X

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.
Another record week - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Aug 13, 2005

    Another record week

    Despite being a record week for the Indian stock markets, the Indian indices ended at almost the same levels as that of last week. Both the BSE-Sensex and the NSE-Nifty closed marginally above last Friday's levels. However, the CNX Mid-cap Index performed relatively better with about 1.5% gains. While the indices remained largely unchanged, it was the second consecutive week of immense volatility on the bourses, which, unlike the previous many weeks, surely must have kept every investor guessing about the markets' next directional move. Also, the FII behaviour this week was not very encouraging.

    Last week's Friday's jitters (Sensex down 43 points) spilled over to this week also with the Indian stockmarkets opening on a shaky note on Monday and proceeding to trade lower throughout the day. In fact, the indices witnessed one of the severest of falls in recent times with the Sensex and the Nifty correcting by nearly 2% each. This was followed by another very volatile trading session on Tuesday with the markets finally ending the day amidst marginal losses. However, it must be noted that in the three trading sessions (Friday to Tuesday), Foreign Institutional Investors (FIIs) remained net buyers of equities. The weakness was primarily a factor of selling by our domestic mutual funds (MFs).

    However, Wednesday and Thursday were two days of a different ball game altogether. The bulls came back with a vengeance in these two trading sessions and took the benchmark indices higher by nearly 3%, thus recouping the previous three days' losses (including Friday). In the process, the Nifty and the CNX Mid-cap Index achieved new lifetime highs. However, the bulls this time were from the domestic mutual funds' camp as the, as yet, pump primers of this rally (read FIIs) took a backseat.

    FIIs who have, in 2005 (to date), invested nearly US$ 7.3 bn in Indian equities, opted to take some profits off the table. They were net sellers to the tune of Rs 1 bn on Wednesday when the Sensex gained a whopping 134 points (biggest gain in over 5 months) and again were marginal net sellers the following day, when the Sensex rose another 87 points. It must be noted that this selling by FIIs has come after 52 straight sessions of net buying (US$ 4.3 bn in this period). On Friday, things again took a turn for the worse, with the markets losing ground. This volatile movement of the indices during the week indicates apprehension and lack of investor confidence at the current high index levels. However, buying at lower levels capped the downfall in the markets.

    Now let us consider some key sector/stock specific developments this week:

    • Largely in line with expectations, the Federal Open Market Committee hiked Fed rates by quarter percentage (to 3.5%) for the 10th consecutive time since June 2004. Although the apex body kept the language 'measured', it acknowledged the strength of the economy and the impact of higher energy prices.

    • Infrastructure Development Finance Company Ltd (IDFC) made its debut on the bourses on Friday and closed at a 104% premium to its offer price of Rs 34 per share. It must be noted that IDFC had financed 25% of the total infrastructure outlay in the country in FY05. Its expertise in the infrastructure sector and strong relationships with government and infrastructure sponsors provide it with a platform for facilitating private investment and public-private partnerships. However, at the current price, the stock is quoting at a price to book value of 3.6 times its FY05 numbers. Other investment and finance stocks

      Top gainers over the week (NSE-50)
      Company Price on
      Aug 5 (Rs)
      Price on
      Aug 12 (Rs)
      %
      Change
      52-Week
      H/L (Rs)
      BSE-SENSEX 7,754 7,767 0.2% 7,861 / 5,022
      S&P CNX NIFTY 2,361 2,361 0.0% 2,390 / 1,574
      HERO HONDA 615 693 12.7% 702 / 412
      TATA TEA 717 789 10.1% 822 / 381
      GRASIM 1,241 1,316 6.0% 1,404 / 1,000
      BHARTI TELE 294 311 5.8% 314 / 131
      RANBAXY 508 536 5.6% 640 / 435


    • FMCG major, Tata Tea, was amongst the biggest Nifty gainers this week. This world's second largest branded tea company is looking for an overseas acquisition to the tune of US$ 1 bn. The tea major is looking at a brand or a company or both, with strong presence in US or Latin America. It is looking for brands, which have a strong presence in the ready-to-drink teas in the US and the target is a mid-sized company. This move by the company is in line with its strategy to enhance its market share in USA, where there is huge growth potential as currently it has negligible brand visibility in that country. Other FMCG stocks

    • Gains in Bharti Tele this week were seemingly aided by the news that the company has raked in a 61% YoY growth in its GSM mobile subscriber base in the month of July 2005 taking the total to 12.8 m. Notably, during this period, the Indian GSM market has grown by 53% YoY. As a result of this outperformance, Bharti's market share has increased from 26.2% in July 2004 to 27.4% in July 2005. Such staggering growth figures from Bharti have been a result of the company's increased presence across India. Also, focus on its core competencies of marketing and branding telecom services through outsourcing non-core functions like network creation and maintenance, has stood the company in good stead. Other telecom stocks

      Top losers over the week (NSE-50)
      Company Price on
      Aug 5 (Rs)
      Price on
      Aug 12 (Rs)
      %
      Change
      52-Week
      H/L (Rs)
      VSNL 433 403 -6.9% 445 / 157
      REL. ENERGY 647 609 -5.9% 707 / 436
      BAJAJ AUTO 1,479 1,393 -5.8% 1,548 / 850
      IPCL 194 184 -5.4% 221 / 156
      MARUTI 502 476 -5.1% 512 / 338


    • As per figures released by the Society of Indian Automobile Manufacturers (SIAM), passenger car volume sales were down by as much as 11% YoY in July 2005, owing to flood like situations in the states of Gujarat and Maharashtra during the month. Two-wheeler sales also dipped 3% YoY. However, this was primarily due to a fall in scooter sales by as much as 35%, while motorcycle sales actually grew by 6%. This reflects a clear shift in preference towards motorcycles, as scooters have been steadily losing market share. Going forward, given a higher base and adverse effect of high crude prices and an increasing interest rate regime, major carmakers, like Tata Motors, have indicated some slowdown in sales this year as compared to FY05. Other auto stocks

    To conclude, as far as the 'critical' FII behaviour this week was concerned, the bulls would want to take solace by convincing themselves that this action by the 'men with the money' was just an act of profit booking considering that the Sensex has gained almost 24% in a single breath (since May 2005). Moreover, for the week they were net buyers to the tune of Rs 4 bn. On the other hand, the bears, who have been praying all along for a correction and haven't had a single (significant) occasion to celebrate, would want to consider this as a sign of a 'seemingly' temporary reversal.

    As far as we are concerned, while we would be better off leaving the judgment game of predicting index levels to those who claim to have the crystal ball to do so, we would rather stick to understanding companies and their fundamentals. This is because, while history has proven that FIIs have largely been 'fair weather friends', we believe that if the fundamentals of a company are strong, it would continue to deliver performance and attract investors, irrespective of the weather. Happy Investing!

     

     

    Equitymaster requests your view! Post a comment on "Another record week". 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.

    You've Heard of Timeless Books... Ever Heard of Timeless Stocks? (The 5 Minute Wrapup)

    Aug 19, 2017

    Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

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

    More
    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

    S&P BSE SENSEX


    Aug 18, 2017 (Close)

    MARKET STATS