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'Poll' vault! - Views on News from Equitymaster
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  • Apr 24, 2004

    'Poll' vault!

    The markets ended the week in the positive, thus making it the fifth consecutive week of gains. During the last 5 weeks, both the benchmark indices have appreciated by about 9% each. The gains this week can be attributed to the good corporate scoreboard that has been produced by India Inc. as yet and also the slew of positive announcements (to be discussed later) that have continued to flow for the Indian stock markets. This week, the Sensex and the Nifty gained a little over 1% each.

    After a sort of consolidation for nearly two weeks, the markets finally witnessed saw some investor interest coming back, but not before the indices had witnessed a correction on the opening day of the week. With barely a couple of days remaining to the first phase of the general elections, which was scheduled to kick off from Tuesday, investors turned jittery in Monday's trade over the impending uncertainty associated with the election results and thus decided to take some money off the table. Tuesday was largely a lacklustre day with the indices trading in a range as polling began across various states in the country. While some investors preferred to stay at the sidelines, others exercised utmost caution as the indices closed with marginal gains.

    Key gainers over the week (NSE-50)
    COMPANY Price on April 17 (Rs) Price on April 23 (Rs) % CHANGE 52-WEEK H/L (Rs)
    BSE-SENSEX 5,862 5,926 1.1% 6,250 / 2,904
    S&P CNX NIFTY 1,868 1,892 1.3% 2,015 / 920
    SAIL 36 40 12.5% 62 / 9
    GLAXO 618 691 11.8% 699 / 294
    ICICI BANK 292 319 9.4% 352 / 119
    MARUTI 541 580 7.3% 602 / 156
    SHIP. CORP. 137 146 6.9% 203 / 61

    However, Wednesday and Thursday saw the investor interest returning. The indices had a great day on Wednesday on the back of the exit poll results of the first phase of elections. Market participants were enthused by the exit poll results favouring the ruling coalition coming back to power, which is a positive for the continuation of the current pace of reforms being witnessed in the country.

    Key losers over the week (NSE-50)
    COMPANY Price on April 17 (Rs) Price on April 23 (Rs) % CHANGE 52-WEEK H/L (Rs)
    DABUR 84 79 -6.7% 98 / 36
    SUN PHARMA 748 725 -3.1% 837 / 266
    ORIENTAL BANK 358 347 -3.1% 367 / 73
    BHEL 640 622 -2.8% 685 / 220
    BAJAJ AUTO 947 920 -2.8% 1,210 / 460

    While this optimism seems to have had flowed into Thursday's trading also, the announcement of the prospects of big funds like CalPERS and Schroeder's making their presence felt in India, seemed to have aided the already prevalent feel-good factor amongst investors. The importance of these names can be gauged from the fact that while CalPERS' portfolio size is estimated to be at about US$ 165 bn, Schroeder's is a US$ 177 bn fund. The interest by such big names is an indication of the focus of global investors on the prospects of the country.

    However, Friday's trade saw some volatility creep in as investors seemed vary of taking an investment decision before an extended weekend. It must be noted that markets are closed on Monday owing to the second phase of elections (wherein Mumbai also goes to polls). Therefore, when the markets open on Tuesday, the effect of the Monday's exit poll results, which would be flashed across all the morning newspapers, would be clearly reflected in Tuesday's trade. Further, considering that next week would see the derivatives settlement taking place on Thursday and that the indices have gained almost 9% in a single breadth, could have forced take investors to take a cautious approach on the final trading day of this week.

    Now, let us look at some key corporate actions (excluding results) this week:

    Going forward, the flow of corporate results is all set to intensify next week. Some key results lined up for next week include HCL Tech, BHEL, Hindalco, Reliance, Godrej Consumer, TV18, Grasim, HLL, Nalco, ICICI Bank, GAIL and GE Shipping. Further, the fact that the indices have already run up by 9% over the last 5 weeks and that the derivatives settlement due on Thursday would play at the top of investors' minds next week. However, index movements would primarily be governed by the results being announced by industry majors as markets adjust (and re-adjust) their expectations on the basis of the results delivered. Hence, some amount of volatility, till the results season is over, cannot be ruled out. Happy Investing!

    Note: Markets are closed on Monday on account of elections.



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