Pre-Market Report - 11.02.2008

[K.Karthik Raja]

Reliance Power to "Shock" or "Rock" ?

Asian markets continued to plunge on Monday morning with Austrialia
dropping 1.7% on the Central Bank warned of higher inflation, raising
fears of increase in interest rates. Kospi, the South Korean stock
exchange plummetted 3,6% while Singapore is currently trading down 1%.
Japanese markets are closed today.

Quoting Wall Street Journal low-rated corporate loans might account
for $100bn in losses after the fire ignited by the subprime
mortgages. As per the report the banks are expected to try to unload
some of those loans this week at fire-sale prices.

Though we are not sure about the above mentioned report we believe
these rumours/reports keep pouring in this kind of market. We cannot
predict the bottom for this kind of turmoil in the global financial
markets. We were strictly of the opinion that Indian Economy is not
highly dependant on exports and is likely to keep up the growth rate
given the recession prediction. The only cause of concern might be the
liquidity inflows and the morale of the global funds might be battered
due to the carnages across the globe.

The situation we believe is definitely not that bad as being predicted
across the globe. Though book economics might predict more odds of a
recession we think the modern day economics do not synchronize well
with the book economics. As expected we are witnessing the real impact
of the so called recession (we call it sluggish or very poor growth).
The US retail numbers of thursday were really worse enough.

Listing of Reliance Power is the major event, the market is looking
for a direction from the last fortnight. Indian Markets are simply
following global markets or at the behest of FII's, trying to build
major short positions in the absence of coutner buying from MF's and
domestic Institutions, with many preferring to sit on the sidelines.
We believe Reliance Power to list at a premium of Rs.100 - Rs.130 and
might go either way. It is definitely hard to pick the direction and
with the kind of sentiment the market is witnessing the odds are in
favour of bears but given the "Power" of Reliance it would be too
early to take a call.

Midcap stocks are beaten down the most giving more and more
oppurtunities for medium to long term investors. This market is
definitely not a trader's paradise but a long term investor's blessing
in disguise.

Previous Market close box:

BSE Sensex 17464.89 -62.039
NSE Nifty 5120.35 -12.90
USD Rs.39.48
Oil Nymex $88.11