show no mercy!

Jan 17, 2004

It was a bear dominated week for Indian equities. All round selling pressure saw the indices close significantly lower in the current week. While the BSE-Sensex lost 2.8%, the NSE-Nifty closed lower by 3.6%. Despite the dole out of some good news by the government and a largely expectations-matched December quarter numbers week, the indices failed to sustain ground as investors decided to cash-in some profits.

Friday (last week) had seen the indices create another history wherein the Sensex had made an all-time (intra-day) high of almost 6,250 and the Nifty had crossed the magical 2,000 mark. However, soon after that, the indices had witnessed a strong bout of profit booking, which saw them close on a flattish note. Continuing from where it was left off last week, the current week kick-started on a rather weak footing with profit booking across sectors leading the indices into the red on Monday. However, Tuesday and Wednesday saw a reversal of trend as investors lapped up stocks at lower levels post Monday's correction. Further, Wednesday's gains were supported by the announcement of a proposal to hike FII investment limits in banking, telecom and petroleum and natural gas sectors.

On the back of two continuous days of strength, Thursday's trading began on a firm footing taking the Sensex, once again, close to 6,250 levels. However, the news of the Cabinet's decision to defer changes in the FII limit in the telecom sector triggered a massive sell-off across sectors during Thursday's trade, which saw the indices lose about 2%. However, private banking stocks managed to hold ground amidst the carnage on the bourses. Friday saw a continuance of the weakness as both the indices, once again, lost about 2% each, this time over concerns over a possible ban on investments through participatory notes (PN). However, this correction, which was long overdue, was imminent considering the recent run up in the indices that saw the indices flare by almost 20% since December 2003.

The big story this week was the announcement of the raising of Foreign Institutional Investors (FIIs) limits in the banking sector, wherein the limit of FDI investment has been raised from 49% to 74%. As per the new norms, FIIs can acquire up to 49% stake in a private bank, albeit adhering to the overall 74% foreign investment ceiling. The development is a big positive for the private banking sector, as it would lead to greater inflow of capital and strategic expertise into the country. This move is also likely to fuel consolidation in the banking industry. Some key gainers. However, the postponement of a similar decision for the telecom sector led to a sell-off in telecom stocks. Some key losers.

Top 5 gainers over the week
COMPANY Price on
January 9 (Rs)
Price on
January 16 (Rs)
H/L (Rs)
BSE-Sensex 6,1205,946-2.8%6,250 / 2,904
S&P CNX NIFTY 1,9721,901-3.6%2,015 / 920
INDO RAMA SYN.9010314.9%110 / 25
SESA GOA58065613.1%701 / 59
TV 1820022412.0%255 / 49
SSI LTD.18720610.4%233 / 54
ATLAS COPCO39043010.3%444 / 222

Sesa Goa was one of the biggest gainers (up 13%) amongst the 'A' group stocks this week. The stock has been consistently gaining ground on the bourses over the last few trading sessions. The optimism surrounding the stock is due to the fact that iron ore prices are ruling firm in the international markets. Further, recently, Brazil's CVRD, the world's largest iron ore producer and the world's largest steel producer, Europe's Arcelor, have agreed upon iron ore prices, which are almost 19% higher than 2003. It must be noted that Sesa Goa is the largest domestic private iron ore exporter and strengthening iron ore prices and insatiable iron ore demand from China will help the company improve its earnings substantially.

Top 5 losers over the week
COMPANY Price on
January 9 (Rs)
Price on
January 16 (Rs)
H/L (Rs)
SHREE RAMA MULTI1412-18.3%17 / 4
KINGFISHER PROP.4740-16.3%69 / 15
NOCIL2420-15.8%30 / 5
TRIGYN TECH.2319-15.8%28 / 10
SILVERLINE TECH.108-15.5%18 / 4

The Indian bourses welcomed a new member this week. Shares of TV Today got listed on the bourses on Friday at a premium of 132% to its issue price of Rs 95 (Rs 5 face value). TV Today Network (TVTN) is a leading news broadcaster of India having two channels namely, Aaj Tak, a 24-hour Hindi news channel and Headlines Today (an English news channel). Its Hindi news channel, 'Aaj Tak' (launched three years back) is amongst the most popular news channels in the country today. The stock finally closed the day with gains of 92% at Rs 182.

The current week witnessed the announcement of results like Digital, Hero Honda, Corporation Bank, Geometric Software, Mastek, Indian Hotels and HDFC. While the results were largely in line with expectations, their performance has already been factored into the stock prices. This could be one of the reasons that led to investors booking profits. Next week will see another round of important results being announced, some of those being Wipro, GAIL, Bharat Forge, Tata Power, Bharti Tele, UTI Bank, Grasim, BSES, VSNL, Hindalco, Tisco, Ranbaxy, Maruti and Satyam Computers. However, from the current levels, any upward movement in stock prices needs to be justified by a similar, stronger and sustainable growth in earnings over the longer-term, though short-term momentum could overshadow the same.

Equitymaster requests your view! Post a comment on "Bears show no mercy!". Click here!


More Views on News

How Much Money Should an Investor Set Aside for Trading? (Fast Profits Daily)

Sep 21, 2020

In this video, I'll give you a simple equation which you can use to decide how much money you can set aside for trading.

Kotak Standard Multicap Fund: Strategizing Growth with Focused Approach (Outside View)

Sep 21, 2020

PersonalFN's analysis on the features and performance of Kotak Standard Multicap Fund.

Sensex Can Go to 25,000 Before it Goes to 60,000. Are You Prepared? (Profit Hunter)

Sep 21, 2020

Am I expecting a big crack in the Sensex and what next?

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

Sundaram Bluechip Fund: Will Hold the Stable Horses (Outside View)

Sep 18, 2020

PersonalFn briefly outlines the newly launched NFO note HSBC Corporate Bond Fund.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

Why am I Recommending Caution? (Fast Profits Daily)

Sep 9, 2020

This is why I have changed my short-term view on the market.

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Sep 22, 2020 09:39 AM