• SEPTEMBER 27, 2008

Anxiety casts a shadow…

Amidst global financial turmoil the Indian benchmark indices continued their southward journey this week, with the BSE Sensex shaving off almost 1,000 points in the past 5 days. There was widespread nervousness among investors as bad news continued to trickle in about banks and financial institution in the US going bust one after the other. However, expectation of a financial bailout plan from the US government is keeping investors’ hope alive. Meanwhile, the domestic economy continued to reel under inflation (measured in terms of WPI) in excess of 12%. The passing of the Indo-US nuclear deal by the US Congress is also being eagerly looked forward to.

  • Also read – Economy is like a bathtub…

    Here is a pictorial representation of how the world and Indian equity markets performed during the week.

    Indian stocks - Movers and shakers during the week
    Company19-Sep-0826-Sep-08Change52-wk High/LowChange from 52-wk High
    Top gainers during the week (BSE-A Group)
    Sesa Goa 109 117 7.1%220 / 99-46.9%
    Asahi India 50 54 6.5%137 / 45-60.8%
    NMDC 218 232 6.5%547 / 172-57.6%
    HCL Infosys 97 103 6.0%300 / 93-65.8%
    Sun Pharma 1,393 1,466 5.2%1558 /890-5.9%
    Top losers during the week (BSE-A Group)
    Ranbaxy 357 272 -23.8%614 / 269-55.7%
    Oracle Fin. Service 975 794 -18.6%1975 / 782-59.8%
    Wipro 417 344 -17.5%552 / 325-37.7%
    Praj Ind Ltd. 151 129 -14.6%273 / 100-52.7%
    Mphasis Ltd. 217 186 -14.3%321 / 150-42.1%
    Source: Equitymaster

    The week’s biggest news
    In a strategic move HCL Technologies has made a counter offer to acquire UK-based SAP consulting company Axon Group at 8.3% higher price of 650 pence a share, for which Infosys had earlier offered Axon shareholders 600 pence a share. The deal is important for both the IT firms.

    If HCL Technologies is successful in acquiring Axon, it will catapult the company to the 12th position in terms of SAP implementation globally. If Infosys counters the bid successfully, it will emerge as the 10th largest SAP player.

    The acquisition of Axon will bring 2,000 employees with capabilities in business consulting and business transformation, which will be beneficial for the acquirer in the long run. This will help the acquirer move up the software value chain and expand geographical presence.

  • Infosys acquires Axon: Our view

    What to expect?
    In volatile times such as these, when markets are moving southwards and all the news are casting shadows of pessimism, investors need to retain their calm. Investing is about intelligently and rationally choosing the companies that are best poised to produce wealth over the long-term. We are of the opinion that it is times like these when investors should roll up their sleeves in search of fundamentally sound companies going at attractive valuations. As Benjamin Graham says – “The individual investor should act consistently as an investor and not as a speculator. This means that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money's worth for his purchase.”

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