Jul 4, 2003|
Top gainers & Top losers
The stock market performance since 2000 till recently has been disappointing for retail investors. Occasional signs of an upturn have been mired by few external shocks like September 11, Iraq war, border conflict and internal unrest in Gujarat and the stock market scam. But the recent rally has come as a relief to investors. We consider the performance of benchmark indices in general and the performance of the BSE 'A' group in the last one year.
As can be seen from the table below, while the Sensex has gained 9.7%, Nifty has moved up by 6.4% for the period between July 1st, 2002 to July 2nd, 2003. However, bulk of the gains have come since May 2003. Since May'03, the Sensex has gained by a commendable 24%. While this rally may have caught some section of the investing public by surprise, if one considers the fundamentals, the writing was on the wall. The Sensex, based on a rough estimate, was trading at around 11.7x trailing twelve months earnings in May 2003. This was among the lowest valuation levels since July 1998. This, despite a favorable interest rates scenario, manageable inflation levels and a slow but steadily growing economy.
Coming to the top gainers over the last one year, banking sector led by Oriental Bank has seen significant correction in valuations. PSU banking stocks, which were trading at between 0.8x-1x adjusted book value, are currently trading at 1.3x-1.5x. The passing of the asset reconstruction bill, growing retail advances and the quantum of unbooked profits in the G-Sec portfolio of banking majors have all contributed to the rise in banking stocks in the last one year. What is also noticeable from the gainers list is that none of the top rung index stocks are a part of the rally. It has been an eventful year for mid-cap stocks like Lupin, Thermax, Exide and Arvind Mills.
In a nut shell
||July 01,2002 (Rs)
||Jul 2, 2003 (Rs)
||52-week H / L (Rs)
||3,633 / 2,828
||1,141 / 920
||162 / 39
||326 / 90
||365 / 135
||391 / 185
||429 / 195
||288 / 116
||150 / 69
||41 / 18
||162 / 38
||288 / 96
||165 / 15
||42 / 5
|Shree Rama Multitech
||32 / 4
||33 / 7
||29 / 7
||135 / 42
||263 / 99
||54 / 10
||116 / 25
||104 / 27
Arvind Mills, the erstwhile darling of the bourses, seems to be back on the investor's radar. While the recovery in denim prices in the international markets have played a part, the debt restructuring arrangement has improved prospects of the company significantly. however we maintain our stance to exercise caution considering the poor track record of the company. Thermax's 97.9% rise over the last one year could be attributed to the growing order book position of the firm. After the restructuring exercise, the company is far more nimble-footed and is likely to benefit from increased industrial activity in the long run.
Though the rally is a positive for the market, the sharp rise in stock prices of Sterlite Industries and United Phosphorus has to be viewed with caution. Investor's have often been taken for a ride in the past and hope they do not repeat the same mistakes. If one were to look at the top losers list on the BSE 'A' group, there are not many surprises. Most of the companies have a dubious track record. The likes of Silverline, DSQ Software, Pentamedia and Sterlite Optical have nothing to write home about.
Having looked at the gainers/losers over the last one year, the question in everyone's mind at the current juncture is whether the rally is for real? How sustainable is the upturn in the stock markets? While there is no denying the fact that the recent rally is for real, the sustainability of the same depends on various factors in the short to medium term (i.e. 1-2 years). Though early reports on the monsoons look promising, it remains to be seen whether it translates into higher consumption demand. Since monsoons have been below normal for the last four years, the rural economy has been affected and it will take some time to recoup. Secondly, the forthcoming elections would also determine the future course of action, as in a top-down approach to investing, politics plays a vital part.
However, when viewed from a long-term perspective (more than 3 years), one is positive about indices moving further north. As we have maintained before, even at the current juncture, Indian stock market seems to be attractively valued for building a portfolio of stocks.
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: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407