Daily Call - July 23 2008

The markets are likely to open with a sharp upward gap of around 400 points in the Sensex, helped by an overnight ‘Trust’ Vote. Short covering could drive that still higher. For the past two sessions, the Nifty Futures had shed their discount and were quoting at a premium, indicating that shorts were anyway getting squeezed.



Expect the SP to now demand its pound of flesh. ADAG group of companies are the most well placed to shine early in this rally, followed by power equipment suppliers and the banking stocks, which should further build on their massive recent gains on hopes that the restructuring of the banks, will now happen in 2009, now that the left will not direct executive action. Small and the mid-caps, which have been resting should do the best today as rising tide will raise all boats. The morning gap will come back to haunt the markets later, but for the day, make hay while the sun shines.