Wishing you a happy & prosperous New Year 2010, just got back from my vacation and was nice to see the markets just struck in the range of 4950 – 5225 levels, the stimulus & steroid induced rally seem to be at the end. All economies need to fund huge debts that is created, US is has another $ 1.8 Trillion in Debt to be sold. So who will fund it, either the foreign countries like India or china, or is it by getting the US treasury to print more notes. Looking at the tepid response by foreigners to buy US debt, my fear is they will push for printing more $ and creating a chain reaction across the globe and driving inflation in 2010 to unprecedented levels. So after a average of 50 % rise in global markets in 2010, if we are expecting a higher rise then we may be foxed to expect this type of returns. India went up by 80 %, one of the highest in the world. India may correct with the global markets, but may not fall as rapidly as the developed markets. It is good the RBI always follow conservative practice. The food inflation last week continued in the 19 % levels, the government needs to do something before it goes out of hand. On the fiscal prudence, the government need to do a lot, some good steps being mooted came last week when, the govt is proposing to restrict the PDS kerosene supply thereby reducing the subsidies and also discouraging adulteration of diesel.
This week markets will be watching the December sales nos, the auto sales came in at > 35 %. So the first week markets will play to these and then will go on to the result season, which may not throw any major surprises. We need to understand macro fundamentals & global markets at this juncture. We may be in for a major downward spiral soon. We need to be careful.
The derivative series has seen some good roll over to the new series, the derivatives positions for the week stand at Rs 74000 Crs OI, the PCR is at 1.22 the option IVs for Calls at 21 % & Puts at 23%. We may see sideways movement with a – Ve bias.
We should see a correction in the overall markets in the next 2 – 3 weeks.
Sell Nifty @ 5200 – 5225 for a Target of 4950