"Stock Market is a leading indicator of the Economy"

[Vaman]

Stock markets shed 290 points despite sound Q2 results
Mumbai | October 16, 2005 11:36:22 AM IST


For the second week in succession, the stock markets closed with losses as the Bombay Stock Exchange (BSE) Sensitive Index (Sensex) shed 290 points.
Last week the Sensex had lost 143 points after touching an all time high closing of 8,800 on October 4.

The investors led by Foreign Institutional Investors(FIIs) booked profit for the greater part of the week, leading to final closing of the Sensex on Friday at 8,201, down by 290 points, as compared to last week's close of 8,491.56.

The weakness of the Rupee and weakeness in the Asian and the US markets led FIIs to sell more in the stock markets than they had purchased. The weakness in the market during the week was despite the sound second quarter results by Infosys Technologies, Tata Consultancy Service(TCS) and ICICI Bank and some smaller companies.

However, the present bear run is healthy for the over heated market, opined an expert.

FIIs turning net sellers prompted others like domestic mututal funds, high net worth individuals (HNI) and retail investors to sell.

FIIs were net sellers by Rs 135 crore on Thursday and Rs 399.60 crore on Friday.

The 50-share National Stock Exchange (NSE) S&P CNX Nifty index also lost 89.65 points as it closed at 2,484.40, as against the previous week's close of 2,574.05.

On Monday, the markets appeared nervous ahead of the second quarter results by Infosys and Tata Consultancy Services(TCS), Sensex closed seven points (7.70 points) down at 8,483.86, as compared to Friday's close of 8,491.56.

On Tuesday, the markets bounced back after excellent second quarter (Q2) results announced by software major Infosys Technologies showing 35.57 per cent growth in its profits. Sensex closed with 56.70 points gains at 8,540.56 compared to its previous close of 8,483.86. It gained 0.67 per cent during the day.

On Wednesday, markets remained closed on account of Vijayadasmi celebrations.

On Thursday, markets fell sharply on account of FIIs and domestic mutual funds turning net sellers. Sensex fell by 163.66 points as it closed at 8,346.32, as compared to Tuesday's close of 8,540.56.

Friday too saw 175 points slide on the Sensex as the FIIs selling triggered selling across the board along with the impact of the weaker global markets.

http://news.webindia123.com/news/sho...5&cat=Business

[Vaman]

Stock markets bleed due to heavy foreign fund outflow
Mumbai | October 29, 2005 5:31:43 PM IST


It was the worst week for the stock markets in the recent past as the Bombay Stock Exchange (BSE) Sensitive Index (Sensex) shed 383.15 points while closing at 7,685.64 points compared to earlier week's close at 8,068.79.
With this week's losses, the Sensex has shed more than 1,000 points at 1137 points since it touched an all-time high of 8,821.

The 50-share National Stock Exchange (NSE) S&P CNX Nifty index also lost 127.15 points as it closed at 2,316.05 points compared to the earlier week close at 2,443.20.

The Foreign Institutional Investors (FIIs) were the main factor behind the fall in the equity markets this week. The total foreign fund outflow this month stood at over Rs 3,000 crore rupees on October 27 at Rs 3,376 crore.

On the same day, FIIs too were net sellers by Rs 755.10 crore or US 171.90 million dollars, according to the data released by the Securities and Exchange Board of India (SEBI).

Meanwhile, the investors waited for the second quarter results to be over and the markets to bottom out before re-entering the markets afresh.

The second quarter (Q2) results did not evoke much response from the markets despite some good numbers like those of Reliance Industries and Bharti Televentures, registering more than 40 per cent rise in profit and ONGC too coming up with more than 20 per cent rise in profit.

However, there were blue chips with moderate or lower than expected rise in Q2 profits like the PSU banking giant SBI with just 12 per cent rise in profit, Tata Motors' Q2 profit rose by just 9.4 per cent.

Steel giant SAIL's profit dipped by 25 per cent. Petroleum refining and retail giant Indian Oil Corporation (IOC) and cement major Grasim Indiustries, too, came with poor numbers and disappointed the investors.

However, the experts say the investor reaction on Q2 performance will be from first week of November only when all the results will be out.

Meanwhile, on Monday, the benchmark index crashed by around 150 points as the pharma, metal, FMCG and bank counters saw heavy selling. However, the bloodbath in the market spared the cement and auto bluechips, which gained marginally. The Sensex shed 148.15 points closing at 7,920.80.

On Tuesday, the stock markets reacted positively to the Reserve Bank of India's (RBI) mid-term review of the credit and monetary policy with the Sensex galloping by more than 150 points in the intra-day trade to touch a high of 8,074. The benchmark index, however, shed some of the gains later to finally close at 7,991.74 with gains of 70.94 points.

On Wednesday, the stock markets saw lacklusture trading with the Sensex closing 17 points lower at 7,974.69. SEBI led searches by the Income Tax officials kept investors subdued.

On Thursday, the last day of the futures and options (F&O) settlement, the Sensex fell by 176.20 points to close at 7,798.49.

