X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Gravity acts on flying markets - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jan 19, 2008

    Gravity acts on flying markets

    The Sensex which seemed in full flight last week seemed affected by the pulls of gravity during the week gone by as all five sessions ended in the red. Moreover, all sectoral indices ended in the negative. Thus, for the week ended January 18, 2008, the BSE-Sensex lost 8.7%, while the NSE-Nifty lost 8.0%.

    The week began on a pessimistic note with the Sensex shedding 99 points, although the Nifty appreciated 7 points on Monday. While select index heavyweights from the auto pack registered gains, heavyweights across the board bore the brunt of selling activity on Tuesday, as the negative sentiment grew stronger. The Sensex sank lower by 477 points while the Nifty lost 133 points. Wednesday was no different as power and auto stocks dragged the indices down along with weak closings in the Asian markets and a negative trend on European bourses. Even though the banking pack registered gains, the Sensex lost 383 points while the Nifty shed 139 points.

    It was a repeat performance on Thursday as well, as the broader markets closed in the red in a volatile backdrop. Heavyweights from the auto, FMCG and engineering pack came to the rescue but not enough to counter the losses from software, power and banking scrips. The Sensex lost 206 points while the Nifty closed 23 points lower. The biggest blow of the week came on the last day that saw a precipitous decline during the second half of the day. Cement stocks waged a lonely battle in the market in the face of a steep decline in the broader markets. Thus the BSE Sensex closed at 19,014 (down 687 points) while the NSE Nifty closed at 5,705 (down 208 points) during the last trading day of the week.

    On the institutional activity front, between 11th January and 17th January, both FIIs and mutual funds emerged as net sellers, selling equities to the tune of Rs 40 bn and Rs 10 bn respectively.

    (Rs m) MFs FIIs Total
    11-Jan (2,742) 1137 (1,605)
    14-Jan (5,514) 1744 (3,770)
    15-Jan (5,195) 2258 (2,937)
    16-Jan (595) (22,796) (23,391)
    17-Jan 3,612 (21,860) (18,248)
    Total (10,434) (39,517) (49,951)

    On the sectoral indices front, the BSE Oil and Gas Index (down 9%) led the pack of losers.

    Index As on Jan 11 As on Jan 18 % Change
    BSE HEALTHCARE 4,183 4,025 -3.8%
    BSE FMCG 2,395 2,303 -3.9%
    BSE SMALLCAP 12,694 12,160 -4.2%
    BSE AUTO 5,413 5,148 -4.9%
    BSE MIDCAP 9,438 8,894 -5.8%
    BSE PSU 10,399 9,660 -7.1%
    BSE IT 4,104 3,791 -7.6%
    BSE METAL 18,751 17,259 -8.0%
    BSE BANKEX 12,479 11,372 -8.9%
    BSE OIL AND GAS 13,833 12,595 -8.9%

    Now let us have a look at some of the key stock/sector specific developments during the week.

    As per a leading business daily, the government may provide BHEL with secure bulk orders from NTPC for its upcoming 800 mw super critical thermal plants. However, the order consisting of 8 to 10 sets of boilers and turbines will have to be executed incorporating the new global technology and manufacturing would have to start under a specified time frame. This is significant because BHEL had earlier suggested that it would be able absorb 90% of the technology only by the time it supplied the 10th unit of 800 mw- towards the end of 11th Plan. The price for the order will be set through international competitive bids (ICB). This is a positive development for BHEL as it sought to manufacture the 800 mw sets. However, the power ministry favored international bids instead of straightaway awarding the deal to the company. While BHEL closed lower by 5% for the week, NTPC ended 12% lower.

    DLF has signed a Memorandum of Understanding (MoU) with Gayatri Projects(GPL) to develop roads and highway projects across the country. Together, the companies aim to develop projects worth at least Rs 10 bn every year. DLF-Laing O'Rourke Ltd (LOR), the JV between DLF and LOR would be the contractor for the projects of DLF-GPL. GPL at present has projects worth over Rs 35 bn under construction including national and state highways, dams, reservoirs, ash ponds and major canal works. It may be noted that infrastructure is an attractive sector given the rising demand and focus of the government in promoting PPP projects. It expands DLF's presence beyond the well-established verticals of residential, commercial and retail projects. This venture is a significant development in the overall growth plan of the company, as it would further diversify its portfolio having already ventured into new businesses of Hotels, SEZs and financial services. While DLF closed lower by 16%, GPL ended 10% higher.

    Top gainers during the week (BSE A)
    Company Price on
    January 11 (Rs)
    Price on
    January 18 (Rs)
    %
    Change
    52-Week
    H/L (Rs)
    BSE SENSEX 20,827 19,014 -8.7% 21,207 / 12,316
    S&P CNX NIFTY 6,200 5,705 -8.0% 6,357 / 3,555
    HINDUJA TMT 738 795 7.7% 890 / 332
    MIRC ELEC. 29 30 4.3% 42 / 16
    ASAHI INDIA 125 127 1.8% 152 / 96
    GUJARAT GAS 341 342 0.3% 379 / 243
    ORCHID CHEMICALS 292 292 0.2% 328 / 176
    IPCA LABS 709 710 0.2% 794 / 545

    Indian pharma stocks ended weak with Ranbaxy (2%) and Dr Reddy’s (1%) leading the pack of losers. Ranbaxy, the largest pharmaceutical company in India, reported 13% YoY growth in revenues in CY07, driven by the strong performance in Europe and Rest of the World. The operating margins of the company expanded marginally by 20 basis points (0.2%) during the year, largely due to the marginal reduction in SG&A and R&D expenditure (as percentage of sales). The net profit of the company grew by 53% YoY in CY07, led by higher forex gains and extraordinary income. Excluding the impact of both, net profits fall by 13% YoY. Ranbaxy will announce the scheme of demerger of the R&D division in early February on receipt of all approvals. It has also acquired a 14.9% stake in Krebs Biochemical Industries Limited, a 14.9% stake in Jupiter Biosciences Limited, and a further equity stake in Zenotech Laboratories Limited (from 7% to 45%) to bolster its biotech business.

    Top losers during the week (BSE A)
    Company Price on
    January 11 (Rs)
    Price on
    January 18 (Rs)
    %
    Change
    52-Week
    H/L (Rs)
    RELIANCE CAPITAL 2,768 2,343 -15.3% 2,925 / 560
    REL. ENERGY 2,486 2,124 -14.6% 2,632 / 448
    CANARA BANK 371 318 -14.4% 421 / 174
    CHAMBAL FERT 78 67 -14.4% 94 / 30
    ICICI BANK 1,440 1,245 -13.5% 1,465 / 791

    Market declines often elicit the opposite reaction to what they should. Warren Buffett mentions in his 1990 letter to shareholders, “Investors… illogically become euphoric when stock prices rise and unhappy when they fall. We will be buying businesses - or small parts of businesses, called stocks - year in, year out as long as I live. Given these intentions, declining prices for businesses benefit us, and rising prices hurt us. The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces.” Have you been checking out businesses with an eye for good opportunities at falling prices, dear reader?

     

     

    Equitymaster requests your view! Post a comment on "Gravity acts on flying markets". Click here!

      
     

    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    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.

    You've Heard of Timeless Books... Ever Heard of Timeless Stocks? (The 5 Minute Wrapup)

    Aug 19, 2017

    Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE SENSEX


    Aug 18, 2017 (Close)

    MARKET STATS