Remain Invested And Reap Benefits

The year 2009 was an eventful year. Global stimulus packages and lowest interest rate regime took the emerging and developed markets to a phenomenal recovery. The year 2010 is not going to be different as focus has again shifted towards emerging countries.
There isn’t much to stop the USD-INR from hitting below Rs 45 level from the Rs 50 level last year and speculation is that it may hit the Rs 42 level by this calendar year-end. The influx of portfolio and long term investment dollars will pick up speed with each of the top ten results this month. The government won’t let up on infra spending and cutting fiscal deficit to 5.5% of GDP this year and 4.1% next year will lead to strong rupee. This means most of the inflows will be parked in the stock markets. Neither any North-America-generated crisis nor Greece or Dubai crisis can hit Indian stock markets since post-Budget, everything points towards a huge rise in stock markets.
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Let’s look at the calendar of events lined up and their impact on market – from 12th April onwards India Q4 results will keep pouring in and are expected to be good for the stock markets. 20th April: RBI will most likely to hike interest rates by 25-50 bps. Impact: Weak markets for a day or two but bullish after that. Market will conclude that the hike is “good for the economy”. 20th April to 30th April: The Indian Meteorological Department will announce its view on the monsoon. As per the preliminary reports, the monsoon is not going to give any negative surprise. 23rd April: Meeting of G20 finance ministers and central bank governors in Washington.  Will they “continue the soft stand” yet again like they had decided on 9th March, 2009 at London? If yes: Impact: Bullish for stocks. If no: Impact: Partly Bearish for stocks. 27-28th April: US Fed meet.
Yet again, they aren’t expected to hike rates but they may talk about withdrawal of stimulus packages. Impact: Bullish for stocks.
If I am asked to give my opinion on a monthly basis I’ll say I’m bullish in July, but will wait for the impact of monsoons in August. September again is a wait for the monsoons and pre Diwali production ramp-up is required. After that I’m bullish in the month of October, November and December. Our safest pick will be to buy the Nifty BEES. It’s the only place where you can safely park cash every single month. It was 250 this time last year. It is 530 today. And we see it heading for 650 and then 750 within the next 18-20 months. Which other place could be better where you can park big money?
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As far as sectors are concerned, we expect a higher crude and gas prices for this year and resulting into higher realization for exploration to refining companies. The best picks will be Cairn India and RIL. Also, with revival in economy, steel as core infra play will report excellent growth. So iron ore and steel stocks are going to boom this year. The best picks are Sesa Goa and JSW Steel. Then revival in real estate and higher thrust on infrastructure will help cement companies to report rising profit every quarter this year. The best picks will be ACC and JK Cement. Retail investors should start taking long positions in the market and try not to miss this bull run since this bull market is driven by improving fundamentals of Indian economy and commitment of Indian government to cut fiscal deficit and fuel GDP growth. India is becoming a popular destination for foreign institutional investors. Investors can take risk and participate in this market rally to reap the benefit as risk-return ratio is tilted in their favour.