| FROM SHAREKHAN'S DESK
Policymakers at work Call it the October jinx (traditionally our market hits the lows in October) or the effects of the global financial meltdown, the fact is the Indian stock market went in a tailspin in October of 2008 and lost a good 25% as a result. With pessimism impairing the market’s vision, positives like softening of crude oil prices to $60 a barrel levels, a consistent drop in the domestic inflation rate and second quarter corporate results in line with expectations were completely ignored. As the foreign institutional investors pulled out nearly $3.8 billion from our market, the Sensex dropped from over 13,000 to below 10,000 during the month. The tide probably turned on October 27th when the Sensex plummeted by 12% intra-day to 7,697, the lowest level in three years, only to recover nearly 10% by the end of the day to close at 8,509. On Diwali day, the Sensex soared by another 499 points, the highest Muhurat day trading gain ever. The market has been in recovery mode ever since and the Sensex has already risen 20-25% since its October 27 free fall. Sanity appears to be returning to the market finally. MARKET OUTLOOK Back from the brink The unprecedented chain of events witnessed across the world in recent times has forced regulators worldwide to respond with equally unprecedented measures. The massive capital infusion by governments across the world totaling to over $1.5 trillion seems to have resulted in the easing of the extreme risk aversion globally.
The stability in global markets should pave the way for the differentiation of the emerging countries based on their level of resilience. With easing inflation, reversal in the interest rate cycle, comfortable external debt situation and anticipated improvement in the current account deficit during H2FY2009, India is relatively better placed compared with many other emerging market peers and could lead the emerging market pack when the tide eventually turns. Moreover the earnings downgrade cycle and contraction in valuation multiple seems to be largely over. However forthcoming elections could potentially outweigh the likely convergence of positive macro factors. - Top picks for November 2008
STOCK UPDATE - Aban Offshore: Price target revised to Rs2,624
- Apollo Tyres: Price target revised to Rs45
- Ashok Leyland: Non-core businesses drive performance
- Axis Bank: Impressive earnings amidst concerns
- Bajaj Auto: Price target revised to Rs650
- Balaji Telefilms: Book out
- Bank of India: Robust bottom line growth continues
- Bharat Electronics: Price target revised to Rs1,209
- Bharat Heavy Electricals: Price target revised to Rs1,546
- Crompton Greaves: Price target revised to Rs271
- Elder Pharmaceuticals: Price target revised to Rs406
- Esab India: Price target revised to Rs456
- Gateway Distriparks: Book out
- Glenmark Pharmaceuticals: Price target revised to Rs555; maintain ‘Hold’
- Grasim Industries: Price target revised to Rs1,469
- HCL Technologies: Price target revised to Rs208
- Housing Development Finance Corporation: Price target revised to Rs2,805
- ICI India: Price target revised to Rs580
- ICICI Bank: Price target revised to Rs728
- Indian Hotels Company: Price target revised to Rs107
- Indo Tech Transformers: Price target revised to Rs375
- Infosys Technologies: Price target revised to Rs1,655
- ITC: Price target revised to Rs218
- Jindal Saw: Price target revised to Rs714
- KSB Pumps: Price target revised to Rs411
- Larsen & Toubro: Price target revised to Rs1,802
- Maruti Suzuki India: Price target revised to Rs679
- Opto Circuits India: Price target revised to Rs367
- Ratnamani Metals and Tubes: Price target revised to Rs694
- Sanghvi Movers: Price target revised to Rs219
- Satyam Computer Services: Price target revised to Rs416
- Shree Cement: Price target revised to Rs685
- State Bank of India: Price target revised to Rs1,640
- Tata Consultancy Services: Price target revised to Rs862
- Thermax: Price target revised to Rs440
- Zee News: Price target revised to Rs61
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