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.
Global roundup: What’s cooking? - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Dec 11, 2004

    Global roundup: What’s cooking?

    While the Sensex has fallen by 1.4% in this week, we take a closer look at the performance of the US economy in recent times, key gainers and losers in the ADR market and what is in store for the Indian stock markets with respect to the events that are shaping up in the US economy.

    As far as the US economy is concerned, while the recent inflation numbers edged higher, the consumer sentiment (measured by an index) increased in the recent month. More importantly, the YoY trend in most of the key indicators like GDP growth, manufacturing index and jobless claims substantiates the fact that the US economy is on the path to recovery. Some argue that it is already well into the recovery phase! The graphs below show the quarterly and yearly GDP growth trend of the US economy. The Federal Reserve is expected to meet on Tuesday next week and expectations of a further rise in interest rates on the back of improved economic performance is not being ruled by the stock markets in general.

    Beside positive vibes on the economy front, the softening of crude prices has also provided fillip to the stock markets globally. Despite the decision by the OPEC (Organisation of Petroleum Exporting Countries) to reduce crude output by around 1 m barrels a day, crude prices fell sharply yesterday. Though prices have softened off late, it is still higher on a YoY basis.

    As far as ADRs are concerned, after gaining ground in the initial part of the week, HDFC Bank fell towards the end. The bank has submitted its offer document with the SEC to raise capital through an ADR offering. The issue size is expected to be in the range of US$ 300 m. The key losers among Indian ADRs were the technology majors. The Rupee appreciation has raised apprehensions over the sustenance of operating margins of software companies at the current levels. Generally, companies hedge against adverse exchange rate movement and to that extent, the impact is likely to be mitigated in the short-term. However, receivables from new contracts could face pressure.

    As the Federal Reserve Governors meet next Tuesday, there is a rising debate whether the Fed will raise interest rate or not and whether the magnitude of increase will be higher or not. Now, as far as investors in India are concerned, increase in interest rates in the US could prove to be dampener for FII inflow into the country in the short-term. It has to be borne in mind that significant FII buying has provided strong support to the Indian markets and if this slows down, there could be selling pressure here. On other aspects, we do not feel that the current valuation levels of Indian stocks are ‘cheap’ as it were before a year and a half.

    To support current valuations and expectations, corporate profitability has to keep pace. Given the fact that there is input cost related pressure on Indian corporates, it remains to be seen whether the profit growth momentum could come under pressure in the short-term. We suggest investors to book profits if the target price is achieved and any further investment decision in equities has to be taken with a staggered approach.



    Equitymaster requests your view! Post a comment on "Global roundup: What’s cooking?". 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.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working (Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    The Key Factor Pushing Gold Up These Days (Outside View)

    Aug 21, 2017

    PersonalFN explains the chief factor pushing gold prices up of late.

    How Unique Are the Companies You Invest In? (The 5 Minute Wrapup)

    Aug 21, 2017

    One of the hallmarks of successful investing is to look out for companies that have a unique and enduring moat.

    You've Heard of Timeless Books... Ever Heard of Timeless Stocks? (The 5 Minute Wrapup)

    Aug 19, 2017

    Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.

    More Views on News

    Most Popular

    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.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    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.'

    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.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    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: 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 21, 2017 (Close)