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.