How March unfolds!

Union Budget 2008-2009 presentation, uptick in inflation data on friday, had their toll on our indices movement, which were volatile in a range of 200 points on Nifty. Nifty and Sensex have closed positive, week on week, bouncing from key support levels during the day's volatility, finally closed in negative territory comparable to thursday closing. While Nifty closed firmly above January closing and also above technical level of 20DSMA, Sensex failed to close above January closing, gives an indication that the uncertainity shall continue for some more time. US markets tanked on friday again on resumption of recession fears, asian markets are following suit with deep cuts, and Singapore Nifty futures are down by 140 points at the moment, indicate weak opening for our indices too today.

Union Budget have number of positives, like reduction in Excise duty across, Customs duty on specifics, raise in income tax exemption limit upto Rs.1.5 lacs and revision of slabs will keep good amount in the hands of tax payers, which will help the economy and individuals in particular, will be digested by markets players slowly and liquidity, advance tax collections by 15th march, 2008, FOMC meeting scheduled on 18.03.2008 will influence the markets during this month. Settlement of Nifty positions for the month being scheduled on 27.03.2008; with number of trading holidays in between, keep participation at lower levels. Markets will improve from 28.03.2008, due to NAV prop up by mutual funds, to close the financial year on positive note, and players will look for first quarter results in April 2008, based on advance tax payments made by 15.03.2008.

Thus, with no domestic triggers during the month, our markets will be reacting to the overseas cues, as FIIs are still the largest owners of majority of index heavy weights. In our opinion, any weakness to September closings levels of 5022 on nIfty is a good buying opportunity in blue chips, for building long term portfolio. Nifty may move in the range of 4800 to 5800 duirng the month; break out of this range in either direction will decide the long term trend of our markets, where most of the analysts are thinking that the current weakness is correction of long term bull market.

A word of caution: Bull markets end while everyone is thinking that the weakness is a correction, and on set of bear markets is realised by everyone, when enough damage is already done. Every one should hedge the portfolios with proper hedge depending on one's own risk perception.