Stock market benchmark Sensex climbed 120 points today on the auspicious occasion of 'Dhanteras', and ahead of Coal India's debut tomorrow, to close at its highest level in three weeks on strong capital inflows.
In sync with the firm global sentiment, the Bombay stock Exchange's 30-share sensitive index settled the day higher by 120.05 points, or 0.59 per cent, at 20,465.74-- its best close since October 14, when the index had ended at 20,497.64.
The wide-based 50-share Nifty Index of the National Stock Exchange gained 0.68 per cent to finish the day at 6,160.50.
The upswing was led by metals, auto and financial stocks. The only laggard was oil & gas sector, with index heavyweight Reliance Industries Ltd among the major drags. RIL shed 0.8 per cent.
Analysts said all eyes are now on decision from the US Fed meet on its policy, especially on further economic stimulus to boost global economy and review from central banks in the UK, EU and Japan.
"Markets managed to garner smart gains on the auspicious occasion of 'Dhanteras', which is synonymous with wealth and prosperity. Besides, CIL's performance will decide the movement on the Street tomorrow," India Infoline Head of Research Amar Ambani said.
Metal stocks attracted strong buying and BSE Metal Index was the top performer among 13 sectoral indices. Sterlite rose 3.7 per cent, the most on Sensex, Tata Steel and Jindal Steel both 1.8 per cent and Hindalco 1.5 per cent.
Analysts said sector saw buying after Indian steel makers announced price cut of 2-3 per cent effective from November 1.
Major auto companies too were in demand, as most of the auto makers reported the highest ever monthly sales in October that was supported by the underlying momentum and a push from the ensuing festive season.
Tata Motors jumped 2.7 per cent, Hero Honda 0.7 per cent and M&M 0.32 per cent.
"This is seasonal trend and around this time of the year, manufacturers usually clear their channel inventories to meet the strong demand emanating from festivals such as Dushera, Id and Dhanteras," Elara Securities analyst Amol Bhutada said.
Financial stocks gained as investors took sigh of relief, after the Reserve Bank of India's statement that likelihood of further rate hike in immediate future is low. The central bank yesterday announced short-term lending and borrowing rates by 25 basis points.
SBI gained 2.19 per cent, HDFC 1.91 per cent, ICICI Bank 0.58 per cent and HDFC Bank 0.24 per cent.
"Although the overall action was aggressive than expected, the accompanying statement was much milder, with the Reserve Bank acknowledging that the likelihood of further rate hike in immediate future is low,"Edelweiss Capital note said.
ACC advanced 2.51 per cent, after the company reported an impressive rise in cement dispatch for October, analysts said.
Wednesday, November 3, 2010
Tuesday, November 2, 2010
Smacked-around stocks usually are a good bet for the long term
Stocks that have been smacked around often make the best buys. I regularly compile a casualty list of stocks that have been beaten up in the previous quarter, and that I think have excellent recovery potential. This fits with my favourite investment technique, which is to buy stocks of good companies on bad news that I believe is temporary.
The Standard & Poor’s 500 Index rose 11% in the third quarter. A quarterly decline of 10% was enough to relegate a stock to casualty status this time.
Among approximately 2,100 US stocks with a market value of $500 million or more, 92 were down 10% or more in the third quarter. Most of them flunked my basic value criteria: a stock price 15 times earnings or less, and debt less than stockholders’ equity. Among the 19 banged-up stocks that met my criteria, I recommend four. Let’s start with Sanderson Farms Inc.
The Laurel, Mississippi-based chicken producer was down 15% in the third quarter, and 18% since I recommended it on February 21. Clearly, my recommendation was badly timed. A poor US harvest contributed to a 53% increase in the spot price of No 2 yellow corn in the past eight months. High prices for feed grains make the lives of chicken farmers harder. Also, the economy hasn’t rebounded as strongly as I thought it would.
Over the next few years, I believe corn prices will moderate, and some measure of prosperity will return to the US. Today, Sanderson Farms shares sell for about $42, which works out to less than nine times earnings and 0.5 times revenue. Those valuations make me feel very comfortable.
The price ratios at Skechers USA Inc are even better: six times earnings and 0.5 times revenue. Following a 36% decline in the third quarter, I consider Skechers is a better buy than it was when I wrote about it earlier. Analysts expect earnings to climb to about $2.90 a share this year compared with $1.16 in 2009. Now, the No 2 US sneaker-maker behind Nike Inc, Skechers is opening more stores this year, bringing its total to about 300.
Amedisys Inc , the largest US homenursing provider, fell 46% in the third quarter. Propelling the drop were allegations that the Baton Rouge, Louisiana, company may have improperly billed Medicare. The company is suffering through investigations by the Securities and Exchange Commission, the US Justice Department and the Senate Finance Committee. I predict the controversy will end in a negotiated settlement.
Health care in the US is too expensive. Amedisys and its competitors help to reduce the need for hospitalisations, thus saving the health-care system a lot of money. Amedisys had a 21% return on equity last year and has reported profits in 11 consecutive years. In the past five years, its earnings per share rose at a 29% annual clip. Yet, because of its legal woes, the stock now sells for less than six times earnings.
