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India Week ahead - 15th - 21st Feb 2010

|Includes:EEM, HDB, IBN, India Fund (IFN), INFY, TTM, WIT
In God we trust or may be in a democracy, in a Leader we trust, with the way the sovereign debt crisis seems to be opening up...we may have to depend on both to survive…that was the week that went by. The PIIGs nations have demonstrated that to the world, the EU wants to get out of the Greece crisis using logic and long term models, but the locals are going on strike against it…the Greece nationals are going the stone age and may GOD help them along with many who may follow the across the world. The Indian market went as expected with a lame duck rally of 2.3 % last week. We had the IIP no’s @ 16.8 %, the highest in a decade…the free cash has driven all the asset classes and industry. Can we sustain it? I doubt! The food inflation is crazy @ 18 %, the government has no clue if it is the easy money policy or the supply side issue! I personally feel it is a mix of both but would lean more on the supply side inflation. The Indian market is going through a huge change on the development side, the NREG scheme has provided employment and empowered a huge rural population and have driven aspirations for a better life. The quality of the population and lack of land for farming, will force India to a scarce food situation sooner in India. If you have money….be a farmer!
This week the markets will go on with global cues and also look up to the Indian budget that is slated to be presented on 26th Feb, There is confusion on the run up to the budget, the pulling out of stimulus & increasing taxes is good or bad for the economy? In the long term increasing taxes and managing the economy with low fiscal deficit is good economics, but in the short term, it affects demand. Good economics will ensure we don’t follow the norm ‘In god we trust’. As we are on economics India has a drop in foreign investment of 21 % Vs UK of 89 % in actually surprised why India has not got an increase in Investment vs. the rest of the world. This confirms the world investors are followers than smart thinkers.
The derivatives positions for the week stand at Rs 115000 Crs OI; the PCR is at 1.05 the option IVs for Calls at 23 % & Puts at 28%. There is fear in the markets; we must see volatile sessions ahead. There is not enough Puts to cushion any fall. The technical levels tell us, we must get to see a fall after a ‘Dead cat’ rally last week.
Nifty on 6th Feb: 4826
For the week: Sell Nifty @ 4825 - 4900 for a target of 4650 or lower.
Stocks that can fall faster than the index is Autos & Real estate sectors!

Disclosure: Have Positions on Nifty Index