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Results add zing… - Views on News from Equitymaster
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  • Oct 18, 2003

    Results add zing…

    One seems to be out of words when markets seem to be heading only in one direction - that is up! It was yet another week of handsome gains on the bourses. The BSE Sensex closed with week-on-week gains of 3.4% while the NSE Nifty also notched up almost similar gains (3%). With this, markets have registered average gains of about 17% in the last 4 trading weeks. A largely good corporate scorecard, as yet, seems to be providing all the reasons for the bull party to continue.

    September quarter 2004: Corporate Scorecard
    COMPANY Sales Profit after tax Stock price change
    Indian Hotels 18% 32% 8.3%
    Zee 18% 29% 6.9%
    Wipro 29% 4% 5.4%
    Reliance 10% 26% 3.9%
    Hero Honda 9% 13% 2.5%
    HDFC 4% 22% 1.9%
    Colgate -3% 22% -1.5%
    Reliance Energy -4% 134% -4.5%
    IPCL 7% 20% -5.2%
    Note: Click on the links for a detailed analysis of the results

    The indices opened the week on a strong note with significant buying among software stocks, which was a factor of the overhang of the good results declared in the previous week by Infosys, MphasiS and Hughes Software. The indices closed with strong gains on the first trading day of the week (Monday). However, Tuesday was a different story altogether with profit booking witnessed across the board. For a moment, it seemed that the indices were due for some correction, despite the undertone being extremely bullish. However, it was short-lived happiness for the bears as they were soon over-powered by the bulls on Wednesday, when once again the indices managed to display the underlying strength.

    Top 5 gainers over the week
    COMPANY Price on
    October 10 (Rs)
    Price on
    October 17 (Rs)
    % CHANGE 52-WEEK H/L (Rs)
    BSE-SENSEX 4,769 4,931 3.4% 4,949 / 2,828
    S&P CNX NIFTY 1,523 1,569 3.0% 1,574 / 920
    BOMBAY DYEING 93 114 22.6% 117 / 41
    IDBI 47 58 22.3% 61 / 15
    EXIDE INDUSTRIES 92 111 20.7% 118 / 36
    ASHOK LEY. FIN. 57 68 20.0% 71 / 38
    STERLITE IND. 731 877 20.0% 925 / 135

    Thursday and Friday were no different as good results from Reliance and Wipro, the two most awaited results during the week, lived upto the market expectations as they declared healthy September quarter numbers. It must be noted that the indices managed to achieve new 52-week highs during the week and managed to close just marginally below those levels. Also, the markets witnessed intense volatility on several occasions during the week. However, investors took the opportunity and bought into the markets at every intra-day correction, which helped the indices to recover ground quickly.

    Top 5 losers over the week
    COMPANY Price on
    October 10 (Rs)
    Price on
    October 17 (Rs)
    % CHANGE 52-WEEK H/L (Rs)
    MASTEK 268 230 -14.4% 615 / 190
    DSQ SOFTWARE 8 7 -11.2% 24 / 7
    SHREE RAMA MULTI 7 6 -10.4% 15 / 4
    GUJ. NARMADA 57 52 -9.6% 68 / 25
    TRIGYN TECH 17 16 -8.8% 32 / 10

    Now let us have a look at some other news, which played on market sentiments during the week:

    • Steel stocks continued to gain on the bourses this week on the back of positive news flows. Some steel companies are planning to raise loans through the External Commercial Borrowings (ECB) route. These loans, raised from the overseas markets, would come at a cost below 6%, which is much lower than the current average of 14% being paid by some steel companies on their debt. This would result in significant savings in terms of interest outgo. Also, it must be noted that practically all the steel companies are targeting substantial growth in exports to aid their growth going forward. Some key gainers over the week

    • The oil-refining majors, HPCL and BPCL, were back in the limelight on the bourses for a brief period this week, which was on the back of the news that the Attorney General has asked the Supreme Court to reconsider their decision stalling the divestment of the two oil majors last month. The news had revived buying interest in the two oil-refining majors, HPCL and BPCL. But a surprising reduction in domestic petrol and diesel prices, despite a rise in international crude prices over the last one-month, led to pessimism towards the sector as a whole. According to a leading business daily, oil companies could take a hit of nearly Rs 4 bn over the next couple of months if domestic fuel and international crude prices continue at the current levels. Some key losers over the week

    We are already in the midst of a heavy flow of corporate results and this will only intensify as the month end draws closer. Some key results lined up next week include Ranbaxy, Grasim, Hindalco, ACC, Bajaj Auto, Bharti, Satyam and Tata Power. While FII’s have reaffirmed their faith in Indian equities, which is evident from the fact that the FII inflows in the month of October 2003 alone (to date) have surpassed the Rs 36 bn that flowed in during the whole of 2002, at the same time caution at the current levels is of utmost importance. As the indices have already had a run up to the current levels too-fast-too-soon, intense volatility and some correction could be seen. Thus, investors thus need to keep a tag on their risk-return profile, research well about companies that they wish to invest in and then select those that have good managements and sound business models.



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