Thursday, May 03, 2007


India Stock Market Update 04 May 2007

The sensex still seems to be somewhat on the upswing. However, I keep on reading more doomsday stories in the papers and magazines about how things may be just on the edge of falling, and how this will be the last good quarter for corporate results. Why so ? Well, dollars are pouring into India at an incredible rate, pushing up inflation. The RBI cannot buy these excess dollars since that will release more rupees into the local economy (pushing up money supply and hence inflation), and hence has to sit by and watch while the dollar gets hammered down. It is already way down, reaching the likes of 41-42 rather than the 45 level it used to be some time back. This level in turn makes exports more difficult since exports get costlier. Equally, earnings in fixed dollars (for IT sector as well as others) fetches less rupees, and hence export earnings are down.
I have no doubt that this will make an impact. However, India has also a local booming market with its own consumption pattern and demand, and that remains unaffected to some extent by these changes. So, companies will adjust to these changes. Many exporters may start importing more raw materials if they start to get cheaper.
As the UP election gets over, the Government seems to be displaying a reformist tend again, with some corrections spoken after the budget, related to cement prices and to FBT for ESOP's. Plus, under pressure from corporates, the Government may amend the SEZ policy to again allow the state to atleast procure 10% of the land requirement. This is a good step.
Stocks that I am currently tracking:
1. Allianz Securities: Rs. 56
2. Ashiana Housing: Rs. 181
3. Adhunik Metaliks: Rs. 48
4. Era Constructions: Rs. 394
5. JMC Projects: Rs. 231

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