NOW Fiscal measures………

The Govt. of India has come out with a mini-budget like slew of measure to kick start the economy and the ailing sectors. The auto and the reality sectors are the fore runners of deceleration, put halt to southward journey. The auto sector will enjoy the CENVAT facility, lowered by 4%. The Maruti wanted to pass the full benefit to its coustomers but the others who already announced rate cuts in advance with this anticipation may announce their plans later, adjusting to market forces.

The Govt. planning to spend nearly 20,000 crores of rupees to stimulate the growth above 7%, focusing on infrastructure and core sector spending. To improve the exports, especially the cotton and fabric sector, textiles will get 2% reduction in interest upto Mar-09. The textile sector will get 1400 crores for Technology Upgradation Fund. A 350 crore export intensive scheme and a back up of 350 crores to ECGC (Export Credit Guarantee Corporation) for proving guarantee to exporters. The micro and small industry will get a collateral free lending support upto 1 cr from earlier 50 lakhs.

A special package on loans will be announced by the banks to encourage housing. The large amount of unmet demand for low cost housing will get a boost with the package which will have two categories, one below 50 lakhs and the other one between 5-20 lakhs category. The RBI plans to refinance 4000 cores to National Housing bank (NHB) to spur the growth in low cost housing to the poor. These measures will absorb the expanded capacity of cement and the demand for longs-steel may increase.

The IIFCL- India Infrastructure Finance Company Ltd will raise 10,000 crores via bonds to finance the roads and other Infrastructure projects through Public- Private Partnership (PPP). The plans come through fast in implementation, 60 highway projects likely to get clearance.

The reality and the Infrastructure stocks are likely to get the benefit. The JP associates is good above 67 and likely to reach the 90 range, will become weak below 60-62 range. The GMR likely to cross the 71-73 resistance but the airports and the low traffic will be a drag for time being. The High way construction companies like Nagarjuna constructions, Mytas, IVRCL, C& C constructions, KNR constructions and low cost housing sector focused Omaxe and Orbit Corp. get the investor support. This euphoria will not live long as the uncertainties are still intact. The best is to focus on JP which is having cement and infra.

The Nifty is good above 2750 level and the bottom support is at 2662-63 level. In case the markets fall due to global pressure but will bounce back, gain momentum above 2750 to touch 3039-45 level. So the temporary slag shall be used for buying instead of going for short. Incase Nifty closes below 2520 level then sell the longs to buy again at lower levels

The markets become weak when the Rel Infra trades below and closes below 491-93 level. The Banking sector will lose the ground as a whole when SBI trades below 1056-53 level and Axis bank trades below 415-16. The ICICI bank trades and closes below 322-21level.

The laggards of the market at this point in time are ONGC and Reliance. The NTPC, ITC and HUL are becoming weak. The techs are losing ground but has little was left to gain. The earlier levels are valid to these stocks.