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Markets on a roll… - Views on News from Equitymaster
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  • Jun 28, 2003

    Markets on a roll…

    The markets have, once again, managed to surprise market players who thought that indices are due for a correction. The indices have witnessed a near vertical rise in the last couple of months, and corrections in a rising market are signs of a healthy bull-run as it attracts more participants to the markets. This argument holds good considering the fact that retail investors who have missed the rally, try to get in at every correction, thus providing support at every fall. The BSE Sensex finally closed the week with gains of 2.4% while the NSE Nifty rose by 2.3%.

    The markets opened the week on a negative note and closed lower in the first two trading days of the current week. However, Wednesday saw a flurry of buying activity, which pulled the indices to higher levels and past the 3,500 crucial psychological level, nudging the 3,600 level!

    According to the data available so far for the first 4 trading days of the week, this week also, in continuance of the trend being observed since the last few months, saw huge FII inflows. The movement of the indices mirrored the FII inflows, which were week (though positive) on Monday and Tuesday, while the quantum was up significantly on Wednesday and Thursday. Just to put things in perspective, of the Rs 3.8 bn poured into equities this week (Mon-Thurs), Rs 2.5 bn was poured only in the latter half.

    Top 5 gainers over the week
    COMPANY Price on June 20 (Rs) Price on June 27 (Rs) %CHANGE 52-WEEK H/L (Rs)
    BSE-SENSEX 3,500 3,583 2.4% 3590 / 2828
    S&P CNX NIFTY 1,100 1,126 2.3% 1,127 / 920
    STERLITE INDUSTRIES 207 307 48.2% 307 / 135
    UNITED PHOSPHORUS 176 260 47.9% 288 / 96
    NOCIL 8 11 33.3% 13 / 5
    SSI LTD. 84 107 27.3% 179 / 54
    LUPIN LTD. 235 296 25.8% 306 / 90

    Among the major happenings of the week, key players in the energy sector reported their FY03 results. Oil and gas exploration major, ONGC, and top two players in the refining and marketing arena, IOC and HPCL announced their results for FY03 during the week. Dismantling allowed ONGC to sell crude at higher prices (earlier the selling price of crude was fixed at US$ 16 per barrel) and this helped the company to post about 70% growth in bottomline. Similarly IOC (112%) and HPCL (95%) also posted significant improvement in bottomline. This was also on account of increased petroleum product prices as an effect of dismantling of APM. The oil companies in general have posted very good results during the first year of APM dismantling and in anticipation they have seen strong investor interest in the last two months.

    Top 5 losers over the week
    COMPANY Price on June 20 (Rs) Price on June 27 (Rs) %CHANGE 52-WEEK H/L (Rs)
    AMARA RAJA BATT. 82 70 -14.2% 97 / 48
    TATA TEA 240 224 -6.8% 247 / 145
    BSES 296 280 -5.7% 302 / 190
    MCDOWELL 50 47 -5.2% 64 / 33
    IND.RESORT 55 53 -4.5% 62 / 35

    Apart from activity in the energy sector, software stocks too saw significant activity during the week. Broad based buying was seen in almost all counters. However strong gains were seen concentrated in second rung software stocks SSI (27%), Tata Infotech (22%), Mastek (14%) and PSI Data Systems (24%). Heavyweights Infosys (9%), Satyam (2%) and HCL Tech (5%) also saw gains during the week. Also, with new noises emanating from the government’s side regarding the disinvestment process, PSU stocks saw some activity during the week. MTNL (11%), EIL (10%), Punjab Tractors (4%) and Nalco (3%) were the major gainers for the week.

    While the gains seen on the Sensex were not as strong as last week, we observe that the undertone continues to be bullish. Also, among global markets, Indian indices are the only ones that have gained in the current week. Gains seen on the Indian markets are also a testimony to the fact that foreign institutional investors are finding value in the same. However, we must caution investors, the indices have already run up considerably and a lot of speculative activity is also being observed in the markets. Hence, investment decisions should not be made in haste.



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