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India Week ahead - 21st - 27th Feb 2011

|Includes: EEM, India Fund (IFN)
The Indian market went up by 2.7 % last week as expected from oversold conditions. The level of uncertainty is increasing by the day; the pressure on margins due to inflation is showing up. The Jan Inflation came in at 8.7 %, the food inflation at 15.7 % continues to be a worry. The Scams and its fall out is seen all across and some corporate that seem to be involved are running scared. This brings in corporate governance to the fore, large corporations can ill afforded to be pulled into controversies as it will affect all stakeholder interest, the employees morale slips, turnover of employees increase, customer dissatisfaction, loss of value to shareholders capital. Corporations that are built on such fast moves lose it out at much faster pace. The US markets continues to move up on the loose money syndrome and Bernanke is saying all is well. The inflation in US is claimed to be 1 %, but when you see the price of wheat and other food items that has escalated by 30+ %, you will be left wondering if the ‘Official’ numbers can be trusted.
This week the Indian markets will look up to the budget expectations and stocks in the infrastructure & rural development will be in focus. The G20 finance minister meeting just got over and nothing substantial came out of it. The global food crisis is only going to get worse and already the Arab world is up in arms, if you thought it was democracy cry ? It is not ! It is the Inflation and run away food prices that are causing all these turmoil in Egypt, Bahrain, Tunisia….
The derivatives position for the week stands at Rs 160230 Crs in OI; the PCR is at 1.24 the option IVs for Calls at 18 % & Puts at 19 %. The Nifty Future is trading at a Premium of 8 points to spot. The settlement must be volatile with a – ve bias.
Nifty on 18th Feb: 5458
Nifty trading ideas for the week: Sell Nifty around 5450 – 500 for a Target of 53200, SL @ 5525. Short term trading Only.
Stock ideas for the Week: Sell Tata steel @ Rs 640 levels for a target of Rs 600 SL: 661