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Nearing all-time highs

Dec 20, 2003

Setting aside all the expectations of a correction, the indices headed towards higher levels during the week. While the BSE-Sensex gained 4.2%, NSE-Nifty closed the week higher by 4.7%. With the gains this week, the indices are near their 45-month highs witnessed in April 2000. It is worth mentioning here that the indices have gained about 90% (!) since the rally began in April 2003 and are now much closer to their all time intra-day highs seen in February 2000 at the time of the tech bull-run. While the Nifty is in striking distance with just a little over 2% to go before it makes a new all time high beating the levels of 2000, the Sensex has still to manage a climb of 11% to get the honours.

The rally being witnessed on the Indian bourses is being termed as an FII led bull-run. Undoubtedly, if not entirely, a huge credit for this rally must be attributed to the FIIs pouring huge money into the Indian stock markets, which has helped the indices almost double in just the last 8 months or so (see chart below). FIIs have pumped in nearly US$ 6 bn into Indian equities in 2003 to date and are showing no signs of tiring, as yet.

Top 5 gainers over the week
COMPANY Price on
December 12 (Rs)
Price on
December 19 (Rs)
H/L (Rs)
BSE-Sensex5,3165,5414.2%5,556 / 2,904
S&P CNX NIFTY1,6991,7794.7%1,759 / 920
ADANI EXPORT25044979.4%478 / 118
SAREGAMA7510641.3%118 / 42
PSI DATA SYS8410931.0%109 / 40
SYNGENTA IND20626528.7%280 / 112
CMC LTD55971427.7%720 / 418

Getting back to the week gone by on the Indian stock markets, after the strong gains witnessed last week, markets opened the week on an equally strong footing. While there was no shortage of volatility during intra-day trading sessions, investors flocked in at every correction and lapped up stocks. Barring the small correction witnessed on Wednesday, the indices remained firm on all the other days, especially Friday. Buying was witnessed across sectors, prominent among them being FMCG and energy.

Top 5 losers over the week
COMPANY Price on
December 12 (Rs)
Price on
December 19 (Rs)
H/L (Rs)
EIH ASSO. HOT.3026-12.0%32 / 7
STERLITE IND1,2671,164-8.1%1,630 / 137
PUNJAB TRACTORS248229-8.0%263 / 117
DSQ SOFTWARE1211-5.6%21 / 5
SAW PIPES305291-4.8%324 / 63

Energy stocks shot into the limelight in Thursday's trade primarily on the expectations of a high interim dividend payout by these companies for 2003-04. As nothing concrete developed on this front, the following day saw profit booking in most of these stocks. However, the Union Cabinets approval to the selling of ross-holdings in three public sector oil companies viz. Oil and Natural Gas Corporation Ltd (ONGC), Indian Oil Corporation (IOC) and GAIL, helped the trio weather the intense profit booking witnessed in Friday amongst energy stocks. Some key gainers

FMCG stocks were amongst the key gainers on the bourses this week. The sudden interest build up towards the sector could be attributed to the valuations of the FMCG sector, which seem relatively attractive. Considering the fact that the effect of monsoons on the economy is generally felt with a lag effect of 6 months to 1 year, the potential upside for the sector seems encouraging since the sector has been a laggard in the current rally. Some key gainers

Cement stocks also attracted some buying during the week on the back of the strengthening of cement prices in the western markets. The producers in the western state of Gujarat have hiked cement prices by around Rs 25 per bag. This augurs well for the producers in the state as they were suffering on account of the prices falling below the Rs 100/bag mark. Now, with the increase in prices, the manufacturers have more than one reason to cheer as the demand has also picked up post monsoons. Some key gainers

At the current juncture, while the index levels have doubled almost at the blink of an eye, the gains, going forward, will be much more stock/sector specific and at a relatively relaxed pace. The market movement from hereon, will be based more on the earnings delivered by India Inc. So, keep an eye on the developments taking place across sectors and companies and research well before investing. Happy Investing!

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