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4,800 in sight!

Oct 11, 2003

The story on the Indian bourses this week was similar to that of the previous two weeks. Akin to the last two weeks of September, wherein the indices gained about 4% on each weekly occasion, this week was even better. In the current week, while the Sensex notched gains of 4.7%, the Nifty managed to climb 5% higher. With this week’s gain, after a modest correction witnessed during the middle of September, the Sensex and the Nifty have gained 13% and 15% respectively in just 3 weeks!

Nifty heavyweights movement over the week
COMPANY Price on
October 3 (Rs)
Price on
October 10 (Rs)
%
CHANGE
SAIL 38 43 11.2%
WIPRO 1217 1347 10.7%
ITC 810 889 9.8%
SBI 455 480 5.4%
RELIANCE 449 471 4.9%
INFOSYS 4560 4630 1.5%
HLL 191 189 -1.0%

The week opened with a bang on Monday as the indices raced past some crucial psychological levels to newer highs. However, the almost 80 points rise on Monday was followed by two consecutive days of subdued performance on the bourses, albeit with significant intra-day volatility. After consolidating on Tuesday and Wednesday, it was once again party time for the bulls as they took control charge of the markets and pushed them to new 52-week highs on Thursday and then again greater highs on Friday. However, the improved sentiments on the last two trading days could be attributed to the fact that the results season had begun with Hughes Software, MphasiS BFL and tech bellwether, Infosys, declaring results, which beat market expectations.

Top 5 gainers over the week
COMPANY Price on
October 3 (Rs)
Price on
October 10 (Rs)
%
CHANGE
52-WEEK
H/L (Rs)
BSE-SENSEX 4,553 4,769 4.7% 4,781 / 2,828
S&P CNX NIFTY 1,449 1,523 5.1% 1,527 / 920
NOVARTIS 259 321 23.9% 324 / 201
ESCORTS 50 62 23.0% 68 / 35
LIC HSG. FINANCE 142 173 22.1% 177 / 57
TATA CHEM 93 113 21.0% 118 / 45
HIND LEVER CHEM 217 258 19.3% 270 / 142

To begin with the most important event of the week, which this time (thankfully) passed by well, Indian software major, Infosys, declared its 2QFY04 results. And as usual, the software major kept its image intact of underpromising and overdelivering. Infosys’ topline grew by 9%, while its bottomline registered an 8% growth on a QoQ basis. The company's software development business, which contributes 32% of total revenues, has seen a 23% sequential growth. However, high-end services like system re-engineering, product development and consultancy have seen negative sequential growth. Infosys has recorded a 10.5% growth in the offshore volumes and a 2.4% rise in the onsite volumes. On the billings rate front, while the onsite rates have improved by 1.4%, the offshore rates have shown a 2.3% growth. This signifies signs of stability on the pricing front.

For a detailed analysis of the results declared during the week, click the links below: Infosys, Hughes Software, MphasiS BFLHDFC Bank and Nalco.

Top 5 losers over the week
COMPANY Price on
October 3 (Rs)
Price on
October 10 (Rs)
%
CHANGE
52-WEEK
H/L (Rs)
HFCL 20 16 -21.9% 45 / 11
SHIPPING CORP 141 123 -13.0% 146 / 50
SILVERLINE 6 5 -9.3% 32 / 5
PENTAMEDIA 8 8 -8.3% 33 / 7
SAREGAMA 56 52 -7.5% 88 / 42

Talking about the losers, the second biggest loser amongst the BSE ‘A’ group stocks this week was Shipping Corporation of India (SCI). It must be noted that the stock has had a good run up on the bourses on the back of disinvestment expectations, wherein the government intends to offload 51% equity stake in SCI along with management control to a strategic partner. The three bidders left in the fray are Essar Shipping, Sterlite and Videocon. However, the reason for the stock to lose ground this week was the fact that the company had declared a 170% dividend last week in the form of a special interim dividend, which took its toll on the stock price.

Going forward into next week, backed by the euphoric sentiment this week, the indices are not only at newer highs but also at levels not seen over the last 3 years. The market sentiments from hereon will be dominated by the results that will flow. Some important results lined up in the coming week include Wipro, Britannia, Colgate, Mastek, Reliance Energy, Reliance, HDFC and Zee. However, we must caution investors here that for the near-term, the markets seem to be a little stretched and any disappointment on the quarterly results front could have some negative impact on the indices, not to forget about the volatility that follows the announcement of key results like Reliance and Wipro. However, at the same time, investors with a longer-term horizon, could stay invested as the India Inc. story is not over yet and the benefits of restructuring and cost cutting exercises over the last couple of years will bear fruit in the years to come.

A good strategy would be that if you have Rs 100 to invest, do not invest it at one go. Try and do it in installments month after month. Increase the proportion if the markets fall, and decrease it if they rise in a month. That way you will be able to average out your cost. Happy Investing!

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