Weekly review as on 12th November, 2011
"Cash is king, systematic stock specific investment philosophy recommended"
Last week was truncated trading week on account of Indian festive holidays like Eid and Guru Nanak Jayanti. Globally markets have remained volatile which has affected sentiments in domestic bourses too. Domestically factors like poor Index of Industrial Production (IIP) numbers (1.9% for September, 2011 as against 3.6% in the previous month), negative auto sales in the month of October, 2011, downgrading of Indian Banking System by Moody's from stable to negative affected bank's performance in the domestic bourses. In addition, Q2FY12 results of India's largest lender - State Bank of India (SBI) were not taken well by analysts especially on the asset quality front despite SBI beating bottom line forecast by the street.
On the domestic front, overall week's performance turned negative as indicated by the leading indices. Sensex was down by 2.1% and Nifty was down by 2.2% touching levels of 17,192.8 and 5,168.8 respectively. Over the week, BSE Metal index was down by 4.8%, BSE Realty index was down by 6%, BSE Auto index was down by 1.2%, BSE Oil and Gas index was down by 1.3%, BSE IT index was down by 0.3%, BSE Pharma index was down by 2%, BSE FMCG index was up 1.2% and BSE Power index was down by 2.4%.
Globally, bearish sentiments are hovering on account of fresh crisis emerging from the Eurozone. The yield of Italian Bonds made a high of 7.48% which confirmed debt crisis. On the last trading day of the week, Italian Senate's approval of economic reforms gave investors some relief from worries about the euro zone's debt crisis. This resulted in global markets turning positive on the last trading day. The Dow Jones industrial average was up by 2.19%, to end at 12,153.68. The Standard & Poor's 500 Index was up by 1.95%, to close at 1,263.85 while Nasdaq was up by 2.04%, to close at 2,678.75.
For the week ended, Dow Jones and S&P 500 were up by 1.4% and 0.8% respectively. On the other hand, Nasdaq was down by 0.3%. Asian markets remained under pressure. Shanghai was down by 1.9%, Hangseng was down by 3.6% and Nikkei was down by 3.3%.
We believe markets would take a cue from global developments especially on Italy crisis outcome. In our view, domestic fundamentals look grim as reflected in IIP numbers. High inflation and high interest rates are taking a toll on the growth of the economy. Major components of IIP have witnessed a slowdown and manufacturing clocked 2.1% YoY whereas mining recorded negative growth of 5.6% YoY. The valuations for major blue chip companies look attractive in the midst of domestic and eurozone debt concerns. In our view, a safety of capital is a prudent option and we recommend investors with 9-12 months horizon to adopt stock specific strategy for investment. At this point of time, stocks like TVS Motors (strong Q2FY12 results, play on Indian consumption theme), ICICI Bank (good Q2FY12 results as compared to PSB, minimal concerns on asset quality), blue chip companies like Larsen and Toubro, BHEL, Maruti on account of attractive cheap valuations, Eros International Media (best play in the Indian Media Entertainment Sector, RA One doing well in terms of return on investment, expected good performance of Rockstar in box office to augur well for the company, Q2FY12 results above expectations), Opto Circuits India (leading player in medical equipment space, good Q2FY12 result) can be considered for investment.
Your friendly advisor since 1986,
Mr. Ashoka Ajmera
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The content in the mailer should not be reported or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as decision such.
Ajcon Global Services Ltd. would not be responsible for any loss to the investors; they should verify all the fundamentals before investing.
Ajcon Global Services Ltd., its directors and employees, will not in any way be responsible for the contents of this mailer. This is not an offer to sell or a solicitation to buy any securities. The securities discussed in this mailer may not be suitable for all investors. Investors must make their own investment based on their own investment objectives, goals and financial position and based on their own analysis.
Ajcon Global Services Ltd. proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. We and our affiliates, officers, directors, and employees may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company (ies) discussed herein or act as advisor or lender / borrower to such company (ies) or have other potential conflict of interest with respect to any recommendation and related information and opinions. The analyst for this mailer certifies that all of the views expressed in this mailer accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this mailer.
Ajcon Global Services Ltd., may be considered as interested party in view of its relationship as the financial advisors and consultants to some of the companies discussed in this mailer.
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