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India week ahead - 26th - 31st Dec 2011

|Includes: EEM, WisdomTree India Earnings ETF (EPI), IFN
Last week the Indian markets moved up by 1.6 % after a 2 days of sharp fall, the markets touched a 26 month low of 5540 levels before moving up to close at 4715. The markets gyrated to the slow growth in the Indian economy to the global fears around the EU. The EU came up with free money to banks totaling $ 650 billion, history says this is a first aid and will not solve the issues facing the globe. The Santa rally seems to have taken shape and the US markets moved up by 3.8 % and has managed to keep up for the year 2011. The Moody’s meanwhile has upgraded the Indian government bonds to ‘Investment grade’. With all countries rushing to print money and manage the liquidity crisis, it is a matter of time when inflation will start hurting global economies especially developed ones and the yield will start moving up.
This week the Indian markets will look up to the derivative settlement, the markets will be on an upward move looking at the cues and the light volume trades that will happen due to the holiday season. We will also have the fund managers managing NAVs towards the end of the year. Technically markets have a little more to go. On the Indian government front, we have the ‘Lokpal bill’ debate starting on 27th Dec. This may add to some volatility to the markets.
The derivatives position for the week stands at Rs 132434Crs in OI; the PCR is at 0.90 the option IVs for Calls at 26 % & Puts at 27 %. The Nifty Future is trading at a 9 point Premium to spot. The volatility indicates we can see some sharp moves in either direction.
Nifty on 23rd Dec 2011: 4718
Nifty trading ideas for the week: Buy around 4760: Target: 49200 Stop Loss: 4720
Stock ideas for the Week: Buy Wipro around Rs 400 for a Target of Rs 420 SL: 389