No clue... - 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?  

No clue...

Jan 18, 2003

Directionless! That's the word to sum up the market trend for the first half in January 2003. Barring some technology results, the third quarter numbers of India Inc, in general, offer a lot more to talk about. As far as the tech sector goes, expectations were so high that even a commendable performance from Infosys was not received positively. So was the case with Wipro. Consider some key quarter results that were declared during the last week in brief. To start with, private sector banking majors like HDFC Bank, IDBI Bank and UTI Bank posted impressive growth in revenues and profitability in 3QFY03. As expected, growth was led by robustness in retail loan disbursements. With interest rate at historically low levels, private sector banks have been focusing on increasing housing loan portfolio where delinquencies are at the lower end. Though operating margins showed a decline for HDFC Bank and IDBI Bank, this was primarily on account of large-scale expansion in infrastructure (branches).

The week also saw stellar performance from Ranbaxy. Buoyed by increased contribution from exports, especially USA and Latin America, net profit more than doubled for the full year. During the year 2002, the company filed 23 ANDAs (surpassing its target of 15-20 ANDA filings annually) and received 11 approvals taking the cumulative number of approvals to 58 with 37 pending approvals. Given this background, one will not be surprised to see similar growth numbers in the future as well. Select old economy companies like Asian Paints, Bajaj Auto and ITC also declared 3QFY03 numbers. Despite a challenging macro-environment, all the aforesaid companies posted a improvement in operating margins and net profit during the quarter.

But Wipro's third quarter results had a big impact on market sentiment. The tech major posted just a 4% YoY growth in net profit even as revenues rose at a faster clip. As expected, markets reacted adversely to the results and the stock price fell by around 3%. With key players in tech sector giving a cautious outlook, tech stocks may continue to remain weak in the near-term. From a long-term perspective, the recent tech results have been a reality check for the stock markets. Hopefully, expectations will trickle down a bit!

Moving away from tech results, the week also saw a glut of money flow in the form of foreign institutional investments. As is evident from the graph above, FII activity seems to have gained momentum with net inflows totaling Rs 5.3 bn in the last week alone. Unlike January 2002 when FIIs pumped significant sums of money in the early part of month, this year has seen a steady rise in investment. Given the fact that India is one of the fastest growing countries among developing nations, one will not be surprised if portfolio inflows continue to remain strong. This argument could be sharpened by the fact that the three major economies where historical money flows have been higher viz. US, Japan and Europe have slowed down. From a long-term perspective, it does not matter whether money flow is in January or February of a particular year.

Backed by strong India Inc. performance and money inflow, Indian stock market have outperformed US bourses by quite a margin. While it is a status-quo kind of a situation if one considers the trend since the beginning of the year for BSE, in the last one week, BSE-Sensex has moved up by 1.3%. On the other hand, NASDAQ has declined by 5% on the back of earnings worries and tension in the Middle East.

As we have maintained till now, while it is difficult to predict the course of the market in the next one week, the near-term concerns that retail investors have to bear in mind are slowing economy, possibility of US-Iraq war and a significant rise in crude prices.

Equitymaster requests your view! Post a comment on "No clue...". Click here!


More Views on News

Better Days Ahead for the Markets (Fast Profits Daily)

Oct 22, 2020

Commodity prices are signalling an economic recovery.

Will Blackstone Group Manage L&T Mutual Fund's Assets Successfully? (Outside View)

Oct 22, 2020

PersonalFN explains whether Blackstone will be able to successfully manage L&T mutual fund's assets in the event of a potential acquisition.

Your "I Was There" Moment in History Could Be Today...Don't Miss It (Profit Hunter)

Oct 22, 2020

The last time such a moment showed up in history, few investors grabbed a 65 bagger.

An Update for Those Looking to Trade Crude Oil and Natural Gas (Fast Profits Daily)

Oct 21, 2020

Trading crude oil and natural gas in the near future will be challenging. Here's why...

Will Pharma and Healthcare Funds Improve the Health of Your Portfolio? (Outside View)

Oct 21, 2020

The COVID-19 pandemic has turned to be a high-growth opportunity for India's Pharma and Healthcare Sector.

More Views on News

Most Popular

My Latest Stock Recommendation (Fast Profits Daily)

Oct 9, 2020

How I picked an exciting stock using trends from both the commodity and equity markets.

The 'Seedhi Baat, No Bakwaas' View on ITC (Profit Hunter)

Oct 12, 2020

Is ITC an investment or a speculation at current levels?

One of the Best Investment Opportunities in the Market Right Now (Fast Profits Daily)

Oct 16, 2020

The one sector that you should be looking at to make good profits.

The Inflection Point for Defence Stocks is Getting Closer (Profit Hunter)

Oct 9, 2020

Few Indian defence companies could use their engineering capabilities to eventually become global leaders.


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


Oct 22, 2020 (Close)