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India week ahead - 28th Feb - 4th Mar 2011

|Includes: EEM, India Fund (IFN)
The Indian market fell by 2.8 % last week as expected, the market was set to fall with expiry and the Libyan factor tuned in. The railway budget presented on Friday came to expected lines on populist measures. We may see a similar move in the general budget to be presented on 28th Feb. Budget lately has become a non event. All eyes will be at the pro reforms, lowering of fiscal deficit & inflation control measures. If the finance minister delivers on this, we can see a rally. Markets are a bit oversold and any small surprise on the positive side can drive up the markets. The traders are scared to take positions, especially with FII’s pulling out $650 M this week from the markets. The US markets too dropped by 2.1 % last week due to the global uncertainties. The retail confidence levels are at its 3 year highs. This may be artificially boosted with all the free cash that is getting pumped into the system.
This week the Indian markets will look up to the budget and the West Asia/North African unrest. The global markets may see some sideways movement before we start the next round of fall globally when the quantitative easing is set to stop. We got a sign of this at the expiry of option settlement in the US a week back.
The derivatives position for the week stands at Rs 960230 Crs in OI; the PCR is at 1.21 the option IVs for Calls at 18 % & Puts at 19 %. The Nifty Future is trading at a Premium of 25 points to spot. We must see a rally post budget keeping low OI’s and oversold conditions.
Nifty on 25th Feb: 5303
Nifty trading ideas for the week: Buy Nifty around 5300 – 320 for a Target of 5450 - 500, SL @ 5225. Short term trading only.
Stock ideas for the Week: None