Positive trends in the midst of gloom

Updated: Jul 03, 2012, 12:59 PM IST

Rohit Joshi and Siddharth Tak/Zee Research Group

New Delhi: There may be all round negativity but the stock story led by Nifty has something positive to offer at the end of six months this calendar. Nifty, the broader stock market index, has grown about 15 percent during January to June 2012 period.

India Inc’s performance, at least in pockets, too has been stellar with ITC Limited, SBI, and HDFC Bank, Coal India and L&T posting handsome market cap gains during the six month period. ITC market cap gained by about Rs 46 thousand crore.

This means the market has bounced back somewhat post negative sentiment triggered by widely criticized retrospective taxation, GAAR proposal, and deferment of introduction of Goods and Service Tax (GST) and Direct tax Code (DTC). All these and the charge that there was a policy vacuum initially paralyzed the markets resulting in Sensex nose-diving to the below 16,000 level.

A Zee Research Group (ZRG) analysis about the performance of stocks during this six month period found out the five top gainers and losers at Nifty.

Reliance Infra emerged the top gainer in 2012 so far rising 64 percent, followed by BPCL (55 percent), Asian Paints (50 percent), IDFC (48 percent), and L&T (40 percent).

Commenting on the gainers, Gaurang Shah, AVP, Geojit BNP Paribas Financial Services, said, “BPCL, still remains in our buying list, and if one has a time horizon of 12 to 16 months then one can take long positions in ONGC, RIL, and Cairn India.” “RIL stock is near its bottom and one can see levels of around 825 in the next 12 to 16 months,” he added.

Amongst the losers, Bharti Airtel lost the most during the six-month period, giving up 11 percent, followed by Infosys (10 percent), GAIL (8 percent), BHEL (3 percent), and Cairn India (2 percent).

Citing the reason for the fall in Bharti Airtel, Jagannadham Thunuguntla, Head of Research, SMC Global Securities, said, “Contentious spectrum pricing remained as an overhang on the stock.”

In terms of market capitalization, tobacco major, ITC has gained the most and its market cap has risen by around Rs 46,265 crore, followed by SBI (41,349 crore),HDFC Bank(31,870 crore),Coal India(29,150 crore), and L&T(24,603 crore).

When asked about the outlook for ITC, the top gainer in terms of market cap, Gaurang believed that the below normal monsoon remained a key concern for the entire FMCG sector as it poses the threat of rising input costs, decreasing rural sales and hence has advised clients to book profits in counters like ITC, and HUL.

As regards market cap laggards, during this six month period, IT giant, Infosys has shed approximately 15,335 crore worth of market cap followed by Bharti Airtel (14,300 crore), GAIL (4,100 crore), BHEL (1,800 crore), Cairn India (1050 crore).

“Management issues and frequent downward revision of earnings guidance are the key factors which led to the downfall of Infosys market cap,” asserted SMC’s Thunuguntla.

Talking about the broad market outlook for the remaining half of this year (2012), Geojits Gaurang, opined, “In the current scenario, one can expect levels of 5600 -5800 on Nifty by December 2012 if few positive triggers remain in the favour of Indian economy like improvement in monsoon, rupee depreciation on hold, some policy action taken by Manmohan Singh, who recently took over the finance portfolio.”

Similar school of thought came from Thunuguntla, who averred, “Next six months look good from market perspective and Nifty can climb to levels of 5800 -6000 by the end of 2012.With Manmohan Singh at the helm of finance ministry, government once again appears confident.”