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India week ahead - 15th - 20th August 2011

|Includes: EEM, EPI, India Fund (IFN)
This week Indian markets fell by 2.8 %, was much less that the earlier week falls, the developed markets gave sharp pull backs towards the end of the week. The level of volatility peaked and has started to dip. There was some consolation in the US with some decent nos. n Retail and unemployment. The Indian market is screaming Decoupling from the western world, as the growth is coming in better than expected. The fall in oil & other commodities may cool inflation & interest rates going forward. India will continue to follow the global trends in some form but the falls may not be as sharp as the others. The forward price earnings for the Nifty is around 14 times, which is below the average of 18 times. The markets will start looking attractive from a 3 – 5 year horizon.
This week the Indian & global markets may start to look up from an oversold condition, the global markets have formed a ‘bullish’ hammer pattern, if there is a follow up above the head, and we can see a move upwards. The Indian markets will open on Tuesday after a long weekend; there are no major data that has to come in. Markets will look westwards in this time of indecision. The technical gurus are talking of much deeper fall coming in.
The derivatives position for the week stands at Rs 133455 Crs in OI; the PCR is at 1.03 the option IVs for Calls at 25 % & Puts at 28 %. The Nifty Future is trading at spot.
Nifty on 12th August: 5072
Nifty trading ideas for the week: Buy Nifty only > 5140 for a Target of 5240 SL: 5060
Stock ideas for the Week: Buy Yes Bank around Rs 300 for a Target of Rs 320 SL: 290
Happy trading