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.
Swinging around 20K! - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Nov 3, 2007

    Swinging around 20K!

    The week was marked by volatility as institutional investors alternated between being net buyers and sellers. The Reserve Bank of India (RBI) raised the Cash Reserve Ratio (CRR) maintained by the banks from 7.0% to 7.5% effective from November 10, 2007. This is expected to curb the growth in Reserve money (base money) from the current 24.4% to about 14.9%. However, the RBI did not increase the bank rate, nor lowered the reverse repo rate at which it absorbs excess liquidity from the banks. The US Federal Reserve reduced the Fed funds rate - by 25 basis points to 4.5%.

    The week began on an enthusiastic note as the Sensex surged 734 points (4%) while the Nifty gained 204 points (4%) on Monday. Tuesday witnessed considerable volatility as the indices oscillated on either side of the previous day's close throughout the day to finally end in the red. The markets regained some of their lost footing as the indices closed above breakeven on Wednesday on the back of buying action in banking and power stocks. Thursday was a repeat of Tuesday as the markets opened on a positive note in the aftermath of the Fed announcing a quarter point rate cut but subsequently slipping into the red on profit booking. Both the Sensex and the Nifty closed in the red (0.6%). Friday witnessed Asian markets across the board, except India, close in the negative. The Sensex gained 252 points (1.3%) while the Nifty gained 66 points (1.1%) on Friday. For the week, the BSE-Sensex appreciated by 3.8% while the NSE-Nifty gained 4%.

    On the institutional activity front, between 26th October and 1st November, Foreign Institutional Investors (FIIs) were net buyers to the tune of Rs 9 bn while mutual funds bought equities worth Rs 4 bn.

    (Rs m) MFs FIIs Total
    26-Oct 8,314 (2,568) 5,746
    29-Oct 4,211 10,474 14,685
    30-Oct (5,336) (3,033) (8,369)
    31-Oct (111) 2,280 2,169
    1-Nov (3,580) 1,806 (1,774)
    Total 3,498 8,959 12,457

    On the sectoral indices front, BSE Bankex (up 9%) and BSE PSU (up 8%) featured among the key gainers, while the BSE Auto Index (4%) and BSE FMCG Index (3%) were among the losers.

    Index As on October 26 As on November 2 % Change
    BSE BANKEX 10,274 11,242 9.4%
    BSE PSU 9,227 9,930 7.6%
    BSE OIL AND GAS 11,103 11,736 5.7%
    BSE METAL 16,745 17,694 5.7%
    BSE SMLCAP 9,551 9,742 2.0%
    BSE MIDCAP 7,921 8,022 1.3%
    BSE HEALTHCARE 3,886 3,934 1.2%
    BSE IT 4,636 4,635 0.0%
    BSE FMCG 2,129 2,062 -3.1%
    BSE AUTO 5,617 5,423 -3.5%

    Now let us have a look at some of the key stock/sector specific developments during the week.

    Software stocks closed mixed with Infosys (3%) leading the pack of gainers, while TCS (5%) and Satyam (3%) closed in the red. Infosys has decided to open a separate business unit (SBU) for India, which has been contributing a mere 1% to its revenues. The company, which so far had not attached much importance to the domestic market on grounds of low margins, will open the India Business Unit in 3QFY08. The company has also turned its attention to new markets such as Australia, China, Japan, West Asia, Canada, South America and Latin America. This is a good move primarily on two counts. First, focusing on newer markets will enable Infosys to reduce its dollar denominated billings. Secondly, by focusing in domestic segment, the company will be able to take benefits of the emerging domestic IT outsourcing market.

    Energy stocks closed strong with MRPL (35%), Reliance Petroleum (33%) and ONGC (18%) leading the pack of gainers. ONGC achieved a topline growth of 10% YoY during 2QFY08 on the back of higher production and increased realisations. EBITDA margin expanded to 54.6% during 2QFY08, up from 50% in 2QFY07 due to lower raw material and staff costs. ONGC's staff expenditure decreased by 42% YoY in 2QFY08, as the company had included Rs 3 bn on account of Golden Jubilee and additional annual incentive in 2QFY07. The subsidy burden on the company was Rs 38 bn in 2QFY08, down from Rs 50 bn in the corresponding quarter last year. A part of the decline can be attributed to the strengthening of the rupee, as subsidised oil received by the downstream companies is billed in US dollars and hence was cheaper in rupee terms. Bottomline registered a growth of 22% YoY during 2QFY08.

    Top gainers during the week (BSE A)
    Company Price on
    October 26 (Rs)
    Price on
    November 2 (Rs)
    %
    Change
    52-Week
    H/L (Rs)
    BSE SENSEX 19,243 19,976 3.8% 19,276 / 12,316
    S&P CNX NIFTY 5,702 5,932 4.0% 5,737 / 3,555
    NATIONAL FERTILISER 42 67 58.5% 96 / 37
    JINDAL STEEL 8,382 12,661 51.0% 849 / 133
    POWER GRID CORP 103 149 44.8% 726 / 430
    RELIANCE NATURAL RESOURCE 99 142 43.0% 802 / 461
    MRF LTD 5,624 7,867 39.9% 8,490 / 1,741

    Engineering stocks closed on a high with L&T (15%) and BHEL (up 12% each) featuring among the key gainers. BHEL achieved a topline growth of 19% YoY in 2QFY08 compared to the corresponding quarter in the previous fiscal and 20% YoY in 1HFY08. Growth was led by 22% YoY growth in 'power' segment sales. Operating margins expanded by 3.8%, owing to lower raw material and staff costs (both as percentage of sales). Other income grew by 195% YoY, which was led by an income tax refund of Rs. 2.7 bn. This led to a 91% YoY growth in net profits during the quarter. Order backlog stands at Rs 726 bn (4.2 times FY07 sales) at the end of September 2007.

    Top losers during the week (BSE A)
    Company Price on
    October 26 (Rs)
    Price on
    November 2 (Rs)
    %
    Change
    52-Week
    H/L (Rs)
    NIIT 139 113 -18.5% 172 / 45
    TATA ELXI 290 250 -13.7% 365 / 221
    MARUTI SUZUKI 1,181 1,021 -13.5% 1,252 / 713
    HEXAWARE TECH 111 99 -10.8% 205 / 97
    VSNL 568 510 -10.2% 600 / 342

    We have been cautioning investors about keeping their focus on the fundamentals of the companies and not unduly worrying over the market movements, as excitement is the enemy of investors. But if rapidly rising markets still tempt you, dear reader, we refer you to Warren Buffett's 2004 letter to shareholders. He mentions that if investors insist on timing the market, they should be fearful when others are greedy and greedy when others are fearful. The markets are greedy right now, perhaps this is the right time to be fearful?

     

     

    Equitymaster requests your view! Post a comment on "Swinging around 20K!". 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.

    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...

    This Company Beat the Business World's 'Three Killer Cs' (The 5 Minute Wrapup)

    Aug 16, 2017

    And what it has in common with beating the stock market too.

    5 Steps To Become Financially Independent (Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Let's Hope This Correction Continues (The 5 Minute Wrapup)

    Aug 14, 2017

    Last week's correction is making a number of Super Investor stocks look a lot more attractive...

    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...

    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 16, 2017 (Close)

    MARKET STATS