WINNING STROKES: THINK DIFFERENT: 

The markets did bounce back from 5200 levels of Nifty, as was expected. This was mentioned to the Paid and Free group (SumanSpeaks) last week with the message tag, "Technical bounce from 5200 expected". The departure of Egypt's Hosni Mubarak after about 30 years from president's role, was rejoiced by the global markets as it to some extent cooled apprehensions over a potential oil supply disruptions along the Suez Canal. The broader Indian markets continued to fire on all cylinders as they once again outperformed their larger peers by quite a margin. The BSE's midcap and smallcap indices skyrocketed 3.52% & 3.94% respectively....On the global front, cues largely remained optimistic as markets in Asia made an all green close with some indices gaining about 1-2 percent for the day. World over  equity indices surged on hopes that global economic recovery will strengthen as oil prices retreated after the political tensions subside with the resignation of Egyptian President Hosni Mubarak.Meanwhile, with just couple of weeks left before the Union Finance Minister Pranab Mukherjee unveils the General Budget for fiscal year 2011-12, speculation is high on what the Budget will hold for India Inc. Most experts however feel that given that the direct tax code (DTC) will be implemented in the fiscal 2012-13, it leaves little space for any major changes in forthcoming budget. For instance, the DTC kicks off with a corporate tax rate of 30% and that is what exists at present. As such, not much could be expected on this front despite the government accepting the need to rationalize the tax structure. Only thing that is likely here is there may be some relief in the form of surcharges being done away. This is because the DTC has explicitly put the corporate tax rate at 30% without any surcharges. Hence for a smooth transition, finance ministry may scrap some of them in coming budget itself.
Further, there was a lot of mention in the last budget about the tax rate being carefully chosen. Similarly the government has been saying that final draft of the DTC had little scope of any further tax relief immediately. As the growth has been robust and there is a lot of pressure on government to bring down the deficit and continue with fiscal consolidation, it is very difficult that any major changes in corporate tax structure are implemented. The government has been clearly mentioning that the objective of direct tax reforms was to rationalize tax structure and not necessarily bringing taxes down so much, which is also not practical either. Over the last 1-2 years the talk has focused on simplifying the tax structure by scrapping most of the tax incentives or tax breaks and at the same time bringing down the surcharges and levies. The government has been eying an effective rate of tax collection of around 21% of the corporate profits. This will require a nominal tax rate of 21% for now and only when the buoyancy increases, the government could be in position to bring down the tax rate further. As such, what we may see in the forthcoming budget is that surcharges are brought down and some incentives are scrapped, in line with the DTC.. 

Most of my earlier recommended counters  hit the buyer freeze today, viz. Jupiter Bio Science Ltd, Northgate Technologies Ltd, PSTL, Refex Refrigerants Ltd, Shree Astavinayak, Avon Corp, Money Matters Financial Services Ltd, etc--you name it and it is there.......some of them which had more than 5% circuit limit closed more than that, eg. Ambalal Sarabhai Enterprise Ltd (which hit the circuits on the news of opening of the Baroda plant within the next couple of months with employees almost ending lockout) and Kohinoor Broadcasting Corp (which hit the circuits but closed a tad below). Even Vision Corporation Ltd moved up by more than 16% and so was Prajay Engineers Ltd, there was in fact a savage buying of the mid, small and micro cap counters by the punters. The mid cap index was up 3.52%, while the small/micro cap counters were up 3.94% as compared to a rise of 2.67% in case of Sensex stocks. 
My last week's recommendation of Rolta Ltd at Rs.137-138, moved to Rs.143.50 today, on improved business prospects of the company. It has now been recommended by a brokerage house with a price target of Rs.182 (near my price target). 

My recommended Reliance Media Works Ltd at Rs.132-133 moved to Rs.147.90 today before closing down a bit.  Similarly my recommended Reliance Infrastructure at Rs.576, last week moved to Rs.640 today before cooling down a bit. 
Entegra Ltd which touched Rs.26.85 today on my recommendation. It came out with flat results today (the loss is basically due to interest paid on loans taken by the company for the execution of its projects and hence does not mean much for the shareholders). I have already mentioned that the company's new power project which is completed is expected to generate power within a very short time. Sree Maheshwar Hydro is implementing a 400 mw run of the river hydro power project in which Entegra Ltd holds 68.73% stake, as mentioned earlier, which will increase to 85.6%. Entire generation will be sold to MPEB and hence company won’t pay any royalties for usage of water. This stock is expected to give more than 100% return from the current price of Rs.25.75 within the next 6-9 months time frame.
The Indian government may take a decision soon on lifting the ban on exports of food grains, including rice and wheat and some other items in wake of the surge in production in Kharif (summer sown) crop and potential increase in the Rabi (winter sown) crop. Export of food grains and many other farm items was banned following the failed monsoon of 2009.
An empowered group of ministers (EGoM) on export related aspects of food items is likely to meet within next week and will take a call on the matter. The (EGoM), headed by Union Finance Minister Paranab Mukherjee, is likely to discuss the cases of wheat, non-basmati rice and vegetables. Farmers have been demanding that given the rise in domestic production, exports should be allowed to ensure reasonably strong prices at home.
The Indian government is expecting a bumper production of food grains and pulses this year in wake of a very good monsoon in 2010 that boosted the Kharif crop coupled with some late rains that have resulted in good soil moisture for the Rabi crop. Overall, farm production is set to reach close to record high levels according to the latest estimates prepared by the farm ministry.
Production of wheat is estimated to reach an all-time high of 81.47 million tonne. In case of pulses, output will for the first time cross the 16 million tonne mark, and will reach 16.51 million tonne. In case of cash crops too there will be significant increase. Cotton will see an unprecedented output of 339.27 lakh bales, which may also allow the government to hike the export quota for the commodity which is currently pegged at 5.5 million bales.
However, the road ahead of the GoM will not be very easy given the high domestic inflation, particularly in the primary goods space. Food inflation in the country currently stands at 15.65%. While the government was hoping that a good harvest will help bring down prices of food commodities', it has not turned out to be the case. As such, any exports which will further boost domestic inflation can become very difficult to be justified, particularly in a politically charged atmosphere that persists in the country currently.