The Indian markets were UP 4.3 % last week and was one of the best performed market globally. There was a fall in the earlier week due to the settlement and the bribe scam, things have got back to normal with the FII supporting the market and buying up in the entire beaten down sector like Real estate & Infrastructure. The retail investors are a worried lot and do not want to be struck, so are selling all the up moves. If history is an indication, the markets will keep moving up every time Retail reduces their position. India had a fantastic GDP growth of 8.9 % for Qtr ending Sept 2010. The consumption driven growth continues in India. The global easy money days continue with Bernanke saying, the stimulus will continue till the markets gets steady, so the tightening is nowhere close. The $ will take a beating and money will flow into countries like India. The FII’s get a double benefit with a higher growth in emerging markets and a strong local currency (due to increase in interest rate & inflation).The Govt. is lining up FPOs for IOC & SAIL early 2011 to exploit the new found love for FPOs post Coal India & MOIL success. The government must move at a faster pace to unload equity and make the PSUs more competitive in the market place.
This week the Indian markets should consolidate and move upwards, due to the huge liquidity unleashed into India by the FIIs. There is no major news globally to un nerve the markets yet. The Irish parliament will pass its budget this week. The Fed POMO buying of the first tranche ends on 9th Dec and the new dates will be announced. China has started tightening; the Indian bangs too have increased Interest rates on lending & deposits by 50 basis points. The RBI is working on increasing liquidity to tide over the Advance tax payment pressure in the 3rd week of Dec.
The derivatives position for the week stands at ` 142850 Crs in OI; the PCR is at 1.26 the option IVs for Calls at 15 % & Puts at 18 %. The Nifty Future is at a Premium of 24 Points. The data suggest an up move to continue this week.
Nifty on 3rd Dec: 5993
Nifty trading ideas for the week: Buy Nifty > 6020 levels for a target of 6180 Stop loss: 5950
Stock ideas for the Week: Buy RCOM around Rs 139 for a Target of Rs 151 - SL Rs 136
Disclosure: Have Long Positions in the Nifty