Sunday, July 12, 2009


Markets tanked after the announcement of the Budget. There was nothing much that can be done since the FM was struck between the devil and the deep blue sea. When markets build optimism based on illusions and not on reality, such reactions are bound to happen. Both sensex and nifty lost close to 10% week on week as almost every sector gave in to the selling pressure. ITC, Hero Honda, Ambuja Cement were among the top Nifty gainers while Suzlon, Reliance Capital, Reliance Infra, Unitech, DLF, ICICI Bank, R Com, Tata Steel, L&T, Siemens, Axis Bank, R Power and SBI lost anywhere between 15-30% week on week.

The fundamentals of the economy are certainly looking bleak. For me the major problems are unemployment, the security threat from our neighbours and the effect of global recession on India. There are talks of green shoots sprouting up all around but we are no way near to a ‘U’ shaped recovery. The rises that we’ve seen do not support any recovery theory. There are already rumours in the air that a downgrade on India is likely in the immediate future. Every positive news must be sold into and we do not expect the markets to stage a very strong recovery from these levels. The momentum would remain on the downside in the short to medium term. Our markets may open with a gap down going by the global cues but we may see recovery towards 4000. On the upside 4020 is a strong resistance and any move above 4000-4200 should be utilized to create medium term short positions. Sell on rises and maintain short positions. Avoid any long positions. Sell not for today, always sell for tomorrow.

Sunday, July 5, 2009

Dated 6th June, 2009

Markets were trading cautious throughout the week and ended the week with slender gains. Both Sensex and Nifty gained over a percentage points while Bank Nifty closed up with more than 2% week on week gains. Tata Steel, ONGC, GAIL and BPCL were the prominent gainers in Nifty and Zee, Axis Bank, Sail, HDFC, PNB and M&M were other gainers. Suzlon and Tata Motors were among the worst performers with more than 10% erosion week on week. Rcom, ACC and Hindalco were among the other losers.

Markets took some positives from the Railway budget and moved higher on the last trading day of the week. The big event is due on Monday - The Union Budget. The budget this year is a very crucial event since this is the first budget of the UPA’s second term and would provide us the broad intent on policy and direction. One must be cautious and avoid trading just before the budget. The indications so far point towards a clear long-term vision by looking at the measures taken on educational reforms and the intention to provide national ID cards. The big question still is to see whether the reforms process could continue with out much tinkering with the basic tax structure in the wake of falling revenues due to global economic meltdown and the indications of scanty rainfall for this Kharif season. If one excludes the first couple of days of this week, the overall direction of the equity markets would still be dictated by the global factors. We expect to see some stock/sector specific rallies going forward but the overall direction would remain bearish.