The 64th Year of Independence for India may turn out to be special from the financial markets here, The Indian market don’t seem to follow the global cues and defying gravity and is one of the few markets that is touching 52 week highs. The long term story I intact for India, there is the strong consumption & a fiscal consolidation story. For a trader the markets will keep fluctuating based on the demand & supply driven by excess liquidity. The FII’s have been consistently buying and the DII’s are selling and India’s retail is hugely under owned on Equity as we talk, just 3 % of Indians have investment in Stocks Vs 60% in the US. India clocked 11 % retail ownership in the year 2000. Very soon India will start on the long term rally that will not stop anywhere close to what you can imagine. It is a blessing in disguise that the developed World is suffering due to excess capitalism; this will benefit India going forward. The Indian markets were flat last week and showed resilience vs the global markets which went down as much as 4 %. The free liquidity is shifting cash to Indian markets in a big way. We are entering a time frame when the short term money will soon be pulled out by Hedge funds; we need to watch this class closely to see the short term trading movement.
This week the Indian markets will move based on Liquidity & global cues. No major events lined up. There is a debate in the US, will they face deflation or inflation, the jury is not out yet. I would think, it will be Inflation rather than deflation, with the free printing of currency that will be the worry. The Indian food inflation continues to be in the double digits, which may affect consumption in the short term. The easy liquidity is pushing up prices too. The RBI has taken this as the biggest issue confronting India. Knowing RBI, am sure they will have the fiscal policy measures to get things under control sooner.
The derivatives position for the week stands at ` 172370 Crs in OI; the PCR is at 1.49 the option IVs for Calls at 13 % & Puts at 17 %. We should see a break out in the week ahead.
Nifty on 13th August: 5452
For the week: Sell Nifty < 5350 levels for a Target of 5180 in 2 – 3 weeks, SL @ 5490
Stock trading Ideas: Sell Sterlite < Rs159 for a target Rs 140, SL @ 165