Jul 14, 2001|
Eye the long term
The Sensex had a good time this week rising by nearly 4.5%. The better than expected earnings results both by the new economy stalwarts and old economy companies in cement and FMCG brought hope to the bourses. CMIE’s forecasts too boosted sentiment. But massive profit booking at the fag end revealed chinks in the armour.
The week was rather eventful considering the spate of positive news that filtered through. Infosys, Satyam and Hughes better than expected results revived the TMT sector. All three companies provided a sense of direction to the perplexed bourses. The US bourses too saw hope in the form of Microsoft’s and Motorola’s comments. GE’s record profits also soared hopes of the US investors. The buoyant NASDAQ also influenced the Indian TMT sector’s fortunes.
ACC and Cadbury too reported good quarterly results thus lifting spirits for the old economy too. Good rain forecasts backed by positive comments by CMIE and RBI over economic growth in the coming year also sustained the rally for a large part of the week. For once it looked like that the bulls had returned with a vengeance. But it was not to be.
Towards the fag end of Friday trading, the bulls suddenly got cold and profit booking eroded all the day’s gains. The Sensex after a brilliant week, finished Friday in the negative. But two very important things came out of the rather eventful week.
One, the comeback trail for the bulls will not be that easy as at every rise there are investors who seem ready to offload and exit, thus making a bull run unsustainable. Secondly (but more importantly), the investors seem ready to come back to invest at the Sensex levels. With each positive event or news the investor confidence is likely to strengthen.
The message that this sends out is that the momentum is picking up and it seems like a good time to build your portfolios’, slowly but surely. There would of course be sell offs at each rise, but on the longer term the prospects seem encouraging.
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