>Karvy Bazaar Baatein (KRAVY)

The dance of democracy…
For a change, a string of good news overwhelmed the markets last week, taking participants completely by surprise after what was increasingly appearing to be a bottomless pit in the penultimate week. The indications by fi nancial services majors like Citicorp, JPMorgan and Bank of America that they had operated profi tably in the fi rst two months of 2009 came as a shot in the arm for global fi nancial markets. In a scenario of complete doom and gloom, the news came in like a breath of fresh air, raising hopes of greater visibility of a turnaround and an early end to the global recessionary fears. Moreover, with IIP (index of industrial production) numbers, though negative, coming in better than market expectations, the market witnessed a major rally in the weekend session. Accordingly, the BSE Sensex gained 5.17% while the NSE Nifty rose 3.78% on a week-on-week basis. However, although the Citicorp news was certainly welcome, it is rather too early to be optimistic. With the US under the grip of the worst-ever financial crisis since the Great Depression of the 1930s, the legendary spending habits of the ordinary American may well be a thing of the past, at least for the foreseeable future. Given that we are in the midst of the MOTHER of all recessions, this view was more than suitably endorsed by the recent US Q4 preliminary GDP growth, which came in at -6.2%, with consumer spending recording multi-decade lows. Clearly, there is a marked change in spending habits, as US households increasingly tighten their purse strings. Given that India is a growing economy, however, we have the ability to generate growth within our frontiers. However, it is not going to be smooth sailing for our economy as we go to the polls in April-May. What’s more, with no clear majority in sight, we can brace ourselves for another round of fractured coalitions and confl icts that may prove to be a drag for the economy. This week, we expect the Nifty to hover between 2600 and 2850 levels and a breach below the 2500 mark should see the index slide to 2200 levels.

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