After a disappointing start, the markets made a positive turnaround during the later half of the week, with the Sensex ending in the positive in 3 consecutive sessions inspite of the Reliance IPO debacle. For the week ended February 15, 2008, the Sensex gained 3.7%, while the Nifty gained 3.6%.
The week began on a disheartening note as the broader markets went through a harrowing time on Monday. The indices languished way below the dotted line through out the day on the back of weak global trends and a subdued listing of Reliance Power. The Sensex lost 834 points, while the Nifty shed 263 points. The indices went through a volatile time on Tuesday as well as they made upward movements only to be dragged back to the dotted line repeatedly through out the day. Select banking and pharma majors came to the aid of the indices, while index heavyweights from the power and cement sectors bore the brunt of selling activity. The Sensex lost 23 points, while the Nifty ended lower by 19 points. Wednesday took off quite well, but then the indices fizzled out in the middle before coming back with a late flourish towards the fag end. Sensex gained 341 points while the Nifty closed higher by 91 points.
The broader markets opened to a flying start and managed to remain steady for the entire day on Thursday due to buying activity in index heavyweights across the board. The Sensex gained 817 points, while the Nifty appreciated 273 points. On Friday, the broader markets opened on a negative note and remained subdued for the first half of the day before managing to gain strength towards the second half. Thus, the BSE Sensex closed at 18,115 (up 349 points) while the NSE Nifty closed at 5,303 (up 101 points) during the last trading day of the week.
On the institutional activity front, between 8th February and 14th February, FIIs emerged as net sellers selling equities to the tune of Rs 28 bn (excluding 8th February), while mutual funds sold equities to the tune of Rs 10 bn (excluding 14th February).
| (Rs m) |
MFs |
FIIs |
Total |
| 8-Feb |
(2,935) |
NA |
NA |
| 11-Feb |
(5,708) |
(18,456) |
(24,164) |
| 12-Feb |
(999) |
(1,151) |
(2,150) |
| 13-Feb |
77 |
3,490 |
3,567 |
| 14-Feb |
NA |
(11,831) |
NA |
| Total |
(9,565) |
(27,948) |
(22,747) |
On the sectoral indices front, the BSE BANKEX Index (up 7%) led the pack of gainers , while BSE SMALLCAP (down 3%) led the pack of losers.
| Index |
As on Feb 08 |
As on Feb 15 |
% Change |
| BSE BANKEX |
10,159 |
10,884 |
7.1% |
| BSE METAL |
15,115 |
16,167 |
7.0% |
| BSE OIL AND GAS |
10,638 |
11,269 |
5.9% |
| BSE PSU |
8,276 |
8,552 |
3.3% |
| BSE HEALTHCARE |
3,634 |
3,692 |
1.6% |
| BSE FMCG |
2,175 |
2,208 |
1.5% |
| BSE IT |
3,843 |
3,880 |
1.0% |
| BSE AUTO |
4,741 |
4,769 |
0.6% |
| BSE MIDCAP |
7,633 |
7,592 |
-0.5% |
| BSE SMLCAP |
9,920 |
9,621 |
-3.0% |
Now let us have a look at some of the key stock/sector specific developments during the week.
Reliance Power IPO got listed during the week. The offer price for retail investors was Rs 430, while that for institutional investors was Rs 450. It settled at Rs 373 on the listing day, a discount of 17% after opening at a premium of nearly 22%. It is the flagship company of the Reliance ADA Group to develop, construct and operate power generation projects. The company is currently developing 12 power projects with a combined planned installed capacity of 28,000 MW, one of the largest portfolios of power generation assets under development. It may be noted that the IPO was oversubscribed approximately 70 times. While Reliance Power closed at Rs 385 for the week, Reliance Energy ended 13% lower.
HUL announced its CY07 results. Net sales were higher by 13.3% YoY in CY07. Double-digit growth across categories in both HPC and Foods business led to the topline growth. Though for the quarter the company witnessed marginal decline in the operating margins on account of higher costs (as % of sales), for CY07, the margins were stable at 13.7%. In CY07, the bottomline grew by 15% YoY excluding extraordinary item. Higher interest and tax outgo hampered the growth to that extent. The company has announced a final dividend Rs.3 per share of Re. 1. While HUL closed marginally lower, Dabur ended 5% lower and Marico ended 1% higher.
Top gainers during the week (BSE A)
| Company |
Price on February 8 (Rs) |
Price on February 15 (Rs) |
% Change |
52-Week H/L (Rs) |
| BSE SENSEX |
17,465 |
18,115 |
3.7% |
21,207 / 12,316 |
| S&P CNX NIFTY |
5,120 |
5,303 |
3.6% |
6,357 / 3,555 |
| RELIANCE CAPITAL |
1,824 |
2,081 |
14.1% |
2,925 / 560 |
| ICICI BANK |
1,067 |
1,191 |
11.7% |
1,465 / 791 |
| HINDALCO |
161 |
179 |
11.2% |
223 / 125 |
| THERMAX LTD. |
601 |
663 |
10.3% |
968 / 341 |
| SAIL |
201 |
221 |
10.1% |
293 / 92 |
| IOC |
516 |
561 |
8.7% |
810 / 355 |
As per a leading business daily, the government has decided to hike petrol and diesel prices by Rs 2 and Re 1 a litre respectively effective from tonight to curb losses of PSU oil marketing companies (OMCs). It may be noted that the PSU OMCs are facing under-recoveries to the tune of Rs 718 bn. The price hikes will reduce the same by Rs 8.4 bn. The government has also decided to increase oil bonds to about 57% of the total under-recoveries from 43% now. It maybe noted that petrol and diesel prices were last hiked in June 2006, when crude prices were in the region of US$ 67 per barrel. Also, LPG prices were last raised by Rs 20 per cylinder in November 2004 when the crude was at US$ 34 a barrel, while for Kerosene it was in 2002 when the crude was at US$ 23 a barrel. HPCL ended higher by 12%, while IOC gained 9% and BPCL gained 7%.
Top losers during the week (BSE A)
| Company |
Price on February 8 (Rs) |
Price on February 15 (Rs) |
% Change |
52-Week H/L (Rs) |
| REL. ENERGY |
1,963 |
1,710 |
-12.9% |
2,632 / 448 |
| ADANI EXPORT |
805 |
731 |
-9.1% |
1,335 / 179 |
| RAMCO SYSTEMS |
153 |
141 |
-8.2% |
257 / 119 |
| ESSEL PROPACK |
50 |
46 |
-8.0% |
86 / 39 |
| REL NATURAL RESOURCE |
149 |
137 |
-7.8% |
250 / 22 |
You must have noticed, dear reader, how macro economic issues dominate the talk on financial media of late. How erstwhile soothsayers are now coming up with doomsday predictions. Contrast this with what Warren Buffett mentioned in his 1987 letters to shareholders, When investing, we view ourselves as business analysts - not as market analysts, not as macroeconomic analysts, and not even as security analysts. He adds, an investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace. While we strive to provide independent fundamental knowledge on businesses, insulation of thoughts from emotional swings ultimately rests upon you dear reader.
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