As expected the Indian markets corrected by 5.5 % last week, it went as per expectation. The price seem to have run ahead of the fundamentals and the smart operators booked some profits. Indias last week performance has been worst compared to other market, this is thanks to the RIL – RNRL judgment that came out affecting the RIL price. The advance tax nos. came in at expected level, there by not surprising the markets on the – ve or + ve side. The whole sale price index at sub zero levels (last seen in 1970’s) were not able to help the markets either.
Next week, will have multiple triggers to confuse traders, we have the Nifty index revamp in the July derivative series, the Nifty index like the Sensex will move to a free float index Vs a market cap based index. This should have been done long back, surely better late than never. No more of managing the index with ONGC/PSU stocks or Reliance. The budget expectation and derivative settlement will be closely watched. In the International markets, the US home sales, the treasury auction of $ 105 B will be watched .
On the derivatives indicators, we are at Rs 89K Open Interest and the PCR is at 0.9 times. With very low roll over on Nifty and stock futures, we are in for a big move on either direction. On technical indicators, the Nifty has closed < 4330 for the week, which was a major level. Only a weekly close > 4450, will get the markets back on the bull trajectory.
The fund managers will be working overtime to lock in the NAVs and show some good performance for the June qtr. So we can expect to have an early fall during the week and move on a short term upmove into 30th of June. So the nifty range for the week is 4090 – 4450 levels.
Stock idea for the week : Extreme volatility – Buy the Nifty around 4100 levels for a target of 4450 by budget.