Monday, May 18, 2009

Bulls charged up for mega rally

18 May 2009,

MUMBAI: After 10 Janpath, the partying may shift to PJ Towers, Dalal Street. Unlike 2004, there is no fear of any Left-sponsored
common Minimum Programme (CMP) on Dalal Street this time around. So the bulls are waiting for the maximum: To take the sensex up by a circuit-hitting 10% within minutes of opening on Monday. Most Street players expect 15-20% rally during the week.

"The market was not expecting this (a thumping win for UPA) and was preparing for a fractured mandate. The election outcome is like a dream-come-true and we are in for a massive gap-up opening on Monday,'' said Nishid Shah, president & chief investment officer, IDFC Mutual Fund. So no one is ready to sit on the sidelines and miss the party. "FIIs, domestic institutions and investors will invest big time over next several months. Local investors, who were left out of the last two months' rally, will also jump in,'' Shah added.

Other than retail investors, speculators and mutual funds could also jump in. Over the last two months, most MFs stayed in cash. But now they are expected to join the celebrations, broking house officials said. "Anticipating a fractured election mandate, domestic institutions did not participate in the rally. But now DIIs have to start investing as the event risk is over,'' said Amitabh Chakraborty, president-equities, Religare Capital Markets.

Other than the expected euphoric buying, some short coverings could further aid the rally. Markets have put built-up around 3,300-3,200 (nifty) level and those positions could prompt some short covering, Chakraborty said.

Technically, the nifty could rally for another 600-650 points before it faces any major hurdle, chartists said. On sensex, this could translate to a rally of about 2,000 points and that could happen in the next 10 sessions, a derivatives analyst with a local brokerage said.

Moving beyond the immediates, the global markets, the budget expected to be presented over the next six to eight weeks, the emerging fiscal and economic conditions of the country will again start playing on investor sentiment and impacting the markets' movement, participants said.

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