Congress led UPA plays their Final Ace ! ~ Announces at one Shot pending FDI reforms !

Congress led UPA has just played their Final Ace ! ~ Announcing this evening at one Shot pending FDI reforms and Specific Disinvestments in PSUs ! 

Clearly the Government was on a long back foot on Corruption Accusations on an unprecedented scale on Coalgate and 2 G

The PM courageously asserting that if they have to go down they will go down Fighting !

It had  played all it’s cards but one ~ FDI Reforms ,especially to open out to a 51% in Multi Brand Retail ,were kept Pending because of huge opposition by Congress allies in the UPA itself

Yesterday evening Government announced Rs 5 hike in Diesel Prices and a LPG Cylinder Subsidy Cap at Six Cylinders per annum per family ~ this is to reign in Oil Subsidies that have been  a major reason for huge fiscal deficits year after year

This bold move,predictably and vehemently opposed by Opposition Parties and so expect a Nationwide Bandh called by BJP and the Left,came quickly after positive and stock uplifting announcements on September 12 by the German Court holding the European Stability Mechanism as constitutional and allowing Germany to financially support it and on September 13,US Fed Governor ushering in QE 3 by announcing a further buying of mortgage backed securities to the tune of US $ 40 Billion a month aggregating to US $ 480 Billion a year

And buoyed by  Stocks rallying,this evening the Indian Government finally played it’s last Ace in my view by announcing at one go a slew of Pending Economic reforms of which major ones are

1. Allowing 51% FDI in Multi Brand Retail
2. Allowing 49% FDI in Aviation
3. Disinvestment of 9% to 12% in Five PSUs ~ four are already listed ~ Oil India,MMTC,Hindustan Copper and National Aluminium ~ while unlisted RITES will make an IPO

However in my view Stocks,given these rapid fire recovery measures announced ~ RBI should join the Party on Monday by announcing a CRR Cut ~ and  enough evidence of growing  Investor Interest and Liquidity ,stocks are expected to sustain buoyancy in the Short term ~ At a macro level expect 5% to 10% returns in the Indices from current levels  in the next few months ~ Sensex and Nifty are up 2% already today at 18500 and 5500+ levels  ~At a micro level one can chase and make Alpha Returns much superior to Indices Movements with astute Stock Selections even though Macro Risks remain

Seems Diwali will be Brighter this Year in mid November ! By then,from indications, US President  Obama would have been elected (November 6 Presidential Elections) to serve a second term !

Second Time to take some Alpha Risk this year after January 2012

Cheers !