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India week ahead - 22nd - 28th August 2011

|Includes: WisdomTree India Earnings ETF (EPI), IFN
This week Indian markets fell by 4 %, on continued global fears of a slowdown and the confusion in the political class to tackle the issue. The Indian and other emerging market story is strong. The planning commission in India is pushing for a 9 % growth in the 12th Plan. These measures auger well for the country. The Indian government must take some tough & fast decisions on the economy side. The monsoons have come in above expectations, s this will help the farm growth too. The companies that are focused on US & Europe will continue to be under pressure. The IT sector has been one of the sectors that has already taken it on the chin being the worst performer in this fall. The FII’s have been net sellers every day in August and have sold $ 2 billion to date this month. It is ironical that the FII’s are selling in India when actually they should be bringing in money here. Hope this is the short term / Hedge fund money that is getting out.
This week the Indian & global markets will continue to look at global cues; we have the derivative settlement that can make the week’s trading tricky. The Nifty is trading closer to the support @ 4800 – 4750 levels. A fall below that can cause a big drop from a technical level. The oversold conditions may arrest the fall around these levels. A pull back can take it to a maximum of 5200 by early September. The derivative positions are at the lower end going to settlement.
The derivatives position for the week stands at Rs 137722 Crs in OI; the PCR is at 0.94 the option IVs for Calls at 27 % & Puts at 30 %. The Nifty Future is trading at a 5 point premium to spot.
Nifty on 19th August: 4845
Nifty trading ideas for the week: Buy Nifty around 4800 levels for a Target of 4950 SL: 4770
Stock ideas for the Week: Buy M&M around Rs 715 for a Target of Rs 740 SL: 705
Happy trading