Tuesday, June 03, 2008


Indian stock market update as of 03 June 2008

The market just is not moving, leading to a lot of disillusionment among investors. Brokerage firms report that individual retail investing is going down, FII participation is down, and it's only the Mutual Funds that are still steady (they have to keep on trying, else how will they be able to get money pouring into their coffers). The macro-economic situation remains bad (and that is probably the reason why the market has refused to take off), with high inflation not coming under control, and the Government trying severe monetary measures including a credit squeeze to try to tackle this inflation (however, this squeeze is stifling the ability of industry to get funds). Further, with the loss in Karnataka, the government is trying to do what it can to retain a positive political picture, and that also means that the massive under-recoveries by the oil companies is not getting passed onto consumers.
The short to medium term remains gloomy, and most investors are sitting it out - the losses remains from the crash, and the market sometimes shows signs of climbing, and then drops again (which is exactly what has happened in the last 2 weeks). In addition, many sectors are hurting because of low consumer demand, with the auto sector coming under significant pressure. However, as always, there has to be a silver lining. The Rupee has dropped below the Rs. 42 mark (considering that it was at the Rs. 38 mark, this is a major drop in the value of the Rupee), and this should help some sectors such as the IT sector and the textile sector to somewhat improve margins. As always, evaluate companies that are fundamentally good and in a sector that is not likely to tank, and see whether you can get bargains (one good way is to read the articles in magazines such as Dalal Steet, Business India and Business Today - there are some good analysis of companies that are carried out in these magazines and should help in an improvement in understanding).
What are some of the stocks that I am tracking:
1. Sharyan (a brokerage)
2. The ever faithful Reliance (not Reliance Power)
3. Starting to evaluate IT sector stocks such as Infosys, Wipro
4. There are pharma companies that could be a good bet for the future, so looking at this sector
5. Engineering companies such as JMC Projects, Walchandnagar

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