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.
The party continues... - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Dec 17, 2005

    The party continues...

    The Indian stock markets continued their gravity defying activity this week also with the benchmark indices notching gains of about 2% each, thus taking the total tally to over 19% rise in the past 7 weeks. Relentless FII buying helped markets sustain the momentum, which was characterised by bouts of profit booking at every rise. However, the buying this week was restricted to large-caps only as the BSE Mid Cap Index (up 0.4%) and the BSE Small Cap Index (down 0.2%) ended the week almost unchanged.

    Riding strong on the back of 6 consecutive weeks of gains, the bulls provided a strong start to the Indian stockmarkets this week on Monday. This continued into the following day's trade also as the bulls were in total control. In the process, the indices continued to break previous records and achieve new lifetime highs. However, selling pressure at every rise marked the near 200-points gain in the first two trading sessions of the week. Nonetheless, the adamancy of the bulls helped them tide over this and continue to march ahead.

    Early trades on Wednesday saw the BSE-Sensex breach the 9,300 mark for the first time in history. However, soon thereafter, a strong bout of profit booking saw the markets nose-dive into the red. Repeated attempts by the bulls to bring the markets out of the trough proved futile. This process of profit booking continued right into Thursday's trade as investors opted to convert some of their investments into cash. However, at the same time, Thursday's trade saw buying emerge at lower levels, which continued into Friday's trade as well after some initial apprehensions. What seemingly helped markets was the advance tax numbers of India Inc.

    Though caution may have crept in, in the latter half of the trading session, Foreign Institutional Investors (FIIs) continued their buying spree, as they were net buyers to the tune of Rs 24 bn in the first four trading sessions of the week. It must be noted that this includes the allotment of the ICICI Bank issue to FIIs. Thus, with this week's net purchase, net FII investment in Indian equities in 2005 to date has reached to US$ 9.5 bn, which is a record in itself. However, while the indices kept scaling newer highs, domestic MFs were on the backseat opting to book profits at every rise. Thus, the cumulative net sales by mutual funds (MFs) in the first 4 trading sessions of the week totaled to about Rs 7 bn. It must be noted that it was the third consecutive week when domestic MFs have been net sellers (see chart above).

    Now let us consider some sector/stock specific developments this week:

    • ABG Shipyard India's largest private sector shipbuilding yard, made its debut on the bourses this week. The stock made a high of Rs 298 on the BSE, a premium of 61% to its allotment price of Rs 185 per share. The company's principal operations consist of the construction of marine ships, which contributes 79% of its revenues. ABG Shipyard derives a small amount of revenue from ship repairs (5%) and construction of windmill towers (6%). it manufactures marine ships, including bulk carriers, deck barges, interceptor boats, tugs and offshore vessels. It has built 88 ships in the past 14 years for domestic and international buyers. It finally ended the week 47% higher over its allotment price.

      Top gainers over the week (NSE-50)
      COMPANY Price on Dec 09 (Rs) Price on Dec 16 (Rs) % CHANGE 52-WEEK H/L (Rs)
      BSE-SENSEX 9,067 9,284 2.4% 9,309 / 6,069
      S&P CNX NIFTY 2,756 2,810 1.9% 2,826 / 1,894
      HINDALCO 127 141 11.0% 164 / 107
      HDFC 1,111 1,232 10.9% 1,258 / 677
      MTNL 133 145 9.2% 170 / 108
      SAIL 51 56 8.9% 70 / 47
      TATA MOTORS 576 619 7.5% 636 / 400


    • Aluminium stocks witnessed considerable buying this week with Hindalco (up 11%) and Nalco (up 7%) registering significant gains. The continued optimism towards both these stocks is owing to the fact that domestic aluminium prices, in line with the international trend on the back of deficit in supply of the metal, have been treading upwards. This would help improve the profitability of both these players. Further, it must be noted that demand in the domestic markets has been robust in the first 5 months of the current fiscal with aluminium consumption having increased by 15% YoY on the back of rise in demand from sectors like construction, automobiles and power.

    • Satyam Computer Services (up 7%), India's fourth-largest software company, has entered into a strategic partnership with the Chinese insurance software solutions company, eBaoTech, and plans to jointly promote insurance package software solutions. This partnership will enable Satyam to tap the Asia-Pacific and European regions for business. The company expects significant growth in this vertical. It should be noted that Satyam currently has the largest insurance customer engagement among all the Indian IT vendors. The company is a leader in the package implementation space and going forward, this business is expected to drive growth. Other software stocks

      Top losers over the week (NSE-50)
      COMPANY Price on Dec 09 (Rs) Price on Dec 16 (Rs) % CHANGE 52-WEEK H/L (Rs)
      REL. ENERGY 656 633 -3.5% 707 / 452
      GLAXO 1,128 1,099 -2.6% 1,185 / 665
      GUJ. AMBUJA 82 80 -2.6% 85 / 49
      JET AIRWAYS 1,240 1,209 -2.5% 1,379 / 973
      RELIANCE 863 849 -1.6% 875 / 472


    • Tata Steel (up 4%), India's largest private sector steel company, has acquired Thailand's largest steel maker, Millennium Steel, for US$ 400 m. Currently, Millennium Steel has a capacity of 1.7 MTPA and makes construction-grade steel products. It must be noted that this acquisition is in-line with the company's strategy of raising its capacity from the current 5 MTPA to 15 MTPA by 2010. Further, it must be recollected here that Tata Steel had bought Singapore-based NatSteel's steel operations in 2004 (2 MTPA). Both these acquisitions will help the company strengthen its foothold in South East nations, which has been witnessing strong construction demand. Other steel stocks

    While retail investors who have missed the bus are yet in a fix as to what levels should one enter at, as at every rise, investor's expect a correction and this has just not happened. This is despite adverse events, such as crude prices raising its head once again, which appear to have been completely discounted by the markets on the back of unprecedented liquidity flowing into the Indian markets. This liquidity flow has, thus, capped the downside and the expected correction has not materialised. In fact, this week's gains have pushed the markets into uncharted territory, again. This is despite the fact that valuations of most stocks are already way ahead of their fundamentals.

    To conclude, in our view, we caution investors that this extended rally is largely a factor of the immense liquidity prevailing in the markets. Thus, investors should remain all the more cautious and search for stocks that still hold value. We would advise investors not to lose patience, as there is no dearth of opportunities in equity markets. Happy and safe investing!

     

     

    Equitymaster requests your view! Post a comment on "The party continues...". 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...

    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 18, 2017 (Close)

    MARKET STATS