Inflation nose dived…..

The great surprise was the fall in the inflation, was below the 21 week level. The inflation was at 8.98% compared to 10.72%, week on week basis but the inflation was at 3.35% a year ago, brought some signs of faster deceleration. As a matter of fact the crude touched 21 month lows at 55 dollars but the Indian government taking time to reduce the local subsidized prices that could even make the inflation lower by 2-3 points lower but the Govt. is tries to meet the fiscal deficit targets and plans to reduce the subsidy burden.

The Indian equities running far behind the Asian peers due to the slow down in our economy and our inherent capacity to rescue from the grave situation is a challenge encouraged the Bears to take a beating on the street.
The markets started adjusting to ground realities as the steep correction from 4400 to 2250 level made a recovery upto 3250 level as a short covering, especially by the weak hands lot got exhausted and the longs if any were also un-winded above 3080 level where the retail investors entered.
There is no doubt that the smart money is entering in the equity market but confined to very selective stocks. The worrisome at this point is the failure of confidence due to the wide spread gloom across the world.
The yesterday laid down conditions were not met either on high side or on the closing basis but left some silver lining while recovering from the lows. The recovery crossed the 2870 level and the actual closing was at 2855 level but the adjusted level placed the Nifty closing was at 2848 level.

The IIP numbers effect….

The IIP numbers announced today were good because above the street expectation but not encouraging as they stand at 4.8% against last year 7% growth. The cumulative April-Sep growth was at 4.9% against 9.5% a year back. The big console was that these numbers are far better than the Aug. numbers at 1.3%.

The recent reports display a big concern about the future investments as the pull out close to Rs 47000 crores from our MFs reveals the faith in our markets and the economy as a whole. The redemption pressure increasing from the melting of value day after day and the cyclical effect is more dangerous than it looks. Now it is too late to sell and puts pressure on the mind due to the "actualised/accounted loss" rather than a "notional loss" that can run for a longer period with a hope of recovery.
The money may not come back to markets so easily as the stocks have to out-perform. But the stock values do not rise as fast as they were a year ago, because there was no chase after them. This grave situation looks/begs for an external investment support. This hypothetical situation has proximity to real situation then the FIIs are likely to buy our Indian blue chips much cheaper than they are today, that to after a considerable time. This opportunity empowers the FIIs to cleanse their home bound investment worries, and then they come back with revitalized strength to emerging markets.
NEVER FORGET that they come back with multicolor research reports that carry the “TREASURE HUNT OF THE EMERGING MARKETS”.

The strength waned…..

The serious knock was a surprise to many who are bullish above 3080 level, every reason to be so except the fear of “dark devil FII selling may occur, so let’s get the early bird opportunity to withdraw the money” is the kind of selling happened when the Asian counterparts start melting. The Nikki was down by 280 odd points when opened in the morning and the Hang Seng held no faith to hold the stocks put pressure on our markets.

The support technicals though lost some ground at the bottom but still a reason to smile for those who can average at the lower levels at 2630-21 level. The markets are under selling pressure for this day but the wipe out today posed a serious question to Bulls.

The developments across the globe are forcing the financial markets to look for bail out packages, now the auto-mobile sector is in the queue back at home the MF are looking for FMPs trouble and the growth slow down may demand a lower Nifty level. The correction is an adjustment as an answer to the demands.
The ONGC and RIL are still in good shape as they can rebound as ONGC is still above 711-20 level and the RIL is above 1115-20 level, until these levels taken out with vengeance, bull have every reason to smile to average the purchases. The real challenge for Nifty, has to cross the 3040 level tomorrow and shall try to close above 2860 even it is a negative close.

STIMULUS PACKAGES….

The Governments across the Globe coming forward to announce stimulus packages that can bring confidence in the investor community, badly shaken by the recent turmoil. The Governments are happy to burn their night oil stock to tackle the emergency situation. The US bail out package, England’s rate cut and stimulus package. Now the China announced a package of more than 580 billion dollars.
A new idea that was floating around on the formation of a BRIC-Trade (Brazil, Russia, India and China), willing to forge a planned measures to increase trade and capital flows. This could be a one more plan to add to the Sarkozy’s sovereign wealth fund plan. The efforts are there across nations to fight against the high handed nature of US investment model and their nature of withdrawals. Hope for the Consistancy……….