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India week ahead - 30th May - 3rd June 2011

|Includes: EEM, EPI, India Fund (IFN)
This week Indian markets moved up by 0.5 %, the move was post a cut to 5340, the markets were highly oversold, so a bounce was needed in any case. Global markets too were pressured towards the downside due the sovereign risk from Greece, Portugal & Spain. The $ started strengthening and then a correction started. The fear of a bigger meltdown coming is very high as the US printing press will have to stop for a while as they have achieved the maximum debt limit. Hope the US does not allow the Debt to go out of control pushing global markets into a huge tail spin. At present US is riding a tiger, not knowing how to get off the back. So the rest of the countries too are following the same. In the meanwhile the India debt yields have hit a 3 year high, this may not be sustainable. The Inflation and growth continues to be the biggest issue for India. We have the petro price increase on 9th June, then the IIP nos. on June 11th followed by the advance tax nos. on 15th June. These events will keep the market on the edge with bouts of buying and selling.
This week the Indian markets will be see some moves on top of the oversold conditions, we will also see the cement & auto nos. coming in the first week giving some direction to the markets. It will also give an indication of the interest rate effect on the core sectors. The global cues will be watched too, the US employment nos. will be out for May, these days all – Ve news are being brought into as the big Fed is bailing them out. We need to see howthe US plans to get off the tiger.
The derivatives position for the week stands at Rs 93657 Crs in OI; the PCR is at 1.38 the option IVs for Calls at 16 % & Puts at 16 %. The Nifty Future is trading at a discount of 4 points to spot. We must see the fall continuing after a small up move.
Nifty on 27th May: 5476
Nifty trading ideas for the week: Sell nifty on Up moves to 5560 - 80 – Target: 5420 SL : 5620
Stock ideas for the Week: Sell Tata Steel around Rs 595– Target: Rs 560 SL: Rs 602