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.
Interesting times! - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Dec 11, 2004

    Interesting times!

    After the euphoria that was witnessed during the previous weeks, this week marked a return to caution as both the benchmark indices, the Sensex and the Nifty declined over 1% each. While there was buying witnessed across select sectors like telecom, others like software, FMCG and banking witnessed a sedate journey throughout the week.

    After a dull close to the week ended December 3, while the markets opened strongly on Day one (Monday) of this week, caution set in and the consequent profit booking led to the markets weaken as the day progressed. Market players booked profits at every bounce-back. This weakness continued even on the subsequent two daysí trades with the Sensex oscillating near the 6,300 levels. Profit booking at higher levels seemed to be the most obvious reason for these daysí fall. At near 6,300 levels, the markets have been in uncharted territories and caution was looming large. These three days of despair were then followed by a day of buoyancy on Thursday as the bulls got back into action with the Sensex crossing the 6,300 levels again. But this optimism remained short-lived as the markets closed over 1% down on the final trading day of the week, Friday.

    Key gainers over the week (NSE-50)
    Company Price on Dec 3 (Rs) Price on Dec 10 (Rs) % Change 52-Week H/L (Rs)
    TATA CHEM 148 162 9.1% 189 / 94
    ACC 293 314 7.3% 319 / 220
    BHEL 642 684 6.5% 690 / 375
    INDIAN HOTELS 494 524 6.0% 535 / 321
    ZEE TELE 151 158 5.2% 175 / 100
    Note: Click on the link above to read our view on the company/sector

    Now considering some stock specific action on the bourses, the losersí table below shows that 3 of the 5 top losers amongst the Nifty stocks this week were from the Reliance Group. While much has already been said about the implications of the current imbroglio created by the management of the Group, we would like to mention here that the Group, as a whole, benefits from synergies and that the outcome of the current situation will have a lingering effect on the way things pan out of the group companies in the future. Confidence and stability in the top management is extremely critical when it comes to the comfort factor for retail and institutional investors. Continued spat by the top management of the Group is thus likely to dent this confidence and consequently, have an adverse impact on valuations.

    Key losers over the week (NSE-50)
    Company Price on Dec 3 (Rs) Price on Dec 10 (Rs) % Change 52-Week H/L (Rs)
    BSE-SENSEX 6,323 6,234 -1.4% 6,386 / 4,228
    S&P CNX NIFTY 1,996 1,969 -1.4% 2,015 / 1,292
    RELIANCE ENERGY 581 506 -12.9% 818 / 426
    RELIANCE 544 499 -8.2% 650 / 382
    PNB 379 355 -6.2% 408 / 176
    IPCL 186 177 -5.0% 240 / 106
    HCL TECH. 367 349 -4.9% 407 / 234
    Note: Click on the link above to read our view on the company/sector

    Coming back to the present state of the Indian markets, the very fact that they have breached their all-time highs requires investors to practice utmost caution with respect to their equity investment decisions. Further, with interest rates on the rise, stocks, especially from industries that are capital intensive and have a high debt to equity ratio should be avoided. While we are not trying to take the role of a 'doomsayer', we are concerned about is the fact that markets are seemingly not taking into consideration the various risks that cloud the horizon. For instance, one of the biggest factors that are helping Indian markets currently is the incessant flow of FII money.

    However, it is important to note that the pressure on the US dollar on account of the huge US current account deficit has the ability to deepen further. A rapidly depreciating US dollar may have inflationary effect on the US economy, which may further result in the Federal Reserve raising interest rates faster than expected. With job recovery, consumer spending, manufacturing index all showing good numbers off late, a faster US economic growth has increased the chance of faster rise in interest rates in the US. And this might be a big reason for the 'much-touted' FII money to reverse direction and move towards the safer US treasury bills and bonds. Whatís more, the rise in US interest rates might also lead to increasing pressure on the RBI to raise interest rates in India.

    Thus, at this moment, it is pertinent to look at both the upside and the downside with a fundamental view i.e. earnings growth and relative valuations. In the same breath, we would like to state that we remain positive on India Inc.ís long-term prospects and believe that a selective and staggered investment approach is apt for investing into equities at the current juncture. Happy investing!

     

     

    Equitymaster requests your view! Post a comment on "Interesting times!". 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.

    Were You Lured By Mr Market's Bait? (The 5 Minute Wrapup)

    Aug 23, 2017

    Mr Market lured investors into believing they'd bitten into a crash. Did you take the bait?

    Deep State First (Vivek Kaul's Diary)

    Aug 23, 2017

    Nowhere was the darkness deeper than in the nation's capital. There, no light shone. No flicker of awareness...observation...learning...or reflection appeared.

    Why Hasn't Warren Buffett Rung the Bell Yet? (The 5 Minute Wrapup)

    Aug 22, 2017

    It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.

    Think Twice Before You Keep Money In A Savings Bank Account (Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    More Views on News

    Most Popular

    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.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    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!

    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 23, 2017 (Close)

    MARKET STATS