The New Year started on a tepid note despite a growth across segments in December, the Indian market went up by 0.4 %, and the US markets had a surprising move with a 2.8 % move. From a technical level the S&P is staring @ 1150 level from where the fall started in September of 2008, when the subprime crisis spread like flu across the globe. The total stimulus pumped in the markets is around $ 11 trillion; this has driven the markets up and has increased money supply without any tangible move in the overall economy. So we may be in for a debt crisis sooner. The fed has already hinted at tightening of rates to tame the coming inflation. The Indian stimulus will have to be pulled out, and is expected so when the budget is announced on 26th Feb. India is a growth story and we will see a lot more portfolio investment coming in here. The food inflation in India does not seem to be coming down in a hurry; this is a big concern for India.
This week markets will be watching the result season, starting with Infosys on 12th Jan, there may not be any surprises. The business mix will be viewed closely, the de risking of business from US & Europe to emerging markets will be watched. The result season also kicks off globally. With markets already discounting most of the outcome, am not sure if we have steam to take markets higher especially with huge debt pile up by developed economies.
The derivative series has seen some good roll over to the new series, the derivatives positions for the week stand at Rs 100000 Crs OI; the PCR is at 1.23 the option IVs for Calls at 21 % & Puts at 24%. The no’s give a feel of complacency on the part of bulls. Technically, the markets are not convinced on the up move, the Nifty volumes are down > 30 %, the frightening part is the volumes on small cap stocks have moved up.
We should see a correction in the overall markets in the next 2 weeks.
Sell Nifty @ 5250 – 5300 for a Target of 4950