But a majority for the BJP does not mean that the fundamentals for theeconomy will change overnight. The recent diesel prices hike is bound tohave a negative impact on corporate earnings. And that should restrict anall-round buying approach.

The buying that is likely to take place in the near future would be ofselective nature which happens most of the time. Stocks from the software,telecom, and pharmaceutical sectors are likely to outperform the market inthe medium term. As for steel, automobile, and cement, the approach shouldbe selective and stock specific.

Liberty Shoes: Improving performance

The Liberty Shoes stock has done exceedingly well in the last six months.During this period, it has appreciated by more than 100 per cent. And animproved performance is the only factor which should be responsible for thisnorthward journey. One of the first companies to announce its second quarterresults, Liberty Shoes has done very well.

For the quarter ended September 1999, the company has recorded a sales of Rs19.57 crore. This figure is higher by 31 per cent from the first quarter'ssales. On the OPM front, the improvement has been from 19.16 per cent to21.03 per cent during the second quarter. While sales have shown a growthover its immediate quarter, if one were to compare the first half(April-September), sales showed a negative growth. For the first half, salesstood at Rs 34.45 crore, down from Rs 35.43 crore in the correspondingperiod of the previous year. The only improvement that has taken place is onthe export front. Export sales during the first half stood at Rs 4.49 crorewhereas the same figure during the corresponding period of the previous yearwas a meagre Rs 34 lakhs. In fact, substantial jump in exports have helpedthe profit margins.

If one were to go by the latest performance, the outlook for the medium termis positive. While improving performance on export front is likely to give afurther boost to its profit margins, an increase in raw material prices mayalso have their impact. As such, if the company needs to improveprofitability drastically, what is required is a major push to the salesgrowth. And if such steps are successful, the market will have no option butto give a higher discounting. At present, the stock is valued at a priceearnings multiple of 10. The trading volume on this counter has improveddrastically in the recent past which again is a positive sign as far as theshort term prospects of the stock is concerned.

Deepak Singh Tanwar