Dec 9, 2006|
The streak's snapped!
Finally its over! The six-week positive ending streak of the markets came to a halt during the week, thanks mainly to a huge selling pressure on the last trading day. Thus, for the week ended Dec 8, 2006, the benchmark BSE-Sensex ended marginally lower while the decline in NSE-Nifty was a tad higher at 1%.
After ending the week agonizingly close to the 4,000 mark, the 'Nifty' breached the barrier once again in early trade on Monday and this time around, even managed to close above the coveted mark. However, that was the only bright spot on what was otherwise a volatile day on the bourses. Volatility continued to rear its head for the remaining days of the week as nervousness at higher levels on the part of investors never really allowed the indices to move into top gear, a trend that was witnessed in the previous week. Tuesday was the only exception as led by heavyweights; both the indices witnessed strong gains. The bloodbath that was however witnessed on the last trading day was more than enough to wipe off all the gains earned during the first four days.
As far as the institutional activity on the bourses was concerned, Foreign Institutional Investors (FIIs) were net sellers this week to the tune of nearly Rs 18 bn. Domestic mutual funds (MFs), on the other hand, turned out to be net buyers to the tune of Rs 2 bn.
As far as sectoral indices are concerned, with the exception of the metal and small cap index, all the others ended the week in the red. Worst hit were the auto and the FMCG index, both of which lost 1.5% each. Gains in the metal index could be attributed to the buying interest in heavyweights such as Tata Steel and Hindalco as both of them account for nearly 50% of the total index.
||As on December 1
||As on December 8
|BSE OIL AND GAS
Having looked at the institutional activity and the movement in key indices in the last week, let us consider some sector/stock specific developments:
Software stock closed mixed for the week with major gainers being I-Flex Solutions (up 22.1%), Polaris Software (up 16.7%) and Sonata software (up 13.6%). TCS, the software behemoth announced a landmark US$ 100 m deal from Bank of China (BOC) during the week. As a matter of fact, the BOC deal is one of the major IT-related deals signed by a Chinese bank ahead of the opening up of the country's banking sector to foreign competition by December 11, 2006 under Beijing's commitment to the WTO. All major Indian IT giants, including TCS, Infosys, Satyam, Wipro, NIIT, and i-flex have set up bases in China, servicing their multinational customers in the country and targeting the huge domestic software market as well as the Japanese and South Korean markets.
Top gainers during the week (BSE A)
Dec 1 (Rs)
Dec 8 (Rs)
|S&P CNX NIFTY
RCL, the telecom major ended 1.2% higher for the week. As per reports, the company has floated an US$ 8-bn telecom tender. This is touted as one of the biggest ever tender for equipment, floated by any telecom operator in the world. The contract is likely to be split in between 3-4 players in as no single player can cater to it alone. The winners are likely to be announced 4-5 months later and the first batch of equipment is expected to be supplied 5-6 months after the contract is awarded. This is a forward looking move on the part of RCL as it currently has a CDMA capacity for 30 m subscribers and it already has a subscriber base of about 24 m. This move is in keeping with RCL's foray as a GSM based operator. Currently the GSM network services 70% of telecom subscribers in India. With RCL having issued Request for Proposal for nearly 70-75 m GSM lines, we believe this move will largely help it to increase its presence in most GSM circle s across the country. RCL currently has a presence in 8 circles and has a subscriber base of 3.2 m GSM subscribers, earlier this year it had applied for license in 21 GSM circles.
Top losers during the week (BSE A)
FMCG behemoth HLL has indicated its keenness towards further acquisitions, which fit in well with its core areas of business. This comes after its parent Unilever clarified that the company would stick to its core areas of strength while taking a decision on acquisitions. The management indicated that it wishes to learn from the past mistakes (of acquiring non-core businesses such as Nihar that was later sold to Marico, and tea estates), which did not do well with the company. However, select acquisitions like that of Lakme, Kissan and Kwality have enabled the company foray into newer businesses, acquire higher market share and improve margins. HLL's turnover, at Rs 110 bn in CY05, was over one third of the total branded/organized FMCG market in India. In the last couple of years, the company has embarked on a major restructuring exercise focusing on improvement in quality of earnings, pruning brand portfolio and securing a viable future for its non-core businesses through JVs or spin-offs. The stock ended the week 2.8% weaker.
With markets poised at higher levels, it is not surprising to see increased volatility as investors continue to look for direction. As mentioned time and again, while we might be concerned with the medium term valuations of quite a few companies, over the long-term we are bullish on India Inc's ability to continue to deliver robust returns to its shareholders. However, strong business model and a competent management are of the essence here.
More Views on News
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.
Aug 21, 2017
Most Indians who cannot find jobs, look at becoming self-employed.
Aug 21, 2017
PersonalFN explains the chief factor pushing gold prices up of late.
Aug 21, 2017
One of the hallmarks of successful investing is to look out for companies that have a unique and enduring moat.
Aug 19, 2017
Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.
More Views on News
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
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.'
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
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: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407