Jul 21, 2007|
Good times roll on
Strong corporate results, buoyant global markets and ample liquidity combined together to yield yet another positive ending week on the bourses and also enabled the benchmark indices to scale more summits. Thus, for the week ended July 20, 2007, while the BSE-Sensex edged higher by nearly 2%, gains in NSE-Nifty were a little lower at 1.4%.
Top gainers during the week (BSE A)
The indices edged higher for four days out of five, with Tuesday being the day when they ended in the negative, albeit marginally. Infact, even the gains that were recorded on the remaining three days out of four, were also marginal. The sole exception however was Thursday, when strong buying in index pivotals led to the Sensex rising nearly 250 basis points. While the buoyancy continued for most part of Friday, profit booking in the final hour took its toll, translating what could have been another strong day into just a moderate one. However, the sentiment was largely positive throughout the week as first quarter results were along expected lines and the liquidity, especially among the foreign institutions also seemed to be ample.
As far as the institutional activity is concerned, while the domestic mutual funds remained net sellers to the tune of Rs 2.4 bn, strong buying was seen amongst Foreign Institutional Investors (FIIs), who pumped in a huge Rs 71 bn during the course of the week.
||As on July 13
||As on July 20
|BSE OIL AND GAS
Buoyancy was witnessed across most of the indices, none more so than the oil and gas index, which rose sharply by 4% during the week. The gains were largely a result of strong buying in Reliance and since it accounts for nearly 60% of the index weightage, the underlying strength also propped up the index. On the other hand, with ITC and HUL continuing to slip, the FMCG index emerged as the biggest loser as it lost nearly 2% during the week.
Top losers during the week (BSE A)
Let us take a look at some of the stock/sector specific important developments during the week.
Software stocks closed a mixed bag. While Infosys (up 2.4%) and TCS (up 3.5%) featured among the key gainers, HCL Tech (down 3%) and Satyam (down 3%) closed in the red. Wipro, India's third largest software services exporter, reported 2% QoQ decline in topline on account of rupee appreciation. Operating margins contracted by 240 basis points (2.4%) on a sequential basis due to rupee appreciation and wage hikes. On the positive side, net utilisation increased by 6.3%, which pared some pressure from the margins. The effect of strained EBITDA margins is reflected at the net level also. The bottomline declined by 15% QoQ largely due to higher taxes and interest burden. The stock closed lower by 1%.
Pharma heavyweights closed mostly lower during the week. Key losers were Dr. Reddy's (1%), Cipla (5%) and Sun Pharma (4%). Domestic pharma major Ranbaxy announced mixed results for the second quarter and half year ended June 2007 during the week. The topline clocked a 16% YoY growth driven by the strong performance in Europe and Rest of the World. Growth in revenues from the US was led by the launch of 'Pravastatin' 80 mg tablets for which the company had received the 180-day exclusivity. EBDITA margins shrank by 480 basis points (4.8%) during the quarter, largely on the back of a considerable rise in raw material costs (as percentage of sales). The bottomline grew by 118% YoY in 2QCY07, led by higher forex gains. Excluding this impact, net profits have fallen by 64% YoY. The stock closed almost unchanged.
L&T edged higher by 3% during the week. Strong results announced by the company perked up the sentiment towards the stock. The company has reported 30% YoY growth in standalone sales, which have crossed the US$ 1 bn mark in 1QFY08. The growth in topline was brought about by sustenance of robust performance across all the business segments - engineering and construction (30% YoY growth in sales), electrical and electronics (56% YoY) and machinery and industrial products (68% YoY). What is more, lower sub-contracting charges and construction material expenses (both as percentage of sales) aided the 2.4% expansion in operating margins during the quarter. Further, on the back of a strong rise in other income (due to large forex gains), the company's net profits surged 140% YoY. Among other stocks from the engineering sector, Suzlon also edged higher by 2%.
‘Be fearful when others are greedy and greedy when others are fearful'. This comment perfectly sums up what we believe seem to be happening with the markets right now. With valuations across most of the sectors looking rather stretched, we would advice investors to practice discipline and assess the risk-reward scenario properly before venturing into any investments. For gains are made in the markets not by making the best investments, but by avoiding the biggest mistakes.
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 23, 2017
Mr Market lured investors into believing they'd bitten into a crash. Did you take the bait?
Aug 23, 2017
Nowhere was the darkness deeper than in the nation's capital. There, no light shone. No flicker of awareness...observation...learning...or reflection appeared.
Aug 22, 2017
It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.
Aug 22, 2017
Post demonetisation, a cut in bank savings deposits rates was in the offing.
More Views on News
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 16, 2017
The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
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