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India - week ahead 14th - 20th June 2010

|Includes:CRB, iShares MSCI Emerging Markets ETF (EEM), IFN

The Indian markets were up 0.3, the US markets moved up 2.8 %, the markets started with a big fall but recouped most of the losses towards the end of the week despite fears looming in the western world on debt & the slow growth. Markets always have the ability to go against the popular mood, there was too much negative sentiments, so a technical pull back happened. This may continue till the results season starts in July. The Indian economy grew at a 17.6 % pace in April 2010, is one of the best performance month in spite of a good March. Is the Indian market over heating with the overhang of all stimulus and excess liquidity? I think it is! Very soon we will have the RBI reigning in with increase in interest rates and will use the CRR to suck excess liquidity. In the short term this will affect the markets but is good in the long term for the economy. So watch out for interest rate sensitive sectors like Real estate, autos etc for a much needed correction.

This week the Indian markets will look at the advance tax nos. starting 15th June, is expected to be in line with market expectations. With economy in a tear, the performance of most companies will be good. The markets will start discounting this heading to the results season in July. There is a sense of – Ve sentiments in the markets, so a technical pull back is possible in the markets and the recent lows around the 4950 seem to be the bottom for the short term.

The derivatives position for the week stands at Rs 136291 Crs in OI; the PCR is at 1.4 the option IVs for Calls at 23 % & Puts at 27 %. We must see volatile movements, would recommend avoid trading.

Nifty on 11th June: 5119

For the week: Will trade in a range of 4980 - 5140, any break will set the trend in the direction. Have a +Ve bias

Stock trading Ideas: Buy Bajaj Hindustan @ Rs 109 for a target of Rs 122. SL @ Rs 105

 

Happy Trading!

 
Stocks: EEM, IFN, CRB