July 1st and 2nd week very crucial for market.

Market had been range bound for last week. It has either remained flat or has dipped on one day and recovery on the next. Similar movement will continue till budget. After two months of formation of new government policy of government are still not pretty clear. There has been conflicting statement for corners of congress as well as United Progressive Alliance (UPA). Investors appear to be waiting for the new Congress-led (UPA) government's budget, which is scheduled for 8 July 2004.

Along with budget on 8th July we also have 2 more big triggers in first half of the next month. One is the bonus issue of Infosys on 5th July and next are Q1 results starting with Infosys on 10/11 July.

Rupee has weakened by approx 4% in last quarter. This will be reflected in the bottom-line as well as top-line of most tech companies.

Expired Call of 25 May Federal Bank.

Federal Bank touched a mark of 360 i.e up 10% from the call price of 315-320 on 8th June, but droped back to 325 levels by 15th June due to credit policy of the new Goverment.

Budget, interest rates and Monsoon to dictate near term market trend

The 30-share BSE Sensex lost 62.72 points to end at 4,769.99 last week, extending a 56.29 points fall witnessed in the preceding week (week ended 11 June 2004).

Investor’s confidence would return to bourses in the event of a market-friendly budget. If the Sensex crosses 5,000 level post budget announcement, retail investors may return to the bourses.

Union Budget 2004-2005 that would be presented on 8 July 2004 is a key trigger for the market for the near term. A cut in corporate tax, extension of the exemption of long-term capital gains tax and reduction in short-term capital gains tax should boost market sentiment. However, an increase in fiscal deficit will not be appreciated by the investing community. And, the market is already worried that the new government may tend to focus on populist schemes, financed through higher taxation.
The progress of the monsoon is also being watched keenly. A good monsoon means higher farm incomes and enhanced spending capacity which in turns leads to stronger demand for consumer and industrial goods.

After the presentation of the budget, the market’s focus is likely to shift to the Q1 June 2004 corporate performance. The Q1 results would start trickling in from the 10-11 June 2004. Usually Infosys kickstarts the quarterly results season on 10th or 11th of the month.

Market ends flat; Reliance Energy drops on disappointing buy-back price

A marginal one-point gain in the 30-share BSE Sensitive Index (Sensex) helped the benchmark index end higher for the fourth straight session on Wednesday after a volatile, yet range-bound, trading session and thin volumes.

While the benchmark index has gained 180.45 points in the last four sessions, it faces strong resistance at the 5000-mark as witnessed at more than three occasions in the recent past.

Tommorow will be decisive. If the Sensex can cross the 5000-Mark. If it fails to do so tommorow a drop of 50 minimum points is expected by friday.

Pick for today Mastek.
Mastek commenced its buy-back programme last last month. Company has planned to buy-back at a miximum price of 320 per share.

Buy Mastek @ 265-270 --> 3/4 weeks view.

Wait and watch

After continues crash for 5 days market has recovered in last two days. Markets have shot up by 160 points in last 2 days.
Rising Oil prices and demand for quota in pvt sector has hit the market hard. One more thing that hit the market last week was the fear in FII regarding reforms.
FM had assured FII yesterday in a video conference that UPA government will continue the reforms. This turned the sentiments positive.

Wait and watch could be the best policy now.