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India - week ahead - 19th - 25th Oct 2009

|Includes: EEM, HDB, IBN, India Fund (IFN), INFY, WIT
A very happy Diwali to all. The markets last week was volatile and ended up 3.6 %, against what I had recommended, the stop loss @ 5050, would have got triggered and moved up to 5142 levels at close. The markets moved up on positive news on IIP with a 10.4 % increase in August. The world will give an arm and a leg for this type of growth during tough times. The other news was the Ambani brothers calling for a truce ! but what surprised me is the volumes have not moved up and we did not see a frenzy of buying yet. The $ too went into a tail spin forcing a lot of money into stock & commodities market. The muharat trading came in flat on Saturday.
This week we will continue to see the results season unfold, all over the world, the global results were close to analyst estimates. 76 % results came in ahead of the estimates. The smart operators seem to be on the sidelines and keeping a hawk eye on the liquidity position. Asset bubbles are created during huge liquidity, like what we are seeing now, but we are yet not there. Traditionally, October is a weak month due to pull out of money from the market for the up coming holiday season world wide. This year, the liquidity aided by the $ fall has moved the markets up. The Indian markets are closed on the 19th Oct.
The new derivative series has seen some good accumulation last week, the derivatives positions for the week stand at Rs 112280 Crs OI, the PCR is at 1.50 the option IVs for Calls at 22 % & Puts at 27%. The derivative  indicators suggest that there is a lot of hedging that is happening in the markets, the PCR suggests there is a level of negative mood in the markets. The technical indicators suggest, we are close to the TOP.
Nifty idea of the week: Positional Trade. Positional Traders can look at going Short < 5150 for a target of 4920. Stop Loss: 5180