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India week ahead - 4th - 10th apil 2011

|Includes: EEM, India Fund (IFN)
This week saw Dhoni’s Indian team taking the world cup and giving the Indians the title after 28 years. This week the Indian Market moved up by 3.1 % but with muted volumes. The FII’s were net buyers this entire week and brought $2 billion. The DIIs and Retail continue to be sellers. The food inflation came in at 9.1 %, it dropped 1 % point from the earlier week. This has been a concern for growth in India. On the global markets, the US GDP growth came in at 3.1 %, that news drove the US markets further up. The free cash driven rally may come to an end soon. There is already the talk of QE3 in the US, if the loose money scheme continues; markets will continue to move up. Walmart CEO has just indicated that, costs are moving up in the US, so inflation pressures seem to be creeping in to the US markets too. The purchasing power will diminish and can cause a collapse sooner. The MENA region has been a little quiet last week with reduced level of tension, the oil prices is already showing signs of peaking. With so much speculation running on Oil, we may see a much needed correction in the commodity markets soon.
This week the Indian markets will start the countdown to the result season, Infosys starts the result season in 15th Apr. till then we can expect a sideways movement. Keep a close watch on the FII daily buying/selling, they seem to be driving up the markets. On global markets, the US consumer credit & housing starts nos. will be out. Technically markets are looking tired, but are trading above some of the bearish trigger levels. We need to see if there is follow up buying / selling around the levels, 5700 is the 200 day moving average.
The derivatives position for the week stands at Rs 107220 Crs in OI; the PCR is at 1.17 the option IVs for Calls at 20 % & Puts at 21 %. The Nifty Future is trading at a Premium of 40 points to spot. We will see high volatility this week with a sideways bias.
Nifty on 18th Mar: 5826
Nifty trading ideas for the week: Trade with levels, Sell < 5700 or Buy > 5880
Stock ideas for the Week: Buy United Phosphorus @ Rs 149 for a Target of 156, SL : Rs 148