Imagination.
Thursday, February 25, 2010
End of the day….
NTPC issues had seen very lukewarm response which we know for sure. Even REC was going on the same lines and suddenly at the last hours the bids poured in from funds at 206, 210, 215 and even at 218 to take the issue oversubscription to over 3 times. The first re action came from IPO investors. As happening in most of other cases ipo investors had gone short in REC in anticipation of firm allotment in issue. They had short in derivatives as well as in gray market.
The oversubscription made them rush for covering their short quantity so that there is no trapping. Even FII which generally buy in secondary market sense that the opening will be high and hence lapped up the opportunity to buy from market.
All this changed in fraction of time when most of the FII were afraid to invest due to Budget consideration after 2 days. How is that FII and investors got sudden confidence in REC even though they lacked vision in the market…? Market overall has been under performing and REC cheered all of sudden. There cannot be smoke without fire.
I was told from some sources ( North bloc ) that FII had an occasion to speak to some high level officer of the FINMIN which had given them to understand that the Hob'ble FM understand their concerns about market and may not do any thing which may harm market sentiments. This has propelled fuel to charge up REC issue. End result we have seen even LIC did not get chance to get REC pie.
The next issue of NMDC is just planned after 9 days of Budget and hence the big question is can the FM or FNMIN afford to displease market..?
I was also told that market is talking about 5.5 fiscal deficit and anything below that could be a welcome sign. The source suggests Govt has already done this by dealing with urea subsidy and expected petrol price hike. Then what could be further wrong in the Budget..? With no expectations, no credit of disinvestments, no 3 G auction figure, no expectation of increase in taxes what can go wrong in the Budget…? On the other hand there could be removal of STT.
What I understand from market players that they are now not worried about India they are concerned about global worries which is hovering their minds. They are waiting for more burst from PIGS or some other European countries which will take markets to 3800 levels and there they will cut their shorts.
There concern is also visible from the fact that many stocks are trading below 200 DMA and Nifty is unable to cross 4950.
All these concerns are really valid and genuine though India has ability to withstand all these concerns per se India is concerned. In fact, one of the leading FII broking house is now arguing vehemently that GOVT should remove the entire stimulus with immediate effect and also raise the CRR by 150 bsp. I think GOI do not require any opinion from the market intermediaries which has more vested interests in the market rather than the sovereignty of the India.
Today is the last day of the settlement. This settlement was rather known as rattlement and not settlement. Market did not cross 4950 even though it made every attempt to do so and on the other hand market did not fall below certain levels even though it had gone down all the way to 4650. Bears are short in Nifty and their stop loss is 4950 and hence market will give decisive break out only above 4950.
Since majority of the market players have already given exit call and nifty short (target 3800) we need to be extra cautious while trading on either side. Even March consideration (mark to market and loss booking) have weighed very heavily on the minds of brokers and as a risk measures they have already wound up majority of retail and HNI long positions.
We once again warn all our members to be very careful in holding your positions. Any investment in B gr shares should be avoided without reading the necessary research material. The cost of research material is less than the volatility of the market. Also note the disclaimer that any stocks which are talked about in this section should be considered as having vested interest of group.
Imagination is more important than knowledge
BigGains !!
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