Major market correction unlikely, good time to buy quality stocks

Globally, expectations of a sustained economic recovery are giving way to talk of a double-dip
recession. This negative view is compounded due to the fact that the European Central Bank
has proposed to postpone the exit from emergency lending measures to 2011, indicating that
problems still persist in Europe. The emotional quotient of the market is one of disappointment,
and that does lead to sensational headlines on the bearish side.

Food inflation continued to ease in mid-August, while fuel inflation was flat on the
week, but concerns over emerging demand-side pressures on prices will likely see
a hawkish central bank hike key rates by 25 basis points when it reviews policy
next month.

Analysts say food inflation would further moderate due to good monsoon rains,
release of government food grains and as the impact of earlier rate hikes trickle
through. Food price inflation in India’s widely watched monthly wholesale price
index (WPI) eased to 10.29 percent in July, from near-20 percent level last
December.
However, the Reserve Bank of India (RBI) seems to be undeterred by such
negative news. Like the stock markets, the view of the central bank was benign
as expressed in the annual report released last week The RBI is very optimistic
about India’s GDP growth being very resilient as has been demonstrated on various
occasions like the global downturn of 2008-209 or the domestic agricultural
shortfall of late 2009. They go on to say that even now the prospects for the
financial year 2011 are extremely bright based on the corporate and consumer
durables’ sales numbers, and that private consumption demand has grown so much
that it almost makes growth self-sustaining. The RBI just wants a good monsoon
and better fiscal control for its prediction to come true.

SO PICK YOUR BLUE CHIP FROM THE CURRENT MARKET ACCORDING TO THE DIP OF
EACH STOCK.

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