Archive for June, 2008
New higher oil prices, higher inflation numbers and an extremly choppy and volatile trade - that sums up the business on the streets today. The Indian stock markets took a major correction today with the inflation numbers a little higher than what the street expectations are.
The Sensex is down by 619.6 points, the much of the damage happened as the markets opened in the morning with a wide margin. The Sensex is down 4.3%. Midcap and Smallcap indices surprisingly are safer. The BSE Midcap index is down 3.19% while the BSE Smallcap Index is down 2.68%. Selling pressure is seen across the board - The BSE 100, BSE 200 and BSE 500 are all down by over 4%.
Inflation-linked sectors - Banking, Auto, Reality are all down. The Bankex and Auto indices are down over 5% on a single day. The Power, Metal, Realty, PSU, IT and Consumer Goods indices are down by over 4%. Health care is the sector which witnessed the least of the downtimes - 1.4%.
Nifty losers like is lead by National Aluminium, Tata Motors, BPCL, HCL Tech, Ambuja Cements, Reliance Infra, M&M, SAIL, ICICI Bank and GAIL. Nifty gainers of the day include Cairn and Dr. Reddy.
All in all this is one of the most volatile and the worst weeks we have so far in this year.
1 U.S. dollar = 42.5043567 Indian rupees
June 27th, 2008
The big number is reached!! $140 - that is the price of a barrel of crude oil. The markets immediately reacted and selling pressures are seen in almost all sectoral counters.
NASDAQ lost 79.89 points or 3.33%. Dow Jones Industrial Average is down 358.41 points or 3.03% S&P 500 is down 38.82 points or 2.94%
Bank of America is said to be planning a cut of 7500 jobs after acquiring Countrywide. Existing- US Home sales rise 2% in May.
The Asian markets that have already been open as of now are in the red. Seoul Composite is down 2.77%. The NZSE 50 is down 1.59%. Shanghai Composite is testing 2900 levels today.
1 U.S. dollar = 0.63500127 Euros
1 U.S. dollar = 106.51896 Japanese yen
June 27th, 2008
When markets correct, there is one batch of people who enter into the picture. While the traders take rest sitting aside, it is the long term investors who are bullish on the stock markets who enters into the picture. These people have a higher horizon / time frame - generally of the periods of 3, 5 or even 10 years. Their investments go into companies that are generally large cap, that have good reputation, into companies working either in diversified sectors or a focused sector, into companies who are the leaders in their segment or those that feature into the top 3 companies of its category. Because of the market correction, these stocks becomes very attractive to buy.
Two such large cap stocks that underwent huge unwinding in recent times are Reliance Industries and Larsen & Toubro.
Reliance Industries is in news these days for wrong reasons - it is one of the hugely corrected stock and since it is the mostly wide held stock by investors, people are getting nervous about what to do with the stock. Its 52-week high is Rs. 3298 while 52-week low is Rs. 1248. Its last traded price is Rs. 2135. Most people do not have to think much about the price at which one can enter into the Reliance counter simply because of the trust in the management. The hope is that no matter at what price they enter, given some time staying invested, the stock surely will enter into new highs in a gradual manner. Reliance has made many millionaires who have stay put with the stock for sometime. Infact there are few investors who always stayed invested for over a decade or ever since the Reliance raised money via the IPO route. Reliance is currently trading at 16x FY09 and has an EPS of 131.34. Needless to stay, this is an attractive buying opportunity.
L&T is our other stock pick. It is a well known engineering company. L&T and BHEL are the leaders in the segment. L&T has the edge over, say, BHEL, since it has well diversified business. It has a number of subsidaries where there is a huge potential available. L&T seems to be coming out of its diversified subsidaries by selling them off and hence bringing money to the investors table on one side and ensuring its focus on core engineering is always maintained on the other makes it look like a company with a good strategy. Apart from that, L&T itself has a huge order book which will keep it busy for the next few years. Looking at the inflation numbers and elections due next year, the next few months will be a bit of testing times for L&T in terms of getting new order. However, considering that which ever Government comes into power later next year, infrastucture will be seen as a major area that needs to be addressed and L&T will surely be the company that will be watched out for.
L&T is trading at Rs. 4690 few days back. With the current market correction, the stock tumbled down to Rs. 2313, the 52-week low being Rs. 2235. We feel that stock has corrected enough and every subsequent correction should been as an attractive buying opportunity considering there is a huge upside available for this stock. Many Market Research firms have already raised the flag of this stock to buy. Macquarie for instance in its recent research report said that the company is an outperformer and gave a target of Rs. 3416.
Before we wind off, just a word of suggestion. Considering the huge volatility (aka uncertainity) in the stock markets, it is always advisable to buy stocks in small lots at different times. i.e the investment needs to be spread over time rather than taking the buy calls on a single go. This way, we can mitigate the risk involved in buying a stock in hurry at a higher price and yet seize opportunities without sacrificing too much.
June 25th, 2008
With the markets going down drastically in the past few days, Mutual Funds are busy readjusting their portfolios. Needless to say, many of them are booking profits and getting their equity portfolios reduced considering that there is a possible downside of up to 4% from now on. Few fund houses went ahead and began announcing the sharing of the dividends for some of their schemes:
Here is a partial list of dividend announcements made recently:
Birla Sun Life Tax Relief 96 – Dividend of 50% of its face value - 8th Dividend
Birla Sun Life Midcap Fund – Dividend of 20% of its face value - 10th Dividend
Birla Sun Life New Millennium Fund – Dividend of 20% of its face value - 2nd Dividend
ICICI Prudential Equity and Derivatives Fund - Income Optimiser Plan - 6% on the face value
ICICI Prudential Blended Plan – Plan A - Dividend of 6% of its face value
Investors who have opt for Dividend Payout option will be getting the dividends depending on the number of units in their folios as on the record date i.e – June 27, 2008.
June 24th, 2008
The Indian stock markets had yet another dull day. The markets opened with a huge gap up early in the morning and the downtrend continued for the rest of the day. Every raising attempt was levelled with an hammer from the opposite direction.
The CNX Nifty closed down 1.71% at 4504.25 testing the 4500 levels once again. The Nifty Junior closed at 7410.80 down by 2.54%. Banking stocks are the ones that are hammered the most - The Bank Nifty closed 3.92% down. The Midcap sector too tasted a trouble water today.
The Sensex opened the day at 7410.80, had an intraday high of 15,259.36 and intraday low of 15,051.66 and closed at down at 15,087.99 - down by 334.32.
Realty, Bankex, Capital Goods, Power, PSU are the biggest losers of the day.
Top gainers of the Nifty today include Cairn (up 3.35%), M&M, Wipro, Hero Honda, Sun Pharama amongst the others. The losers list is lead by Ranbaxy (down 7.56%), Unitech, Reliance Infra, BHEL (all down over 5%), Punjab National Bank, L&T, ICICI Bank (all down over 4%) amongst others.
Overall, another bad day for the markets.
June 19th, 2008
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