Consolidation is the name of the game: Concentrate on Select stocks in Large, Mid, Small and Micro-cap Space: The bullish outlook to continue & the Next Station for the Sensex will be 20, 000; as Rate Cut from RBI looms large, with inflation plummeting sub 3.5%: HDFC Bank cut interest rate today across the board and hence look for some sparks in the Real Estate/ Construction Sector, very soon:

Last week the markets went up on the back of a smart rally following a surprise interest rate cut by 50 basis points by the Ben Bernanke and his team; which was not in tune with what the average analyst felt and understood about the US economy. It was this simple and well calculated feat that brought in cheers in the world-wise bourses. Dow Jones Industrial Average & Nasdaq soared followed by the Hang Seng (up 4%), Nikkei (up 3.7%), Korea and Taiwan (both up 3%) and the Sensex jumping nearly by 4%, giving it all time daily gain. The much awaited trigger came from the USA which proved the point what West Bengal Chief Minister, Mr.Buddhadev Bhattacherjee professed and wanted: It is difficult to survive with the support of the US and ultimately a smooth implementation of the Indo-US nuclear deal. The bulls went bersek on last Wednesday which gave a rise in the market cap by Rs.5.5 lakh Cr Wednesday and Reliance’s market cap reached Rs.3 trillion or Rs.3,00,000 Cr. At the end the bourses sat on the shoulders of Reliance and its group companies to make new highs. One interesting point is that Reliance Industrial Infrastructure Ltd (RIIL) which after I recommended at around Rs.375, was castigated by an Analysts from Delhi, who recently wrote about S B Stockholding Ltd, saying, “One will cry if they had invested in RIIL, almost doubled in one week. Last week, brisk buying was seen Auto, Realty, Ccapital goods, Banking and Crude oil related counters. IT continued to under-perform as the rupee appreciation continued and apprehension about US economy slowing down deepended. Incidentally, FIIs remained net buyers in the cash and F&O segment although they were occasional sellers in the derivatives segment. Domestic institutional investors, however, remained net sellers at higher levels cooling off the benchmark indices a bit. The Sensex which give a breakout and comprehensively crossed the top to make a new historical high, dumb founded most of the technical analysts, who were shouting from the top floor of Qutab Minar, for a decisive correction. But what is alarming is the rise of Crude oil prices above the threshold limits on the back of weak US inventory levels. But, one good news is that inflation continued its downward march amidst a strong and vibrant economy. However, the markets expected to remain volatile and choppy ahead of the derivative, segment expiry next week. In the meantime the broader market will run taking clues from the global front. Though the oscillators are nearing their overbought zones, I do not foresee a large correction in the week ahead due to positive developments in the Indian economy—but some analysts want to go by the book always. Such bookish knowledge is not enough while playing in the markets, otherwise everyone would have been Warren Buffet, after cramming some books on investment. On the upside, if the Sensex manages to sustain above the 16,415 level it is likely to test the 16,620 level, followed by the 16,840level. The Sensex has support at 16,344 followed by the 16,140 levels. If the Nifty manages to sustain above the 4,785 level, it is likely to test the 4,848 followed by the 4,900 levels. The 4,760 followed by the 4,700 levels are its important support levels. The much awaited breakout was witnessed last week as mentioned above. As a result of the breakout and close above 15860, it is expected that the Sensex could move towards 17960-19250-21335 range in the days to come. Thus we can expect 17000 before Deewali. My earlier target of 16 000 on the Sensex before Durga Pooja / Idd, was achieved. It is worth mentioning that any corrective dip in levels of 16200-15800 can be used for buying good scrips at reasonable valuations. The Sensex could be gradually heading towards then euphoric, 20, 000 mark. The Sensex took a long time of more than a decade to touch 10,000 in December 2005 from the 4,500 level it had attained in February 1992. Indian economy is bursting at its seams with the GDP growth expected to overtake that of China’s. Forex reserves are swelling in such proportion that it is becoming increasingly difficult to manage while the corporate earnings are growing at an average rate of 25% plus. Tax collections, too, are buoyant with the highest ever collection of direct taxes or through excise, customs or service tax. Foreign funds have pumped in over $1 billion or Rs.4,000 Cr on a single day in the Indian stock market-which indicated the bullishness of FIIs towards the Indian bourses. Cotton production this year has been bumper and also the monsoons more or less were stable. In this situation, I can only say, “Hip hip Hurray”, the much awaited time has come for the Indians to take on the world—just sit back and watch Sensex cross 20, 000 in the days to come.

Meanwhile H S India Ltd might cacel the Preference issue and go for a rights issue to boost the sentiments of ensuring Follow-on Public Issue.

Mark Faber is also bullish on Real Estate Counters...........