0735

30 July 2009

New Delhi

A wide swathe of Indian stocks recorded new highs on yesterday's markets, even as the major indexes were under pressure. Crisil, the rating agency which we featured in our magazine, was a star, having risen 100 per cent in 4 months; our favorite consumer goods stock, Glaxo Consumer Health, closed at Rs. 1070; Bartronics, which manufactures smart cards and radio identification chips, hit Rs. 193,  more than three times its Rs. 56 low in December 2008.

Scores of examples like these underline the upside for those willing to spend time on company-level analysis and stock-picking - even in markets that are as volatile as they have been over the last year.

Chinese stocks yesterday showed that volatility is not yet out the window, dropping 5% in one session. Across the world, stocks are hesitating at the end of an exhilarating climb from the lows of this spring. Shrinking orders for consumer durables in the US underline the weakness of the economic recovery; in addition, an increase in US petroleum inventories and a continuing weakness in consumption had crude oil retreating sharply to 63 dollars a barrel.

Results from the Indian refinery companies, HPCL and BPCL, are beginning to show the positive impact of better realisation from petrol and diesel; the government's stated intent to reimburse them directly for losses on kerosene and cooking gas is also beefing up their cash flow and profitability. The drift in crude oil will add further to their fortunes going further, and these scrips are now looking very attractive.

Airline companies will also experience some relief if crude oil sags. While Kingfisher and Jet have a great deal of pain on their balance sheets, the company which seems best placed to profit from lower input costs is Spicejet, which declared a small profit last quarter.