Also, the stock markets did not seem to be impressed with the second quarter (Q2) results of Reliance Industries, Bharti Televentures, State Bank of India and Steel Authority of India, triggering an over 200 point fall to 7,766.99 in intra-day trade before partial recovery.

On Friday, the markets could not hold onto the feel good factor provided by the Rs 6,700 crore Bharti-Vodafone deal and ended 112.85 points down at 7,685.64 compared to its yesterday's close at 7,798.

''The stock markets had fewer buyers than sellers as buyers continued to skip markets expecting further fall,'' summed up a leading BSE broker.

http://news.webindia123.com/news/sho...9&cat=Business

[Vaman]

Another disastrous week as frontline indices lose 5 per cent each
Rex Mathew*
29 October 2005

Most analysts and traders were expecting a short term recovery as the markets appeared oversold during last week. Many of them were expecting a rally as short positions were expected to get covered ahead of the derivatives settlement.

Belying all these expectations and expert calls, the markets continued their downtrend during the week. Continued weakness in global markets and quarterly results which failed to excite, even though they did not disappoint much, exerted more pressure on the indices.

The indices opened the week on an extremely weak note, losing 2 per cent each on Monday. Tuesday was a big day for the markets as the RBI came out with its quarterly review of the credit policy. The policy was in line with expectations and the markets closed higher helped by banking stocks.

After closing marginally lower on Wednesday, the indices saw another sharp decline on Thursday. Contrary to expectations, most traders exited their long positions on the futures segment even though the markets have declined substantially. Thursday afternoon saw a major sell off and both frontline indices lost over 2 per cent each. The markets failed to stage a bounce back on Friday and the indices lost another 1.5 per cent each.

The Sensex lost 383 points or close to 5 per cent during the week and the Nifty shed 128 points or more than 5 per cent over the week.

Mid-caps were relatively better off during the week as the index survived any large sell off during the early part of the week. However, the mid caps which are present on the derivatives segment saw considerable weakness on Thursday and Friday pulling down the indices considerably. Friday was the worst day for the mid-cap index losing close to 2 per cent. The CNX Mid-Cap 100 index lost 130 points or over 3.5 per cent during the week.

http://www.domain-b.com/investments/...isastrous.html

[Vaman]

Markets crash before the Diwali bash

Narayan B Bhatt

[ Thursday, October 27, 2005 10:21:07 pmTIMES NEWS NETWORK ]
AHMEDABAD: The 1000-plus-points crash in the BSE Sensex, which has dived from its all-time high of 8821.84 posted on October 5 to Thursday's close of 7798.49, has ruined the Diwali mood of many investors.

Technically, the Sensex can fall further to around 7400 over the next couple of weeks, according to analysts. But, as the growth story of India still remain strong, long-term inve stors can pick up quality stocks where prices have come down significantly in the past few weeks and valuations have become attractive.

On Thursday, the settlement in the futures and options (F&O) segment along with sustained selling pressure from foreign institutional investors (FIIs) led to a 176.2-point collapse in the Sensex. The Nifty closed 55.60 points down at 2352.90. Only five of the 30 Sensex stocks closed with gains.

In spite of better-than-expected results from Reliance, the share price went down by 1.7% to close at 751. The biggest Sensex loser was Bharti, which crashed by 7.4% to Rs 312 as its Q2 results were below expectations. Among the sector indices, BSE Bankex was the biggest loser.

Selling in banking stocks was primarily due to lower-thananticipated earnings reported by SBI. SBI's stock price fell by 6% to close at Rs 831 and ICICI Bank's scrip shed 6% to close at Rs 481.

What does a retail investor do now? Many of the analysts and market experts who were bullish even when the Sensex was at 8800 have now turned bearish. Mutual funds have also witnessed an erosion in the net asset values (NAVs) of most equity mutual fund schemes, especially the mid-cap funds.

Vinod Sharma, head of research at Anagram Securities, feels that it is better if retail investors do not make fresh purchases and wait till the middle of November. "Stock markets are difficult to predict and after the current gloom this Diwali, it is possible that the markets will bounce back," said Sharma.

Interestingly, when the crude oil prices were shooting up, the Indian stock markets continued to rise and seemed to be insulated from this global menace. Recently, when crude oil prices have fallen, the bourses are witnessing a selling spree.

http://timesofindia.indiatimes.com/a...01,curpg-2.cms

[Sameer]

You cannot make such conclusions based on incidents, you must take years and collect data so that you can notice a trend of causality. The word "a" is also misleading, noone ever ever claimed that the stock market is the only leading indicator for future economic growth, it is only one factor, anyone who looks at the BSE knows that the expiration of derivative contracts, and profiting before Diwali are two major reasons along with the increase in the US fed rate. It is more complex that adding one and one= 2

my last post on th matter as last time it got bogged down to personal fighting amongst Indans.

tata

[Sameer]

I should also mention that the causality runs from stock market to LONG RUN ECONOMIC GROWTH not short term, in this case, very short run....

sorry i forgot to mention that.

[Vaman]

Didnt someone claim that the current bull run wasnt speculative and based on fundamentals?

[Vaman]

err... BTW, profit booking isnt the normal practice at Diwali.