Epaper
US Markets pulled back dramatically during the last 30 mins of the trade on Friday, keeping the die hard bull hopes alive. Reports of bailout of bond insurer Ambac is cited as the primary reason for the pullback. We believe Dow Jones has formed a medium term bullish pattern on charts and Monday’s positive close will confirm our version.
Japanese markets along with other Asian markets pulled back strongly on the back of strong global up move. Nikkei is currently trading up 317 points up nealy 2.4 percent from the previous close. Nikkei has bottomed out a fortnight back on an upbeat GDP growth due to strong exports.
Back home lacklustre markets are driving investors crazy from the last 40 days coupled with huge volatility. We are now in a do-or-die zone with the biggest possible trigger, the Union Budget coming up on Friday Feb 29th. All eye are on Mr.Chidambaram to deliver the goods. Low expectations can be considered as a welcome sign. Export driven sectors are hoping for a relief package and are likely to get the same. All in all a populist budget is expected from the FM taking next year’s general elections into consideration. At the same time Mr.PC cannot take the chance of neglecting the country’s economic growth. Infrastructure needs a big boost and there might good news on the taxation front for common man.
Reliance Power declared a 3:5 bonus in yesterday’s board meeting. The price after bonus works out to be Rs.269 for a retail shareholder and Rs.281 for a HNI. We leave it to Mr.Ambani to decide whether the bonus is in agreement to the extreme high valuation of the IPO or a sympathy towards the retail investor. The stock is likely to react positively to the news though we do not see a huge rally in the coming days.
Private banks are likely to be re-rated on the news of HDFC-Centurion bank merger. Stocks to watch in this space include Bank of Rajasthan, Dhanalakshmi Bank, IndusInd Bank, City Union Bank and South Indian Bank.
Given the volatility and the drag in the capital markets not many investors are likely to believe in our theory. In case of a subdued market response to the budget we are unlikely to see rallies till Q1 results or any global news that impacts Indian bourses. So in short it is a ‘Now or Never’ situation for Indian markets to perform.
We expect the markets to open strongly and hold on to the gains. The extent of gains are largely dependant on the pre-budget rally, which we believe will set in any time.
— Article written by Research Team @ www.indiabears.com
