MFF – 100522 – 19:40 Hrs

– Almost 160 people are dead in today’s tragic Air India Express crash at Mangalore. It is sad that one side we talk about modernisation of airports and in reality some airports like that in Mangalore lack basic rules of engineering. As usual expect no one to take major responsibility for this tragedy and the files of the accident would shortly be buried. Google maps show that Mangalore airport has just one runway and is situated amidst jungle surrounding it. It is estimated that India would have more number of airports than China in the year 2025 meaning lots of people would fly. Roads, Airports & Ports can really stimulate the economy, and the present government is slow on all three.

– A proof is not required to show that our so called Honest PM is only working towards safe-guarding his own chair. He is not able to do anything about the communications minister Raja who sold away 2G spectrum for a song. Full page advertisements of the ministry has appeared today in news papers where along with the pictures of sonia-manmohan-raja the picture of karunanidhi also has appeared, sending a clear message to public that as a CM of TN he also controls communications ministry! One great achievement that the TN CM can boast about is that his government has started removing all name boards of shops and commercial establishments which do not carry its name in Tamil in large fonts!

– Markets have stolen away sleep of many investors due to the volatility. After having missed the rally of 2009, investors had finally started entering stocks and have faced a major jolt from the European Crisis. The major mistake investors again as usual would do is not buying into this crisis! Its time to buy since however big is the crisis it will wane away within a year.

– The 3G spectrum auction has thrown a major surprise to all including the government. FM was estimating to collect Rs.35000 Crs out of 3G & BWA auction put together. Now the good news for the government is that it will just get almost Rs.68000 Crs from 3G alone and the estimates suggests that Rs.10000 Crs may come in from the BWA auction which begins on monday! Meaning a bonanza of almost Rs.75 to Rs.80 thousand crores to the government! This will reduce the fiscal deficit pressures. We now have to wait and watch how the money would be used by the government.

– Thanks to the EU crisis the crude is trading almost at year lows which again is favourable to the fiscal deficit as the import bills of the government would be smaller. This is the right time for the government to implement the Kirit Parikh committee report atleast partially if now fully. A small beginning has been made through gas prices and hope it continues.

– The US senate has passed the financial regulation bill yesterday which would regulate the financial sector and large companies and banks in the US. It hopefully would reduce the speculative activites these banks enter into at the cost of investors and finally tax payers monies rescue these institutions. The German parliament has also passed its share of Euro 148 Bn or $ 185 Bn of the Euro 750 Bn or $940 Bn EU rescue package which was announced few days back. The markets globally were fearing that the package may fall apart in the parliaments of various countries and this passage by the German parliament has sent a strong signal to the investors thus helping Dow close almost 125+ on Friday after hitting more than 150- in the opening trade.

– The swift actions by the legislators would definetly bring some solace to the markets. FIIs who are withdrawing now will once again start coming to our market as the cant find this growth anywhere else in the world, not even in China! China is a scary place for investors right now!

– We in our last post had mentioned that the Sensex would take support at 16300 – 16200. On Friday it hit low of 16187.03 and recovered. The lowest five minutes closing was at 16219.35 just within the support range mentioned. We may see some recovery on Monay on back of better US cues coupled with some sort of short covering which may happen due to F&O settlement coming on Thursday. In case the panic continues then expect to see 15700 and if again broken then 15300 – 15000. Though the case is remote one should enter at every support level we mention here.

Jai Hind.

Vivek Karwa