Dec 10, 2003|
The current rally in the stock markets seems to have fueled the imagination of a host of market participants including the likes of speculators as well as traders. True, that the current stock market rally is more secular in nature than the last one, however the movement of certain sectors makes one wonder whether like the last time are we headed for a stock market bubble of over ambitious expectations?
Is the rise warranted?
The case in point is the abnormally significant appreciation in the stock prices of second-rung software stocks. The table above indicates the gains these second rung software stocks have made yesterday, i.e., in a single day. For one, the movement of these, that too in a single day looks more speculative in nature. This notion seems logical especially considering that some of the companies mentioned above have a dubious record in the stock markets. The question that comes to mind is that what has changed suddenly to warrant such movement in these stocks? The fundamentals for the sector and we can safely say for these stocks does not seem to have changed much.
The large sized orders that investors are expecting are few and far in between. And even if large orders do come around they are more likely to go to larger and more established companies in the sector. Smaller companies are not likely to feel the benefits of the same until later. While the pressure on billing rates have abated for most of the companies in the sector it is still too early to say whether we are completely out of the slowdown in the sector. Also the topline growth is limited mainly to the larger players. Under these circumstances one needs to carefully look at the valuations of the second rung software stocks, especially since they are not relatively as researched as the larger companies.
In a bull market investors can easily get carried away. Speculators are the main reason for the same. Investors need to guard themselves against these kind of speculative movements in the stock markets. The need of the day is to carefully assess the risk return profile of any investment and, specifically, at this point of time to limit ones expectations from the stock markets. Research or entities that can provide you with unbiased research are the order of the day.
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 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
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.
Aug 17, 2017
Mr Trump is in the White House and the gods are in their heavens; what's not to like?
Aug 16, 2017
All across the country, the old gods become devils. New, gluten-free gods take their places...
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 4, 2017
The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.
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 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: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407