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.
Tone down expectations - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Oct 3, 2003

    Tone down expectations

    Going by the trend in the stock markets over the last six months or so, indications are that there is no stopping at this point in time. Though there are apprehensions about the forthcoming election, the undertone is bullish.

    If one were to look at the top five gainers over the last month or so, large market capitalization stocks are completely absent. Just to put things in perspective, the top gainers list in the BSE 'A' group goes like this HCL Infosys, Aurobindo Pharma, Sesa Goa, Moser Baer and Saw Pipes. Except from some stocks like Ashok Leyland, P&G, M&M, Infosys and Zee, the top 25 gainers list consist primarily of mid-cap stocks.

    Top 5 gainers…
    Company Price (Sep 1st, 2003) Price (Oct 3rd, 2003) (% change)
    Sensex 4,325 4,531 4.8%
    Nifty 1,376 1,446 5.1%
    HCL Infosys 159 310 94.3%
    Sesa Goa 223 310 39.0%
    Aurobindo Pharma 483 663 37.3%
    Saw Pipes 168 230 36.6%
    Moser Baer 283 386 36.2%

    Domestic small cap pharma stocks have been in the limelight in recent past on account of various factors like huge outsourcing opportunities, R&D thrust and industry consolidation. However, our view is that of caution. Even bigger players like Ranbaxy and Dr. Reddy with a relatively strong balance sheet are finding it difficult on the R&D front. Outsourcing offers significant growth prospects in the long-term. But whether all companies will benefit from this trend remains an area of doubt (look at the software sector).

    On the other hand, stocks in the top five losers in the BSE 'A' group is hardly surprising. Shree Rama Multitech, Pentamedia, DSQ Sofware, Wockhardt Life, Chennai Petro and Silverline. Barring Chennai Petro, none of the other stocks have strong fundamentals to support the rise during the recent rally. With the BSE also taking some action in these speculative counters, the loss has been significant.

    Top 5 losers…
    Company Price (Sep 1st, 2003) Price (Oct 3rd, 2003) (% change)
    Shree Rama Multitech 9 6 -36.5%
    Pentamedia 12 8 -28.8%
    HFCL 27 21 -22.8%
    Silverline 7 6 -21.7%
    DSQ Software 10 8 -21.2%

    Given this backdrop, one wonders whether the premise of some stocks gaining ground is strong or not.

    1. Are investor's buying a stock because the stock market, as a whole, is showing positive signs? Or,

    2. Are investors buying stocks based on the fact that fundamentals are looking strong?

    The latter seem to be a safer option from our perspective. This is important because the risk return profile of stocks have changed when one considers the recent rally. Though the long-term prospects remain promising, probably, it is time to tone down return expectations from equities in the future.



    Equitymaster requests your view! Post a comment on "Tone down expectations". 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.

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

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    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.

    Which Gods Will Bring Down the US Empire? (Vivek Kaul's Diary)

    Aug 17, 2017

    Mr Trump is in the White House and the gods are in their heavens; what's not to like?

    Will They Haul Off Trump's Statue, Too? (Vivek Kaul's Diary)

    Aug 16, 2017

    All across the country, the old gods become devils. New, gluten-free gods take their places...

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    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.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    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: 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 17, 2017 (Close)