Return of the blue chips - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Return of the blue chips

Sep 29, 2001

Investors seem to have done a lot of soul searching over the previous weekend ruminating on the country's economic health and degree of impact of the WTC strikes. Many would be thinking is the health of the economy same as it was 8 years back? The answer seems to have been answered over the current week. Domestic equities, despite uncertain U.S markets, finally made a come back after four consecutive weeks of decline. There are very few and far between instances in an investor's lifetime that equities are priced cheapest in a decade. After all those years of above 5.5% GDP growth one gets to pick equities as if none of it had happened. Also, market thinking seems to be that U.S is not likely to adopt blanket military action. First salvos against terrorist outfits could take the form of choking their financial and intelligence infrastructure. Consequently, as repeatedly stated by the U.S prez, retaliatory action is likely to be a longish term exercise. Keeping this in mind investors seem to have lapped up stocks.

Having said that, the economy continues to decelerate. Earning season is set to commence with the fiscal first half coming to an end. The results and management guidance is likely to help guage the health of India Inc. and expectations for rest of the year. The picture is not likely to be pretty. Another dampner is that the season is universal. U.S corporates are set to declare thrid quarter results and are not expected to match earning estimates. Many of whom could use the happenings over the previous fortnight as a key reason for drop in earnings.

  Points % change
Sensex 211.5 8.1%
HLL 14.4 7.4%
RIL 49.3 22.8%
Infosys 167 7.6%
ITC -34.5 -5.6%
RPL 4.5 17.8%
The BSE Sensex and NSE Nifty spurted sharply over the past trading week led by old economy counters with resurrection of the blue chips. The top five scrips on the Sensex, in terms of weightage, control 57% of the market cap. Many of these counters were instrumental for the gains. All of these, save for HLL, were trading at their 52-week lows if not more, which could have whetted market appitite.

With a weakening global and domestic economy investors may choose to take refuge in defensive counters. Portfolio rebalancing is likely to be guided by the rationale; which sectors/companies are most immune to the slowdown. Also, who are most likely to withstand the tough times. With lower household incomes one tends to cut down on big ticket items; automobiles and consumer durables. At a lower level consumer facilities (clothing etc.), petrol and telephone bills. On the other hand, the last thing one stops is probably eating 'rotis', biscuits ... your basic consumer staples etc. The smokers are going to be smoking and probably a lot more when the chips are down.


Equitymaster requests your view! Post a comment on "Return of the blue chips". Click here!

  

More Views on News

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

How to Save Money by Exiting Stocks Before They Fall podcast (Views On News)

Sep 24, 2020

A penny saved is a penny earned. It doesn't matter where you enter. All that matter is where you exit. Watch this video to identify an opportune time to exit your investments and book profits.

ICICI Prudential ESG Fund: Aims for Sustainability (Outside View)

Sep 24, 2020

PersonalFN briefly explains the newly launched fund : ICICI Prudential ESG Fund.

What to Do if there is a Second Wave of the Stock Market Crash (Profit Hunter)

Sep 24, 2020

Here's what I think investors should do in this selloff.

IDFC Mutual Fund Starts Campaign 'SIFI'. Should Buy Into the Idea? (Outside View)

Sep 23, 2020

IDFC Mutual Fund is taking the road less travelled and hence started a campaign SIFI (SIP in Fixed Income) to promote the concept of SIP for its debt funds investors.

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

How Much Money Do You Need to Be a Professional Trader? (Fast Profits Daily)

Sep 17, 2020

In this video I'll answer a question I get asked often: How much capital do I really need to trade the markets for a living? Let's find out...

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Sep 24, 2020 (Close)

MARKET STATS