On Friday a surprise move by the Bank of Japan helped the market to post gains. It imposed negative interest rates on banks to encourage them to lend to businesses, in order to support the economy. This is a indirect way to encourage banks to invest in riskier assets to secure a return. Unfortunately this could also drive the asset prices higher and create asset bubbles. Sweden and Denmark have also introduced negative deposit rates on a temporary basis in recent years. Switzerland also adopted the measure last year.

Bloomberg informed that Hedge funds increased bullish oil bets by the most since 2010. Analysts suspect that the oil rose owing to short covering. We will have to check how far the oil price goes up and where it stabilizes. Interestingly there is no agreement has reached in the OPEC on cutting output of oil.

Yesterday we had a scheduled value investors meet in Chennai which attracted 32 knowledgeable investors. This was an informal meet where we discussed on several aspects of value investing including the price of oil and US listed stocks like AAPL & CAT. Couple of years has been tough for CAT and it is going to experience more difficult year in 2016. The business may not improve any time soon for CAT and we expect a tumultuous year for its investors. CAT is already trading at yearly low price of  $62 we expect a further downside as the restructuring has done by the management has not  yet shown results in the books. Long term investors can still wait for the stock to go down sub $50 and then plan to acquire the stock. We would discuss about the prospects of CAT in our future meetings.

While AAPL has posted good results analysts have been skeptical about its prospects in the near term. Some analysts have openly said that AAPL is not a growth stocks and some analysts have recommended initiating shorts using LEAPS (long-term equity anticipation securities). While we are bullish on AAPL we would like to wait for some more time to go gung ho on it.

Both these stocks would be discussed in our future meetings and interestingly both the stocks are not listed in Indian bourses. These examples only enlighten us in value investors meet on how to buy securities at incredible value.

Coming back to Indian equity the BOJ and FED effects may help the market to trade at higher levels. Nifty may try to cover the downward gap between 7675 and 7721! Nifty is bullish only above 8000 and for this week the range may be between 7500 to 7950!

Let us discuss more about the market in our next newsletter.