Mar 18, 2006|
On higher ground!
Bulls firmed their grip further on the markets this week, as they pushed the indices into a higher orbit. Both the Sensex and the Nifty created new records. While the BSE-Sensex ended this holiday-shortened week with 1% gains, the NSE-Nifty managed to gain 1.6%. However, contrary to this, the buying interest was absent in mid-cap and small-cap stocks, as is evident from the movement of their respective indices. While the BSE Mid-cap index remained almost unchanged for the week, the BSE Small-cap index ended the week in the red, down about 2%.
The markets began the week on a euphoric note, riding on the back of the strong gains garnered over the previous three weeks. However, the bulls were finding it a tad difficult to hold on to the gains, with strong profit booking emerging at higher levels. A similar trend characterised Tuesday's trading session. However, the intentions of the bulls did not falter, as they bounced back smartly during both these trading sessions from the lows of the day. It must be noted that the Sensex made new lifetime highs in both these trading sessions.
Wednesday was a holiday on account of Holi. Having seemingly renewed their vigour during this break, the bulls took total control of market proceedings over the next couple of days as their forward march continued, helping the Sensex breach the 10,950-level during Friday's trading session. However, the final hour of trade saw the bears strike back with substantial force, pulling the Sensex (and also the other indices) down from their lifetime highs and into the red. To put this into perspective, the Sensex fell over 100 points from its intra-day highs before finding some feet.
As far as institutional activity this week was concerned, they (institutions) continued to pump in a significant amount of money into Indian equities. To put this into perspective, in the first three trading sessions of the week, while the Foreign Institutional Investors (FIIs) net investment was at Rs 6 bn, domestic mutual funds (MFs), who have raised a significant amount of money through their new fund offerings over the last couple of months, also put in a significant Rs 5 bn.
New listings during the week
Now let us consider some sector/stock specific developments this week:
The Zee Telefilms stock shot into the limelight this week, as the company announced that it would raise its advertising rates by 20% to 40% for FY07. Zee is India's first private TV channel covering nearly 30% of Indian television homes. Advertisement is one of its major sources of revenue and contributed to about 45% of the company's topline in 3QFY06. On the advertising front, the company had been witnessing good times since the last three quarters due to increased focus on Zee TV, the company's flagship channel, which, as per the company release, has clawed to the No. 2 spot in the general entertainment category. The company is planning to increase the rates due to the good economic growth and demand for content. The increase would apply to its flagship Hindi entertainment channel, Zee TV, as well as its English language entertainment channels and some regional language channels. The stock soared higher by as much as 25% this week. Other media stocksTop gainers over the week (NSE-50)
Mar 10 (Rs)
Mar 17 (Rs)
|| 10,951 / 6,118
|S&P CNX NIFTY
|| 3,258 / 1,896
|| 240 / 128
|| 445 / 161
|| 124 / 53
|| 1,298 / 806
|| 782 / 410
The Anil Ambani-controlled Reliance Communications Ventures Limited (RCoVL) will merge Reliance Infocomm Ltd (RIC) with itself. RCoVL will also hold 100% in the three principal operating subsidiaries - Reliance Telecom Limited (RTL), Reliance Communications Infrastructure Limited (RCIL) and FLAG Telecom. The re-organisation does not involve any cash outgo and will be achieved by a share swap only. RCoVL currently owns 45.3% of RIC, 45% in RCIL, 35.6% in RTL and 100% in FLAG Telecom. With this, all of RCoVL's communications services businesses - CDMA/GSM wireless, wireline, long distance voice, data and broadband services - would come under a single holding structure. On completion of the re-organisation, RCoVL will become a major operating company with over 19 m subscribers. The RCoVL stock ended the week higher by 7%. Other telecom stocks
Tata Motors, the largest commercial vehicle (CV) player in the country, is planning to invest Rs 25 bn in its plant in Uttaranchal wherein it can manufacture its fast-selling light CV (LCV), Ace, and possibly also its Rs 100,000 car. The plant will have a capacity to produce 350,000 to 400,000 vehicles a year. It can be recalled that Tata Motors had recently announced that it would double the production of Ace to 60,000 units a year. This is a positive move by the company, as demand is robust for 'Ace' and the success of this has the potential to alter the dynamics of the LCV industry (including three-wheelers). The Tata Motors stock ended the week with 5% gains. Other auto stocksTop losers over the week (NSE-50)
Mar 10 (Rs)
Mar 17 (Rs)
|| 310 / 139
|| 1,078 / 500
|| 70 / 47
|| 568 / 339
|| 2,615 / 920
ITC has increased prices of its 'Wills' brand of cigarettes. The tobacco major has increased prices from the current rate of Rs 3 per stick to Rs 3.5 per stick (17% hike), after the Finance Minister increased the excise on cigarettes by 5%. It must be noted that prices of its other cheaper mass-market brands have not been changed. Thus, overall, the 17% hike will dilute to around 5% as per rough calculations, in line with the excise hike. The 5% excise hike would have resulted in a Rs 3.5 bn hit to the cigarette industry, dominated by ITC, which owns 6 of the top 10 brands. With this move, ITC has passed the additional burden onto the consumer, thus protecting its margins. The stock ended the week down 1%. Other FMCG stocks
Going forward, our stance towards equities at current levels continues to remain cautious. We believe that considering the sharp rise in the value of equities in recent months, which has been driven largely by foreign money, the situation certainly warrants a much higher degree of caution. In light of the concerns with respect to rising US interest rates and FII flows reversing their direction, thus leaving local investors in the lurch, we suggest that investors should not base their decision on the trend in FII inflows alone. It is pertinent for investors to bear in mind the ‘fair-weather-friends' image of international investors. Thus, one of the best ways to deal with the situation of a possible correction in Indian stockmarkets (for whatever reason) is to invest in fundamentally strong companies' stocks, which are not at the mercy of anything, but their own performance. Happy investing!
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 19, 2017
Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.
Aug 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.
Aug 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
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
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 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
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: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407