The Indian markets were volatile and closed with an up move of 0.6 %. The markets went down to the Nifty target set of 5160 and pulled back, The week saw the RBI policy coming in as expected with a 25 basis point move on rates due the lean season. The inflation is still ruling strong and the RBI did not want to tame it in a lean season affecting demand. We did see an up move in all rate sensitive’s post the policy, the bank index went up handsomely and SBI & most private sector banks shot up. The result season too is going to expectations and the market seems to have discounted all of it, so no major moves post results. It happened to TCS, Zee, Wipro & Sesa Goa. The old lesson of buy the rumor and sell the news seems to be playing out well in the result season. The IMD is forecasting a normal monsoon for the year after a drought last year. India is dependent on agriculture, so this good news must bolster consumer goods companies that were tired last year. On the global front the Goldman sachs issue seems to be quite and the US markets have moved up 1.6 %, so the markets are back to the pre Lehman days in the US and expectations are running high, the Russel 2000 index (The US small cap index) is on a fly over shooting the S&P 500, there is so much euphoria on the buy side. In the US March marked one of the highest growths on home sales of 27 % thanks to the government incentive ending in April. So the much needed correction may come soon….I have been expecting it for a while, but markets work on its own time of ‘Demand & supply’.
This week the Indian markets will be watching the result season continuing and also the derivative settlement. There will be volatility going forward. The global markets will be looking for the Greece debt, the Fed meeting, US GDP, financial reforms bill and the $ 129 B auction in the US. The G20 ministers met over the weekend to discuss the state of global economy and all are bullish on the world front on the same count have also talked about retiring the debt (in this case stop the currency printing machine & increase taxes), this will be interesting to watch. Smart countries like India, Australia & Brazil have taken to this move way ahead of time making the local economies stronger against the rest of the world. The faster the better, but all eyes will be on US when it starts to tighten.
The derivatives position for the week stands at Rs 139000 Crs in OI; the PCR is at 1.35 the option IVs for Calls at 15 % & Puts at 18 %. The derivative position gives a feel of uncertainty, expect volatility, and trade light.
Nifty on 23rd April: 5304
For the week: Buy Nifty around 5280 for a target of 5400 (SL 5250)
Stock trading Ideas: Buy Sterlite @ Rs 795 range for a Target of Rs 850 or higher SL: 790 (In 2 weeks)
Happy Trading!