Indian stocks rose to a fresh 32-week high on Friday, fuelling expectations of the benchmark Sensex topping the 20,000 mark as early as next week on the back of abundant foreign fund inflows.
The Sensex had last touched the 20,000 mark over 32 months ago in January 2008, well before the start of the worst financial crisis that year marked by the collapse of storied-investment bank Lehman Brothers.
Over the last six months, foreign investors have been the primary drivers of the rally, buying at every given opportunity while local institutional investors, including mutual funds, have been offloading shares.
Provisional data on the websites of stock exchanges show that foreign funds have bought shares worth close to Rs 1,500 crore on a net basis on Friday alone. Dealers at foreign broking houses say a sizeable chunk of the money is coming through exchange-traded funds, which some view as hot money.
The 30-share Sensex hit a high of 19,639.18 intra-day, before settling at 19,594.75, up 177.26 points over Thursday’s close. The 50-share Nifty closed at 5,884.95, up 56.25 points, or 1%, over the previous close. Stock markets not just in India but also in other parts of Asia, including Sri Lanka and Pakistan, have been going up, taking a lead from Wall Street.
Foreign funds have been buying into Indian stocks given the growth potential in an economy that is projected to grow at over 8.5% this fiscal, rather than investing in other major economies in the West where growth is faltering.
“The fundamentals of the economy are strong, but the market is going a bit too fast, fuelled by foreign money,” said Nirmal Jain, chairman and managing director, IIFL. Mr Jain has a word of caution for those buying and selling shares. “Any event that could disrupt foreign fund flows could trigger a sharp correction and investors should brace for a choppy ride in the short term,” he warned.
Investors, however, continue to place faith in second-line stocks, pushing up the BSE Midcap index by 1.4%. This despite the fact that many brokers have advised their clients to pare exposure to mid- and small-cap shares in a rapidly rising market, since these stocks take a steep hit when the market corrects.
“There is a feeling of euphoria when you look at the rise in the last three weeks. But on a calendar basis, the market is up 12-13%, which is not much,” said Rashesh Shah, CMD, Edelweiss Capital.
Brokers say valuations are not exorbitant when compared to those at the peak of the bull run in early January 2008, when the Sensex was trading over 25 times one-year forward earnings. Yet the spate of share issuances by companies is a cause of worry, they say.
Sunday, September 19, 2010
Monday, September 13, 2010
Nifty ends above 5750; banks, oil & gas, realty up
Indian equities closed near January 2008 high levels on Monday as foreign institutional investors remained bullish following better than expected economic data from across the globe.
National Stock Exchange’s Nifty ended at 5760, up 119.95 points or 2.12 per cent. The index touched high of 5770.60 and low of 5639.20 in today’s trade.
Bombay Stock Exchange’s Sensex closed at 19208.33, up 408.67 points or 2.20 per cent. The sensitive index hit intraday high of 19243.44 and low of 18845.31.
BSE Midcap Index was up 0.75 per cent and BSE Smallcap Index moved 0.18 per cent higher.
Amongst the sectoral indices, BSE Bankex gained 3.70 per cent, BSE Oil & gas Index advanced 2.56 per cent and BSE Realty Index advanced 2.32 per cent.
State Bank of India (5.83%), HDFC (5.60%), Kotak Bank (4.67%), Hindalco (4.61%) and Reliance Infrastructure (4.51%) were amongst the top Nifty gainers.
Idea Cellular (-2.48%), Reliance Communications (-2.02%), Wipro (-0.98%), Reliance Capital (-0.89%) and Suzlon Energy (-0.78%) resisted the upmove.
Market breadth was positive on the NSE with 1639 gainers against 1592 losers.
India’s Index of Industrial Production ((IP) for the month of July was reported Friday to have grown 13.8% beating market forecast of 8.4%. European markets also moved higher after Basel III norms for banks were announced. In the US, wholesale inventories rose 1.3% in July, much better than the forecasted 0.5% and US jobless claims fell to a two-month low.
Tuesday, September 7, 2010
India, China look top investment targets to 2012: UN
GENEVA: The world's biggest companies are planning to boost their international investments over the next two or three years, with most spending planned in major emerging economies, according to a United Nations study.
China, India and Brazil are the top three target countries for foreign direct investment (FDI) until the end of 2012 with the United States, for years number one, now in fourth place, the U.N. trade and development agency UNCTAD said.
The Geneva-based agency, which acts as a think-tank on economic trends in developing nations, said the global economic crisis from 2008 was less harmful than feared for investment.
The conclusions were based on a survey of the FDI climate among 236 leading multinational corporations and 116 investment promotion agencies.
Global investment flows slumped in 2008-09 as a result of the economic downturn but are expected to recover slowly in 2011 and 2012.
MERGERS AND ACQUISITIONS
Incoming FDI, mostly from richer countries like the United States and the bigger powers in the 27-nation European Union, is a key component in development plans for many poorer countries.
But in recent years big firms based in the more successful emerging economies have taken a growing role, investing in both rich and poor nations, often through mergers and acquisitions.
The crisis had accentuated a shift of the geographical focus of FDI towards developing and former communist economies.
