Market Talk – 03/10/2009

Market march is on though most of them are pessimistic. Market is making traders tiring as traders have lost patience and they want returns same day. Market knows it and using rotation theory. Traders sold IDBI and IDBI fired. IDFC we started with 127 made one top of 146 allowed traders to exit thereafter it made them tire between 140 and 150 range and today suddenly it is out of woods. Same thing we have noticed in Larsen Reliance and GLT Infra. RNRL and R Power in the same boat. Ispat a clear turnaround stock with OTS in place which will match the losses of Q1, inventory gains and renewal of contracts at high prices will spark Q2 and with renewed interest in any steel Ispat is set to change its name to IS PAR… You must understand the market philosophy. It just wants the traders to stay invested for sizable period of time to earn some profits. Very rarely the intra day tips work. Traders keep on changing stocks and what they buy goes down and what they sell goes up. Therefore the loyalty factor has to be kept in mind. One thing you have seen is that Nifty O I has been showing continuous rise which is an indication of fresh built up of short in anticipation of correction. This trend we have been seeing since 4400 and Nifty has already close t0 5100. Now where would you stop saying that the Bull Run is on…? Bears would not agree as they feel that at 17000 market are expensive and liquidity cannot drive for long. My opinion is otherwise. Govt has set targets of few IPO in March 10 which is post Budget which is a fair indication of further rally. This IPO are possible only if the Budget 10 is good. Budget 10 could be good only if the revenue for 09-10 exceed target by wide margin and deficit drops down to 5%. This all seems dream nos especially when FM and finance man and not opening up their mind clearly. With 15 bn usd QIP and fund raising and another 10 bn usd in the pipeline, there is no ambiguity in my mind about the revenue collection and the targets. It is very simply arithmetic. For every Re 1 raised we generally contribute 78 paise to the exchequer in the form of various taxes. This 25 bn funds churning is a big exercise for Govt for revenue collection. In fact, now each and every sector attracts service tax which is 12% and this 25 bn usd which is expected to go in capex cannot escape this tax apart from all other taxes. Apart from this, 32 bn capex is planned by Posco and Mittal alone which will add huge number game for tax collection. In short, there is no end of pessimism though we need to have basic thinking to know why markets could test new high before budget. Just not liquidity, it is fundamentals which are driving markets and whole world will realise this at the time of Budget 2010. You have every right the take negative call and sell short. But the fact remains, 2009 was never a year of bears and those who tried to go against the wind have seen themselves evaporated. My friends who were advocating 2500 and 900 Nifty are now a day vanished and I don’t know what their current status is. If they are still bearish I wish all the best to them and God may give courage to them. At Cni, all the followers have made decent return in market. Rs 60 lacs profit on one lot each in 8 months speaks about the Cni performance. Our best bets now are Ispat, IDBI, IFCI, IDFC, Idea and Larsen apart from RIL and SBI.