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Market predictions for the week: February 21 to February 24

Last updated on: February 20, 2012 15:26 IST

India is one of the best performing markets today.

An interesting bit of history reveals that Mr JP Morgan, yes, the Mr Morgan, mega-financial tycoon, was quoted as saying: "Millionaires don't use astrology, billionaires do!"

It is a documented fact that Mr Morgan purchased a ticket for the Titanic's maiden voyage a few weeks prior to her ill-fated departure, as so many of his elitist associates had done.

However, JP Morgan suddenly changed his itinerary for the South of France. His close friends claim that Mr Morgan had consulted with his astrologer just prior to changing his travel plans.

Last week's review

The stars kept their promise of an action-packed week giving the Sensex the much-needed boost. Extending the gaining streak for the seventh week in a row, the Nifty glided smoothly above the 5,600 mark to close three per cent higher for the week at 5564 and the Sensex at 18,290.

The week saw the midcap index gaining five per cent while the small cap index added another three per cent confirming an overall strong market rally.

Let me recap what I had said on 14th November 2011: " For interim long-term investors this year should be used to accumulate select "A" group stocks for February 2012. Even the penny stocks will rise - overall an all round rally."

The 7th February report said: "The January rally was more fundamentally based on good corporate earning numbers economic data and the RBI cut but the February one may be purely a sentiment and money power driven one."

India, which was among the worst performing markets by December 2011, is one of the best performing ones today. The main reason for the sharp 18 per cent rise in indices is the Rs 22,000 crore FII money that has entered the country, the highest ever, since Sebi started disclosing the data in 2000.

FII inflows in the first 15 days of February, at Rs 11,681.7 crore, were higher than that for the entire month of January 2012, which stood at Rs 10,907 crore.

High liquidity to give our markets the necessary boost this week and high volumes a possibility was foretold, and FIIs pumped in Rs 4,518.09 crore for the week and high volumes of around 2.5 lakh crore shares were traded on Wednesday.

"Mid week may see some further buying activity," was another point I had foretold.

"Venus will give some spectacular aid to some stocks," was again mentioned in my last week's report. Many stocks like Tata Motors, Voltas, Bhel, Rel Power, Tata Power, Axis Bank showed stellar performance, and even some stocks with poor earning numbers did well, discounting their poor performance.

In my last week's report, I had also predicted: "Government will make a sincere effort to keep the image of India going by coming out with better policy announcements or organising funds to reduce its deficit."

In a major move, the government okayed the disinvestment of ONGC on predicted lines and initiated clearance of coal supplies to private-sector power producers and unveiled new norms for the telecom sector.

My last week's report also said: "Though problems may continue to make some headline news but since liquidity will be also high, these may not be taken seriously on certain days, though they have a bearing in the short term."

This was borne out by the fact that despite Moody's putting France, Britain and Austria on "negative outlook" and downgrading six eurozone countries, the market held steady and was unfazed by the news.

Under normal circumstances such news would have seen the markets buckling under immediate pressure, but high liquidity helped global markets to stay in the green in spite of some selling pressure.

Normally, February rallies have generally coincided with the budget but this month has been an exception and when I said that markets will rally in February many investors called to ask what I was talking about as there was no budget to provide the normal boost for the markets to rally.

This is precisely the difference between seeing things from our "logical point of view" and astrologically.

"The week may see a mixed trend where investors/institutions in the early part of the week may think of capitalising on their gains", I had said in my last week's report.

The markets on Monday and Tuesday were subdued compared to the latter part of the week.

The week started on a quiet note on predicted lines and Saturn held the market in a fragile state before stabilising, taking a cue from strong European markets on the adoption of austerity measures by Greece's parliament.

I had also mentioned in the same weekly report: The afternoon session may see a pick up based on some policy announcement or some favourable news flow on Monday a possibility.

The OECD survey said that the Indian economy showed signs of improvement, even as it said: "The international economic outlook is showing tentative signs of improvement, with the momentum shift spreading from the United States and Japan to other developed countries, the OECD's December survey of growth prospects."

On Tuesday the market opened in the red on expected lines despite Europe and the US markets closing positively. The day also saw Moody's putting France, Britain and Austria on "negative outlook" while India's January inflation eased to a two-year low at 6.55 per cent month-on-month helping our markets consolidate further.

Markets ended marginally higher on Tuesday and actually started recovering only after 3pm as I had said: "Market may recover especially after 3pm."

US stocks slipped on Tuesday as January's retail sales were weaker than expected, dousing some optimism about the strength of the economy, but recovered on news: "Greek government said the conservative party leader was expected to deliver a letter of commitment to the country's international lenders."

Wednesday, the markets zoomed almost two per cent with the Sensex crossing the 18,000 mark while the Nifty closed above the 5,500 mark.

My last week's report for the day said: "Market may see a big relief coming in with better market sentiment. " FIIs pumped in 1,838.85 crore.

On Wednesday the Indian market moved up, despite Europe closing in the red on Tuesday and the US markets closing marginally in the green.

The EU meet scheduled in Brussels on the Greece bailout approval was cancelled; the economy of the 17-nation euro zone shrank 0.3 per cent in the final three months of 2011 and reports that the UK unemployment continued to climb - but none of these developments made a dent to the upward trajectory of our markets.

Also on Wednesday, supportive news concerning Europe emerged from the People's Bank of China governor Zhou Xiaochuan, who said he believes the eurozone's challenges can be solved and that China will expand its investments in Europe.

Thursday was partially dominated by Mars, which I discounted and markets closed marginally in the red on support coming in from other strong positive planets.

"News flows could be dual in nature" was predicted by me for Thursday. Bomb blast in Delhi, Georgia and Bangkok by Iranian extremists added some tension. Moreover, Iran's nuclear programme and warning that it was mulling cutting exports to six EU countries, and the postponement of the Greece bailout approval to 20th Feb were other factors which caused a dip in market sentiments.

Though all these hit the headlines, none of them dented the markets from roaring on Friday. "Some negative news flows may be a possibility (domestic/global) but it may bring sentiments down for that moment or day but overall the market may downplay such news on certain days," was said in my last week's report.

Dow closing with strength on positive US economic data on Thursday saw our markets surging to cross the 5,600 mark on the Nifty on Friday. The US economy will do well was foretold earlier.

"The week will be dominated by the unpredictable planet which may give a positive result during the later part of the week" was said. The markets picked up very well on Wednesday and Friday.

Government to be distressed: In a significant political development, six chief ministers have joined hands demanding a review of the National Counter Terrorism Centre.

Crude price touched $120 per barrel on disturbing news from Iran was also foretold.

The market did see some profit taking and buying activity during the timings mentioned in my last weeks' report.

One favourable news for Greece: "The ECB, one of Greece's largest creditors, on Friday completed an exchange of its Greek bonds aimed at protecting the central bank from being forced to write down the value of its bondholdings in the restructuring, which will see Greece's private creditors receive new bonds with half of the value of their existing ones."

Germany's president resigned on Friday after a string of scandals, handing Chancellor Angela Merkel a political headache at home as she battles to lead Europe from its debt crisis.