Did i not tell you that January's going to be volatile? This week proved that beyond any doubt... bad week for the market, with almost every sector treading 1-2% down. With good news from Genzyme, Celgene, ISIS and others, Healthcare did repay our trust amidst this troubled economy. And, the winner among all losers? - Financials! Though they have not seen any siginifcant correction given the beating they have taken over the past 2 months, Financials did bounce back. Despite good gains today for MBIA & Ambac (bond insurers), C, WB, MER, ETFC and others, this sector has still take way too much a beating in the last 30 days.
FINANCIALS
Let's see how Financials did in the last 30 days:
MBIA (MBI) down 48% - market over-reaction to bond insurers
ETrade (ETFC) down 25% - short sellers galore; last past 3 days did see some counter-action!
American Express (AXP) down 18% - Isn't lower guidance natural in this market?
JPMorgan (JPM), Ban Am (BAC), Citi (C), Wachovia (WB) all down 9%-11%!
Goldman Sachs (GS) down 7% - Why on earth punish GS?
Notable exceptions:
State Street (STT) up 6% - diversified business model with strong custodial services business
Fannie Mae (FNM) - more of a correction; its still down 44% past 3 months!
Though there would be more volatility this month, hold on to Financials and note entry opportunities! Its hard to believe any market crash can take out 26% of value from Bank Am and 40% from Citi!
HEALTHCARE
As expected, Healthcare beat the market tide. Let's see how some marquee names did over the past 30 days:
Humana (HUM) up 10% - Healthcare services will hold against the slow down
Genzyme (GENZ) up 7% - biotech holds strong. Not very sensitive to economic cycles
Pfizer (PFE) up 1% - Note this one - its going to go a long way. Still down 5% over past 90 days!
Notable 30 days losers are Amgen (AMGN) down 5% & United Healthcare down 3%
Hold on to big pharma names, load up PFE.
Among others, beware of Commodities (like GG, NEM), Oil (like XOM, CVX). Stay away unless you want a wild ride!
And, remember to hold tight through the January roller coaster!
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5 comments:
how do you think the banking sector in india and south east asia going to be effected considering changes in Citi group and downfall of multi national banks like barclays cos of mortgage crises ? And also taking into view that these banks have targeted indian market for 2008
India will see some correction starting mid-2008 at the latest. Banks like ICICI Bank (IBN) and HDFC Bank (HDB) trade at absured P/E multiples of over 50! The Real Estate market in Florida-like markets like Mumbai and Bangalore will see significant corrections once the US slowdown moves in to the 2nd or 3rd quarter and slowdown shows in Europe, Japan and China. This would in turn affect sectoral stocks like DLF, Unitech; sectoral funds focusing too narrowly on real estate construction; banks and fin serv firms with too high a mortgage loans focus. This would definitely force some mid-term correction in key banking stocks - I would say latest by Q3 2008.
However, that said, I am still bullish long-term, especially on core infrastructure sectors like Power, Roads and Ports.
People in india are all worked up about reliance power floating its 1st IPO. Do you this it will actually do as much as it is hyped considering it has not yet started full fledge production of power ?
People in india are all worked up about reliance power floating its 1st IPO. Do you this it will actually do as much as it is hyped considering it has not yet started full fledge production of power ?
Reliance Power IPO - the retail portion would most probably be oversubscribed multiple times, with a lot of 'outside-market'(a better way to state the obvious) allotments and trading taking place apparently. Might open with 50% upwards of the offer price. Short terms trade are positive; medium term trades (6-12 months) might be risky..i foresee a market correction in India towards Q2-Q3.
Long term, Power (and core infra)is a sweet play in India and Reliance has all the capabilities to be succesful in any endeavour of this magnitude! So, bullish long term.
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