The momentum of the northward journey of the bulls fizzled out on the last trading day of the weekend – the Sensex lost 45.87 to end at 17570.82 and the Nifty lost 12.25 to end at 5162.60. The biggest loser was Reliance Capital which lost Rs. 29.60 down by 3.87 per cent. The biggest gainer was IDFC, closed at Rs.169 up by Rs.4.65, 2.83 per cent.
Let’s hope that last weeks impressive net gain of 505.87 is replicated to a great extent in the coming week, So, do you think the sensex will breach 18000 and the Nifty will come closer to 5400 in a week or so? Direction apart, one thing is for sure – some profit booking cannot be ruled out in the days to come.
But the way events are unfolding in the global world with the recent crash in commodities, I hope we don’t get to see more bubbles. Quite some time back, Peter Schiff of Euro Pacific Capital had this to say about bubbles:
“ What Mr. Greenspan and Mr. Bernanke have achieved is historically quite unique. They have managed to create a bubble in everything, everywhere in the world: in real estate, equities, commodities, art, worthless collectibles; even bond prices continued to rise as interest rates fell due to the loose monetary policy.” And I would like to add Gold to his list – but the billion dollar question is whether Gold is a bubble?
It’s a well known fact that the US Dollar and Gold are competitors as a monetary store of value. And more important, there is negative correlation between gold and the greenback- when one rises, the other falls over a period of time, But for quite some time, both US Dollar and Gold are rising. The US $ kept rising as the Eurozone crisis started unfolding resulting in money flowing into “safe” currency and this can be viewed as a fear indicator since the fundamentals of the underlying currency do not support such movement. In other words, one can expect Gold to continue its bullish movement. And, hopefully the so called Gold bubble will not burst too soon.
In corporate news, Aditya Birla Finance has entered the micro finance business and has closed a financing deal with a Hyderabad based Micro Finance organization.
There is good news for shareholders of Reliance Power – the company has announced the commencement of power generation from 300 MW Unit II of its Rosa power plant.
As is known, India has a ambitious plan of investing close to US $ 70 billion in order to ramp up solar power capacity in our country from 30 MW [ current cap ] to 20 GW. In this respect, Arizona’s First Solar and China’s Suntech Power are planning to grab a major part of this project. Just wondering whether our great Indian entrepreneurs have decided to watch all this happening in meditative silence? Be alert on this front and be the first one to grab stocks of companies who intend to go for solar power in a big way.
Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd
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