Daily Call - July 3 2008

Though we had advised covering shorts on Wednesday morning in anticipation of a sharp bounce back, which eventually materialised in the form of a 700 point rally in the Sensex, but the basic reason why the markets have fallen since May remains intact even today. Crude continued to climb further as it closed at $143.57 and touched $144 in the electronic trade.


If Crude continues to climb, inflation will be higher, even if we do not raise petroleum product prices. That makes the Friday inflation number redundant. The ongoing truckers strike, if allowed to continue beyond 4-5 days will further add to inflation, could effect industrial production numbers, raise default for truck financing companies and hit truck sales. There are some positives for the market if SP jumps on the UPA bandwagon, but that is counting the chickens before they hatch. Chop those realty stocks and don’t let the buyback trick fool you.