The past week the markets exhibited a volatile move with the index dropping by 1 %. The markets were spooked by the Dubai world crisis towards the end of the week, and dragged the global markets. There is an all round fear that this may start the meltdown back again. This is an $ 80 B debt and there is every chance there will be defaults and the risk premiums across the world will increase. The Indian govt has come out with a statement,” India will not be affected by the crisis in Dubai “. Stock markets are all about liquidity, so the lesser flows or pull out of funds by FII’s will increase risk in our markets. The Macro fundamentals have not improved much, the loan disbursement is still very low, and the sales growth is flat to low, the food inflation last week is at 15.58 %. We also had the Indian Prime minister visiting the US and the US is keen to have a greater relationship with the largest democracy in the World. So here is an opportunity for India to become a super power.
This week markets will be watching the global fall out of the Dubai world crisis, markets have been overheated and this crisis came in at an hour for the bulls to take in some profits. Most analysts continue to believe the worst is behind us! My personal belief us we may not be out of the woods yet. The US markets will be looking at the Black Friday report on shopping, it is expected to be 0.5 – 1 % up over last year. The holiday shopping is expected to fall by 1 %. Traditionally December has been a positive month with the Santa rally and the funds adjusting their NAV’s. So even if we have a technical correction in the early part of December, we may see an upmove later on..
The derivative series has seen some good roll over to the new series, the derivatives positions for the week stand at Rs 87805 Crs OI, the PCR is at 1.31 the option IVs for Calls at 24 % & Puts at 28%. The technical momentum indicators say, we may have some more corrections this week. So watch out for the levels 4920, a break of it will take the markets down to test 4550 levels before we see a pull back.
Sell Nifty @ 4950 for a target of 4550 in 2 weeks.