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The Bank of England didn’t show much willingness to adapt an aggressive monetary policy, when it cut interest rates to 5.25% last Thursday (February 7). This is because inflation is pushing forward in the UK and the combination of this and slowing growth has a nasty effect on the equity market. We saw the FTSE 100 falling towards 5,750, also following in Wall Street which performed a sharp dive last week. However, our portfolio

looks healthy with a number of well-chosen plays chalking up large gains.

The star this week is Royal Bank of Scotland (RBS), which hit the target on February 7. We said the rally in the past days was overdone, as investors had welcomed the idea of asset sales to strengthen its balance sheet. However the enthusiasm faded away quickly and the shares fell to 364.25 – pouring a 10.5% profit in our pockets. Another good play was Persimmon (PSN), which we sold short when the technical picture suggested the shares would fall, and so they did, with the price dipping to 717p and giving us a 9.47% profit.

Fears about the South African economy and temporary strength in the dollar meant our dollar/rand currency play went our way, earning a 7.23% profit. Bid speculation failed to support shares in our short play InterContinental Hotels (IHG) and the price falling to 739p means we have a 4.34% gain so far. There are more profitable trades, but the disappointment this week was Sainsbury (SBRY). Shares in the supermarket chain fell to 361.5p and our position was stopped out of the portfolio.