Close: Ready for subprime levels !

This week market had roller coaster ride. The global woes had Indian markets on their knees. The huge liquidity was seen flowing out of the system. US market had the subprime market worries with the crises expected to spillover beyond the credit markets. Globally markets buckled on US woes. The worry was also fuelled by CRR hike expectations which did come in Given that these were in line with expectation, Markets rallied only to fall sharply the next day on Global woes. Though markets recovered from this, the impact will be seen gradually.

Sensex lost less than 1% this week about 105 points. There was a 670 points swing in Sensex for the week between a high of 15569 and low of 14896. Madcap index was 0.3% up. IT down 3.5%. Auto down 3%. Capital goods index 2% up. Oil and Gas 2.5% down.. The big losers included Infosys (-4%), Mahindra (-12%), MTNL -5%, Nalco - 10%, Suzon -5%, Tata Motors -6%, TCS -5%, Wipro -4%, Zee-5%, SBI was the only hewavyweight gainer up over 4% for the week clocking +9% gains.

We covered Reliance with some cautious comments on Reliance earlier in the week and the stock got whacked. Do read our views on he same in Economy: Stocks in action:

We had a note on Greenply which has been a wonderful performer. We believe that the business is now ready to catch momentum even though its up significant since we initiated coverage. The benefit of taking marketshare from the unorganised sector is expected to flow in and this is the large player with a fantastic distribution set up well placed to exploit it.

We had a detailed research note on ABG shipyard. The stock gained 14% this week. The Industry is well placed to exploit the global opportunity of ship building. The Government is backing it with a subsidy. The company managed to bag a large order and the orderbook now stands over 5500 crores. We believe that the business is good but valuations are pricing in too fine an execution. Do read the note.

There was more research as well.. including the results analysis for MoldTek, Nestle and so many more..

Technically speaking.: On a weekly closing there Sensex close was comfortable though on a daily basis the closing was below the trendline support. 15230 is a resistance but the big ones are near 15380 - 15497. In terms of support 14890 is a support but 14830 is crucial and below this markets may see more pressure.

The momentum is now broken and value buying by locals feeling left out is more likely to be met with profit taking.. making it more of a consolidative phase. We fail to find catalysts other than global bounces for markets to see further inflows and test the recent highs.

Fundamentally speaking: The results are all out and there are not many triggers left. There are hopes for an interest rate cut but with crude a $ 77 thats unlikely to happen. Growth in certain sectors has started to slow. The sectors performing are the ones which depend on Government spend. Markets may see some value buying but on valuaton basis the risks have increased given the volatility. This itself should lead to lower valuations. All in all.. we dont seem to be positive. But, thats not out of choice. We believe that the global risk of subprime lending is not play out and we have not heard the last of it. Understanding the way it works, it could grow on itself. Also the Yen carry trade is another issue we have to live with. A US rate cut is what many in the US markets are hoping for, but that would imply a weaker dollar. Having said all this we believe that there would be opportunities and we will be there looking for them for you at wow-iindia.com. Its not going to be easy and sifting through will be a tough job.