Sunday, March 22, 2015

Key Bills passed in Parliament

The markets continued on their downward trend and lost another 1 pc this week. The key feature of this week was the parliament passing a number of key bills and this sets the trend for the next 12 months.

1. 1 of the biggest complaints of the UPA 2 regime was the non performing Parliament. The current sessions of the Lok Sabha and Rajya Sabha were 1 of the most productive in the last 10 years. Key Bills like the Insurance Bill, Coal Bill, Mining Bill have got the assent from both the houses. These will replace the ordinances in many cases.

2. The passing of key bills sets the stage for reforms. Add to it the low crude oil prices and the windfalls from the Spectrum and Coal Auctions, thing seem to be going in the right direction.

3. The immediate movement of the markets is based on many factors like liquidity, year end considerations, overbought and oversold conditions. I believe the current down trend provides a very good opportunity to buy into good companies.

4. Before the Modi Government was elected, the markets were around 7200 levels. In the last 10 months or so, we have a stable Government in place, now we are getting action on the passage of key bills, corruption loopholes have been plugged. This also means the fair value of Nifty has moved up to around 8000 levels from 7200 levels.

5. The current fall is in spite of FIIs buying. The FIIs and DIIs together have bought stocks worth almost 10000 crores in March but still the markets have corrected about 4 pc.

6. The 10 year bond yield has moved to about 7.75 % from a low of 7.65 %. If it goes up further that would be a good entry point.

The Global markets seem to be up beat at the moment and any further dips are good buying opportunities.

1 comment:

  1. This article may shed some light on point No. 5: