Pessimism rules... - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Pessimism rules...

Dec 21, 2002

After the sizzle last week, Indian bourses ended more or less flat this week. The trend was in line with the global indices, which too saw little variation. Renewed fears of US-Iraq conflict kept global investors worried. Meanwhile, the JPC report unveiled in the parliament, was nothing out of the ordinary and seemed to have achieved little to allay investor concerns. The week was a landmark for the Indian currency. The rupee continued to gain strength against the dollar. The weakening dollar is worrying global investors. Consequently, the week saw gold prices touching a 6-year high at near US$ 350 levels per ounce. Also, crude prices went past US$ 30 per barrel owing to the crisis in Venezuela, which has cut crude output. Venezuela is the world’s 5th largest oil producing country. However, with the new year approaching, we may seen an abatement of war concerns as the western countries get into the holiday season.

There were a few positives for India Inc. this week. The big one was of course, Dr. Reddy’s winning the patent case against Pfizer in US courts. This together with the slated commercial launch of ‘Cipro-XR500’ by Bayer (which triggers royalty payments for Ranbaxy), led to investors once again focusing on the domestic pharma sector.  

Also, banks continued to be in the limelight owing to the perceptible gusto with which the sector was looking at recovering its NPAs from defaulters. However, the key gainers this week were the small banks. Investor sentiment was geared towards possible M&As or strategic investment taking place among them. Going forward, we believe that valuations will perk up only for the best in the business and only when profits continue to come in and NPAs are actually whittled down. What we are seeing now seems unsustainable in the medium term.

Software had its share of the limelight too. This week HCL Technologies bought over the software exports business of HCL Infosystems. With this, the former continues to expand its software services folio and the later has now become a pure hardware company. This deal seemed tilted in favour of HCL Technologies and we felt that its other sibling got a raw deal. The Polaris chief’s arrest in Indonesia highlighted the need for Indian service providers to study their clients more closely as well as be prudent while giving commitments.

Towards the weekend the sector got another jolt when the state of New Jersey, USA, passed a law against outsourcing BPO services to foreign soil for government contracts. This has raised fears that more states could follow suit and that this opposition may expand to private contracts as well. The move seems to have nipped atleast some optimism towards the ITES (Information Technology Enabled Services) potential and consequently, we may see a correction in the sector in the coming week.

Equitymaster requests your view! Post a comment on "Pessimism rules...". Click here!


More Views on News

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

How to Save Money by Exiting Stocks Before They Fall podcast (Views On News)

Sep 24, 2020

A penny saved is a penny earned. It doesn't matter where you enter. All that matter is where you exit. Watch this video to identify an opportune time to exit your investments and book profits.

ICICI Prudential ESG Fund: Aims for Sustainability (Outside View)

Sep 24, 2020

PersonalFN briefly explains the newly launched fund : ICICI Prudential ESG Fund.

What to Do if there is a Second Wave of the Stock Market Crash (Profit Hunter)

Sep 24, 2020

Here's what I think investors should do in this selloff.

IDFC Mutual Fund Starts Campaign 'SIFI'. Should Buy Into the Idea? (Outside View)

Sep 23, 2020

IDFC Mutual Fund is taking the road less travelled and hence started a campaign SIFI (SIP in Fixed Income) to promote the concept of SIP for its debt funds investors.

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

How Much Money Do You Need to Be a Professional Trader? (Fast Profits Daily)

Sep 17, 2020

In this video I'll answer a question I get asked often: How much capital do I really need to trade the markets for a living? Let's find out...


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Sep 25, 2020 09:05 AM