The last day of trading of our markets after a collapse on the settlement day, in the last one hour, proved to be anti climax, due to heavy short covering in rate sensitives along with some long build up in tech sector, as rupee weakened against dollar. Both the indices have closed with gains, week on week basis in the first instance and also above July closing levels, which I have been advocating during the last few days regularly. Nifty futures have closed with a premium of 10 points with addition of open interest is encouraging too. VIX closed at 33.31 but intraday high stood at 73.29 suggesting higher intra day swings to continue further.
GDP data releaed on friday has shown a down tick to 7.9%, below 8% after 9 quarters, is the first sign of moderation of growth. The components once analysed show that this will unfold further down in the coming months, as inflation is at double digit levels, interest rates are almost double from their lows registered in 2005-2007 period. The fiscal situation shows stress due to unbudegeted loan write off, pay commision arrears payment, raise in oil, food and fertilizer subsidies. RBI is concerned about the M3 raise, and might use CRR or Repo rate any time, as rupee is weakening due to demand for dollar raising. Though crude corrected from its peak levels of 148$ still the pass through effect of actual price is half done by PSU oil companies, which continue to bleed under current pricing mechanism.
US markets became nervous on friday, as the hurrican 'Gustav' intensifying in Gulf of mexico, likely to hit 40% of crude production and supplies and 25% of gas production, which might again push demand for crude in the near future. September Nifty series have begun on positive note, but this week 03.09.2008, is a trading holiday for our markets on account of 'Ganesh Chathurthi' thus, investors and traders might resort only to trading intraday. Nifty 4360 level will be a reference level for this week as it was the August month closing too. Our markets might open weak today, following weak global cues and the first indication will come from Singapore Nifty futures which shall start trading fro 07.00 a.m. (IST) will confirm the mood of FIIs, who are mostly operating on Singapore Exchange now a days, as volumes have shifted from NSE to SGX.
Range for the Week: Nifty might trade in the range of 4200 to 4400 during this week.
Strategy for the Day: Buy 4400 puts on rallies for intra day trading.
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