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India - Week Ahead - 18th - 24th Jan 2009

|Includes: iShares MSCI Emerging Markets ETF (EEM), HDB, IBN, IFN, INFY, TTM, WIT
The week saw some sideways moves in the Indian market, the markets opened with fantastic numbers from automobile, cement etc, we also had the Infosys numbers coming ahead of expectation. The markets don't seem to react despite all the good numbers, confirming the markets are nearing the top and there is fatigue. Was analyzing the market behavior post the great depression and we did see identical moves, we are not sure if this will play out again in the global markets but the chances are bright. There needs to be some large sovereign defaults to come soon. We have Greece, Portugal etc struggling. So we need to watch these carefully. How long can developed countries keep printing currency without fundamentals to back it ? Conservatism is the best mode at this hour. Live within your means.
This week markets will look to the earnings season back again, but all of it seem to be discounted. In the US despite good results from JP.Morgan, Intel & Alcoa markets were not able to hold highs. The S&P is struggling @ the 1150 levels from where it is reacting downwards. This level is also a technical level from where the 2007 crash started. So you need strong fundamentals to take it ahead. In case it does, we will enter into a bubble territory which can be a disaster for the global markets. The good news is India need not unduly worry due the conservative mode of the RBI. India may not fall as much with its global peers.
The derivative series has seen some good roll over to the new series, the derivatives positions for the week stand at Rs 109000 Crs OI; the PCR is at 1.28 the option IVs for Calls at 20 % & Puts at 22%. 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 the much needed correction this weeks.
Sell Nifty @ 5250  for a Target of 4950