Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Party pooper - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Aug 7, 2004

    Party pooper

    It was the 6th straight positive week for the Indian indices. Though the current week's gains were rather muted, the air of optimism continues to embrace investor sentiment. If it wouldn't have had been for the party pooper this week (read inflation numbers on Friday), the indices would have had a much more decent close.

    Last week's positivism trickled into the current week with the indices having a respectable start to the week on Monday. Backed by good India Inc. results in the month of July, investors continued to evince confidence towards Indian equities. Despite the TCS IPO having been underway, which had raised apprehensions with respect to market liquidity getting affected, there seemed active participation from all sections of the investor class in the market. Even the TCS IPO ended with an oversubscription of over 10 times. Though there was some profit booking witnessed over the next couple of days, it seemed more in the nature of consolidation as the indices had been on a largely one-way street since the last few weeks.

    Thursday once again saw the bulls back in action and this time with a much greater conviction and force, pushing the indices to levels closer to last seen during mid-May, just before the historic fall of the Indian stock markets owing to the change in the government at the Centre. It must be noted that till now (since July), the Indian stock markets had been bucking the trend witnessed across global stock markets. This was thanks to the strong June quarter performance by India Inc.

    However, Friday was a different day. With situation on the crude oil front getting grimmer with prices breaching the US$ 44.5 per barrel mark, global indices unnerved further. This is a big concern for India considering that India imports about 70% of its crude oil requirement. Oil accounts for roughly about 30% of India's total import bill. While the effect of this was visible on the Indian markets at the start of trade on Friday, it was the weekly inflation numbers (that touched 3.5 year highs) that turned the indices jittery.

    The inflation numbers (7.5%) for the week ended July 24, 2004 declared on Friday took investors by surprise in both the markets - equity and debt. No sooner was this declared, Indian equities plunged on fears of a sooner than expected interest rate hike that could impede not only corporate profits but also the pace of our economic growth and consequently the stock markets. (Also read Inflation and stock markets) Bond prices also fell on similar fears that the central bank would now be forced to tighten monetary measures in order to control the rising inflation.

    Key gainers over the week (NSE-50)
    COMPANY Price on
    July 30 (Rs)
    Price on
    August 6 (Rs)
    H/L (Rs)
    BSE-SENSEX 5,170 5,197 0.5% 6,250 / 3,722
    S&P CNX NIFTY 1,632 1,633 0.1% 2,015 / 1,165
    GUJARAT AMBUJA 278 303 9.0% 347 / 199
    ACC 240 257 7.4% 308 / 179
    GRASIM 981 1,041 6.1% 1,317 / 543
    HERO HONDA 429 452 5.3% 544 / 245
    BAJAJ AUTO 824 854 3.7% 1,210 / 623

    However, on the bourses this week, there were certain sectors and stocks that managed to steal the limelight, despite the near flattish weekly behaviour of the indices. One such sector was cement (see table above). It must be noted that cement stocks have been the market favourite in recent times owing to improving fundamentals of the sector. Strong 1QFY05 despatches on the back of higher demand from domestic construction and exports, improving realisations owing to firm demand and consolidation in the domestic cement industry, all augur well for the sector. Further, even a couple of two-wheeler stocks made it to the top gainers list this week as the revival of monsoons in the country seems to have provided a temporary lifeline to the auto industry, which had been out of favour over the last few weeks.

    Key losers over the week (NSE-50)
    COMPANY Price on
    July 30 (Rs)
    Price on
    August 6 (Rs)
    H/L (Rs)
    GAIL 196 183 -6.4% 312 / 101
    MARUTI 425 400 -5.9% 600 / 190
    VSNL 181 172 -5.1% 210 / 109
    HINDALCO 1,102 1,054 -4.4% 1,599 / 720
    ZEE TELE 141 135 -4.0% 175 / 95

    Looking to the next week, the markets are likely to open with an overhang of this week's negative cues, both domestic and global. From the domestic front, high inflation numbers remain the biggest deterrent for investor sentiment, more so, considering the fact that these are yet to reflect the recent petroleum price hikes and steel price increases. On the global front, soaring crude oil prices and the result of its inflationary effect on global economic growth (including India) is surely to make investors think twice before committing themselves to equities. However, while these concerns are undoubtedly near-term dampeners for the capital markets, the relatively attractive valuation of Indian equities vis-a-vis many emerging and developed economies and the fundamental improvements being witnessed in India, do offer an investment case for long-term investor monies to nourish here. Happy Investing!



    Equitymaster requests your view! Post a comment on "Party pooper". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    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.

    Were You Lured By Mr Market's Bait? (The 5 Minute Wrapup)

    Aug 23, 2017

    Mr Market lured investors into believing they'd bitten into a crash. Did you take the bait?

    Deep State First (Vivek Kaul's Diary)

    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.

    Why Hasn't Warren Buffett Rung the Bell Yet? (The 5 Minute Wrapup)

    Aug 22, 2017

    It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.

    Think Twice Before You Keep Money In A Savings Bank Account (Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    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.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    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.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 23, 2017 (Close)