MARKET COMMENTARY FOR THE DAY 24 JUNE 2010

The Sensex closed at 17730.24, down by 25.70 points and the Nifty rested at 5320.60, down by 2.55 points. The top three gainers were HUL, L&T and PNB which rose by 1.77 per cent, 1.51 per cent and 1.28 per cent respectively. The top three losers were Kotak Bank, HCL Technologies and Unitech. which shed 3.57 per cent, 2.31 per cent and 2.17 per cent respectively.

The reason for our markets being lackluster, of late, can best be attributed to a mix of the following factors:

• Federal Reserve’s decision to keep cheap money flowing.
• Fears that Eurozone’s increased debt region especially in Greece, Spain and Portugal, may derail the economic recovery.
• Closer home, high food inflation at 16.90 per cent is making market participant edgy
• Rollover of June 2010 derivatives contracts today

Despite the markets going up one day and down another day, one thing is for sure the markets are not undervalued.

"Whatever you call it, 'fair-value' or anything, we are not definitely undervalued," Head of Equities, SMC Capital, Thunuguntla said. "It pays to be conservative in such a market, not aggressive."

"Anybody working on the Toyota assembly line can pull the cord and stop the line if there's a problem that needs to be fixed," How I wished our great TV friends look to Toyota whilst dishing out stock ideas to the “junta” at large.

As is known, Toyota has become a victim of its own dizzying success. But this cannot be said about Reliance [ both brothers included] Both the brothers are dynamic to the hilt- and I was just wondering what if Obhama called up Mukesh and urged him to try fix the problem in the Gulf of Mexico ? And I’ll bet one to a million that Mukesh and his team will take up the challenge and emerge victorious – they’ll ”just do it.” In short, that’s what RIL is all about.

Though the bitter truth is that shareholders are not getting the capital appreciation that they keep dreaming of ! And our good friends on our grand TV’s keep assuring RIL shareholders that one fine day their dreams will come true – just hold on, that’s what they say, But hold on for how long, may I ask! And some market gurus talk about the unlocking value of its subsidiaries like Reliance Retail [ from the Mukesh stable ] and Reliance Life [ from Anil’s stable ]. RIL closed the day at Rs. 1051.30, down by Rs. 7.30, 0.63 per cent.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd