The Indian markets were volatile and closed with a loss of 1.9 % as expected, this was the first fall in 9 weeks, India was one of the markets that fell the most matching with some of the commodities like Gold & Oil. The result season kicked off with Infosys announcing better than expected results but the forecast has been a bit weak. The Indian markets are also started to discount the monetary policy outcome on the 20th of April, expectation of the rate hike is imminent. The runaway inflation needs to be curbed, it is interesting to note that HDFC & SBI are continuing their teaser rates into June 2010; this gives a feel that in spite of a rate hike, the demand for loans don’t seem to be high, so the rates may remain soft for some more time. The banking system is flushed with liquidity and we are entering into the lean season. On the global front the results of Alcoa, GE, Intel and Google have been to analyst expectation, so no surprises. Markets seem to have topped out. In the fag end of the week we had the SEC charges against Goldman Sachs (aka GOD..Man), for CDO fraud. The un fellable wall street co. seems to have its trouble, it could not have come at a better time when the dodds bill on financial reforms is being sent to the senate and the republicans are dead against it. This bill comes with sweeping reforms of the banking system and will save the tax payers of bail outs. The US & the world need such a strong bill but the Wall Street pros are against it. Watch out for a correction in the US & global financial markets due to this.
This week the Indian markets will be watching the RBI lean season credit policy and the results season. The first weekly fall will trigger off a lot of technical selling too in the next few days. Markets are generally weak during the Apr – June period, so we have a seasonal correction time in hand too. The global markets will be watching on the GS saga un folding and we may also have a lot of civil law suits on CDO’s putting pressure on the global financial world, not to forget the redemption pressure on some of the funds. There are also murmurs on the timing of the GS fraud, so the markets are on a leash and the financial reform bill can be passed soon just like the health care reform bill.
The derivatives position for the week stands at Rs 125000 Crs in OI; the PCR is at 1.23 the option IVs for Calls at 18 % & Puts at 21 %. The derivative position gives a feel uncertainty, so we must trade weak. Breaking of 5240 is good for the bears.
Nifty on 9th April: 5262
For the week: Sell Nifty around 5400 for a target of 5150 (Keep the position recommended last week)
Stock trading Ideas: Sell Reliance Power @ Rs 157 range for a Target of Rs 146 or lower SL: 160 (In 2 weeks)