Jose Koshy's  Instablog

Regret for not having my update last week, was on a holiday. I was wrong in predicting a fall and in turn the markets have been resilient to all the moves. The $ weakness has helped emerging markets and commodities. Last week saw some very important move in the global scene, with the G20 becoming the world order, this is good news for India, as we are in a position to participate in the new world order. In the long term, this will drive in a lot of investments into India, one of world’s largest consuming democracies. This week saw the World Bank sanctioning $ 4.3B for infrastructure projects; this will go a long way in developing our roads and ports. Also this amount will be used to enhance capital base of some public sector banks. India will be in the forefront while implementing the Basel II norms that will get to be implemented from 2012. The advance tax collections have been robust, so also was the core sector index for August coming in at +7.1 %.

This week India will see a shortened trading week, with no major cues, Markets will look for $ strength and this may drive some small scale pull back from emerging markets and commodities. The festival sales seem to be very robust and we will have early information by the 1^st week of October. The Bharti – MTN deal is being tossed up and down, and none have a clue which way it will swing. The Reliance Soap opera continues with new sound bites on it every day. There are many companies lining up to raise capital, but the fear is there is no money left on the table for retail investors. Most of the fresh issues are quoting less that the issue price, which may drive down the appetite for new paper.

The new derivative series has seen some good accumulation last week, the derivatives positions for the week stand at Rs 78219 Crs OI, the PCR is at 1.24, the option IVs for Calls at 24 % & Puts at 26%. The derivative indicators, show that there is no fear and there is a level of complacency in the markets. The technical indicators suggest, we will see Nifty see a correction this week to 4850 levels. We are getting to October when we will see all the results coming in, my view is markets have discounted the results, so we may be in for some descent correction in October & November before we start to move up.

Stock idea for the week (Long term) : Buy IDBI @ Rs 118 levels for a Target of Rs 160 in a year.

Nifty idea of the week: Buy around the 4850 levels for a Target of 5050, Stop Loss: 4780