India Morning Report: Rail budget holds Nifty below 7800

The markets seemed among early finishers in stakeholders holding out on India’s Economic juggernaut unfolding and thus Rail budget day would be a good day to lose some of the sunny disposition if a budget induced rally is still the way. However, even if markets breakdown today or tomorrow ( improbable, <0.01%)  beyond 20 or 30 points on the Nifty it would be on specific stocks and the bank breakdown on Monday shows the rally is keeping alignments to macroeconomic predilections safe with cyclicals losing to even IT for Monday’s session in an oft repeated down tick day in the last month.

The Banknifty could again show up the long queue of buyers it last displayed at 15200 before the Banknifty starts leading more of the rally above 7750-7800 or 26200 as the Sensex is showing up to the promosed targets on strength of real investment backing Indian pie in the growth plans, one which has gravely seen a lot of pies thrown away into the fire as fuel instead of food in the last few years of a hung parliament. One is unable to fathom a strong year for IT overall as the currency gains will eat into any dollar revenue increases as the industry returns to its new weak normal since Satyam

The markets would likely stay above 7750 on the bottom and close towards a new mark in the best case though a simple downtick seems to show markets will top out at 7800 if its just no bad news in the budget and the market has indeed overthought  the recovery jump. If indeed tomorrows budget day follows a more sunny /happy shower day ( if you are in the North) you’d like some real investment back into social welfare, higher disinvestment and real plans for increasing the FDI regime to Indias gain or other plans to increase India’s pie of the World as it ‘catches on’/cashes its demographic advantage

Rail suppliers have definitely overrun their wont in the mostly optimistic prognostications of the new avatar of Indian Railways likely to be put back in place by observable fiscal prudence today and tomorrow. Markets will hold most of the rally gains to 7800 only after budget day for a corrected Fiscal stance without sacrificing the welfare stance but this market is well on its way to ruling on more subsidy cuts sooner than later without nodding to political compulsions, unlikely for a government with 300 seats in the Treasury benches.

I am still trying to find out why ICICI Bank led the Banknifty down with a near 10% cut in yesterday’s session despite news of a planned acquisition, with plans to expand in China and South Africa as International assets continue to expand faster again for the bank. A new acquisition definitely demands more multiples in valuation from the market as a cash positive and profitable operation is unlikely to be for sale in Pudong(Shanghai) or Sandton(SA) YES Bank reports expected better than normal results this week with Indusind also having written off most of its CV portfolio woes.


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