Jan 29, 2005|
Bulls back with a vengeance!
The current weeks stock market performance must have provided a (big) sigh of relief to most market participants. This weekˇ¦s behaviour of the indices was very much unlike the previous 3 weeks of the month wherein for the first couple of weeks, the indices had met with severe pounding as FIIs decided to cash out of Indian equities by booking some profits leading to a 9% fall in the indices. The third week was more in the nature of consolidation as buying emerged at every fall in the markets and selling at higher levels. This had, however, given rise to substantial volatility during the week. In contrast to the above, the current (4th) week was like a happy ending to almost a month long agony for investors, as the indices notched gains of about 4% week-on-week.
The markets opened on a rather weak note on Monday and continued to tread lower into the red. This was primarily in continuation of the trend witnessed during the entire third week of the month wherein investors opted to book profits at every rise. It must be noted that on Thursday (last week) the indices had recovered smartly (100 points on the Sensex) from intra-day lows to end the day in the positive. However, Tuesday onwards was a different ballgame altogether. After displaying some volatility in the first half of trade on Tuesday, the indices started their northward movement, which continued well into Thursday and Fridayˇ¦s trade. Wednesday was a holiday on account of Republic Day. Consequently, the indices ended the week with gains of over 3%. However, if we consider the gains from the intra-day lows during the week, the gains are much more sharper at about 6%!
While the key reason for this weekˇ¦s rally seems to be the continued strong December quarter results doled out by India Inc., the fact that expectations are also being built up from this years Budget, which could have perked up investor interest in stocks. Already, as per reports, there are positive noises emanating from the government with respect to a favourable budget in February. While the latter is the speculative part that has generated positive vibes, the former (strong 3QFY05 results) is more of a concrete reason. Just to put things in perspective, considering the Quantum Universe of companies that have declared their December quarter results so far, the topline and bottomline have registered YoY growth of 25% and 27% respectively. Apart from this, the smooth rollover of derivatives contracts on Thursday and the return of the FIIs have also aided market sentiments.
Let us now consider some stock/sector specific news during the week.
Dabur, the Ayurvedic products major, which reported good December quarter numbers, was in the limelight during the week on the back of the news of its acquisition of the oral and healthcare major, Balsara (revenues of Rs 2 bn) and all its well known brands for a total cash consideration of Rs 1.4 bn. Consequently, Dabur will own brands like Promise, Babool and Meswak in oral care segment, Odomos mosquito repellant and household care brands like Odonil, Odopic and Sanifresh. The deal is a good fit for Dabur's existing oral care folio and will propel it into No. 3 position in this segment (11.1% share), behind Colgate and HLL.
Another big news for the FMCG sector this week was the announcement of Procter & Gamble (P&G) intentions to acquire Gillette globally for US$ 54 bn. If and when the deal goes through, P&G will become the world's largest consumer products player surpassing Unilever NV. To read our view on this development, click here Key gainers over the week (NSE-50)
Jan 20 (Rs)
Jan 28 (Rs)
|| 6,696 / 4,228
|S&P CNX NIFTY
|| 2,120 / 1,292
||600 / 300
|| 63 / 360
|| 65 / 21
|| 442 / 230
|| 188 / 61
Among the key gainers this week was steel major, SAIL (see table above), which posted strong performance in the 3QFY05 results declared during the week. While the topline of the company grew by 32%, the net profit of the company more than doubled. While strong steel prices (up 34% YoY) have primarily contributed to this performance by the company, improvement in product mix has also helped the company to post strong margin expansion, which was supported by better efficiencies at operating level. Other steel stocks Key losers over the week (NSE-50)
Jan 20 (Rs)
Jan 28 (Rs)
|| 252 / 110
|| 189 / 100
|| 808 / 450
|| 616 / 320
It must be noted that most of the stocks that have gained substantial ground during the week have come out with encouraging December quarter results, which helped support investor sentiments towards the same. However, loss of over 1% this week in Zee Telefilms was on the back of the disappointing 3QFY05 numbers declared by the company. Further, until there is more clarity on the Zee-Padmalaya tangle, investors seem to have taken a cautious approach towards the stock. Other media stocks
Going forward, with the results season now almost behind us, markets would now focus back on companiesˇ¦ future prospects and accordingly arrive at a stand. Further, with increasing activity on the Budget front, there could be some volatility on the bourses in the run-up to the same as speculation with respect to the possible government stand towards various sectors starts to flow. However, investors should avoid getting swayed by rumors and continue to remain focused on the fundamentals of a stock. Long-term staggered investment approach continues to remain the appropriate recipe for decent returns from the current stock market levels.
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 21, 2017
Most Indians who cannot find jobs, look at becoming self-employed.
Aug 21, 2017
PersonalFN explains the chief factor pushing gold prices up of late.
Aug 21, 2017
One of the hallmarks of successful investing is to look out for companies that have a unique and enduring moat.
Aug 19, 2017
Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.
More Views on News
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
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.'
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
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: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407