>Trade Winds (KARVY)

Slow rollover into the May series…

Indian stock markets rallied sharply due to heavy buying interest in energy, BFSI and software sectors. Major heavyweights did not disappoint market participants with their earnings last week. Buying momentum picked up in the markets after Reliance Industries and select banking stocks declared better-than-expected profi ts. Heavy short covering was witnessed in the Nifty and frontline stocks during the settlement of futures and options for the April series during the week. The Nifty witnessed a rollover of about 76% positions, whereas the rollover in the overall market was 68%. The rollover of positions into the May series was relatively lower than the rollover in the previous months due to uncertainty over the election results scheduled to be announced during the May series.

Global markets traded on a positive note during the week, considering better-than-expected earnings and expectations of deceleration in the global economic recession. However, the outbreak of Swine Flu in Mexico and its spread to other parts of the globe led to selling pressure in travel and tourism sectors. The outcome of the stress test results on banking stocks in the US is likely to infl uence the direction of the global equity market in the coming sessions.

Overall, data indicates that consumer confi dence has increased signifi cantly across the globe, but the major economies in the world are still recording negative growth. The GDP in the US shrank 6.1% for Q1 which is slightly better than the contraction of 6.3% in the previous quarter, but worse than estimates. This indicates that the pace of global economic recession is not as slow as economists estimated in the previous quarter.

Domestic markets are likely to be highly volatile as election results are scheduled to be announced on May 16. The earnings announcements of major heavyweights are likely to infl uence the market direction in the coming sessions. The Nifty is expected to trade on a positive note within the range of 3300-3650 levels during the week. Stocks in energy, software, BFSI and capital goods are expected to trade on a positive note, whereas auto, metals and telecom stocks are likely to trade on a negative note during the week.

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