Experts sees mkts rallying if govt wins trust vote

The markets keep trust with the UPA’s ability to sail through tonight's vote. Nifty closed at 4,240 up 81 points, while the Sensex shut shop at 14,104 up 254 points.

Nitin Raheja, CIO, Rada Advisors, expects the markets to rally post the government winning the trust vote. "We might see some sort of rally, which might take the market anywhere between 500-1,000 points."

Nitin Raheja feels that if the government wins the trust vote there might see some rally in the market which might take the market between 500-1,000 points on and thereon it will be interesting to watch what happens.

Raheja said, “After huge dollops of bad news, we had some respite in the market. Crude came from a high and we have a market, which had got oversold. There were huge positions that are built-up. So, it was relatively light market to cover-up and then results started to flow in. The level of pessimism was so high that the results were not as bad as most people expected. If one takes a cross-section of results, we have typically seen companies who have been growing the numbers at about 15-16% at the end of the day. So, the markets are really reacting. If one sees the individual stocks, where there were bad results those stocks got hammered down even in today’s market and where there were good results those stocks are doing well.”             

According to Raheja, it is very difficult to put a range in the way the markets are behaving because the shorter-term impact of FIIs selling in terms of how far it has played itself out and how much of that is there to go is going to act like a cap on the markets. He said, “I would want to believe that in the shorter-term, markets have made a bottom somewhere around the 12,500 range as such. We will probably trade in this kind of range for sometime. “

Ashu Madan of Religare said if the government sails through, then the markets will see a strong gap up opening tomorrow. "Because of underownership and very long position, the upside is not capped. We can see a strong upmove from these levels also."

According to Madan, investors should look at lightening once portfolio and booking some profits around 15,000 on the Sensex.

He further stated that inspite of the fact that there is too much of belief that the government will sail through and vote of confidence will survive, yet to initiate a long position is a difficult call.

He said, “Till now the stage was right for short covering and if the government sails through, we can have a strong gap up opening. But beyond that we will be back to basics. Till what level, one can go is a difficult call. We will have to see if suddenly retail or normal euphoria is back. We see correction out of the fear that now all the bad news is taken into account. So, it all depends on how it pans out to be."

Madan said, “The macroeconomic situation is bad while crude and inflation have become household names. Too much of maturity on the negative side is also bad. That has led to a clear underownership in the market because of which there could be a bounceback. Whether we are around 15,000 is a difficult call. I presume that would be a right level to book profits because profit booking is only a phenomena when somebody is on the long side and there are very few people who have participated in this. The underownership and profit booking does not come into the picture. But there are people who are holding these stocks since long and have seen the highs and lows. Close to 15,000 could be a level that one should definitely look for lightening the portfolio and booking some profits.”

Madan feels that there could be a strong gap up opening tomorrow from the way the stocks have reacted. He feels that politics is something one cannot predict.

“Most people believe that there will be a sail through and it will be a positive. So, a kind of caution is definitely there. We have already seen 300-400 points upside on the Nifty. There is still uncertainty attached to the event even if 10% goes awry. So, because of underownership, the upside is not capped and we can see a strong upmove from these levels also.”