Aug 4, 2001|
Concerns cloud positives
The BSE Sensex has moved up over 2% during the week backed by renewed buying interest in software companies. Meanwhile, the meteorological departmentís report on monsoons is encouraging. Nevertheless, concerns about UTIís bailout and instability in the financial sector still cast a shadow on these positives.
It was a dazzling week for pharma companies. The Indian pharma companies have achieved yet another milestone. Dr. Reddyís, Indiaís leading pharma company, has bagged a six months exclusive marketing rights of Prozac. This is expected to garner around US$ 17 m for the pharma major and the shipment has already begun. Other majors like Ranbaxy, Cipla and Nicholas Piramal also ended on a positive note.
Cement was the other key gainer. Good results by cement majors in the June quarter as well as news that the hike of Rs 5 per 50 Kg cement bag has already been affected in western Maharashtra, continues to spur sentiment. The latest good news is that Gujarat Ambuja saw a 16% growth (YoY) in production and around 18% growth (YoY) in despatches during July 2001. ACC has also reported a 5.3% rise in cement despatches for July 2001. As a result, major cement companies like L&T, Gujarat Ambuja, India Cement and ACC gained.
Despite an uncertain US economy and trailing IT spending, software sector was in the limelight during the week. NIIT, Infosys, Satyam, Digital and Wipro were very active for most of the week. Probably valuations, which have come down drastically over the last one-year, coupled with the promising potential for the Indian software sector seems to have interested bargain players.
Meanwhile, there is something to cheer for the bourses. The meteorological department has said that the country has had a normal monsoon (in fact 5% above the normal monsoon) with the timely arrival of the South West monsoon. Though some regions like Rayalseema and certain areas in Karnataka have witnessed subdued monsoon, the meteorological department expects these regions to have normal rainfall towards the end of the year. The other consolation factor is that the drought-affected regions like Rajasthan, Gujarat and Madhya Pradesh, after a prolonged dry season, have received good rainfall. Ultimately, this could turn out to be the key driver for Indian economy towards the end of the year. But this is just a hope. But in this environment market movers may prefer to wait and watch for further encouraging signs, rather than plunge headlong into the markets.
But, the continuous tussle between the finance ministry and UTIís former chairman continues to remain a cause of concern. While both are blaming each other for the recent happening in the UTI, no one seems to be taking responsibility as a whole. Added to that the FMís decision to bail out the ailing IFCI has also cast a doubt about the Indian financial sectorís health as a whole. This has also created a lot of nervousness in the markets, which might continue to subdue sentiment in the coming weeks also.
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