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Mid & Small cap indices finding favour
Wed, 29 Apr 01:30 pm

Choppy trade seems to be the order of the day as the indices which were trading significantly in the negative have recovered somewhat are now trading only marginally in the negative. The BSE-Sensex is trading lower by around 19 points whereas S&P BSE Midcap and S&P BSE Smallcap indices are in the positive and higher by 0.4% and 1% respectively. Amongst sectoral indices, healthcare and realty are showing good buying interest.

After closing lower by around 2% yesterday, Godrej Consumer is down yet again today and is amongst the top losers in the BSE 200. The stock is trading lower by around 4%. While the company put up a decent show during the March quarter results, the weakness in the share price perhaps has to do with the fact that the performance was not as good as what the analysts had expected. Of course, there was currency volatility which has impacted the performance. However if a leading daily is to be believed, the 8.3% growth in consolidated revenues during the quarter was worse than expectations. Besides, the worries about a consumption slowdown in the economy combined with fears of a below par monsoon also seem to be taking toll on the stock price.

Amidst the weakness in the broader markets, Tata Steel is one of the few stocks that's defying the trend and is trading positive currently with gains of around 1%. As a matter of fact, as per a leading daily, after having a poor FY15, the stock has turned a corner and is the biggest gainer amongst the Nifty stocks this fiscal. It has gained more than 17% as opposed to more than 2% drop in the Nifty. The buoyancy seems a result of a combination of factors, most important amongst these being the weakness in the Euro and few positive developments in its Indian operations. It should be noted that with majority of the business of the company based out of Europe, the current weakness in the currency is helping the company be more competitive in terms of costs. Besides, with the company getting permission to re-start its iron ore mines in India, its cost competitiveness in domestic operations is also likely to resume. Last but not the least, at less than book value, the company does not seem all that expensive. However, any lack of revival in steel demand and the gains could be short lived we believe.

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Jan 24, 2018 03:29 PM