Saturday, July 23, 2005

India stock markets on a roll

Indias stock markets are on a roll. Irrational exuberance? Atleast the hordes of investors dont think so. The Sensex (Bombay Stock Exchange Sensitive Index) closed above 7400, its all time high mark on 22nd July. The NSE (National Stock Exchange) Nifty, closed at a high too. Barring a few corrections, it has been an uphill ride all throughout 2005. In the last 6 months, the sensex has gained about a 1000 points. High inflation, crude oil prices have done nothing to dampen the enthusiasm of the market. They should have. Then what happened? Some stocks which contribute to the market index moved up so sharply that the entire market has moved with them. Chief among them has been the resolution of the split of the huge Reliance group among its two brothers (some analysis on how it appears to be two Reliances on the horizon in a few days time) and an huge inflow of FII funds.

According to Businessworld (Subscription/Registration required), the P/E is about 16.02 for the entire market at about this point in time. So what is the way from here? Sure there are positives. There is capacity addition on textiles (post quota), auto ancillaries are picking up with India becoming more and more of a hub for exports, Reliance appears to have got stronger with the split. But, if commodities fall, as they are expected to cool down due to the China effect or if monsoons fall driving down rural demand or if there are mid term elections, it could well go the other way round. According to Businessworld, FIIS invested about 23070 crore when the market was about 7000. Japanese FIIs have come in for a piece of the action this time around, through Fidelity, a giant in itself. More FIIs are interested in India. How does this compare with action around the world? About 6 months, back, Asian markets appeared to be overheated. The Indian markets cooled off only to take off again.

In the past 6 months, the Nikkei has moved up by about 8 percent, the Hang Seng has remained largely flat. The Korean markets have gone up by about 13 pct. Karachi (Pakistan), Phillipines and Sri Lanka markets have gone up by 20, 6 and 26 pct respectively. India (BSE and NSE) by contrast has gone up by about 7.5 percent since June of 2005 only and have gained about 1100 points in the last 3 months or so. (Thats about 15 percent).

Mutual fund subscriptions have gone up, though performance is another thing altogether (esp by the new ones). IPO (Initial Public Offers) too have boomed. Indias market has been rocked by scams in the past (Harshad Mehta, Ketan Parekh), but this time it seems to be a clean bull run.


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Now we are making you beware that now trade with due care. As Nifty and Sensex will see correction now.
We are making this statement but still we request you don’t start shorting right now, and no need for panic at all. We are just making you aware that you need to take precautions.

Apart from this We would like to highlight few facts also regarding SENSEX journey to 15000 mark.


L&T 61.7
RIL 33.7
BHEL 20.4


4000-5000 2551
5000-6000 125
6000-7000 1965
7000-8000 80
8000-9000 81
9000-10000 70
10000-11000 43
11000-12000 30
12000-13000 193
13000-14000 37
14000-51000 213

Right now best buy are any IT stocks specially TCS and INFOSYS are very hot for buying.

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Right now Nifty is in consolidation state it can go to any direction.
We suggest you not to take too long positions right now.

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Have a Nice trading days ahead.