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India week ahead - 24th - 30th Jan 2010

|Includes: EEM, India Fund (IFN)
The Indian market moved up 0.8 %, the Inflation taming is yet to happen and the government seems to be sounding helpless. The RBI policy next week will set the ball rolling on the hardening of interest rates. The expectation is a 0.25 % increase anything above that will affect the markets. The government needs to fix the supply side to control inflation rather than the demand side. The huge gap between the interest rates in developed world and countries like India will drive inflows into the country driving up Inflation. This is a new phenomenon and the RBI needs to act smart rather than the old time fixes to the Inflation problem. Globally the result season has come out strong; the markets have given thumbs up. In India too the result season has kicked off with good set of Nos. from reliance, SBI, Bank of India etc...
This week the Indian markets will continue to look to the result season, RBI policy on 25th Jan and the global cues. We also have the derivative settlement on 27th. The technical position and the derivative cues confirm more downside going forward. We may get a sharp up move followed by a fall.
The derivatives position for the week stands at ` 154230 Crs in OI; the PCR is at 0.90 the option IVs for Calls at 17 % & Puts at 17 %. The Nifty Future is trading at the same price of spot. Traders are confused. There is a mixed feeling. The recommendation is to stay out till the settlement is over.
Nifty on 21st Jan: 5700
Nifty trading ideas for the week: Stay out and watch the markets.
Stock ideas for the Week: None
 
Happy Trading!
Cheers.