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.
World markets stage a recovery - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Nov 7, 2009

    World markets stage a recovery

    After witnessing a dreadful previous week, key markets worldwide staged a positive performance this week. India's benchmark index, BSE-Sensex, which fell by about 5.4%, last week, ended higher by about 1.6% this week. As for global markets, China led the pack of gainers (up 5.6%). This was on the back of speculation that the government will extend stimulus measures to strengthen the economic recovery. Following China were the Brazilian and US markets, recording gains of 4.7% and 3.2% respectively. France and the UK markets followed suit, ending the week higher by 2.8% and 1.9% respectively. Japan was the sole loser amongst the key markets, recording a weekly loss of 2.4%.

    Source: Yahoo Finance

    Coming to the performance of BSE indices, PSUs stole the limelight this week. Recording a strong weekly gain of 4.7%, the BSE-PSU index was the top gainer. It was followed by BSE-Realty (up 4.4%) and BSE-Metal (up 4.1%). Gains in PSUs were seen on account of the Indian government firming up plans towards the divestment plans of certain PSUs (more on this below).

    Amongst the major underperformers were stocks from the FMCG, IT and capital goods spaces. The BSE-FMCG index was the sole loser this week, ending lower by 1.6%. The BSE-IT and BSE-Capital Goods indices ended higher by about 1% each.

    Moving on to the institutional activity this week, the foreign institutional investors (FIIs) and the mutual funds invested a total of Rs 11 bn this week (net amount). While the net investments from the FIIs stood at a figure of around Rs 7 bn, mutual funds invested a net of Rs 4 bn (not including Friday's transactions as data was not available at the time of writing).

    Source: BSE

    Moving on to corporate news this week, L&T won a massive order worth Rs 70 bn from Maharashtra State Power Generation (Mahagenco) for manufacturing turbine generator units. Considering the average size of orders that the capital goods and engineering companies have been winning over the past few years, this Rs 70 bn order seems quite a large one. This comes in just a few weeks after L&T won a Rs 40 bn order from Jaypee Industries for supercritical equipments. This is a significant step for the company considering that it has been a major player and thus, had been focusing on the power transmission and distribution (T&D) side of the power sector in the past. But by the looks of it, now it seems as if the company is focusing on generation side to fuel its growth going forward. At the end of September 2009, the company's engineering and construction segment had an order backlog of Rs 799 bn.

    Stocks forming part of the cement sector were not favoured by the investors this week. The key reason for the same is concerns over overcapacity. While the demand story remains intact, the fast pace of capacity expansion is what has been concerning investors. As per reports, cement prices, which started softening in select regions during the month of August this year, are expected to fall by another 10% over the next few months. The reason behind the same would be the disparity between the demand and supply. In addition, as the demand during the second half of the year is expected to be lower than in the first half, cement prices are likely to feel the pressure in the coming months. India Cements and Ambuja Cements were amongst the top losers amongst stocks forming part of the BSE 'A' group this week.

    As mentioned above, gains in PSUs were seen on the back of the Indian government firming up the divestment plans for PSUs. The government announced that it would make it mandatory for at least 10% of the equity of all profit-making public sector firms to be held by the public. In addition, it also plans to list unlisted companies. However, these unlisted PSUs will need to match certain criteria such as - having a positive net worth, no accumulated losses and three consecutive years of positive bottomline figures. PSU stocks such as RCF and MMTC were amongst the top gainers this week.

    Auto major, Maruti Suzuki reported strong sales numbers for the month of October. The company reported an increase in sales of 32% YoY in October. This was led by a 21% YoY growth in domestic volumes. Exports (which form a very small contribution to the overall volumes) grew at a rollicking pace of 159% YoY. The company's A3 segment took the cake this month as it grew by a robust 63% YoY. The A2 segment, from where the company gets majority of its volumes from, also performed strongly, growing by 18% YoY. Going forward, while sales of similar magnitude are not likely to be sustainable, Maruti is well positioned to achieve a strong double digit growth for the entire fiscal.

    Movers and shakers during the week
    Company 30-Oct-09 6-Nov-09 Change 52-wk High/Low
    Top gainers during the week (BSE-A Group)
    Jet Airways 379 463 22.2% 462 / 115
    RCF 61 74 20.9% 89 / 25
    Torrent Power 283 339 19.7% 318 / 64
    MMTC 30,242 36,147 19.5% 39,091 / 9,125
    GSK Consumer 1,208 1,401 16.0% 1,335 / 480
    Top losers during the week (BSE-A Group)
    Indiabulls Financial Ser. 167 137 -18.0% 222 / 81
    Tata Communications 392 367 -6.5% 615 / 336
    India Cements 110 104 -6.1% 179 / 79
    Ambuja Cements 89 84 -5.8% 111 / 50
    Tata Power 1,343 1,272 -5.3% 1,440 / 596
    Source: Equitymaster

    Moving on to matters relating to the Indian economy, during the week, a leading business daily reported that bank credit growth has fallen to single digits for the first time in the last decade. Growth in credit disbursements until October grew at a poor rate of 9.7%, as against a 29.7% growth during the same time last year. While poor credit appetite amongst retail customer has been cited as the main reason, lower corporate borrowing, particularly from oil companies has been attributed as a reason for the same. This development does render the RBI's credit growth target of 18% for FY10 (revised downwards from the 20% target set earlier) as unachievable.

    Coming to international news, while the world is expecting green shoots in the IT industry, particularly relating to the increase in IT spending, the CEO of the world largest IT firm, Microsoft thinks otherwise. Steve Ballmer (CEO of Microsoft) recently reiterated that the global economic slowdown has reset the world to a new once in a lifetime low. As such, he is of the belief that while growth will continue, it would be at a very slow and steady pace and not as a quick recovery. In fact, Mr. Ballmer even doubts the global IT spending to ever attain its pre-downturn peaks. However, in our eyes, the prospects of the Indian IT firms look much brighter considering that the demand for outsourcing will only be on the rise in the coming years.

     

     

    Equitymaster requests your view! Post a comment on "World markets stage a recovery". 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.

    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.

    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 18, 2017 09:04 AM

    MARKET STATS