Weak global cues, recovery due

[K.Karthik Raja]

Weak global cues, recovery due

US Markets ended last week on a weak note after dismal jobs data.
Continuous
negative news on credit crisis coupled with worst data on the economic
front
pushed wall street to the lowest level from the last 18 months. Market
is
currently discounting a 75 basis point rate cut by Fed on March 18.
There are
no major events for the next 3 days. Credit crisis news flow is likely
to
take charge of the direction of the wall street.

Japanese Index was currently down by 140 points on weak US cues. The
Machine
orders data today morning surprised the market analysts growing the
fastest
in 7 years. Expectations of a rate cut started building up as Yen
continued
to move up against the US Dollar. IMF expects India and China to lead
the
world economic growth this year.

Indian Markets continued the slide given the weak global markets and
lack of
retail participation. Budget is definitely a wasted opportunity and
now the
ruling party is indicating early elections. Market never likes
uncertainty
and the above factors are likely to arrest any upsides the market has
to
offer. Large cap stocks joined the stockfall, which mostly comprised
of the
mid cap and small cap stocks till date. There are no signs of
weakening
economy at the domestic front though Crude and Inflation is likely to
continue the up move.

Subprime drama was enacted on dalal street courtesy ICICI Bank's
exposure to
collateralized debt obligations (CDOs) in the International market.
The bank
should have proactively announced the same during Q3 numbers.Banking
stocks
were under severe pressure given the the Rs 60000 crore farm loan
waiver
announced in the budget. Brokerage stocks were beaten to death due to
increase in STT in the budget and lack of volumes on the bourses
suggesting
tough times ahead for the brokerage firms.

IT Sector and the Pharma Sector comparatively sustained the carnage
to
certain extent. Market once again proved it is supreme where analysts
were
expecting a huge fall in the stock prices of these two sectors due to
the
recession in US. Realty and Infrastructure stocks continued to fall.
There
were questions about valuations of GVK, GMR Infra and others.

Technically the Sensex bounced back from 15,880 levels. We expect a
bounce
back today after an initial slide. The selling is way over done but
there are
very few positive triggers and one being aggressive short covering.
The Left
parties, the ruling party's ally and the stock market's foe started
threatening a pull out from the government.

Interest cut by RBI might attract some lost interest back to equities.
India
story is here to stay but given the global scenario and rise in
commodity
prices might hinder the growth to certain extent. There are always
opportunities for long term investors and it is not advisable to get
out of
equities at this point of time.

Market Close Box
BSE Sensex 15975.52 -566.56
NSE Nifty 4771.60 -149.80
USD Rs.40.29
Oil Nymex $105.4

Ravichandran K.