The markets: The boom ends

Out of the 70-odd scrips which India Today monitors on a regular basis only three - Brooke Bond, Larsen & Toubro and Voltas - have managed to keep their heads above the swirling waters. Brooke Bond, because it has produced a reasonably good report; Larsen & Toubro because its future is even more attractive than its immediate past; and Voltas, for no particular reason.Most of the other scrips have taken a beating, many - like Associated Cement, Bombay Dyeing, Century Enka and Union Carbide - being forced to beat a retreat to a position very close to their original levels before the market surge.The market has lost nearly two-thirds of its net gain since the boom and is now only 10 per cent or so ahead of its lowest level. No one will really know why the market picked up in the first place and why it is now sinking. One reason may be that prices had to catch up with inflation and now that this is more or less under control - going by the finance minister's statement in Parliament - money is possibly being diverted elsewhere. It is also possible that the recent spate of debentures which are said to have netted over Rs 500 crore during the past one year or so is another factor. Now that the debenture issues are not doing as well as they should - at least two companies have had to close issues without getting all they asked for the stock market may pick up again.Boom or slump, there are a number of attractive pickings in the market. Delhi Cloth Mills (DCM) has been a steady feature for the past month or so, mainly on reports of its commercial vehicles deal. At Rs 53 (paid-up value: Rs 25.00) it is about as attractive as, say, Brooke Bond, though DCM is a highly diversified company with interests that range from sugar confectionery to special castings. It is however, rather a slow-moving outfit and does not always deliver but there is evidence of new brooms in the boardroom - if not the boardroom, at least at top management level - and the scrip is worth watching.So many companies are changing hands that it has become virtually impossible to keep track of them. Two companies are reported to have acquired new managements - Sehgal Papers, the ailing Haryana-based company that has somehow never been able to find its feet, and East Anglia Plastics, the Calcutta-based chemicals firm that has been sick so long it is a wonder it is still ticking. According to reports, Sehgal Papers will now be managed by ITC, the cigarette giant which has recently diversified into hotels and paper. East Anglia Plastics has apparently been taken over by the same group which runs India Carbon. It was earlier managed by the Shroffs of Bombay but they could not, apparently, make much of a dent. Both these are being quoted below par - around Rs 7.50 or so - and are also worth watching.Too much should not be made of the finance minister's statements about buoyancy in government revenues, which are not always a faithful indicator of the health or otherwise of the corporate sector. Government revenues are picking up mainly because of inflation, for taxes are generally onad valorembasis.There is evidence, however, of a spurt in industrial production - it is stated to have reached a two-digit growth figure - but this again need not translate itself into higher profits for companies. Last year, the corporate sector did pretty well despite the sluggishness in the industrial sector. This year, it might do better, but not necessarily so. Perhaps the most disturbing aspect of the economy is the report about poor kharif prospects in Punjab and Haryana where the harvest might be no more than about 85 per cent of the target. This single factor might upset all calculations about buoyancy and leave the corporate sector high and dry.Published By: AtMigration Published On: Nov 8, 2013 13:22 IST--- ENDS ---

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The markets: The boom ends

Out of the 70-odd scrips which India Today monitors on a regular basis only three - Brooke Bond, Larsen & Toubro and Voltas - have managed to keep their heads above the swirling waters.

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