These countries accounted for 9 of the top 15 priority FDI destinations for global firms, UNCTAD said.
China was the number one attraction for the second year, with India up from third in 2009 and Brazil up from fourth, pushing the United States down from second.
Russia was fifth, the same as in 2009, but Mexico leapt to sixth place from 12th last year, leapfrogging Britain at seventh, Vietnam at eighth and Indonesia at ninth. Germany, Europe's biggest economy, fell from seventh to 10th.
Thailand, Poland, Australia, France and Malaysia were the five countries next most favoured, the UNCTAD survey showed.
In July, UNCTAD predicted that total FDI flows could rise to $1.3-$1.5 trillion in 2011 after $1.2 trillion this year, and jump to $1.6-$2 trillion in 2012.
The highest total on record was $2.1 trillion in 2007, but this fell 16 percent in 2008, then a further 37 percent to $1.11 trillion in 2009 as the crisis left companies slashing spending.
UNCTAD said optimism that the worst of the crisis was over had encouraged companies to revise investment programmes, with some 58 percent saying they would boost FDI in 2011-12.
But it noted that optimism was greater among multinationals based in the developing world than among those in richer economies, especially those headquarted in Europe.
China, India and Brazil are the top three target countries for foreign direct investment (FDI) until the end of 2012 with the United States, for years number one, now in fourth place, the U.N. trade and development agency UNCTAD said.
The Geneva-based agency, which acts as a think-tank on economic trends in developing nations, said the global economic crisis from 2008 was less harmful than feared for investment.
The conclusions were based on a survey of the FDI climate among 236 leading multinational corporations and 116 investment promotion agencies.
Global investment flows slumped in 2008-09 as a result of the economic downturn but are expected to recover slowly in 2011 and 2012.
MERGERS AND ACQUISITIONS
Incoming FDI, mostly from richer countries like the United States and the bigger powers in the 27-nation European Union, is a key component in development plans for many poorer countries.
But in recent years big firms based in the more successful emerging economies have taken a growing role, investing in both rich and poor nations, often through mergers and acquisitions.
The crisis had accentuated a shift of the geographical focus of FDI towards developing and former communist economies.
These countries accounted for 9 of the top 15 priority FDI destinations for global firms, UNCTAD said.
China was the number one attraction for the second year, with India up from third in 2009 and Brazil up from fourth, pushing the United States down from second.
Russia was fifth, the same as in 2009, but Mexico leapt to sixth place from 12th last year, leapfrogging Britain at seventh, Vietnam at eighth and Indonesia at ninth. Germany, Europe's biggest economy, fell from seventh to 10th.
Thailand, Poland, Australia, France and Malaysia were the five countries next most favoured, the UNCTAD survey showed.
In July, UNCTAD predicted that total FDI flows could rise to $1.3-$1.5 trillion in 2011 after $1.2 trillion this year, and jump to $1.6-$2 trillion in 2012.
The highest total on record was $2.1 trillion in 2007, but this fell 16 percent in 2008, then a further 37 percent to $1.11 trillion in 2009 as the crisis left companies slashing spending.
UNCTAD said optimism that the worst of the crisis was over had encouraged companies to revise investment programmes, with some 58 percent saying they would boost FDI in 2011-12.
But it noted that optimism was greater among multinationals based in the developing world than among those in richer economies, especially those headquarted in Europe.
Monday, September 6, 2010
Sensex gains 346 points to close at 18,567
Indian stock market indices ended Monday’s session sharply higher, as equities in Europe rose to a four-week high after factory production in UK grew at a record pace in the third quarter.
Stealing a march over other sectors were metal stocks, with the BSE Metal Index gaining the most by 3.42 per cent. Oil & gas came next with 2.08 per cent lead, followed by banking at 2.04 per cent.
Of the key indices, Nifty ended the day at provisional 5580.25, advancing 100.85 points or 1.84 per cent from the previous close. The 50-share National Stock Exchange index recorded a high of 5589.40 after opening at 5479.55.
Bombay Stock Exchange’s Sensex closed at 18,567.17, higher by 345.74 points or 1.90 per cent. The 30-share index touched a high of 18,600.30 after opening at 18,124.29.
Top Sensex gainers were Tata Steel (6.47%), Hindalco (4.61%), Sterlite (4.01%), ICICI Bank (3.60%), Jaiprakash Associates (3.41%), Reliance Industries (3.20%), State Bank of India (3.12%), Maruti Suzuki (3%), Infosys Tech (2.47%), BHEL (2.34%).
The only losers were Hero Honda (-1.62%), Reliance Communications (-0.37%), Hindustan Unilever (-0.26%) and NTPC (-0.08%).
Stealing a march over other sectors were metal stocks, with the BSE Metal Index gaining the most by 3.42 per cent. Oil & gas came next with 2.08 per cent lead, followed by banking at 2.04 per cent.
Of the key indices, Nifty ended the day at provisional 5580.25, advancing 100.85 points or 1.84 per cent from the previous close. The 50-share National Stock Exchange index recorded a high of 5589.40 after opening at 5479.55.
