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When it rains... - Views on News from Equitymaster
 
 
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  • Jun 12, 2003

    When it rains...

    With monsoon setting favorably over the last one week, there seems to be a sense of optimism among investors. This is further aided by some acceleration in the disinvestment process, starting with Maruti and then for Shipping Corporation.

    International markets, especially the Dow and the Nasdaq have also been on the uptrend, over the last three months. During this period, the Dow has gained as much as 22%, Nasdaq by 30% and S&P by 25%. Even yesterday, the Dow gained by almost 1.5% led by positive indications from the Federal Reserve on the economy front. Investors are also expecting some positive news from Oracle, which is slated to announce results today. The US markets have been rallying despite concerning signals of piling inventory and higher unemployment rate. Fundamentally speaking, growth prospects continue to remain weak.

    Coming to the Indian markets, power and engineering majors have come back in the limelight recently. The passing of the electricity bill is expected to provide a big boost to investment by private sector. With the central government also going ahead with the restructuring of state electricity boards (SEBs), the concern to that extent are also taken care of in the long-term. The Indian power sector is at a stage where the telecom sector was pre-1999. After the announcement of the National Telecom Policy 1999, things changed for the better. So there is a lot to look forward to in the long-term.

    Backed by good progress of the monsoon, FMCG stocks have also gained led by none other than HLL. This sector has been a neglected one by investors in the last two years due to revenue growth concerns. However, companies like HLL have restructured its operations and as a result, are far more efficient and focused than ever before. When demand gains momentum, companies like HLL are likely to take advantage. That said, one good monsoon is just not enough. After a dismal period between 2000-2003 for the country in terms of rains, rural demand has fallen significantly and it will take a while before everything gets back on track.

     

     

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