There was squawk on the Dalal Street. The Nifty ended at 4919, below its 200 DMA.

There was squawk on the Dalal Street. The Nifty ended at 4919, below its 200 DMA.
We saw a global selloff today, with Asian indices tanking abt 1%. More pain was witnessed in the European Markets which plummeted about 2% after Greece banned naked short selling in Euro bonds and some 10 European banks.

However I see this as just a sentimental reaction and Indian markets should rise again from the current levels.
I think markets are overdoing the Greece crisis because India is least affected by it. Infact countries like Poland, Chez and Hungary are most affected as they carry a lot of trade with the EU nations.

Infact in this era of shrinking economies, overgrown debt burdens, fiscal imprudence and increasing unemployment of the biggies like the US, UK and Europe, India stands to gain the most. With near term concerns over China monetary tightening and Japans decade long deflation what seems to be shining brightest is India.

With consumption driven economy growing at 8%, inflation coming under control, coupled with stable government, strong & sound banking sector and credit growth picking up India is at the center stage of the world.

I think it is only in the short term that the FIIs are pulling their out their money as they are nervous and want to book their profits and emerging markets are the ones where they have made most of the profits. I think any further dips should be used to buy in the Indian markets as fundamentals are strong and valuations now getting cheap.

I place my bets on IRB (an infra play) and Reliance.

I also feel one should buy in Sesa Goa and Gujrat NRE Coke at every dip. Commodities have been overly bashed and you will see a overturn. With Chinese economy growing at 10% and inflation at 3% is not much a worry. China has already taken a few steps to tighten its monetary policy and so I dont see much concerns over Chinese economy as well.

Another lucrative long term buy is Cairn. Crude has temporary fallen to levels of 68 and it will bounce back any time.

Lets just hope that this time Monsoon does not play a spoil sport and we have adequate rainfall so that our economy can sustain growth of 8% and above.

Great Offshore surges to 475

I had suggested in my earlier post dated 13th April to buy Great Offshore at levels of 418-422.

The share had been languishing constantly in range of 400-420 levels since quite some time and break out at higher levels looked very likely.

The stock past two days is seeing a good rally of more than 5% and today it touched an intraday high of 475.80.

Interest rates not to rise immediately

The RBI has increased all its key policy rates by 25 bps.

Current Prev
Repo rate 5.25 5
Reverse Repo 3.75 3.5
CRR 6 5.75


The CRR hike coupled will Government borrowing plans will suck away some money from the system. However since there is enough liquidity in the markets, it doesnot look like bankers will immediately resort to raising interest rates.

At the same time with the credit growth picking up ( around 20%) and deposits rising (17%), and the gap between supply and demand narrowing, we can see rise in interest rates inching up in next 5-6 months.

Great Offshore - A Good Buy at Current levels

The stock has been languishing in the range of 400-420 since a long time now. Breakout looks eminent, and when this happens stock would rise minimum upto 500.

The company is about to pass a special resolution to raise 1750 crs of funds.
It is expected that before this fund raising exercise begins share price will start shooting up.

Moreover ABG Shipyard has bought shares of the company at Rs 510 in open offer and Bharti Shipyard too in open offer has bought the shares at 590.

Bharti Shipyard which is the biggest shareholder in the company is continuously mopping up shares of the company at prices above the CMP in off market transactions.

Speaking from a fundamental perspective too, stock looks attractive. For FY10 it is expected to generate EPS of 50 Rs on a consolidated basis.
It is trading at PE of 8 and P/BV of 2.2.

Hence there is every reason for the stock to rise to higher levels from here.

The latest shareholding pattern is something like this :-
Bharti Shipyard-49.73%, ABG Shipyard - 12%, FIIs-6%, MFS/FIs/Insurance - 3%. Public 23%