The challenge ahead…..

The govt. announced stimulus package-2 was short of satisfaction as there was more room left to do and the govt. announced that the doors were closed for now till the new financial accounting year begins. So the domestic financial and major policy measures are announced except the 3G auction. The international news and the global indices will be in the drivers’ seat as the new govt. in US will determine the next course of action.

The RBI announced policy measures will carry a positive start on Monday unless the Asian markets open deep in red. The banking sector has been waiting and the rates cuts were already factored in the bank stocks. This can be seen as the HDFC has failed to cross the resistance at 1560 level and the SBI took long time to trade above 1335-39 level. The reality sector though raised on big hopes were belied as the 20 lakh bracket was not raised to 30 lakhs is a big set back as the demand and profitability was in and above that 30 lakhs. The Monday trades can change the direction but for now the banks may look South.

The package has unilaterally given benefit to cement companies and to the logistic sector that can afford to buy. The IIFCL will spur the demand but not immediately. The IDFC and PFC are cautious on the demand as the industry is not jubilant to spend on BOLT projects.
The duty cuts on steel products have negative impact on the sagging industry. The reality sector that uses longs gets the benefit and will form a cap on raising the prices due to demand revival by the steel industry.

The overall balancing act by the Govt. will keep the Nifty crawling but not a break-out shoot up with this stimulus and monetary measures.