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.
Markets end the year on a high! - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Dec 30, 2006

    Markets end the year on a high!

    The three-week bear streak was finally snapped this week and quite fittingly, both the benchmark indices ended week as they ended the year, on a high. For the week ended December 29, 2006, while the gains in BSE-Sensex stood at 2.3%, NSE-Nifty closed with a tad higher growth rate of 2.5%.

    Although the indices edged lower for the last two days of the holiday shortened week (markets were closed on Monday on account of Christmas), the gains in the first two days were more than enough to enable the indices to close the week with sizeable gains. Just to put things in perspective, while the Sensex cumulatively gained close to 400 points on the first two days, only 72 points were shaved off in the last two days, resulting into a net gain of close to 325 points for the benchmark index. On Tuesday, where the index gained the highest, the markets seemed to be literally on tech tonic as strength in IT heavyweights sent the indices soaring. The rally was however more broadbased on the next day as stocks from banking, energy, FMCG and telecom sectors also participated in the rally. The decline on the last day where the markets fell the most for the week was largely led by banking stocks apart from heavyweights like Gujarat Ambuja and HLL.

    As far as the institutional activity on the bourses was concerned, Foreign Institutional Investors (FIIs) were net sellers this week to the tune of nearly Rs 2.5 bn. Domestic mutual funds (MFs), on the other hand, turned out to be net buyers to the tune of Rs 17.0 bn.

    (Rs m) MFs FIIs Total
    22-Dec 3,479 2,648 6,127
    26-Dec 3,364 82 3,446
    27-Dec 3,561 (1,530) 2,031
    28-Dec 6,771 (3,682) 3,089
    Total 17,174 (2,482) 14,692

    As far as sectoral indices are concerned, tables seemed to have completely turned as last week's laggards, IT and Bankex emerged as the top sectors, while the Oil & Gas and the FMCG index that were among the top gainers last week, occupied the last position in this week's pecking order. For the IT index, all the three behemoths namely, TCS, Wipro and Infosys logged in impressive gains, thereby helping the index to surge an impressive 4% during the week. Gains in HDFC Bank, ICICI Bank and SBI on the other hand helped Bankex to grow by a similar margin. Reliance was among the few stocks that declined during the week and hence not surprisingly, the Oil & Gas index, where the company has close to 60% weightage, occupied the last place on the list.

    Index As on December 22 As on December 29 % Change
    BSE IT 5,055 5,273 4.3%
    BSE BANKEX 6,829 7,086 3.8%
    BSE AUTO 5,346 5,519 3.2%
    BSE MIDCAP 5,649 5,805 2.8%
    BSE SMLCAP 6,721 6,892 2.5%
    BSE METAL 8,838 9,040 2.3%
    BSE PSU 5,917 6,034 2.0%
    BSE FMCG 1,902 1,934 1.7%
    BSE HEALTHCARE 3,746 3,792 1.2%
    BSE OIL AND GAS 6,127 6,180 0.9%

    Having looked at the institutional activity and the movement in key indices in the last week, let us consider some sector/stock specific developments:

    Software stocks edged higher during the week and major gainers included TCS (6%), HCL Tech (6%) and Wipro (6%). Infosys closed with 3% gains, which seemed a fallout of reports that the company has entered into talks with ten international banks, in different countries, for implementation of its universal core banking software 'Finacle'. Currently, Finacle contributes to less than 4% of Infosys' total revenues. As reported, the deals are expected to be largely with tier I and tier II banks and are likely to be finalised in the next couple of months. Finacle already has a good foothold in the country, with more than 30 banks using the software. However, when it comes to the international marketplace, the product trails i-flex's 'Flexcube' by quite a distance. Infosys is expected to announce its 3QFY07 results on January 11 2007.

    Top gainers during the week (BSE A)
    Company Price on Dec 22 (Rs) Price on Dec 29 (Rs) % Change 52-Week H/L (Rs)
    BSE Sensex 13,472 13,787 2.3% 14,035 / 8,799
    S&P CNX NIFTY 3,871 3,966 2.5% 4,047 / 2,596
    RAMCO SYSTEMS 190 223 17.6% 345 / 142
    HINDUJA TMT 630 737 17.0% 867 / 343
    D-LINK INDIA 82 93 14.0% 150 / 64
    IPCA LABS 525 594 13.1% 600 / 235
    CENTURY IND 658 740 12.5% 746 / 260

    Strong buying was also seen in stocks from the auto sector. Major gainers here included Punjab Tractors (11%) and Tata Motors (5%). Gains in Punjab Tractors seemingly followed reports that the company might see a change in its ownership with its tractor competitors M&M and Tafe eyeing the private equity fund Actis' 29% stake in the company, for an approximate consideration of Rs 4.1 bn. While the news remains unconfirmed, the acquisition might fit well into M&M's strategy of growing its tractor business, where it has a 27% market share in India. M&M edged 4% higher for the week.

    Top losers during the week (BSE A)
    Company Price on Dec 22 (Rs) Price on Dec 29 (Rs) % Change 52-Week H/L (Rs)
    J&K BANK 673 620 -7.9% 695 / 306
    NOVARTIS 372 355 -4.7% 635 / 350
    BALAJI TELEFILMS 133 127 -4.5% 197 / 95
    G.E.SHIPPING 209 200 -4.2% 268 / 113
    TATA CHEM 223 216 -3.4% 280 / 183

    Dr. Reddy's, which announced the grant of final approval by the US Food and Drug Administration (US FDA) for the abbreviated new drug application (ANDA) of Ondansetron Hydrochloride tablets, closed 1% higher during the week. As a matter of fact, Ondansetron Hydrochloride tablets are the generic equivalent of GSK's Zofran tablets, a product indicated for the prevention of nausea and vomiting associated with cancer treatment. With six product introductions to date in the current year, Dr. Reddy's is making good progress in building a sustainable base in the generics business in the US markets. We take this as a long term positive.

    With the gains in the week gone by, Sensex extended its YoY gain to 48%, no small feat considering the fact that it had gained more than 40% in 2005 as well. While the rise does have fundamental and very valid justifications behind it, dark clouds in the form of inflationary concerns and tightening liquidity have started gathering in the horizon, putting the near term outlook in jeopardy. That's the view from the top. For a bottom up guy, there are still good quality stocks out there with a strong balance sheet, honest and competent management and above all reasonable valuations from a long-term perspective that can keep earning sizeable returns on your investments. Look out for these hidden gems and you will reduce the risk of losing your capital manifold. Happy investing in 2007!



    Equitymaster requests your view! Post a comment on "Markets end the year on a high!". 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.

    Will They Haul Off Trump's Statue, Too? (Vivek Kaul's Diary)

    Aug 16, 2017

    All across the country, the old gods become devils. New, gluten-free gods take their places...

    This Company Beat the Business World's 'Three Killer Cs' (The 5 Minute Wrapup)

    Aug 16, 2017

    And what it has in common with beating the stock market too.

    5 Steps To Become Financially Independent (Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Let's Hope This Correction Continues (The 5 Minute Wrapup)

    Aug 14, 2017

    Last week's correction is making a number of Super Investor stocks look a lot more attractive...

    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.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    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...

    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 17, 2017 09:57 AM