Markets Moving Up - 04 July Update

Markets have up sharply on the back of buying by domestic mutual fund houses and FIIs on friday.

The Sensex has touched an intraday high of 13,509.74 before ending the day at 13,454, up 359.89 points or 2.75%.

The Nifty, which hit a high of 4033.50 during the day, but only to close at 4016, up 90.25 points or 2.3%.

Some sectors like realty, capital goods, power, banking and FMCG were the favourites for the investors. Especially, Realty and Capital Goods Indices shot up 8% and 6.8%, respectively.

But there was bad news for the consumers. Inflation for the week ended June 21 has inched up to 11.63% as against 11.42% in earlier week.

The looming political crises at the centre or the inflation numbers or the global energy prices did had no effect on the markets.

The rally in the stock market was more to do with the prices of some of the blue chips sectors especially like realty, power and so forth.

Sector of the day was Realty. Real estate stocks like Ansal Properties, HDIL, Peninsula Land, Mahindra Life, DLF, Unitech and Indiabulls Real gained 7 to 14% on friday.

Power stocks also got the fancy of the investors, with index shot 132.61 points or 6.1% to close at 2,306.24.

Power stocks like Tata Power, Lanco Infratech, Suzlon Energy, Reliance Infra, GMR Infra, GVK Power and Reliance Power were up 4 to 9%.

Other stars of the day were, Reliance Comm up 12.50%, Siemens 11.17%, Jaiprakash Associates 10.65%, Tata Power 9.78%, Unitech 8.01%, DLF 8.56%, BHEL 7.43% and Reliance Infra 7.21%

Stock Market Update - March I

It's been a while I wrote something. It is not because I am giving up this blog, but because I was too much busy with respect to my work for the last couple of weeks.

Markets have came a long way since my last post. Of course the movement was towards the south. On Friday, Sensex touched another low and closed at 15975.52, a down of 566.66 points from the previous day.

Nifty closed at 4771.60, a down of 149.80 points.

This is lowest in the last six months. Can it go down further from here? Is this the time to put in your money? These are the few questions I have been asked this weekend.

I would say hold on for few weeks more. FED is coming up with an expected interest cut in the coming week. So we can hear from Ben Bernanke, the current FED Chairman, himself about where the US economy is heading.

Having said that, there are rumours that domestic mutual fund houses are ready to go in with billions of dollars, since they feel that market is at a discount right now.

So hopefully, next week will give us a direction.

Wait and Watch

Stock markets are know for volatility. But not something like what we have witnessed last week. In this kind of situation, it is always better to wait and watch.

Don't press the panic button yet. Hold on to the stocks, because this is the long awaited correction period that is being due for the last 2 months.

In fact this is a good time to buy some of the stocks. Some small and midcap stocks are available on discount at the moment. Some are extremely attractive.

This volatility could last for at least couple of weeks more.

Tuesday will be a big day for the market. RBI's quarterly review of credit policy is to be announced on Tuesday. There are rumours of a reduction in the benchmark interest rates (repo rate) by 25 basis points. But lots of other factors will also influence RBI decision.

However a rate cut will clear a lot of uncertainty prevailing in the market. So wait for Tuesday's RBI decision.

Indian Power Sector IPOs – 2008 and beyond

Year 2008 will be most likely a year of the power sector IPOs in India. The 11th plan period (2007-2012) has set an ambitious target of achieving 78,577 MW by the government of India.

The capacity addition target has been set with a perspective of adding 100,000 MW by 2012, which will take India's total installed capacity to 200,000 MW.

Unlike the last plan period, Indian private sector is going to play a major role in the 11th plan to meet the ambitious target set by the government. No wonder almost all power companies are contemplating the idea of initial public offerings to raise money for this capital intensive sector.

With economy tipping near the 10 percent growth rate and BSE SENSEX on record high, the timing is not bad at all.

If one take a quick look at the power sector companies that have already announced or planning with IPOs for 2008, he will be speechless.

From Reliance Power to Sterlite Energy to JSW Energy to JP Associates, the list is long and all these companies are going ahead with their plans for IPOs this year. The total capital these companies are planning to raise from the market is whopping Rs 30,000 crore (US$ 7.69 billion).

If all these plans fructify, this year's power IPO collections alone will match last year's total IPO mobilisations of Rs 34,000 crore (US$ 8.71 billion).

With economy growing at full throttle and power in short supply, this sector will be the next big thing to watch for in the coming years.

Surely I will bet some 20% to 25% of my investments in this sector in the medium to long term.