Last week the Indian markets fell by 1.8 % against our expectations of a move up, seasonally the last week of the year is a low volume trading week as most traders & fund managers are on vacation and no major moves happen. The Indian market closed down 26 % in 2011, one of the worst closing in 14 years next only to 2008 when India fell by 56 %. The slowing economy is adding to the fall in the markets added to this a growing non governance & poor management at the government levels. There is nothing in the horizon to think we will see some spectacular stock market moves in 2012. All macro indicators are telling us things will go worse into 2012. We may get some improvement in inflation and interest rate side but the demand side and growth is slowing at a dramatic pace.
This week the Indian markets will look to the New Year and December no’s for any cues of growth, the result season will start in the 2nd week of January and expectations this time is tepid. The global cues from Europe will be closely watched. The $ has hit a multiple resistance level and we need watch this closely this week to see direction. If the $ weakens, then there is chances of higher allocation to risk assets like emerging markets & commodities. This week will also be watched closely for any technical break outs on the downside too.
The derivatives position for the week stands at Rs 79453 Crs in OI; the PCR is at 1.06 the option IVs for Calls at 24 % & Puts at 27 %. The Nifty Future is trading at a 9 point Premium to spot.
Nifty on 30th Dec 2011: 4624
Nifty trading ideas for the week: Buy around 4620: Target: 4720 Stop Loss: 4580
Stock ideas for the Week: Buy Wipro around Rs 70 for a Target of Rs 74 SL: 68
Wishing you a Happy & Prosperous New Year