INDIAN EQUITIES- TOP CLASS PERFORMANCE, BULL RUN AHEAD

The Indian equity markets snapped the calendar year 2010 on a solid note with an optimism of a great year ahead. The passing year proved to be a good one for the domestic markets as the major indices were not only able to garner good gains but scaled their more than two and half years high.. Global funds bought this year record Rs 1.31 trillion worth of equities. The Sensex and Nifty rallied more than 15% each this year while the midcap index is up by almost 16%. The commodities markets have also seen a significant upside with crude being up 13% year-to-date, gold prices up 28.1% and silver surging 81% year-to-date. Journey for the Indian stock exchange attained over the past decade has been overwhelming. On January 1, 2001, the entire market capitalization of the Bombay Stock Exchange was about Rs. 700,000 crore that is USD 150 billion. At present, the whole market capitalization of BSE is about Rs. 70, 70,000 crore, that is USD 1570 billion, indicating a 9 times increase in market cap over the past decade. At the commencement of the decade, the Sensex was at 3972. Currently, it is trading above 20,000, more than 400% rise over the past decade. In other words, if somebody had invested Rs 100,000 in the Sensex at the beginning of thedecade, it would have currently more than Rs 400000. FII inflows have been the highest ever in India's history in 2010 at USD 28.6 billion in nine and a half months. In 2009, FIIs invested USD 17.6 billion while the year before in 2008, India registered foreign investors inflows of USD 12.7 billion. One-third of the total FII inflows this year went into the primary market. MF outflows for the year stood at USD 6 billion, also the highest ever in history. A year ago, outflows stood at USD 1.17 billion. Domestic insurance inflows however have seen a steady decline over the last two years. Among sectors in the Indian market, 2010 did not favor the leaders. In almost every sector, the stock of the second-biggest company was more favored than the leaders. Thus, ICICI Bank outperformed SBI, Hindalco outperformed Tata Steel, Idea Cellular beat Bharti and Lupin overtook DRL, Ranbaxy. At the top of the gainers among midcaps was United Breweries which gained 197% during the year. Titan Industries continued its stellar run with a 147% gain over its closing price in 2009..

MARKET OUTLOOK: While looking at the current series Nifty January futures saw an addition of 10.36% or 1.97 million (mn) units, taking the total outstanding open interest (OI) to 21.04 mn units. For Nifty calls, 6200 strike price (SP) from the January series was the most active call with an addition of 0.84 mn or 26.96%. Among Nifty puts, 6100 SP from the January month expiry was the most active put with an addition of 0.71 mn or 24.42%. The maximum Call OI outstanding was at 6200 SP (3.94 mn) and that for Puts at 6100 SP (3.63 mn). Among most active underlyings SBI witnessed an addition of 3.69% in the January month futures contract, followed by Tata Steel which saw an addition of 3.87% of OI in the near month contract. Tata Motors witnessed an addition of 4.05% in the near-month futures. Reliance Industries saw an addition of 2.89% in the OI while IFCI witnessed an addition of 4.18% in the near month futures contract. Hence we are expecting slightly bullish scenario however 6200-6230 might be the crucial resistance zone. On the flip side 5900 should act as a crucial support in current scenario.  

HAPPY TRADING AND HAVE A VERY PROSPEROUS NEW YEAR -2011.