Weekly Close: Party continues.. !

Huge activity were seen during F&O expiry weak...Mid caps were also active.

Its clearly a party on the markets and there was activity in the mid caps as well. There was huge activity given that it was the FNO expiry. Markets were volatile after falling a big way on Tuesday on Global cues. But it was global cues which helped really. Japan had a booming economy against expectations that it was slipping. US economic data was mixed but the earlier GDP growth data was revised upwards and that had the US stocks rallying. The US housing prices and demand seems to be slipping. The worry also was the US Dollar which hit a 14 year low against the pound and was again created records in terms of weakness against the yen.

Leading the charge this week for the Sensex which closed up 1.12% was State bank. The Banking regulation act is to be presented and that had the interest flowing in. There was news of the petrol and Diesel price cut which fueled the Cement stocks and ACC and Ambuja were the Sensex gainers really. Maharashtra had more benefits with Sales tax being cut on diesel and also the surcharge being removed. We believe that reduction in taxes is positive but this cut in fuel prices is only robbing Peter to pay Pan with no real benefits. The Auto stocks fired up at the end of the week helped by strong sales numbers for November which were announced. Metal stocks were typically weak and also weak were the refinery stocks who will be really hit badly because of this fuel price cut. The software stocks were strong this week though they recovered from the initial lows not to end up gaining much. The dollar is weak and rupee was strong at Rs 44.5 against the dollar. However these software companies are resorting to innovative ways of increasing productivity. HCL T has increased the working hours. TCS has cut the number of holidays. Thats some way of beating the need for higher manpower in a crunch environment.

The leaders in the Nifty this week were, State Bank + 10%, ABB + 4%. ACC + 5%. Bajaj Auto + 4%. Gujarat Ambuja + 4%, Hero Honda + 7%, ITC +5%, Maruti + 4%, Rel com + 5%. Sun Pharma + 6%, Tata Power + 4%,

The losers this week were Bharat Petroleum -9%, HPCL -8%., Cipla -4%, Hindalco - 7%, Jet -4%. Sail -4%, Tisco -3%

India GDP galloping with agriculture a lagard; Honda Siel, Tyres, RSystems were some action stocks this week.!

The Indian economy grew by 9.2% in the July-September quarter (Q2) and 9.1% for the first half of the current fiscal. This is the highest such growth rate registered by the economy since the CSO started compiling quarterly GDP data 1996-97 onwards. The share of agriculture, forestry and fishing in the economy has come down to 17.2% in the first half, less than half the share of the primary sector in 1990-91, agriculture has grown by only a meagre 1.7%. Manufacturing registered a growth of 11.9% in the second quarter as against 8.1% in the corresponding period last year. The sector contributes to 16% of the GDP. The services sector, which now accounts for aboutt 66% of India's GDP, saw growth of 10.9% from a year earlier, accelerating from annual growth of 10.6% in the previous period. Within services, Trade, hotels and transport services expanded 13.9 percent, while financial services business grew 9.5 percent. Construction at 9.8% and financing, and real estate at 9.2 % and 9.5% were the drivers.

RBI statistics released upto 10th November indicate that credit growth is placed at 28.4% YoY. There has been a slowdown in % YoY terms largely on the back of a high base effect. Total deposit growth uptill the same period has increased to 20.7% YoY from 19.8% YoY on 27th Oct, 06. We seem to be headed towards a crunch period.

Mr Chidambaram said inflation was the only worrying factor in the overall macro-economic story and that we agree with. We believe that India's central bank will hike interest rates by at least 25 basis points in December or January. To add to the above.. Lower agriculture growth is a negative sign for the FMCG companies dependent on higher rural offtake.

We had a wow call on Honda Siel and that delivered wonders. The company is into engines gensets and pumpsets. The stock delivered a fantastic 15% gains and more expected in due course. The company has introduced LPG run products in the 1.5 KVA segment and that is a big positive. Going ahead they are trying to get the 5 KVA genset and that really will be the killer. We have a research note here do read

We had a Quickies call on R Systems which delivered a super 15% returns in a matter of days. The company is into offshore product development. It had fallen out of interest and with interest in offshore product development expected to increase the stock delivered. The stock remains inexpensive at around 14 times FY 08 even at current levels.

We had a research note on Apollo Tyres but the stocks we had calls on were Ceat and Premier Tyres. Both were fantastic super gains in a matter of days. Tyres benefit because of lower rubber prices and also because of lower costs of crude related raw materials. This sector has not performed and we caught it bang on. Do read the research note on Apollo tyres.


Mid caps have started performing and party may go on.. but be careful as always: Performance unbelievable this week too !

The mid caps have started joining the party and more is possible next week. However the worry is from the global markets where the US cues are not too encouraging. A weak dollar is certainly bad for the US markets we believe. However the US GDP growth has been the saviour and hopefully these negatives should pass. However, as investors its best to play safe. Get some cash off the table. Put stoplosses and all fresh entries should be with stoplosses.