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India week ahead - 5th - 10th Sept 2011

|Includes: EEM, WisdomTree India Earnings ETF (EPI), IFN
This week Indian markets moved up sharply by 6.1 % and was one of the best performing markets globally, this despite a truncated week with just 3 days of trading. The FII’s buying did the trick; they brought Rs 2050 Crs in 3 days vs Rs 8500 Cr Net sales in August. This type of volatility in liquidity only confirm how fleet footed and short term these FII’s are and a market like India growing at 8 % still is being viewed as a HIGH risk market to most FII’s. The concern India is facing is inflation and not growth, this is the concern all of us are battling on a day to day basis. On the global front the US markets sharply came off on Thu & Fri due to bad employment data. The Banks in the US came in for hammering post the news that 17 banks will be sued to recoup $ 196 B which was spent on mortgage backed securities during the housing crisis.
This week the Indian markets must trade firm despite all the bad news emanating from the developed world, India is one of the few markets despite strong fundamentals have not moved up with global peers. So India has to do some more catching up to the 5200 levels where we can expect a resistance. The FII flows will be closely watched, trying to predict their moves is speculative. This week the US president may come up with some much needed stimulus for Jobs & infrastructure to re kick start the economy. So the US markets may start to rally in expectation from Tuesday.
The derivatives position for the week stands at Rs 113897 Crs in OI; the PCR is at 1.35 the option IVs for Calls at 21 % & Puts at 27 %. The Nifty Future is trading at a 7 point premium to spot.
Nifty on 2nd September: 5040
Nifty trading ideas for the week: Buy Nifty around 4960 - 80 levels for a Target of 5140 - 5200 SL: 4940
Stock ideas for the Week: Buy GE Shipping around Rs 240 for a Target of Rs 250 SL: 235
Happy trading