June 2007


For most of the month, markets were very weak and picked up towards the end. More interestingly, we are starting to see interest in the broader market and several of the mid-cap stocks starting to see investor support. Based on the way we have been seeing investor interest across the board, one should be optimistic on the coming months.


Equity markets did fall sharply from Feb 07 primarily due to inflation going up sharply (increased from about 5% to about 7% within a 2 month period) leading to sharp increase in interest rates.

  • Firstly, despite the increase in interest rates, overall growth has been unaffected and only those pockets of the economy which seems overheated were affects (like home loan, commercial vehicles, etc). The broader economic growth continued without being affected
  • Secondly, inflation has come off sharply over the past few weeks reaching almost 4% for last week – which should eventually lead to the government easing off some of the tightening measures adopted earlier.
  • Rupee appreciation has been another factor affecting markets. Over the past month, the currency seems to have stabilized, but its direction in the coming months is keenly followed.


  • Most companies have announced results for the full year. Plastiblend blend, announced a 35% revenue growth for the year and also expects new capacity expansion to come on-stream in the coming months. Poly Medicure is a medical consumables company which is growing at about 25%. Several mid sized companies in the portfolio are undertaking capacity expansion programs that should help growth in the coming months.

The Rupee appreciation has raised concerns on margins for the IT companies. Though, this may be true in the short run, eventually the relative competitiveness of these companies continues. This is giving us an opportunity to invest into some truly global class companies at reasonable valuation.