May 2007

Markets continued to be strong in the current month. Firstly, inflation has been cooling off and has reduced to about 5.5%. It also seems to be on its way down. Secondly, the government had taken quite a few tightening measures, but results so far seem to indicate a continued growth environment despite the tightening measures.

One also needs to note that much of the market movement over the past few weeks has been led by commodity related stocks like steel on the back of some recovery on underlying metal prices. Sectors like Information Technology, Auto, consumer products have not really seen favorable movement. The IT sector continues to reel under a strengthening currency and the sector is starting to throw up some interesting investment opportunities.

The pace of the strength in the currency continues to be of concern for several pockets of the economy.

During the month we exited Balaji Telefilms. The stock had nearly doubled in 2 months and despite business conditions being good, did not really see valuation support at current levels.