EXPECT INDICES TO REACT FROM MORNING HIGHS TODAY as RBI only reduces CRR by 0.25% to 4.5% ~ keeps repo and reverse repo rates unchanged
Had blogged earlier of strong indication of a CRR Cut today
Sensex was up 175 points this morning at 18650 levels and Nifty was up 75 points at 5650 levels in anticipation of RBI rate cuts all around ~ they will retract from these levels on the RBI announcement which will be viewed as a conservative one ~ however the Indices should bounce back soon and Diwali in November should see a new high for the year
Sentiment remains bullish in the short term on the back of positive announcements last week from USA (Fed eases in QE 3) and Germany (Court allows Germany to support the ESM) and India (Congress led UPA lets loose a rapid fire one shot announcement for FDI Reforms and PSU Disinvestments)
This is the second strong opportunity this year in 2012 after early January to take advantage of short term rallies ~ this should last longer than the earlier one which was for @ 45 days While the Sensex should cross 19000 and move towards 20000 by year end 2012 to notch 5% to 7% gains,selective high beta selections would give potentially higher returns
As Valuations are not exactly cheap or at bargain prices,do exercise some caution when making the selections ~ every scrip is not going to move North !