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.

Reliance Power compensates with 3:5 Bonus issue to Public Share Holders

Our indices have traded in small compressed range, after opening in negative territory, taking global cues on thursday, and closed negative at the end of the session. Both the indices have closed below January monthly closings due to bear pressure, However, Nifty has held 5110 on closing basis, which is a crucial level to be watched during this week, where lots of information and events are scheduled which will bring in huge volatility on indices, due to F&O expiry, Railway Budget, Economic Survey and finally the Union Budget on 29.02.2008. Inflation has shown raise which is a cause of concern for regulators world over.However, US markets after opening negatively and trading in negative territory for most part of the session of trading, recovered and closed with good gains, due to last hour rally on expectation of rate cut and also that the bond insurers are likely to have a bail out.

 

Reliance Power management announced hefty bonus of 3:5 shares for all public share holders, excluding the promotores(ADAG group), diluting their stake in the company, increasing the public holding to 15%, for improving liquidity too, brings the cost of issue price to 269 fo retail investors is a positive measure which will enthuse investors today at the opening of the markets. March Nifty futures are trading at hefty discount of 50 points indicate shorts rollover and bear grip on the market and Singapore Nifty futrues trading at 70 point premium to friday closing and positive opening of asian markets indicate positive opening for our markets and short covering coupled with follow up buying if emerges, we might get huge rally upto budget.

 

Strategy for March: Buy 5100 Call and Put and leave it till expiry of the series for capturing the wild gyrations expected post budget presentation on 29.02.2008.