Sep 1, 2007|
Bulls on the march…
The week belonged to the bulls as domestic indices closed firm for all the five trading sessions. Though global and political factors made their presence felt during the week, markets managed to sail through. Uncertainty in Indian politics, which gnawed at investors in the previous week, saw some relief and stability. BSE-Sensex and NSE-Nifty ended with gains of more than 6% for the week.
The week ended August 31, 2007, began on a positive note with BSE Sensex advancing more than 400 points on Monday, tracking strong global cues. The rally was led by banking, metals and auto stocks, which were butchered in the past few weeks. Revival of global worries on Tuesday, however, led indices opening marginally in the red. Subsequent buying in metal and software stocks, however, led to indices closing with marginal gains. Similar trend was visible on Wednesday, with the BSE Sensex closing with a gain of 77 points after being down more than 250 points in the early trades. The markets were less volatile on Thursday and Friday, with the BSE Sensex advancing by 1% and 2% respectively.
On the institutional activity front, between 24th and 30th August, FIIs and mutual funds both emerged as net buyers to the tune of Rs 11 bn and 13 bn respectively.
The recovery in markets was broad-based as all the sectoral indices ended the week on a positive note. The BSE Metal (up 13%), BSE Oil & Gas (up 8%), BSE Bankex and BSE Small-Cap Index (each up 7%) were the biggest gainers for the week.
||As on August 24
||As on August 31
|BSE OIL AND GAS
Now let us have a look at some of the key stock/sector specific developments during the week:
Auto stocks closed firm with TVS Motors (up 15%), M&M (up 11%) and Maruti (up 10%) leading the pack of gainers. As per leading business news daily, TVS Motor, India's third-largest two-wheeler manufacturer will launch a hybrid and a CNG-run two-wheeler next year. The company will invest Rs 500 to 600 m every year to increase its capacities and launch new products. Around 3% of its turnover will go into R&D and developing future technologies. It is close to launching hybrid and CNG bikes, which will bring fuel costs down by 50%. TVS Motor, which has faced reversals on the two-wheeler front and had cut production to control inventories, expects a turnaround in 2008. The company is expecting good growth during the festival period of October-December. It has strengthened its portfolio and entered the 125 cc executive segment with its product Flame, which should help in increasing its sales. The stock closed up 8% while its peer Bajaj Auto ended 1% higher.
Top gainers during the week (BSE A)
Aug 24 (Rs)
Aug 31 (Rs)
|| 15,869 / 11,444
|S&P CNX NIFTY
|| 4,648 / 3,328
|| 20 / 10
|| 157 / 73
||731 / 399
|| 1378 / 660
||173 / 71
As per a leading business daily, the Telecom Regulatory Authority of India (Trai), in a move to enhance competition and spur mergers in the telecom sector, has recommended no limit on the number of players in this sector, relaxation of stringent M&A norms, technology neutrality for telecom licences, in addition to suggesting that both GSM and CDMA players pay an entry fee and higher spectrum fee for additional 2G radio frequency allocation. It also has suggested that the price of spectrum beyond 10 Mhz should be raised substantially. The operators should pay Rs 160 m for every additional one Mhz of spectrum that they require beyond this cut-off bar. Also the telecom operators should pay Rs 800 m as 'one time spectrum acquisition charge' in the cities of Mumbai and Delhi and other prime states. Also companies like RCOM (a CDMA operator) should be allowed to now launch a pan-India GSM service within the same license, but only after paying an additional Rs 15 bn. However, the industry is not happy with the recommendations, as it would have to pay over Rs 20 bn for 5 MHz of spectrum (Rs 5 bn due to additional revenue share and the rest as payment for spectrum). While Reliance Communications gained 9%, Bharti Airtel advanced by 2% for the week.
Real Estate stocks closed firm with Parsvnath (up 8%), DLF and Unitech (up 6%) leading the pack of gainers. As per a leading business daily, real estate major Parsvnath Developers is forming a special purpose vehicle (SPV) to foray into the mobile services (GSM) space. The company has already submitted applications to the Department of Telecom (DoT) for providing unified access service in 22 telecom circles across the country. According to the management, the company will rope in a strategic partner for the venture while the Parsvnath group will hold atleast 26% stake in the company. Parsvnath's application will put further pressure on the Government, which is finding it difficult to make available adequate spectrum for existing operators. Mobile service providers including Idea Cellular, Spice Telecom and Aircel are awaiting spectrum in new circles.
Top losers during the week (BSE A)
Aug 24 (Rs)
Aug 31 (Rs)
||170 / 40
||1020 / 762
||607 / 440
||110 / 66
||1005 / 725
While the markets have recovered most of the lost ground during the week, we believe there are still plenty of opportunities left on select counters. With the liquidity tap being turned off to a great extent, courtesy the recent sub prime meltdown, more sanity is likely to prevail in the markets. As such, we would advice our investors to stay invested for the long-term and in good quality stocks, as the fundamental stories remain intact.
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 19, 2017
Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.
Aug 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.
Aug 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
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