Last week the Indian markets moved up by 1.9 % on the back of a good IIP data for November and global cues around Europe bond auctions. On Friday the 13th Jan, the global markets were up to some major downgrades by S&P, 8 European countries were downgraded with France leading the pack. This makes the European revival tougher; the free money at low interest rates can manage only so much and can start to drive inflations. The Euro fell to the lowest levels against the $. The Greece situation is not good either, the creditors and the government have not been able to conclude on the hair cut for the loans, market expectation is a 50 % cut. The Indian market is closely watching the inflation data and growth data to see if the RBI will go slow on the interest rate hikes. The Loan growth has considerably slowed to 11 % against 18 % target set; this is due to lower growth levels and high inflation. The odds are for the RBI to stop increasing rates. The Infosys results came in better than expected but the forecast was below expectation, the stocks were hammered by 8 %. HDFC too announced results with the loan disbursement at the lowest levels in a year. Globally Alcoa & JP Morgan announced results closer to analyst expectations. On the currency front the $ is strengthening due to the so called ‘Safe Haven’ currency amidst Euro woes.
This week the Indian markets will look up to the results season, there are 92 Co’s announcing results, the big names like ITC, TCS & Jet will be closely watched to see how the respective categories perform. In the US we have Google & Goldman announcing results. The Greece debt talks will be closely watched along with the Spanish 10 Yr bond auction. The Inflation data will come out on 16th Jan for Dec and will be closely watched to see the direction of interest rates. The Bond markets are already signaling a pause in interest rate hike.
The derivatives position for the week stands at Rs 119117 Crs in OI; the PCR is at 1.26 the option IVs for Calls at 21 % & Puts at 25 %. The Nifty Future is trading at a 12 point Premium to spot. The Technical & Derivative positions seem to suggest a correction in the offing.
Nifty on 13th Jan 2012: 4866
Nifty trading ideas for the week: Sell < 4820: Target: 4700 Stop Loss: 4900
Stock ideas for the Week: Sell ITC around Rs 208 for a Target of Rs 200 SL: 210