India Stocks

As of writing this, the Sensex is on the verge of crossing 18,000 for the second time in 3 months. It’s a surprising scenario to many because it’s a situation that was not expected. Many brokerages had gone on record to say that the Sensex would not reach this level in the current trade because the signs of a breakdown had begun to appear. Europe was and still is in the woods and the thinking was that the situation in Europe would rub off onto the other markets.

Frankly speaking, an effort to time the fall of this market has proved futile again and again. The pattern of thinking has been to anticipate a fall in the markets but as we have seen, the Sensex may tumble into a multipoint fall but does not continue the tumble but rather makes up the fall in a few sessions. Throw in a few flat sessions in between and the cycle has repeated.

But in the past few days the trading has been strong. Buying has increased which is why we stand at the threshold of 18K.

It’s been a long winding road for the Ambani brothers. The Supreme Court after months of deliberation has spoken and the verdict is undoubtedly in favor of the Mukesh Ambani led Reliance Industries .The war it seems has ended and the Anil Ambani led RNRL has lost. While the judgement of this controversial RIL-RNRL case will be debated for long, for now our focus is on the judgement itself delivered by the 3 member bench of the Supreme Court headed by the Chief Justice of India Himself. It’s also necessary to look at the immediate future of the respective companies involved from a market point of view.

In an article a few months ago here on The India Street, I had pointed out as to how the 17,000 level on the Sensex had become like an electric fence. A market barrier that was seen as a warning. Investors were not confident enough to believe that it was a fundamental thing . Like many we too believed that a correction was due around this level. Though some bearish traders did go a step ahead and went on to suggest that in light of the recentness of the global economic situation, our own Sensex reaching the 17,000 level was a case of the market being overbought and many scrips being overvalued.

For us to personally believe that the market was not overbought, it was necessary to see that this level could sustain for a long time. Over time as we now see this has happened and 17,000 is no longer an electric fence.

In a positive move for the alignment of the world markets in a quest to make the economy  a lot more flat, we heard last week that a deal between the National Stock Exchange(NSE) of India and the Chicago Mercantile Exchange (CME) owned by the CME Group had been reached. This will allow Nifty futures to be traded on the CME. Vice versa the Dow Jones S and P 500 Futures will be traded on the NSE. This of course after proper regulatory approval is received by both exchanges. Approval isn’t going to be a problem, so it’s only a matter of time before you can start buying Dow Jones futures here in India when they list on the NSE.

We’ve been a little iffy about recommending a majority of the IPO’s to hit the Indian market in the past few months. As far as the power companies went, there wasn’t anything that interested us apart from maybe Indiabulls Power but even that was something you could have dealt with in the secondary market. This week saw the successful listing of Jubilant FoodWorks, better known as the company that runs and markets the pizza chain Domino’s Pizza in India. Now that Jubilant has listed, the IPO is a success and the rest will run from the secondary market, looking at the prospects of this company, TIS recommends a buy on Jubilant FoodWorks from a long term investor’s point of view.

The joke doing the rounds since yesterday is quite cheeky! It goes “Du-bai or not Du-bai that is the question”. Ha! Quite tongue in cheekish but appropriate all the same. When the markets open this week that’s the first question that traders and investors the world over have to answer. In a previous article posted this month titled ‘Signs Of A Correction’ , I remember ending that post with these words and I quote straight from the article “A correction around this time is likely to be a drawn out one. Price wise and time wise unless of course some big event casts its shadow and spooks the market leading to a tremendous fall.”

The events related to Dubai and the news that comes out of there this week has the potential to be that ‘Big event which spooks the market’. It’s something that can shift the Indian market from the current bullish gear to a selling, fear driven frenzy.

By now you must have probably heard that Reliance Industries has decided to acquire LyondellBasell also known as the world’s  third largest manufacturer of chemicals.It is refreshing to talk about Reliance in a context which does not involve the battle of the Ambani brothers in the Supreme Court and news of an acquisition interest like this is a guaranteed news maker. Reliance has offered Ten billion dollars to buy LyondellBasell and it is doing so in style. An all cash deal-no fuss, no tangle. With the pile of cash Reliance is sitting on it’s no wonder that Mukesh Ambani finds himself the richest Indian in the world even past steel Czar Lakshmi Mittal in the Forbes List of Indian Billionaires.

In the past few months a lot of opinions have been thrown around regarding the rise in the world markets. Compared to last year the markets are definitely doing better. In India the rise has been phenomenal. From March we’ve been on a very welcome Bull run. The question which has been asked for quite a while now has been “When Is This Going to End?” ,there are some traders who are ripping their hair out unable to understand what exactly is going on, according to many this is a level that both the Sensex and the Nifty should not be able to sustain.

The Auto pack has rebounded excellently this year making the pack a stand out outperformer on the Indian markets. It’s been a sector which even the bears like, that in itself says a lot about it. This article is however not about the entire auto sector. It’s about one small section within the auto sector that is nonetheless an important one. I’m concentrating on companies which are involved in the manufacture of trucks and similar heavy vehicles. If you are a long term investor then these are companies that you can seriously consider adding to your portfolio.

The first impression that you might receive upon reading the title of this post would be that the writer is trying to suggest that the Indian markets are headed or heading towards a correction. A dip in the indices which have for the last six months or so stayed positively in the green are now going down into the red zone. Let me categorically say that I am not suggesting that a correction is imminent or anything like that. However based on the movement of the markets during the past few trading sessions, there is evidence to suggest that we might be moving towards a correction in the medium term.