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.

All eyes on Chidambarm's Union Budget 2008-09 presentation!

Our markets have turned volatile on the last day of settlement of February series, as major roll over to march series completed by 27th itself, Nifty traded for most part of the day in negative territory, threatening to break the key support at 5DSMA placed 5227, on bear attack, however, as support emerged number of times around this level, huge short covering in the last half an hour, brought Nifty to touch 5302 level, and finally Settlement price 5285.10 was higher than January(5137.45), as predicted earlier.

US markets and Europen markets tanked overnight, and Asian markets are bleeding before our markets open for trading today and have an important event during the trading hours; Unon Budget presentation at 11 a.m. by FM in Parliament, which would last one hour, by which time, inflation data would be released for the week end, which might show further uptick! Crude oil crossing US $ 102 and trading firmly above 100 mark, and analysts predicting it to touch 150 in the days / months to come, is very sad news for regulators fighting inflation. While Railway Budget shown the indication of soft budget, in view of large number of states going to polls this year, and General Elections due any time after October' 2008, owing to the political developments in the country, some sops to cross sections of society and sectors to please voters cannot be ruled out.

Agricultural Loan write off which is being demanded very strongly from all quarters, including left parties, if considered is definitely populist measure, but severely affect the public sector banking system, is the reason why PSU banks shares are nervous a head of the presentation of budget. If one goes by the indications from Economic Survey presented, impetus on agriculture growth is a must to catch double digit growth of economy, in the 11th 5 year Plan, of which, this will be the first Union Budget which has to lay the foundation and road map to achieve 4 % growth in agriculture. The raise in food (agricultural products) prices along with other commodities might throw a big challenge to our country too, if proper steps are not taken now.

Markets will be volatile today with announcement of each and every item, and digestion of the proposals and their affect on various companies, sectors and economy will be known by monday. Today being the last day of February month, some NAV prop up by mutual funds also can be expected to protect the indices.
Singapore Nifty futures are trading at a discount of 200 point to spot nifty will suggest gap down opening of our markets.

Settlement Blues!

Our indices opened firm and gap up, and traded in positive territory for most part of the session yesterday, due to short covering(roll over of short position to next month series); and due to negative opening of European markets, profit booking of three day rally brought the indices to flat, to marginal,negative closing at the end of the session. With 60% roll overs being completed by yesterday, roll over pressure is mostly out the markets, however, volatility will continue, in view of impending Union Budget tomorrow at 11 a.m. by F.M. Economic Survey shall be presented in Parliament today, which will be also watched keenly by FIIs and Institutinal Investors.

January Settlement of Nifty being at 5137.45; our view is Nifty should settle above this point today at the end of the session. Nifty shall oscillate between 5200 and 5400 today, as majority of the investors / institutions are still sceptical about the markets.

Portfolio Pick for Long term: GIPCL(Gujarath Industrial Power Corporation Limited) which closed at 102 is a good long term bet, since it is in public sector, having book value Rs.70; with good profit ratios and is a dividend paying company. Accumulate and hold for long term at current price and on weakness at any time for building in portfolio.

Strategy for the Day: Buy 5200 calls on weakness and 5400 puts on rallies for intra day quick returns in current series.

Pre-Budget Rally on cards!

The way our indices opened strong and went down and came back in vengence, to finally close at the upper end of the trading range, in the process Nifty closed above 5DSMA gives hope for a Pre-budget rally. US markets closed positive overnight, should help the sentiment to some extent, however, volatility cannot be ruled out due to roll over to next series before expiry, as lots of shorts are being built in March series which begin on the budget day, present good trading opportunity.

 

Number of times during the past 10 days markets going below 5100 and bouncing back to close above it, suggest some support seen in the area of 5050 to 5100; once this is gone then the markets are llikely to revisit january lows, as follow up buying is absent after bounces seen like one yesterday.

 

Strategy for the Day: Buy 5100 calls on weakness and 5400 puts of February series on rallies for intra day trading.