o The International Monetary Fund said that India can gradually start raising interest rates as Asia’s third-largest economy

International News:

The International Monetary Fund said that India can gradually start raising interest rates as Asia’s third-largest economy is among the first to recover after the global financial crisis. Stocks buckled Thursday under the growing belief that the global economy is weaker than many investors expected and likely to stop companies from hiring. A flood of bad news, including rising debt levels in European nations and an unexpected jump in the number of Americans filing for unemployment benefits, had investors pulling money out of assets like stocks and commodities that look increasingly risky. Warren Buffett’s Berkshire Hathaway Inc. was stripped of its last AAA credit rating by Standard & Poor’s after the billionaire investor agreed to buy railroad Burlington Northern Santa Fe Corp. Berkshire, which is taking on debt to fund the $26 billion takeover, was cut to AA+ from S&P’s highest grade. Companies in the U.S. are spending the highest portion of bond-sale proceeds in more than a decade for acquisitions and expansions, joining Warren Buffett’s “all- in wager” on a recovery and taking advantage of the lowest borrowing costs since 2004. Australia’s central bank said economic growth will continue to accelerate this year even if policy makers are forced to raise the benchmark interest rate by another three quarters of a percentage point. The economy will be growing at an annual pace of 3.25 percent in the three months through December 2010, up from 2 percent last quarter. Food inflation up 17.56% y-o-y, on January 23, compared to 17.40 percent in the previous week. The country's software and business process outsourcing exports are expected to rise 5.5 per cent to touch $50 billion in the current fiscal (2009- 10), according to Nasscom. International Monetary Fund (IMF) has predicted that the Indian economy would grow at 8 per cent in fiscal 2010-2011. FDI inflows rise 10% to $1.5 bn in Dec 2009. India's exports are likely to contract by 5.2 per cent in the current fiscal but would start looking up in 2010-11, according to a Reserve Bank-sponsored survey. Trai plans to set up a national policy on setting up telecom towers by June. Sugar mills and other food processors have entered into contracts to import over 12 lakh tonnes of sugar in the last one month. USFDA has asked Ranbaxy to assess the manufacturing practices at its plants saying that the company has failed to adequately address the concerns raised by it earlier. Dalmia Cement (Bharat) Ltd has raised its stake in OCL India to 45.4 percent, from 21.7 percent earlier, through inter-se transfer, in an all cash deal. The foreign lenders of Wockhardt have said they would not object to the proposed sale of its nutritional business to Abbott if the money received were to be put in a separate account till their case was pending in the High Court. Real estate developer DB Realty has fixed the issue price of its initial pubic offer (IPO) at Rs 468 per share, the lower end of its price band. Essar Oil, India's largest private fuel retailer, plans to nearly double its petrol pumps to 2,500, by March 2011. Public sector enterprise HMT Watches is likely to receive a revival package from the government by the beginning of the next financial year for plant upgradation and revamping marketing strategy.
Israel court stops Sun Pharmaceuticals Industries Ltd. from exercising a warrant to purchase additional Taro shares till the time an earlier temporary injunction is in effect.

Derivative View:

Nifty near contracts ends the day down by 92.20 points at a discount of 11.75 points adding OI by 3.1% with indications of short build up. Nifty OI PCR in at 1.098 compared to 1.148 in the last trading session. Nifty puts sees addition of 11.05 Lakhs and calls sees addition of 32.70 Lakhs over the day. 4600, 4200, 4500 & 4800 Feb strike Nifty puts adds the most during the day and 4900, 4800, 5100 & 5300 Feb strike calls add the most during the day. 5000 & 4700 Feb puts saw unwinding of positions during the session. Highest OI in Nifty calls seen at 5000 Feb strike and puts at 4800 Feb strike. Nifty VIX at 27.07 from 25.54 last day. Long build up seen over the day in etc. Short build up seen in GMRINFRA, UNITECH, AMBUJACEM, HCC, RENUKA, HINDZINC, HINDUNILVR, MINIFTY, HINDALCO, LITL, BAJAJHIND, VOLTAS, RANBAXY, JPASSOCIAT, HCLTECH, RPOWER, PATELENG, BANKNIFTY, CROMPGREAV, DLF, DIVISLAB, KOTAKBANK, ACC & CENTURYTEX etc. FII side sees marginal short build up in Nifty futures and short build up in stock futures and Nifty options was bought with an addition of open Interest.

Outlook & Strategy:

Technically in Nifty near contracts chart patterns are indicating the break down of the flag formation with an eventual target of 4350 in the coming days. Nifty open Interest put call ratio moved down over the day and IV’s have started moving up with negative implications for the market. Short build up was seen in Nifty and a lot of stocks during the day.