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 at the top... - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Nov 17, 2007

    Swinging at the top...

    Markets felt the heat as the US sub-prime mortgage crisis continued to plague global equity markets. However, positive developments in the political arena and better than expected results from the US heavyweight Wal-Mart helped assuage worries leading to the highest single-day gain in the Sensex on Wednesday. In fact, this even made up for most of the decline in the other trading sessions. Thus, for the week ended November 16, 2007 the BSE-Sensex gained 4.2% while the NSE-Nifty gained 4.3%

    The week began on a pessimistic note on weak global cues as the Sensex declined by 171 points while the Nifty lost 46 points on Monday. There was a restoration of positive sentiment on Tuesday as the indices recovered to end in the green by 298 points on the Sensex and 78 points on the Nifty. Aided by global clues, the markets shot up 894 points on the Sensex and 243 points on the Nifty on Wednesday. Banking, metals and engineering sectors registered the highest gains. While pharma, software and power stocks weighed heavy on the indices on Thursday, buying interest was seen in select energy, auto, metals and telecom stocks. The Sensex closed 145 points down while the Nifty declined 26 points. Friday witnessed considerable volatility as the benchmark indices started on a negative note in the early hours, went on to swing upwards and subsequently languished in the red. The Sensex lost 87 points while the Nifty pared 5 points. Thus the markets gained in 2 out of the 5 trading sessions in the week.

    On the institutional activity front, between 8th November and 15th November, Foreign Institutional Investors (FIIs) were net buyers to the tune of Rs 8 bn while mutual funds bought equities worth Rs 1 bn.

    (Rs m) MFs FIIs Total
    8-Nov (2,188) (2,869) (5,057)
    12-Nov 55 (8,200) (8,145)
    13-Nov (1,394) 1,222 (172)
    14-Nov (128) 9,520 9,392
    15-Nov 4,830 7,884 12,714
    Total 1,175 7,557 8,732

    On the sectoral indices front, BSE FMCG (up 11%), BSE Smallcap (up 8%) and BSE Oil & Gas (8%) featured among the key gainers.

    Index As on November 8 As on November 16 % Change
    BSE FMCG 2,011 2,231 10.9%
    BSE SMLCAP 9,611 10,381 8.0%
    BSE OIL AND GAS 11,594 12,480 7.6%
    BSE PSU 9,847 10,571 7.4%
    BSE MIDCAP 7,946 8,512 7.1%
    BSE BANKEX 10,353 11,003 6.3%
    BSE METAL 17,050 17,498 2.6%
    BSE AUTO 5,229 5,284 1.0%
    BSE HEALTHCARE 3,859 3,885 0.7%
    BSE IT 4,299 4,159 -3.3%

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

    Auto stocks closed mixed with Ashok Leyland (8%) leading the pack of gainers, while M&M (1%) closed in the red. Tata Motors closed marginally higher. Tata Motors, is readying a slew of launches in the commercial vehicle segment during 2008 to counter increasing competition and also revive demand. The Indian auto market has been hit in recent months by a sharp rise in interest rates, which have risen almost 3-4% since December last year. Almost 95% of CVs are purchased on credit in the country. It would also roll out a new range of passenger cars during 2008. The company would first introduce a new range of pick-up trucks early next year. The pick-up launch is important as that particular segment is gaining popularity in India as seen in the success of Mahindra & Mahindra's 'Maxx' pick-up truck. The company is also working on a 15 tonne plus commercial vehicle that will be rolled out during the later part of next year.

    Stocks of the oil marketing companies closed strong with BPCL (22%), HPCL (19%) and IOC (17%) leading the pack of gainers. Buoyancy in these stocks seems a result of the announcement that the government is considering an excise duty rejig to minimise the impact of soaring crude oil prices on both consumers and oil companies. At present, the excise duty on petrol and diesel has two components - a 6% ad valorem duty that varies with the basic price and another duty specified per litre. This ad valorem duty may be replaced by a larger specific duty and the new specific duty rate should be lower than the combined duty by Rs 2 per litre. Currently, the excise duty is 6% plus Rs 13 per litre for petrol and 6% plus Rs 3.25 per litre for diesel. This development comes on the back of recommendation by Standing Committee of Parliament on Petroleum for the removal of the ad valorem component of the excise duty on petroleum products.

    Top gainers during the week (BSE A)
    Company Price on November 9 (Rs) Price on November 16 (Rs) % Change 52-Week H/L (Rs)
    BSE SENSEX 18,908 19,698 4.2% 20,238 / 12,316
    S&P CNX NIFTY 5,663 5,907 4.3% 6,012 / 3,555
    CHAMBAL FERTILISER 48 72 51.9% 77 / 30
    MRPL 87 130 50.4% 149 / 32
    BONGAIGAON REFINERY 72 105 45.9% 117 / 39
    MIRC ELECTRONICS 20 29 45.6% 30 / 16
    RCF 58 81 39.8% 85 / 33

    Real Estate stocks closed strong with Unitech (8%) and DLF (3%) featuring among the key gainers. As per a leading business daily, India's largest real estate company DLF is acquiring the Singapore-based privately-held super luxury resorts and spa chain, Amanresorts, for around US$ 250 m. In addition to this payout, DLF will assume debt of approximately US$220 m as part of the deal. The US $220 m debt will remain on the Amanresorts balance sheet and be paid off from its future revenues. The 20-year-old Amanresorts has 18 operational properties under its belt in Indonesia, Cambodia Bhutan, India, the Philippines, the United States, French Polynesia and France. All Amanresort properties have a room tariff of over $600 per night, giving it a hugely exclusive tag. The acquisition also entails DLF taking over a prime property at Delhi's Lodhi Road. DLF is getting an opportunity to gain access to the super-luxury hospitality market with this acquisition. The 'Aman' brand name will continue even after the acquisition. DLF forayed into hospitality segment last year. It has a 74:26 joint venture agreement with Hilton International for developing 50 to 75 properties in the long term.

    Top losers during the week (BSE A)
    Company Price on November 9 (Rs) Price on November 16 (Rs) % Change 52-Week H/L (Rs)
    GUJARAT MINERAL DEV 604 555 -8.0% 634 / 67
    IPCA LABS 660 609 -7.7% 794 / 411
    MRF LTD. 7,805 7,235 -7.3% 8,956 / 3,100
    HEXAWARE TECH 98 91 -7.3% 205 / 77
    NESTLE 1,465 1,371 -6.4% 1,663 / 876

    With the markets registering a huge gain after having declined in six consecutive sessions, now is perhaps the right time to have a re-look at one's attitude towards stock prices. Warren Buffett's letter to shareholders in 1991 points out "think about long-term business prospects rather than short-term stock market prospects, a perspective likely to improve results. It's true, of course, that, in the long run, the scoreboard for investment decisions is market price. But prices will be determined by future earnings. In investing, just as in baseball, to put runs on the scoreboard one must watch the playing field, not the scoreboard."



    Equitymaster requests your view! Post a comment on "Swinging at the top...". 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.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    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.

    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...

    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


    Aug 18, 2017 (Close)