MFF – 090712 – 17:24 Hrs

We come across many people at various events and forums and over the last month many who spoke to us have been surprised the way markets went up, and the moment they thought that markets are going to move past 18000 as predicted by certain analysts on television channels, they have fallen sharp and the budget has already done away the cheer which was there when India voted a decisive government. Atleast the readers of Market Fast Food, who come frequently to our website and read our views, must not be among the surprised lot. We draw your attention to the TIA Article which was published when the index was at around 15000+ where MFF clearly expressed the discontent over the hype the markets built up over the budget and also mentioned that any negative surprises can take Sensex all the way to 12000 – 12500 index levels. We feel we are definitely headed towards the Sensex targets if the Rain Gods don’t smile on urgent basis.

The budget has nothing which the market can cheer about and hence we saw the selling on the same day and now we are being haunted by the likely failure of monsoon in NW India. Even today if the monsoons recover their will still be a deficit of around 15% which is more than enough to spiral up the prices of foods and hence fears of Actual Inflation (not the misguiding numbers which gets telecasted) will weigh over an immediate rally. The +ve IIP numbers which we saw over the weekend also failed to cheer the bulls as expectation of the same deteriorating if rains failed was looming large.

The budget was not able to cheer the market since it has spoken lot on spending but the FM has remained silent on where from he will get the money to spend? Markets require immediate directions, this budget has many hidden directions which bulls are not able to identify. The focus on rural spend, increase in the spending budgets in programs like Jawarharlal Nehru National Urban Renewal Mission & Rajiv Awas Yojna for the urban infrastructure, increase in spending budgets for NHAI will lead to indirect addition to the GDP over next few years.

NREGS scheme will lead to more income among the people of rural areas and these will help India a lot. If India has not felt the impact of the recession it is due to rural economy, if it was not rural economy led consumption we would not have been any better than US or UK.

FII’s are spooked on 6.7% fiscal deficit numbers, if state numbers are added we would be at around 11% deficit which can even lead to rating of India as unsafe and negative by the poors! The government now needs to send positive signals on what they are likely to do, to do away with the mess they have created over last few budgets. The FM remained tight lipped on disinvestment due to political reasons since many joker partners of them would have screamed has he uttered a word on selling to raise money. The NHAI and Oil India are already in the process of disinvesting and such moves will help bring back the confidence.

So what did the Congresses Aam Admi get in the budget? Only Hopes!

The increase of Rs.10000/- in the personal income tax slab shows how Aam we are. The surcharge which people earning above Rs.10/- Lacs have to pay on the income has been removed hence the rich will get richer and poor gets richer by just 10k per yr.

We would here after be regularly sending updates through the Free SMS Group. Message are getting delivered late due to faulty service by the service provider but hope it gets corrected very soon as we have already complained about the same. We continue to recommend Bartronics. We are buying at every fall and would step up buying stocks if index falls to 12000 – 12500 levels. No one can predict the exact bottom and hence we will buy at every fall.

The breaking news is that a portion of Delhi Metro has collapsed and the brain behind it has already resigned. If this is the kind of construction our companies are going to do then what’s the use of increasing the spending limits in the budget. CW games are supposed to kick of in early 2010 and this is going to be yet another set back. People holding the hospitality stocks need to watch out their scrip’s on Monday.

Stock Specific Disclosure: I hold Bartronics in my personal account & in accounts of various clients.

Disclaimer: Investing in Equity & other Similar markets can be risky. The recommendations and views mentioned are based on certain expectation’s which may or may not occur. The author thereby, will not be Liable for any loss incurred, monetary or otherwise. Seeking personal advice from your Financial Planner is recommended before acting on any of the substance given herein.

Jai Hind.

Vivek Karwa

Certified Financial PlannerCM

& Investment Strategist

Desk.Mob: +91-98-405-405-75

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