India Insight

The BSE Sensex ended above the 20,000 mark on Friday after gaining 2.6 percent in the last five trading sessions. The index has now risen for four straight weeks. Here are the top five Sensex gainers and losers of the week:

GAINERS

Tata Motors: The automaker’s stock surged 8.15 percent in the week ending May 10, making it the best Sensex performer. Though the stock is still flat in 2013, it has gained nearly 15 percent since April. However, Ambareesh Baliga of Edelweiss Financial Services advises caution: “Tata Motors’ overdependence on Jaguar Land Rover (JLR) to negate the Indian underperformance makes it a risky investment at this juncture especially in view of lower margins at JLR”

Hindalco: Shares of India’s largest aluminium producer surged 8 percent this week. The stock extended gains throughout the week after rising 3.5 percent on Monday, on expectations of better realizations after copper prices rose more than 6 percent last Friday.

ITC: Shares in India’s biggest cigarette maker ended the week with gains of 6.7 percent, after touching an all-time high on Friday. Investors have placed long positions in ITC futures, indicating they expect gains to continue.

Hero MotoCorp: This was another auto stock which was among the top five performers, gaining 5.9 percent for the week to end at 1705 rupees. The stock had fallen to 1434 rupees on April 15, but has gained nearly 19 percent since then. The company reported better-than-expected results in the last week of April, but sales growth has slowed amid rising competition, denting its market share.

Sometimes people suspect that the grass is greener in the next field … but they’re not always right.

Consider this. India’s gross domestic product has grown about 7 percent on an average per year for the past nine years. Its industrial growth has been steadily rising since then. Buoyed by economic growth, the country’s capital markets also offered itself as an attractive and inflation beating investment option.

That means that someone who invested at the end of 2002 in the BSE’s benchmark index, Sensex, would have made a 418 percent return on his portfolio by July 11 (just a random date). It sounds like the Madoff plan, but it’s not. The Sensex’s value on Dec 31, 2002 was 3377.28 which rose manifold to 17489.14 on July 11, 2012. Our market had its fair share of ups and downs, but it remained focused and depicted the country’s growth story.

Slowing growth, a falling rupee, sliding stock markets, a rising current account deficit, drying foreign inflows and policy paralysis at the centre. Things certainly don’t look rosy for India.

With the rupee down 22 percent in the last 10 months and a 6 percent drop in stock markets so far in May (as of Friday’s close), is it time for the government to seriously rethink its strategy ahead of the 2014 general elections?

From Mark Mobius, who said the Indian government has been making many big policy mistakes, to Lakshmi Mittal, who told The Times of India on Friday that decision-making is too slow and India needs to move the way the rest of the world does — there is no dearth of criticism.

When the finance minister presents the budget, the stock market moves one way or the other.

And like every year this will dominate the news.

Over there and everywhere.

Is that fair? Or convincing?

Some of the analysis will follow a pattern.

If the stock market goes up, the budget may be described as successful because it didn’t “rock the boat”.

If  it moves sideways, it may be said the market had already absorbed the good news — the growth figures for instance.

Diwali, the festival of lights, is here but do we see a pall of gloom with the BSE Sensex crashing more than 50 percent since January 2008?

Things have come to such a pass that some people have simply stopped looking at their portfolios. They think it’s too late now to cut losses.

“I have now lost faith in long-term investment, I wish I had booked profits in January when my portfolio had doubled,” says my friend Vikrant, who works for a leading business newspaper in New Delhi.

The world of equities seems to have opted for a bargain-basement sale. The BSE Sensex which scaled the dizzy heights of 21,000 points in January 2008 is today testing 10,000 and nobody is sure if the bottom has been found.

“Nowhere in the world are we close to a bottom. Put your money in a safe bank at 9 pct and forget about the stock market for the next two years,” Shankar Sharma, Joint Managing Director of First Global, told Reuters.

If that’s the case, one wonders if the response pattern will change to the Reuters Money question – Where do you see the Sensex by Diwali??

Joke 1
Joe Blogger had a cheque returned last week. They said it was due to “Insufficient Funds.” Now, Joe’s not sure if they meant his account or the bank’s?

Joke 2
There are two sides to a bank’s balance sheet – the left side and the right side. On the left side, there is nothing right, and on the right side, there is nothing left!

My cell phone has been bombarded with forwarded jokes like the ones above ever since the global financial crisis started. At least some people have their sense of humour intact despite the troubled times. Some might even thank God for such small mercies.

Would someone please remind folks that it’s Friday and we all deserve a relaxing weekend? I for one will be doing my usual Saturday morning Yoga. But it’s nasty out there – the contagion has spread, and panic is now the correct adjective.

The overnight Dow crash hit Asia hard – the Sensex is down at least 9 percent and looks like it’s headed for a holiday south of 10,000, the rupee has hit an all time low and in Japan the Nikkei tumbled another 10 percent. Looks like that decision to let Lehman go bust set off the mother of all chain reactions…and Indian markets may be headed back to 2006 levels.

Here’s our resident technical analyst Phil Smith:

…As the chart shows the SENSEX has broken through some very strong and very important support points in the past couple of weeks. These are clearly showed on the chart with the support at 11,900 to 12,500 being broken effortlessly. The next major support levels for this market now stand at around 9,700 as marked and coincides with the old support levels reached back in 2006 when the market staged its dramatic correction then. Currently all the technical indicators are bearish as they have been since the middle of September