X

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.
Valuations drag Indian markets lower - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 24, 2009

    Valuations drag Indian markets lower

    After witnessing strong buying interest during the previous week, the Indian markets ended up as the top losers amongst key world markets during the latest completed week. We assume that the two key reasons behind the same would be - one, stretched valuations and two, corporate results not meeting market expectations.

    India's benchmark index, BSE-Sensex ended lower by 3% this week. The scenario in the global markets was quite mixed. While Asian markets ended higher, indices from Europe and the Americas ended on a weak note. China (up 4.4%) and Hong Kong (up 3%) were the top gainers this week. They were followed by UK (up 1%), Singapore and Japan. Brazil, France and the US were amongst the top losers this week down by about 1.7%, 0.5% and 0.2% respectively.

    Source: Yahoo Finance

    Coming to the performance of sectoral indices in India, barring stocks from the IT and FMCG sectors, selling activity was seen across the board. Stocks from the oil & gas and capital goods bore the brunt of profit booking as the BSE-Oil & Gas and BSE-Capital Goods indices ended lower by about 6% each. Stock from the consumer durables, realty and banking spaces followed suit as their respective indices ended lower by about 3-4%.

    Smallcap and midcap stocks seemed to be preferred choice (as against large caps) again this week. While the BSE-Smallcap Index ended marginally higher, the BSE-Midcap Index ended lower by about 1.5% only. As mentioned above, the BSE-Sensex ended lower by 3%.

    Source: BSE

    Moving on to corporate news - The week saw a number of corporate giants announce their September 2009 quarter results this week. The cigarettes to hotels conglomerate, ITC was one amongst them. The company's topline grew by 13% YoY during the quarter. This was largely on the back a strong 21% growth in its cigarettes business. On the back of a 5% YoY improvement in operating margins, the company's operating profits surged by 31%, while its net profits were higher by 26% YoY during the quarter.

    Engineering and construction major, L&T also announced its results this week. While the company reported a muted performance on the revenues front, it put up a good show at the bottomline level. While standalone revenues grew by a marginal 2% YoY during the quarter, net profits were higher by 20% YoY (on exclusion of extraordinary items). The reason behind the surge in profits was a huge jump in other income. As per the company's management, the reason for the company's poor topline performance has been a combination of delay in project execution (especially of road projects), and a slowdown in off-take of products under its electrical & electronics and Machinery & Industrial Products segments.

    Two wheeler market's leader Hero Honda also announced its 2QFY10 results. The company witnessed a strong revenue growth of 27% YoY during the quarter. This was largely on the back of a 22% YoY increase in volumes. The quarter ending September 2009 was a milestone quarter for the company as it crossed the 1 m volume mark during the quarter and in the process also reached a market share of 59%. A combination of factors such as strong brands, investments in brand building, market expansion and new launches have all helped the company witness this strong performance over the past few quarters. Further, on the back of a 5% YoY expansion in operating margins, the company's operating profits grew by 71% YoY largely due to lower raw material prices. During the quarter, Hero Honda's bottomline grew by 95% YoY.

    In other news, it was a significant week for Wipro as it signed a 10-year outsourcing agreement with Delhi International Airport Ltd (DIAL) to provide information technology infrastructure and services for the latter's Indira Gandhi International Airport (IGIA). As part of the contract, Wipro will deliver business IT alignment for DIAL by combining airport solutions with governance and integrated service delivery. The scope includes airport specific applications, data centre, networks, security and surveillance systems and end-user systems. In addition, the IT major will be responsible for managing a host of intelligent systems, including building management systems, access control, public address and telephony. It may be noted that the two have also signed an agreement to form a JV (which will be called Wipro Airport IT Services) with focus on emerging business models and airport specific applications wherein Wipro will hold 74% stake in the JV.

    Movers and shakers during the week
    Company 16-Oct-09 23-Oct-09 Change 52-wk High/Low
    Top gainers during the week (BSE-A Group)
    Hind. Copper 208 252 21.3% 328 / 70
    Jubilant Organosys 218 237 8.9% 306 / 85
    HCL Tech. 301 326 8.0% 343 / 89
    Yes Bank 237 256 8.0% 257 / 41
    Hindustan Zinc 866 934 7.9% 890 / 215
    Top losers during the week (BSE-A Group)
    Nagarjuna Const. 178 159 -10.7% 178 / 34
    Zee Entertainment 254 227 -10.5% 255 / 88
    Grasim 2,391 2,150 -10.0% 2,898 / 831
    Punj Lloyd 288 261 -9.4% 306 / 67
    GTL Infra 39 36 -9.2% 50 / 28
    Source: Equitymaster

    India's inflation rate as measured by the WPI (wholesale price index), touched a high of 1.21% for the week ended October 10. This rise in inflation was led by a marginal increase in the cost of food and manufactured items. However, what remain a major concern is the fact that the consumer price index (CPI) continues to remain high and thus for all practical purposes, inflation in India is currently much higher than 1.2%. Food prices have been on the rise for a while now, given that weak monsoons this year had hampered crop production. It may be noted that the RBI has already estimated that inflation (WPI) may rise to 5% by the end of this fiscal.

    If there is one parameter that indicates the situation of the world economy, it would be the global trade data. After showing signs of recovery during the months of June and July, global trade flows slipped during the month of August. This gives frail sings of the economic recovery. As per the Netherlands Bureau for Economic Policy Analysis, trade volumes fell 2% from July. This data is compiled on customs data from 23 developed countries and 60 emerging markets, which together account for about 95% of global trade. It is believed that volumes were lower by 13% YoY during the month of August.

     

     

    Equitymaster requests your view! Post a comment on "Valuations drag Indian markets lower". 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.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working (Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    The Key Factor Pushing Gold Up These Days (Outside View)

    Aug 21, 2017

    PersonalFN explains the chief factor pushing gold prices up of late.

    How Unique Are the Companies You Invest In? (The 5 Minute Wrapup)

    Aug 21, 2017

    One of the hallmarks of successful investing is to look out for companies that have a unique and enduring moat.

    You've Heard of Timeless Books... Ever Heard of Timeless Stocks? (The 5 Minute Wrapup)

    Aug 19, 2017

    Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    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.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    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

    S&P BSE SENSEX


    Aug 21, 2017 (Close)

    MARKET STATS