Indian Markets Thursday Wrap-Up: India Leads Asian Surge

Strong buying activity led the indices to spike upwards during the final hour of trade as the BSE-Sensex ended the day with gains of around 320 points (2.9%), while the NSE-Nifty closed higher by about 90 points (2.8%). Stocks from the mid-cap and small-cap space also ended the day on a positive note, higher on an average by 1.5% and 0.9% respectively. Buying activity was witnessed in stocks across sectors led by IT, metals and realty. At the time of closing, the overall advance to decline ratio was poised at 1.4 to 1 on the BSE.

Other Asian markets also ended on a firm note today. The European indices are currently trading strong as well. Rupee was trading at 50.06 to the US dollar at the time of writing.

Undeterred by the slowdown in growth of companies in the near to medium term, stocks from the IT sector closed strong today. The pack of gainers was led by Wipro (WIT), whose management had shown a bullish stance for the industry in its conference call held yesterday. The stock was followed by Tech Mahindra, Infosys (INFY)and TCS in that order on the gainers’ pedestal. Factoring in the short term concerns surrounding offshoring, a report from the consulting major, McKinsey, has projected the Indian IT sector to miss its US$ 60 bn export target set for 2010 by around a year. However, McKinsey has also put forward its belief in the value proposition that Indian IT companies can provide to their clients in the long run, while predicting that the industry is sitting on a potential opportunity to treble exports from the current level by the year 2020. That might bring some sigh of relief for long term investors in IT stocks.

Stocks from the telecom sector closed mixed today. While gains were seen in Reliance Communication and Idea Cellular, weakness marked trading in Bharti Airtel. In fact, selling in Bharti came in despite the company’s announcement earlier today that it might consider giving out a dividend to shareholders this year. What is remarkable here is that, if recommended by the board of directors, this would be the first time Bharti will give a dividend to its shareholders since it got listed in the year 2001. As is widely known, the company has grown strongly over the past few years but has ploughed back a lot of the profits back to the business to spread its network across the length and breadth of the country. Today, the company is India’s largest mobile services provider with around 93 m GSM subscribers and covering towns and villages with around 79% of India’s total population. The company’s announcement of the maiden dividend might definitely bring some cheer to investors who have held the stock for many years, only benefiting in terms of capital gains.

Latest inflation figures came in today. As reported, inflation measured by the wholesale price index or WPI rose to 0.26% for the week ended April 11, from 0.18% in the previous week. Rise in prices of essential food articles like cereals, eggs, salt, fruits, and vegetable is reported to be the reason for the rise in inflation for the said week. But did the prices of these essential items did fall anytime in the recent past while inflation was on a decline? We wonder!

While investors and analysts around the world and in India remain worried about the ‘E’ in the P/E as companies come out with their quarterly results, there are some companies that do not seem perturbed by the slowdown or so it seems. Take the case of McDonald’s (MCD), your neighbourhood fast food joint. As reported in the international media, while the company’s global sales grew by 4.3%, growth in Asia, the Middle East and Africa combined stood at 5.5%. And here is what the company’s CEO Jim Skinner had to say, "Our well-known value proposition and unparalleled convenience continue to resonate with customers."

Comments

[Fremont Rea...:]

I bought this stock when they started their premium coffee push about 2 yrs ago. It's been a nice ride. I just sampled their capaccino this morning. It's excellent. However the branding of McCafe is crappy. The branding the had with their coffee was superior. No one adult want to go to McCafe. MCD you are marketing to adults with this product, not kids.

Apr 24 12:06 PM