As expected, the Indian stock market (NSE) very volatile and closed 1.5 % lower, there was a sharp up move on Friday evening from the support level of 4580 levels. This week also saw Gold move up 4 %, the first up move in a long time, this could be because, either the fear of a down turn and the added risk of deflation. We did see the plan panel headed by the planning commission deputy chairman, revisiting the growth and have reiterated, India will get back to 9 % growth sooner. The G20 summit too talked about emerging markets playing a bigger role in the revival of the global economy. The BRIC nations today contribute to 24 % of global GDP and having growth rates exceeding 6 %, this will drive global growth. The smart money will soon find its way to the growth markets. China on Friday announced increased investment limits FII’s into their markets, this may arrest the fall in the Chinese markets which have fallen by 20 %. The China market is in bubble territory, due to the hot money and a heated real estate market. We also did see the Mittals buying stake in Uttam galwa steel, so this talks of confidence in the Indian markets.
This week India will see the Oil India FPO, this should sail through without much trouble. The only talk from traders are, will the issue leave enough money on the table while listing, if the recent FPO’s are any indication, investors & traders may go slow as the NHPC & Adani power listing was lackluster and are quoting below the issue price. The US markets are closed on Monday for Labor Day, we don’t expect any major news there, so will be more of technical play in the market. The markets are looking exhausted, so we can expect sideways trading with a technical breakout on the upside.
The derivative series has seen some good accumulation last week, the derivatives positions for the week stand at Rs 85000 Crs OI, the PCR is at 1.20, the option IVs for Calls at 28 % & Puts at 34%. The technical indicators suggest, we will see Nifty break out of the range upwards and move to the final target of 4950 levels.
Stock idea for the week (Long term) : Buy Fortis @ Rs 85 - 105 levels for a Target of Rs 160 in a year.
Nifty idea of the week: Buy around the 4680 levels for a Target of 4950, Stop Loss: 4580