May 28, 2003|
Is the rally over?
Notwithstanding yesterday's nervousness, both the Sensex and the Nifty have gained over 4% till date in May. The rise has been marked by a shift towards old economy pivotals and banks while investors have been cautious towards technology stocks. But yesterday's sell off must have jangled some nerves. So is the positive sentiment over?
Despite the run this month, the indices still continue to trade a shade above 11x earnings. Backed by infrastructure reforms and healthy economic prospects, these valuations still look good if one has to create a portfolio with a long-term view on India. India still continues to be one of the fastest growing countries globally. Of course we have some drawbacks and red tape is just one of them, but the progress has been in the right direction. Within their limitations, the policy makers have done well.
As has always been our line, it is a time to pick and choose. The markets may see a bounce back today, or they may not, but the fundamental attractiveness of India Inc. stands and going forward this will reflect in valuations. Stick to quality.
The phrase stick to quality sticks both to the current heartthrobs on the indices, i.e. PSU banks as well as to the 'do not touch' software services sector. While PSU banks have had a great run on the bourses, a lot of banks with untested credentials have also basked in the sun. Our worry is that sooner or later fundamentals will catch up. So in this case, stick to banks that have strong fundamentals, balance sheet size that have it in them to participate steadily in India's progress.
In the 'not so hot' software sector, we do agree that pressure on the US economy and the consequent negative feeling towards outsourcing has taken a toll on sentiment towards the sector. However, even while everybody is feeling averse to this sector, a few quality companies will continue to withstand the current pressure and come out stronger. India's story as a software services hub is not over. The churning in the sector has begun, but in this quality companies will survive and consequently, will be able to make the most of the expanding services pie.
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