The Indian and the global markets were quite over last week, we had the inflation nos. coming at 0.13%, the lowest in 33 years, India is one of the few countries in the world which calculates inflation based on wholesale price index (WPI) vs consumer price index (NYSEARCA:CPI) followed in all the developed countries. The pre budget rhetoric seem to be the fashion by most ministers, we have telecom minister talking about extending the STPI scheme, the finance minister talking about reduction in interest rates. The disinvestment of PSU’s back in the news. The markets are reacting all these sound bites. The liquidity driven rally continues globally, the last count says there is another $2 trillion in cash looking for investment. So which asset class will get this ? Will the stimulus & money printing mode continue to push markets up, or will sense prevail sooner to ask ‘what is the value of $’ just now ?
On the derivatives indicators, we are at Rs 86K Open Interest and the PCR is at 1.1 times. The indicators show a level of indecision and technical indicators show some sign of tiring on the rally.The global markets too were tepid and all news seem to be fully discounted. All the good news on housing and retail sales in the US did not drive the US markets. So we may see some sideways movement with a descent correction.
This week will see the much expected advance tax nos. out. This will be one major factor that will play on the minds of traders. On the global events, the BRIC summit on Tuesday & the G8 summit over the next weekend will be watched for cues on world economic health. The fund managers will be working overtime to lock in the NAVs and show some good performance for the June qtr.
So be ready to play the week with a – Ve bias, we must see levels of 4650 – 4250. At the lower end when markets get oversold, you can buy the budget expectation rally. Stocks that will correct this week are Banks, real estate & Oil co’s, the stocks that will hold on will be pharma, fmcg & autos.
Stock idea for the week : Short DLF @ Rs 375 Target Rs 325 Stop loss : 382