Indian Markets Extended Its Gains And Continue - Sep 2, 2008

Indian Markets extended its gains and continue to trade up led by strong buying over the counters due to the drop in crude oil to $111.22 a barrel on estimates that the damage caused along the Gulf Coast off the United States by Hurricane Gustav was less than expected. The BSE Sensex is trading above 14,800 mark and NSE Nifty is above 4,400 level. All indices except Pharma and Consumer Durables are trading in green and among that sustained Capital Goods, Bank, Oil & Gas, Metal and Reality stocks are witnessing most of the buying from these baskets. Among the Sensex pack, 28 stocks are trading in green and 2 stocks are trading in red.

At 1.31PM, the BSE Sensex is trading higher by 342.13 points at 14,840.65 and NSE Nifty is up by 97.54 points at 4,446.20.

The BSE Mid Cap is trading higher by 77.46 points at 5,819.44 and Small Cap is up by 70.15 points at 6,961.55.

Gainers from the BSE are ONGC trading higher by (5.37%) at Rs1,085.10 in line with JP Associates by (4.77%) at Rs170.30, ICICI Bank Ltd by (4.28%) at Rs693.00, SBI by (3.99%) at Rs1,472.50, Reliance Infra by (3.80%) at Rs1,020.15, L&T Ltd by (3.00%) at Rs2,639.00, Tata Power by (2.79%) at Rs1,068.00 and ACC Ltd (2.53%) at Rs578.50.

Only two losers from the BSE are Ranbaxy Lab down by (7.01%) at Rs464.75 and Tata Motors by (1.44%) at Rs431.50.

The BSE Capital Goods index is trading higher by 134.64 points at Rs12,098.42 as Wallchand In is trading up by (5.14%) at Rs276.35 along with Reliance Industrial Infra (3.47%) at Rs935.00, Suzlon Energy by (3.27%) at Rs223.90, L&T (2.93%) at Rs2,637.00 and Everest Kanto (2.36%) at Rs302.00.

The BSE Bank index is trading up by 217.77 points at Rs7,239.12. Scrips trading higher are Union Bank (6.13%) at Rs154.00 followed by Kotak Bank by (5.61%) at Rs626.50, OBC (5.36%) at Rs173.00, PNB (4.59%) at Rs509.35 and IOB by (4.53%) at Rs94.65.

The BSE Pharma index is trading lower by 16.16 points at Rs4,294.28 as Ranbaxy Lab is trading down by (7.06%) at Rs464.50 along with Cipla Ltd (0.84%) at Rs236.05, Aurbindo Pharma by (0.83%) at Rs318.30, Matrix Lab (0.36%) at Rs152.00 and IPCA Lab Ltd (0.35%) at Rs570.00.

From the telecommunication sector, Tata Communications is trading up by (3.32%) at Rs420.30 along with Reliance Com Ltd by (2.08%) at Rs397.00, Bharti Airtel by (0.72%) at Rs822.05 and Idea Cellular is higher by (0.49%) at Rs80.00.

In auto sector Hero Honda Motors is up by (1.18%) at Rs858.00 followed by Maruti Suzuki up by (0.90%) at Rs639.20, M&M Ltd by (0.70%) at Rs576.90, while Tata Motors is down by (1.54%) at Rs431.00.

From cement sector ACC Ltd is trading higher by (2.02%) at Rs575.15, followed by Grasim Indus up by (1.64%) at Rs1,972.55 and Ambuja Cement by (1.12%) at Rs81.00

Stock Mkt May Remain Volatile For 6-12 Months

Nilesh Shah, Deputy MD, ICICI Prudential Asset Management Co Ltd talks to Gopal Modi the sidelines of launch of company's new fund 'Focused Equity Fund'. Shah shares his views on Indian stock markets and India's growth rate.

Where is the Indian market heading in the FY2008-09?

Indian markets are fairly priced at 16,000 mark and we expect a growth of around 15-20% for the FY 2008-09 and the same can be expected for the next three to five years. In FY09 earnings along with strong fundamentals, increase in direct tax collections leading to GDP growth, domestic savings of around $350 billion and seventh largest foreign exchange reserves will drive the markets in spite of odds like higher fiscal deficit and inflations.

