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.
Benign expectations - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Feb 9, 2002

    Benign expectations

    It was a euphoric week for the stock markets with the Sensex moving up by 5%. In one of the landmark decisions, the government took some concrete steps on disinvestment. Buoyed by this news, valuations for most of public sector undertakings almost doubled. This will not only unlock hidden value but also benefit the government and the economy, as a whole, in many ways.

    Following the sale of VSNL to the Tata Group and IBP to IOC, the cabinet committee on disinvestment (CCD) has plans to divest BPCL and HPCL, the two big refining cum distribution majors, within three months from dismantling of the administered price mechanism. It has also given the mandate to sell 51% stake in the company to the investment bankers. Many foreign and Indian shipping majors like GE Shipping and Essar Shipping seem to be interested in SCI.

    If one were to look at the top gainers on the bourses from the BSE ‘A’ Group, of the top ten gainers, 8 were PSUs. Amongst the eight companies, five hit their new 52-week highs. Shipping Corporation of India (SCI) topped the list, gaining 54% to Rs 53, a new 52-week high. Indian software companies, despite the global slowdown, continue to receive orders from global corporations, which is a comforting factor.

    PSUs – Back in action…
    Company Jan 31, 2002 (Rs) Feb 8, 2002 (Rs) % change 52-week H/L (Rs)
    Shipping Corporation 35 53 53.9% 55 / 20
    HPCL 174 241 38.6% 248 / 95
    Corporation Bank 107 146 36.5% 165 / 102
    BPCL 216 291 34.7% 323 / 120
    MTNL 115 151 31.3% 200 / 99
    Ingersoll Rand 119 155 30.2% 187 / 92
    IOC 135 173 28.1% 224 / 102
    Gillette 287 359 25.3% 711 / 226
    BOI 17 22 25.3% 22 / 10
    IPCL 60 74 23.3% 85 / 32

    There is also positive news on the economy front. Higher forex reserves, low inflation, stable exchange rate, favorable oil prices and falling interest rates have led to a rise in business confidence. Auto sales, more notably commercial vehicle demand, has gained momentum in the second half of the current fiscal. CV sales are presumed to be one of the lead indicators of an improving demand scenario. Infact, Telco, the market leader in the CV segment, recorded the highest growth in CV sales in January 2002 in the current fiscal. If that is not enough, HLL’s fourth quarter sales growth was comparatively higher than previous quarters. But at the same time it needs to be noted that a good Rabi output is also vital for the economy for demand to sustain in the coming quarters. This is because, of the total agricultural output, Rabi output accounts for 50%.

    On the flip side, the US markets continue to languish on account of bleak earning prospects and concerns of accounting standards followed by US companies. The Bush government has also been under criticism following allegations of republicans' having close ties with Enron, the beleaguered energy trading major. Though companies like Wal-Mart managed to outperform earnings expectations, there is a sense of cautiousness in the air for technology stocks and rightly so. Just to put things in perspective, Intel slashed its tech spend by US$ 2 bn and estimates suggest that Intel accounted for almost 15% of total tech spend.

    Unlike US markets, Indian markets have much to look forward to. The countdown has already started for Budget 2003. The Finance Ministry is flooded with wish list from several industry representative organisations. The new fiscal i.e. FY03 would also bring with it lots of challenges. Dismantling of the Administered Price Mechanism (APM), telecom de-regulation, decontrol of sugar prices, DPCO order and gradual reduction in customs duty could change the face of India Inc. Threats of cheaper imports, which hitherto has been on the lower side, will increase as imports tariffs continue to fall to align with other Asian countries. But this would make domestic companies more cost efficient and globally competitive. Overall, the longer-term trend seems to be on the brighter side.



    Equitymaster requests your view! Post a comment on "Benign expectations ". 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.

    Why Hasn't Warren Buffett Rung the Bell Yet? (The 5 Minute Wrapup)

    Aug 22, 2017

    It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.

    Think Twice Before You Keep Money In A Savings Bank Account (Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    A Darkness Is Spreading Across the US (Vivek Kaul's Diary)

    Aug 22, 2017

    Today, we are attacked by one preposterous thing after another, each of them even more absurd than the last.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working (Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    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 Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    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.

    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?

    5 Steps To Become Financially Independent(Outside View)

    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: 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


    Aug 22, 2017 03:25 PM