"Improvement in liquidity with investors to bring in stability in our markets"

Our indices have closed in negative territory for the 3rd week in succession, after reaching all time highs in Jan'2008. The 30% correction from  the top and 10% circuit down on 22.01.2008; due to continuous selling by FIIs, and margin calls from brokers in the carnage, wiped out almost all small traders, and affected the sentiment of retail investors and HNIs too, who have mostly blocked their liquidity in largest IPO..Reliance Power and others. Reliance Power refunds started reaching the investors from 02.02.2008, and the allotment is completed to all eligible investors.

 

US FED announcing another 50 basis points cut on 30.01.2008, brought some calmness to thier markets which are now pricing futher rate cuts during this year, and now concentrating on the performance of individual companies. All is not gone out of shape or bad even in an economy which has slowed and showing signs of recession. All markets with these developments shown some relief rally and were volatile as CBOE voaltility index touching 35 last week. Currently it stands at 24 suggesting that some sideways movement with lessened volatility for the markets during this week.

 

Inflation touching 4% levels as announced on last friday, indicate that RBI may not tinker with the rates for the present and also in view of petroleum product price increase being referred to cabinet this week, which once passed on to consumers/economy will push the inflation futher up in the weeks to come. Huge dollar inflows expected on account of subscription to recent IPOs, will continue to exert pressure on rupee, is another concern for RBI. Thus, Monetary management being the top priority it will be left to individual banks and financial institutions to deal with the interest rates structure owing to their Asset liability Management policies and tools.

 

Nifty & Sensex have closed above 5DSMA which stand at 5235.44 & 17977.10 respectively last week. If these levels are held during any weak ness during the week, there will be stability in the markets in the coming weeks and once, 6000 on Nifty and 20000 on Sensex are cleared with increased volumes, the bullish sentiment shall return to markets, which will challenge previous highs.

 

Strategy: Purchsing Index heavy weights on every dip in small quantity can reap in substantial returns by year end.