Our markets have posted gains on thursday, on the strength of global cues and better than expected results from Infosys and other tech companies.Finally Nifty closed above 50DSMA for the week ended 17.04.2008, though Sensex is at a shy away distance for such performance, missing by 100points. After market hours RBI announced CRR hike in two tranches since the inflation though shown a down tick from 7.41% to 7.14% is far above its tolerable (comfortable) level of 5% for the year. 25bps will be effective from 26.04.2008 and another 25bps will be effective from 09.05.2008. This will drain away Rs.18,500 from the banking system, apart from the MSS and LAF measures being put in place by RBI to suck the liquidity from the economy. This measure of raise in CRR, a head of its monetary policy meeting on 29.04.2008, surprised many FIIs, though every one is expecting raise during the meeting. Now, the mute question is whether this move helps in containing the ever increasing inflation or bring it down to at least below 7%? What other measures are in store from RBI and government to tackle the inflation 'dinosaur' which has gained centre point of attention and discussion, since government is under tremondous pressure, as every section of the people and sector of the economy is now feeling the pinch.
Tinkering with Repo rates, and further CRR hikes, or discouraging lending to non-productive sectors by commercial banks, bringing the constituents of the WPI under Essential Commodities Act, Increasing supply by allowing imports and banning exports etc., are already being attempted by Government separately, which also are not showing any impact, since the problem is complex, as the inflation is mostly imported phenomenon. Crude touched $117.50, due to supply concerns and raising demand and might touch $120 during this weak is destroying the economic growth of best performing economies like China and India too will be impacted shortly, as our dependence on imports is quite large even today. It is being estimated that inflation shall touch 8% in the coming months, owing to the above situation, is not at all good news to economy, equity markets, especially rate sensitive sectors like, banks & financials, automobiles, commodities and consumer goods sectors.
Thus, the technical levels of Nifty and Sensex, might give bullish indication in short term having stabilised above short term moving averages, but moderation of economy and effect on profitability will be felt by the above sectors, in the coming quarters, which 'cap the upside' on our markets too. Investors need to be cautious for committing large chunks of money to equities, in these uncertain, and conflicting times.
The Week a head: Though the VIX has comedown to 27.10 lowest so far after it is introduced by NSE, volatility shall return back during this week, due the expiry of current series on 24.04.2008, next inflation data to be released on 25.04.2008, results of important companies like Satyam(today) before market opens & Reliance Industries during or after market hours (today); TCS (22.04.2008). Institutions and investors will be guessing on medium term trend now, expecting the policy stance from RBI to be known on 29.04.2008 and finally FOMC meet on 30.04.2008.
US markets have closed strongly on friday and closed above february highs, confirming bottoming out in medium term, and asian markets are trading positive today, where as Singapore Nifty futures indicate a premium of 45 points, might give a gap up opening for our markets, and whether 5022 on Nifty will be conquered is to be seen!
Range for the Week: Nifty might trade in the range of 4740 to 5140 during the week.
Strategy for the week: Buy 5050 puts on rallies and 4750 calls on weekness of current series, as we expect the nifty to settle around 4920 on the settlement day(24.04.2008), based on the open interest position as of now.
Tinkering with Repo rates, and further CRR hikes, or discouraging lending to non-productive sectors by commercial banks, bringing the constituents of the WPI under Essential Commodities Act, Increasing supply by allowing imports and banning exports etc., are already being attempted by Government separately, which also are not showing any impact, since the problem is complex, as the inflation is mostly imported phenomenon. Crude touched $117.50, due to supply concerns and raising demand and might touch $120 during this weak is destroying the economic growth of best performing economies like China and India too will be impacted shortly, as our dependence on imports is quite large even today. It is being estimated that inflation shall touch 8% in the coming months, owing to the above situation, is not at all good news to economy, equity markets, especially rate sensitive sectors like, banks & financials, automobiles, commodities and consumer goods sectors.
Thus, the technical levels of Nifty and Sensex, might give bullish indication in short term having stabilised above short term moving averages, but moderation of economy and effect on profitability will be felt by the above sectors, in the coming quarters, which 'cap the upside' on our markets too. Investors need to be cautious for committing large chunks of money to equities, in these uncertain, and conflicting times.
The Week a head: Though the VIX has comedown to 27.10 lowest so far after it is introduced by NSE, volatility shall return back during this week, due the expiry of current series on 24.04.2008, next inflation data to be released on 25.04.2008, results of important companies like Satyam(today) before market opens & Reliance Industries during or after market hours (today); TCS (22.04.2008). Institutions and investors will be guessing on medium term trend now, expecting the policy stance from RBI to be known on 29.04.2008 and finally FOMC meet on 30.04.2008.
US markets have closed strongly on friday and closed above february highs, confirming bottoming out in medium term, and asian markets are trading positive today, where as Singapore Nifty futures indicate a premium of 45 points, might give a gap up opening for our markets, and whether 5022 on Nifty will be conquered is to be seen!
Range for the Week: Nifty might trade in the range of 4740 to 5140 during the week.
Strategy for the week: Buy 5050 puts on rallies and 4750 calls on weekness of current series, as we expect the nifty to settle around 4920 on the settlement day(24.04.2008), based on the open interest position as of now.
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