Bombay Stock Exchange’s Sensex closed at 18,567.17, higher by 345.74 points or 1.90 per cent. The 30-share index touched a high of 18,600.30 after opening at 18,124.29.
Top Sensex gainers were Tata Steel (6.47%), Hindalco (4.61%), Sterlite (4.01%), ICICI Bank (3.60%), Jaiprakash Associates (3.41%), Reliance Industries (3.20%), State Bank of India (3.12%), Maruti Suzuki (3%), Infosys Tech (2.47%), BHEL (2.34%).
The only losers were Hero Honda (-1.62%), Reliance Communications (-0.37%), Hindustan Unilever (-0.26%) and NTPC (-0.08%).
Sunday, September 5, 2010
Indian markets may decline in 12 months: Jim Walker
ET Now caught up with Jim Walker, Founder & MD, Asianomics, for his views on the Asian markets. Excerpts:
There is a real buzz in Asia right now as economies in the region here power head. How are you viewing the investing environment in Asian economies, particularly when it comes to India?
It is quite interesting to look at how people are viewing the region. You quite rightly said people are seeing it powering ahead, but this is very much on a year on year basis. Last year in the first half of the year, economic activity was weak. This year because of something about rebound looks as if the region is powering ahead, but some of the momentum is probably slipping though especially as we start to see problems arising in the US and in Europe going into the second half of this year.
India, in particular, the valuations are pretty stretched. The economy seems to be doing quite well. At the same time, interest rates are definitely going to go up further from and the export sector will be struggling. So if anything at the moment, we would actually be taking some trading profits in India.
Monsoon though in India has been normal this time around and Indian companies are reviving their capex plans as well. How do you see these two factors playing on rural and corporate incomes in the coming months?
Certainly the improvement in the monsoon this year is a huge benefit for India. It takes a lot of the pressure of consumer prices because the expectation will be a much better harvest, much better vegetable supply, some of the facts is behind the high CPI and the high PPI over the course of the last year.
So inflation will come off relatively sharply in India and that really improves disposable income rather than incomes per se. It means that Indians will have much more available money to spend on other things other than essentials, food in particular. So that is positive going forward for broadening of the demand base in India and of course an improvement in real incomes as food prices come down. So the normal monsoon is a major positive right across the board.
Just shifting focus since you did talk about US, what are your views in growth investment economies, particularly the US right now? Now looking at the recent jobs data and housing prices, do you see FED going for another asset buying spree to support growth if required because El-Erian of PIMCO recently said that US recovery is indeed losing momentum and the situation is getting alarming?
We sent a message to our clients a couple of months ago in June with a report that was just called double dip. So our view of the prospects for the US, and I am afraid for Europe as well, is that it will probably go back into recession over the course of the next 2 to 3 quarters. That is really a consequence of the policies of being forwarded by the FED, done by other central buyings as well as governments around the world. There has not been new revival in the private sector across Europe and the US basically because there is too much debt in the first place and that debt is now being paid down with no revival in the private sector and cutbacks in the public sector.
There is a real buzz in Asia right now as economies in the region here power head. How are you viewing the investing environment in Asian economies, particularly when it comes to India?
It is quite interesting to look at how people are viewing the region. You quite rightly said people are seeing it powering ahead, but this is very much on a year on year basis. Last year in the first half of the year, economic activity was weak. This year because of something about rebound looks as if the region is powering ahead, but some of the momentum is probably slipping though especially as we start to see problems arising in the US and in Europe going into the second half of this year.
India, in particular, the valuations are pretty stretched. The economy seems to be doing quite well. At the same time, interest rates are definitely going to go up further from and the export sector will be struggling. So if anything at the moment, we would actually be taking some trading profits in India.
Monsoon though in India has been normal this time around and Indian companies are reviving their capex plans as well. How do you see these two factors playing on rural and corporate incomes in the coming months?
Certainly the improvement in the monsoon this year is a huge benefit for India. It takes a lot of the pressure of consumer prices because the expectation will be a much better harvest, much better vegetable supply, some of the facts is behind the high CPI and the high PPI over the course of the last year.
So inflation will come off relatively sharply in India and that really improves disposable income rather than incomes per se. It means that Indians will have much more available money to spend on other things other than essentials, food in particular. So that is positive going forward for broadening of the demand base in India and of course an improvement in real incomes as food prices come down. So the normal monsoon is a major positive right across the board.
Just shifting focus since you did talk about US, what are your views in growth investment economies, particularly the US right now? Now looking at the recent jobs data and housing prices, do you see FED going for another asset buying spree to support growth if required because El-Erian of PIMCO recently said that US recovery is indeed losing momentum and the situation is getting alarming?
We sent a message to our clients a couple of months ago in June with a report that was just called double dip. So our view of the prospects for the US, and I am afraid for Europe as well, is that it will probably go back into recession over the course of the next 2 to 3 quarters. That is really a consequence of the policies of being forwarded by the FED, done by other central buyings as well as governments around the world. There has not been new revival in the private sector across Europe and the US basically because there is too much debt in the first place and that debt is now being paid down with no revival in the private sector and cutbacks in the public sector.
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