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India week ahead - 1st - 6th August 2011

|Includes: EEM, WisdomTree India Earnings ETF (EPI), IFN
This week Indian markets fell by 2.8 %, this was against expectation of an up move continuing, the spoil sport for the fall came from the RBI increasing rates by 50 basis points to control inflation & the US Debt raising issues within the lawmakers. The Indian fall is much less than the developed markets fall; giving hope that money may be flowing into safe emerging markets. The FII’s have been net buyers in July to the tune of $ 920 M, giving bulls some hope. Global money will always chance returns and a disciplined financial market like India will not be ignored. The result season has its own moves on individual stocks, the pressure of inflation and slower demand is being seen last quarter.
This week the Indian & global markets will continue to look up to the result and also the US debt closure on Aug 2nd. As we write, the law makers seem to be reaching a compromise and should clear the bill by Sunday afternoon. This done will give a global rally and the next moves will be on state of economy and the debt situation in EU. August is also the season where most bankers go on vacation, so we may can expect lackluster movement in a range globally. Am sure all bankers don’t want to go on holiday with uncertainty built in.
The derivatives position for the week stands at Rs 102002 Crs in OI; the PCR is at 1.12 the option IVs for Calls at 17 % & Puts at 20 %. The Nifty Future is trading at a premium of 8 points to spot.
Nifty on 29th July: 5482
Nifty trading ideas for the week: Buy Nifty only on a Trade > 5540 for a target of 5720 SL 5475
Stock ideas for the Week: Buy L&T around Rs 1720 for a Target of 1780 SL: Rs 1700