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Jose's India next week - 29th June - 5th July 2009

|Includes:EEM, HDB, IBN, India Fund (IFN), INFY, TTM

The last week saw the correction in the Nifty end at 4143 levels, had advised buying the Nifty around the 4100 levels. The week saw many market propping announcements, starting with LIC planning to invest Rs 50000 Crores in the Indian market, SBI reducing its PLR by 50 basis points to 11.75 %, Barclays launching an India ETF and investing Rs 700 crores in the markets on Friday, Nandan Nilekeni being appointed as the chairperson of the India’s UID project, China pushing IMF to manage some funds and find an alternative to the US $, the US savings rate has gone up for the first time in 15 years. All these announcements did help markets move up despite the bad news announced on the Indian rainfall being at 93 % of normal. In the long term, India is setting a strong base to grow. India will surely have the mirror effect of the global macro economy. The much talked about de coupling is slowly happening; the Nifty is trading at 30 % more than the 200 day moving average and we have the S&P 500 trading at the 200 day moving average, so the outperformance will continue for a long period.

Next week, the budget expectations will run wild, we have the railway budget on the 3rd & the general budget on 6th July. We will have the banking pack & PSU stocks running up on expectations of reforms. Beware India has a huge deficit and the world will be watching, how the biggest democracy plans to bridge this. The US markets will be looking at the consumer confidence and un employment rates data.

On the derivatives indicators, we are at Rs 57K Crores Open Interest and the PCR is at 1.41 times, implied volatility on calls is at 36 % & puts at 41 %.With very low roll over on Nifty and stock futures, the traders seem to be cautious, the data too confirms that. My view is we will have an up move that can take the nifty to 4650 levels in the next 5 – 7 days. Technical indicators too confirm this upmove. We will also have the fund managers working overtime to lock in the NAVs and show some good performance for the June qtr.

Stock idea for the week : Buy the Nifty around 4355 levels for a target of 4650 by budget.

 

Stocks: IFN, EEM, INFY, IBN, HDB, TTM