• OCTOBER 21, 2000

The focus is on results, takeovers, buybacks

Just when it seemed that the domestic markets were headed lower, the surge in the US bourses came to the rescue. The NASDAQ infact jumped nearly 10% in three trading sessions. As a fall out, domestic TMT (technology, media and telecom) stocks rallied. So did some other stocks owing to a good performance in the second quarter.

Among the top gainers in the A group during the week were NIIT (up 40%), Great Eastern Shipping (20.1%), HFCL (18.2%), TVS Suzuki (17.7%), Ashok Leyland (17.5%) and Tata Steel (13.9%). The broad mix of sectors these companies belong to itself highlights the fact that the buying interest in the markets was very stock specific.

Of the above group, two companies, NIIT and Tata Steel, announced results that exceeded market expectations. This drove buying interest in the stock resulting in large appreciation in stock price. Another two, Great Eastern Shipping (G E Shipping) and Ashok Leyland saw their stock prices spurt after the companies announced plans to buy back stock. In case of G E Shipping the move was triggered by a takeover threat looming large over a group company GESCO Corporation (up 34%, B group).

The top losers in the A group during the week included Zee Tele (down 16.6%), Pentamedia (11.6%), BSES (11%), Punjab Tractors 9.5%), Hindalco (8.7%) and Bajaj Auto (7.1%).

Pentamedia suffered on account of its unimpressive quarterly results. Zee too met with unloading on similar expectations. Indeed, Zee has announced a 60% growth in profits, one third of which is accounted for by other income. Among the other losers, was Bajaj Auto which met with selling pressure on account of disappointing quarterly results. The Hindalco stock reacted to the decline in global aluminium prices.

The stock markets have had their hands full in recent days. On the one hand corporate India is in the midst of unfolding its financial scorecard even as the volatility on the US bourses has created a flutter in global markets. On the other buyback offers and the takeover threats have given a new twist to the entire scenario. These factors have created a scenario in which the domestic bourses have been trading in a range bound manner. Gains in recent days have been eroded, while sharp falls have drawn buying interest. The BSE Sensex declined by a marginal 1.2% during the week.

In the coming week the focus will continue to be on the takeover battles brewing in Corporate India, involving GESCO Corporation and Bombay Dyeing. Another stock to look out for would be Tata Engineering (Telco). The company has announced a much higher than anticipated loss of Rs 1.46 bn for the quarter. Also Colgate, ITC and M&M are scheduled to announce their results. With their peers already having reported disappointing results, market expectations are already running low from these companies. Whether the markets will be finally able to break away from existing levels is however difficult to say. Nevertheless, the week promises to be an interesting one.

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