Sunday 8 January 2012


Build Equities

We have seen once again sharp rally in 10 year G-sec from 9.00% to 8.15% in period of month. LAF is showing short liquidity of 80,000 crores which reached 1.7 Lac crores in 3rd week of December. We are seeing sharp easing in long end of curve due to OMO and also borrowing at long end of curve has significantly slowed down. In our view RBI will reverse its stand from short liquidity to surplus liquidity in next 3-6 months.

Market suffered its sharpest fall in December-11 due to very tight monetary condition. Some of the high quality stocks suffered fall in that period. Due to slight easing in liquidity conditions these stocks have already moved up by 4-10%. We are trading near 15000 mark for last 6 months. We have touched 15000 mark in August, October & December-11 month. Market is giving window to buy at these level for long time. My personal view is that market will be constructive for equity investors in 2012. Also market will incrementally move up in middle of all the bad news in the market ranging from lower GDP number, bad quarterly numbers, high fiscal deficit, slow government policies, high current account deficit, muted FII flows etc. etc.

Someone asked me, what is risk for equities in 2012. My answer was – “EVERYONE IS UNDERINVESTED”.