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India Week ahead - 15th - 21st March 2010

Mar. 14, 2010 12:21 AM ETIFN, EEM, INFY, WIT
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Jose Koshy's Blog
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The Indian markets were so boring this week with a 1 % increase, the range of 5090 – 5160 has been held, the FIIs were buyers all through the week, they have brought $ 2B in 2 weeks of March and the DII’s were net sellers to the tune of $ 800M during the period. Are the foreigners going overboard on the Indian story? Like they are doing with the US markets? I will be happy if they are Long term long only funds investing, our experience shows majority of the funds are trading for the short term and buy as a herd and sell as a herd. Last week saw the NMDC issue being subscribed fully with the help of LIC, the retail and foreigners stayed out of the issue. The issue was set to bomb from start, the NMDC issue was priced at a PE 46 times. This is crazy by any standard; we have the world’s commodity giants quoting at a PE of 10 – 12 times, so why pay 3 times more? This also brings in an interesting point in the Markets, who will cushion the market if the FII’s start selling? LIC will have lesser money to play the secondary market. The IIP nos. came in very strong at 16.7 % for January; the markets did not cheer it, as this has been discounted and also the fear of tightening of Interest rates by RBI sooner to control runaway inflation. The US too had a better than expected retail sales and despite that markets have not moved up….are the markets tiring? I would think so keeping in mind the following, 1. Good news doesn’t seem to push up markets 2. Volumes are dwindling across the globe 3. The bullish sentiment is high 4. The S&P is at 1150 levels which is a double Top and is the levels from where the markets started the biggest fall in 2008.
This week the markets have a lot of data to help break the range, In the US the fed meeting will be eyed also the manufacturing index & jobless data. The +Ve news is fully factored, any – Ve news will tank the markets. In India we have the advance tax nos. which will start to trickle in from the 15th of March; this will set the stage to the expectation of Q4 results.
The derivatives position for the week stands at Rs 123000 Crs OI; the PCR is at 1.44 the option IVs for Calls at 16 % & Puts at 18 %. The derivative position gives a feel of a break out this week. The IVs confirm absolute complacency, the calls OI has increased 5:1 against Puts. There is complete bullishness among market operators. Being a contrarian will help this time around.
Nifty on 12th March: 5137
For the week: Sell Nifty @ 5150 for a target of 4950 or lower. (Stop Loss – 5180)
Stock trading Ideas: Sell Axis Bank @ 1160 - 65 range for a Target of 1080 SL: 1170
Happy Trading!

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