Which important events will affect Indian market in next six months to a year?

Indian stock market may remain volatile for next six months to a year as many important events are likely to come by. Events such as credit policy announcement by RBI may lead to hike in interest rates, which may affect stock markets. In the monsoon report which will be announced in May, it is estimated that global banks will further write off around USD $150-200 bn in coming quarters result of sub prime. With elections to follow, it will necessarily affect market and movement will be more sideways rather than one way.

Which sectors are likely to outperform and underperform market returns?

Indian markets are expected to be a consumption driven market and with disposable incomes on rise it will help outperform sectors like infrastructure, power, FMCG, while sectors like financial sector and export oriented sectors such as information technology, textile are likely to underperform.

What per cent of GDP growth rate is expected in current and coming financial years?

India also will be impacted as developed economies are going through bad phase. India is expected to manage a growth rate of around 7% to 7.5%. Global research houses have also lowered estimates for growth of Indian economy to 7% to 8.5% from earlier 9% to 9.5%.

Tell us more about your new fund offering and scheme objective.

'ICICI Prudential focused equity fund' is an open ended equity scheme which aims to invest in large cap stocks. Up to Rs 1,000 crore of total asset under management under this scheme will be invested in top 20 market capitalisation companies picked from all over the world from National Stock Exchange (NSE). When market bounce back after correction, it is the large cap stocks who lead the market so our scheme objective is restricted to large cap companies. If company manages over Rs 1,000 crore it may increase number of companies from 20.


Performance of company's schemes vis-à-vis markets and other schemes in the FY 2007-08?

The Company has underperformed market returns of 30% in FY2007-08 as company's growth and power sector schemes did not perform well. We expect to give our investors 15-20% returns at least for the next three to five years. Company manages around Rs 54,321 crore of asset under management.

World’s Not Enough For Indian Markets

Till some months ago, the Indian market just needed a whiff of good news to vault a couple of hundred points. On the other hand, it would take loads of negative news to bring the market down. That seems to have reversed.

You need oodles of good news to keep the market up, and just a sprinkling of bad news to pull it down. That could explain why Indian shares closed with relatively modest gains on Wednesday, despite the euphoric mood in world markets.

Much before the Indian markets opened on Wednesday, the Dow had gained nearly 400 points, or more than 3%, over investors belief that the credit crisis was nearing its fag end. The Asian markets responded positively, with the Nikkei gaining more than 4%, or 533 points, and Hang Seng up 3.18% or 735 points.

However, the day had its share of bearish news with the International Monetary Fund (IMF) cutting its forecast for global growth this year. The international organisation feels that there is a 25% chance of a world recession and that the world economy will grow at 3.7% in 2008, the slowest pace since 2002. Reports also say IMF has lowered its forecast for US economic growth to 0.5% this year, below the 1.5% prediction made in January.

While the benchmark Sensex was up more than 600 points during the morning session, weakness was clearly visible as the day progressed. Index constituents like TCS, HDFC, Infosys Technologies, ICICI Bank, ACC and SBI came off their intra-day highs in the absence of fresh buying, thereby pulling down the Sensex.

The 30-share index touched a high of 16,236.70 during the day, but closed at 15,750.40, a gain of 123.78 points. The 50-share Nifty settled the day at 4,754.20, up 14.65 points. However, overall market breadth was robust with gainers outnumbering losers 2:1

Dealers say rising inflation has further undermined sentiment in the market, as the government’s measures could hurt growth even though inflation may be tamed. Goldman Sachs’ latest report says the current surge in inflation is not temporary. Goldman Sachs has increased its inflation forecast to 6.5% over the next six months. It will come down gradually to 5% by the end of FY09 due to a falling output gap and further policy action, adds the report.

Volumes continued to be on the lower side, with quite a few arbitrageurs staying away from the market. The combined cash market turnover at Rs 16,154.48 was only slightly higher than Tuesday’s figure. Provisional figures showed that FIIs were net sellers at Rs 135.65 crore. However, domestic financial institutions net bought stocks. “We are still not completely out of the woods,” said an institutional sales head of a domestic brokerage.

“Some amount of weakness is still clearly visible and the market is bound to face resistance on every rise,” he added.