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.
Extending gains... - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Sep 8, 2007

    Extending gains...

    Markets extended their gains during the week, presumably on the back of assurances from Federal Reserve chairman Ben Bernanke and President George Bush that they would not let the US economy collapse. Though bears made their presence felt many times during the week with domestic indices closing in negative for 2 out of 5 trading sessions, the bulls weren't complaining as the BSE-Sensex and the NSE-Nifty ended the week with gains of 1.8% and 1% respectively.

    The week began on a positive note with BSE Sensex advancing more than 100 points on Monday, tracking strong global cues. Banking and pharma stocks led the rally. Infact, the BSE Bankex and the BSE Healthcare Index gained more than 1.5% each. In absence of any global cues, market traded within a narrow on Tuesday and Wednesday. While the BSE Sensex advanced by 43 points on Tuesday, it shed 19 points on Wednesday. The bulls were back on Thursday, as the BSE Sensex gained 170 points to close at 15,616. Though markets opened on a negative note, the index pared all its losses and proceeded to trade higher for the rest of the trading and finally closed with a gain of 1.1%. Although Friday started on a positive note, market pared early gains as fresh selling emerged in later half of the day when European markets drifted lower. The BSE Sensex finally closed the day with a marginal loss of 26 points.

    On the institutional activity front, between 31st August and 6th September, Foreign Institutional Investors (FIIs)and mutual funds both emerged as net buyers to the tune of Rs 29 bn and 8 bn respectively.

    (Rs m) MFs FIIs Total
    31-Aug 4,636 6,773 11,409
    3-Sep 1,425 5,277 6,702
    4-Sep 989 6,304 7,293
    5-Sep 674 4,104 4,778
    6-Sep 452 6,231 6,683
    Total 8,176 28,689 36,865

    The week belonged to the mid-cap and small-cap counters, who were left behind in the recovery witnessed last week. The BSE Small Cap and the BSE Mid Cap Index ended the week with a gain of 4.6% and 3.7% respectively. Among sectors, the BSE Healthcare and the BSE FMCG emerged as the key gainers (each up 4%).

    Index As on August 31 As on September 7 % Change
    BSE IT 4,586 4,660 1.6%
    BSE SMLCAP 8,061 8,434 4.6%
    BSE OIL AND GAS 8,160 8,186 0.3%
    BSE HEALTHCARE 3,573 3,706 3.7%
    BSE AUTO 4,878 4,890 0.2%
    BSE PSU 7,095 7,288 2.7%
    BSE MIDCAP 6,608 6,852 3.7%
    BSE FMCG 1,974 2,047 3.7%
    BSE BANKEX 7,859 8,096 3.0%
    BSE METAL 11,566 11,609 0.4%

    Now let us have a look at some of the key stock/sector specific developments during the week:

    Pharma stocks closed firm with Sun Pharma (up 9%), Cipla (up 8%) and Ranbaxy (up 5%) leading the pack of gainers. As per a leading business daily, Ranbaxy has completed the second phase of the clinical trials of a revolutionary anti-malarial drug that could enable it to be the nation's first pharmaceutical company to launch a New Chemical Entity (NCE) globally. The company has just finished phase II clinical trials and is doing a phase II for the combination of that product. If everything continues to be successful, Ranbaxy will be able to launch the NCE in the market by 2011. While two to three dozen new molecules are being developed for cardiovascular, arthritis, diabetes and oncology, there have been just two products launched in the last 30 years for malaria. Though the market size is considered small the competition is not likely to be intense.

    Top gainers during the week (BSE A)
    Company Price on
    Aug 31 (Rs)
    Price on
    Sep 7 (Rs)
    H/L (Rs)
    BSE SENSEX 15,319 15,590 1.8% 15,869 / 11,444
    S&P CNX NIFTY 4,464 4,510 1.0% 4,648 / 3,328
    NIIT 125 154 22.5% 170 / 40
    CENTURY ENKA 118 140 18.3% 164 / 112
    RAMCO SYSTEMS 145 168 15.9% 233 / 119
    LIC HOUSING 186 214 15.2% 221 / 128
    HCL INFOSYS 199 229 15.1% 230 / 125

    As per a leading business daily, Reliance Industries (RIL) has acquired Mauritius-headquartered Gulf Africa Petroleum Corporation (Gapco), a petroleum distribution company with an extensive network and large storage facilities in east Africa. RIL acquired the company through its wholly owned subsidiary, Reliance Industries Middle East (RIME), a company registered in the United Arab Emirates. Gapco owns and operates large storage terminal facilities and a retail distribution network in Tanzania, Uganda and Kenya. It also owns and operates large storage terminals in Dar-es-Salaam in Tanzania, Mombassa in Kenya, Kampala in Uganda and has other well-spread depots in east and central Africa. It also operates more than 250 outlets covering retail and industrial segments. The imports of petroleum products into these countries are expected to rise in the near future and the east African countries have rapid economic growth and progressive government policies in place. The acquisition is a strategic fit for RIL's exports from the country and a step towards achieving its global vision in the petroleum downstream sector by integrating the entire value chain consisting of refining, shipping, trading, terminalling and marketing through retail and wholesale segments. While RIL closed flat, Cairn India gained 2% during the week.

    Top losers during the week (BSE A)
    Company Price on
    Aug 31 (Rs)
    Price on
    Sep 7 (Rs)
    H/L (Rs)
    WELSPUN GUJ. STAHL 247 231 -6.8% 264 / 65
    JINDAL STAINLESS 165 156 -5.3% 178 / 95
    BALAJI TELEFILMS 264 250 -5.3% 278 / 104
    EIH LTD 114 109 -4.5% 127 / 88
    PIDILITE 149 143 -3.8% 160 / 93

    Reliance Energy is planning to hive off its engineering, procurement and construction (EPC) division into a new company. REL is considering the option to list the new company to raise funds for its projects. The EPC division has an order backlog of Rs. 70 bn. The EPC division's revenue was Rs 20.8 bn in FY07, almost a third of company's total revenue of Rs 65.8 bn. The EPC division has contributed about 8% of the net profit of Rs. 8 bn of Reliance Energy. While Reliance Energy gained 9%, Tata Power advanced by 5% for the week.

    With markets close to their all-time highs, dangers of overvaluation in select sectors have once again surfaced. While on an aggregate basis, the markets do look adequately valued, it should be remembered that not all sectors have participated in the current rally. Hence we advise investors, to closely monitor the risk-return equation in overheated sectors.



    Equitymaster requests your view! Post a comment on "Extending gains...". 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)