Beckman Coulter Inc, located in Brea, California, makes laboratory instruments. For the past five years, it has sold, on average, for 18 times earnings. Today, investors can buy it for 14 times earnings. The stock fell 19% in the third quarter, hit by a triple whammy. In June, the company received a warning letter from the US Food and Drug Administration concerning failure to pre-clear one of its medical-test products.
In July, it announced earnings that fell short of analysts’ expectations. And, in September, chief executive officer Scott Garrett resigned. A year from now, I suspect that all three of those adverse events will be forgotten.
The Standard & Poor’s 500 Index rose 11% in the third quarter. A quarterly decline of 10% was enough to relegate a stock to casualty status this time.
Among approximately 2,100 US stocks with a market value of $500 million or more, 92 were down 10% or more in the third quarter. Most of them flunked my basic value criteria: a stock price 15 times earnings or less, and debt less than stockholders’ equity. Among the 19 banged-up stocks that met my criteria, I recommend four. Let’s start with Sanderson Farms Inc.
The Laurel, Mississippi-based chicken producer was down 15% in the third quarter, and 18% since I recommended it on February 21. Clearly, my recommendation was badly timed. A poor US harvest contributed to a 53% increase in the spot price of No 2 yellow corn in the past eight months. High prices for feed grains make the lives of chicken farmers harder. Also, the economy hasn’t rebounded as strongly as I thought it would.
Over the next few years, I believe corn prices will moderate, and some measure of prosperity will return to the US. Today, Sanderson Farms shares sell for about $42, which works out to less than nine times earnings and 0.5 times revenue. Those valuations make me feel very comfortable.
The price ratios at Skechers USA Inc are even better: six times earnings and 0.5 times revenue. Following a 36% decline in the third quarter, I consider Skechers is a better buy than it was when I wrote about it earlier. Analysts expect earnings to climb to about $2.90 a share this year compared with $1.16 in 2009. Now, the No 2 US sneaker-maker behind Nike Inc, Skechers is opening more stores this year, bringing its total to about 300.
Amedisys Inc , the largest US homenursing provider, fell 46% in the third quarter. Propelling the drop were allegations that the Baton Rouge, Louisiana, company may have improperly billed Medicare. The company is suffering through investigations by the Securities and Exchange Commission, the US Justice Department and the Senate Finance Committee. I predict the controversy will end in a negotiated settlement.
Health care in the US is too expensive. Amedisys and its competitors help to reduce the need for hospitalisations, thus saving the health-care system a lot of money. Amedisys had a 21% return on equity last year and has reported profits in 11 consecutive years. In the past five years, its earnings per share rose at a 29% annual clip. Yet, because of its legal woes, the stock now sells for less than six times earnings.
Beckman Coulter Inc, located in Brea, California, makes laboratory instruments. For the past five years, it has sold, on average, for 18 times earnings. Today, investors can buy it for 14 times earnings. The stock fell 19% in the third quarter, hit by a triple whammy. In June, the company received a warning letter from the US Food and Drug Administration concerning failure to pre-clear one of its medical-test products.
In July, it announced earnings that fell short of analysts’ expectations. And, in September, chief executive officer Scott Garrett resigned. A year from now, I suspect that all three of those adverse events will be forgotten.
Monday, November 1, 2010
Sensex to hit 21,000 mark on Diwali: Analysts
The Bombay Stock Exchange's benchmark Sensex is likely to hit the much awaited psychological level of 21,000 in the next week, driven by the smart RIL numbers and expectations of robust listing of the Coal India IPO, say analysts.
Sensex, which saw a subdued performance last week by shedding 0.66 per cent, mainly on account of tight liquidity, may bounce back by surging over a staggering 1,000 points.
"The country's most valued firm Reliance Industries has posted better-than-expected second quarter numbers, which will boost the investor sentiment and lead the market to the 21,000-mark on Diwali ," CNI ResearchChairman and Managing Director Kishore P Ostwal said.
On Saturday, Mukesh Ambani-led Reliance Industries had posted a robust growth of 27.8 per cent in its net profit for the second quarter ended September 30, at Rs 4,923 crore against Rs 3,852 crore in the year-ago period.
Besides, the Reserve Bank of India's (RBI's) quarterly review policy on November 2 and Coal India, which will list on the bourses on November 4, are the two big fat issues on which the market will heavily bank upon, feel marketmen.
Sensex, which saw a subdued performance last week by shedding 0.66 per cent, mainly on account of tight liquidity, may bounce back by surging over a staggering 1,000 points.
"The country's most valued firm Reliance Industries has posted better-than-expected second quarter numbers, which will boost the investor sentiment and lead the market to the 21,000-mark on Diwali ," CNI ResearchChairman and Managing Director Kishore P Ostwal said.
On Saturday, Mukesh Ambani-led Reliance Industries had posted a robust growth of 27.8 per cent in its net profit for the second quarter ended September 30, at Rs 4,923 crore against Rs 3,852 crore in the year-ago period.
Besides, the Reserve Bank of India's (RBI's) quarterly review policy on November 2 and Coal India, which will list on the bourses on November 4, are the two big fat issues on which the market will heavily bank upon, feel marketmen.
Subscribe to:
Posts (Atom)