As expected, the Indian stock market closed 3 % down this week; India & China were the only markets that went down this week. The US & other International markets were all up 2 % +. The better than expected unemployment nos. in the US kept the tone on the ‘Market has bottomed out’ theory pushing up stocks. In India the drought like condition with 64 % deficit on monsoon can get the Indian GDP stunted, added to this is the pandemic H1N1, which may blow off and affect our economy. The red flags are up in India & global markets, we are not seeing demand increase in the global markets, the food prices are shooting up, and Sugar is on a 28 year high. The credit off take is slowing, consumption is dropping. We will surely see inflation raising its head sooner and drive up interest rates.
There is a bubble like situation building up in the global stock markets especially china, where the stimulus driven rally is made on weak fundamentals, the good money is going behind inflating real estate prices & stock markets and not driving organic GDP growth, a very senior communist party leader in China commented that they may be growing at around 2 % and not the 8 % claimed by the government, so buyers beware! Will China be responsible to bring in the next BIG CRASH?
In India, this week all eyes will be on the monsoon progress & H1N1 cases, on the corporate front, we cannot expect much except may be for all the noises from the Reliance brothers. The US has the Fed meeting to review the interest rate, nothing much is expected and Fed will keep the closer to 0.25 % interest regime going. The economists world over believe the US is managing the inflation & interest rates, so how long will they manage ?
The derivative indicators tells us, we will continue the correction this week too, The derivatives for the week stand at Rs 69861 Crs OI, the PCR is at 0.91, the option IVs for Calls at 34 % & Puts at 36 %. So brace for a side ways movement with a – Ve bias. The technical levels indicate, we may see supports ar 4420 – 4350 & 4250 for the Nifty.
Stock idea for the week (Long term) : Buy into Balaji Tele & IFCI on all falls.
Nifty idea of the week : Sell Nifty @ 4520 – 580 for a target of 4350 (Stop Loss : 4620).