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Old is gold - Views on News from Equitymaster
 
 
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  • Dec 29, 2001

    Old is gold

    Stock markets, for many investors, once again disappointed. Many were anticipating 2001 to be a turnaround year, ending their worries of declining stock prices. With a revival expected in the second half of '01, markets rallied over April & May only to be hit by reality. A similar rally is unfolding globally, investors hope reality is different this time around.

    Earlier in this column, we had hypothesized that Foreign Institutional Investors (FIIs) could turn sellers as the year comes to a close, which could result in markets giving back some of the gains registered over the past two months. FIIs, although over December '01 have been net buyers of equity, for the last two weeks have been net sellers. Mutual funds were also sellers during this period. However, in both cases, the numbers are not very damaging. The shallow participation on the bourses could have led to markets sliding on lower volumes.

    If 2000 was the year for TMT stocks then 2001 has been the comeback year for the old economy. A small check for the top 25 gainers in 2001 is filled with asset heavy companies. That said, knowledge-based industries, like pharma, have also found representation. Auto seems to be the top performer with maximum number of representations in the list. This is followed by banking & finance. Few IT stocks did find representation. View Top gainers

    On the other hand, the biggest losers for 2001, and no prizes for guessing, have been new economy stocks, and most not being part of the best of breed club. Although, exposure to the sector through frontline IT stocks may not have prevented capital erosion, one would still not be part of this infamous list. During boom times, survival for all is easy and it is even easier building castles in the air -- on which these stocks ran. But in a downturn, only companies with real earnings are likely to find support, as they turn into value plays. Let's hope better sense prevails in 2002. View Top losers

     

     

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