MFF – 100711 – 16:48 Hrs

– 100711 – The major news of the week is that International Monetary Fund has given a forecast on India’s 2010 GDP growth at 9.4% and pegged a growth of 10.3% Dec’2010 quarter. IMF further adds that the growth finally would settle down at 8.5% in 2011. The charm here is that Dec’2010 prediction of 10.3% is way higher than the possible growth of China. If you all remember even in our last posting we had mentioned about our very old statement that India will cross China by way of growth sometime. It is materializing now. Our interactions with fund managers situated outside India brings in confidence in us to say that even the money flow into India will slowly overtake that of China. Still, money making by way of beating the benchmark would continue to be tough and picking the right sectors and stocks remains the key. MFF is one of the solutions!

– Monsoon seems to have improved over last one week and our contacts across India have been informing us that rain gods have been smiling over their areas. A good monsoon will help kick off second round of growth for the country and would help India achieve IMF’s targets. Food inflation has come down a bit but the overall inflation is still in uncomfortable range due to the fuel price hike. The over all expectation is that RBI may increase the Reverse Repo and Repo rates once again on 27/July meeting. We have been writing here that increasing rates drastically due to fuel prices would be injustice for the investors and looks like same is the opinion with RBI and thus the first round ended just with 25 basis points.

– Some may call it bad news! Yuan has not appreciated much even after China saw a trade surplus of $20 Bn as against expectation’s of around $13.8 Bn. Many may call it as a bad news since the export oriented stocks which rose on Yuan news a fortnight back many not see much of activity. MFF feels China surplus points that the country is still in healthy condition which is very vital at this point of time when US and whole of EU is suffering. Another thought is that it is only a time lag before Yuan appreciates significantly. It will finally happen and China cant continue at this pace consistently in future hence will come again under influence of USA to let Yuan appreciate. After US & EU next world crisis when ever it has to come will emerge out of China!

– Sugar stocks rallied on talks by Sharad Pawar that he would look at decontrolling sugar prices. MFF feels it is good chance for stuck investors to get rid of these stocks on all rallies, firstly we feel decontrolling sugar is not very easy for the government, secondly going by track record of our Cricket minister Sharad Pawar, we don’t have confidence in him that he will walk his talk!

– We have been posting various articles on our website and though many of you visit regularly, we still would remind you to regularly visit. Many knowledgeable articles are also being posted. We don’t want to mail everything and flood you inboxes, especially when you can read them on the website and moreover strictly moderated groups like InvestorTalks would not allow us to post many mails per day.

– One quarter of FY 2010-2011 is already over and market will now on track the quarterly results which will start pouring in. The resistance remains at the earlier mentioned levels of 18360-18600 on Sensex and 5480-5555 for Nifty. We would be in a range until all major companies declare their results. Our year end target remains at 19300-20200 for Sense and 5760-6070 for Nifty. We last week in a TV show had recommended investors to Buy Karur Vysya Bank Ltd. KVB at Rs.580/- with a year end price target of Rs.750/- The AGM of the bank is on 21/July. The call was repeated again on a show on Raj TV. We also send calls on our Free SMS group. Be part of the group, to join just type a message saying… JOIN MARKETFASTFOOD and send it to 567678.

Jai Hind.

Vivek Karwa, CFPCM

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