Markets’ mood on Monday and the Week Ahead[excerpts from the Report send to Premium/Paid Members, Yesterday]:My Morning Call on Pioneer Emborideries Ltd saw it hit the Buyer freeze: Southern Online Bio-Technologies Ltd hits another buyer freeze: Nagarjuna Feriliser Ltd tanks after the sell call at Rs.35: Orient Beverages Ltd hits 7th consecutive circuits: Kanishk Steel Ltd, Pochiraju Industries Ltd, Amforge Industries Ltd, Silverline Technologies Ltd and H B Portfolo Ltd are all up: Last week, a carnage of sorts swept the allies of Dalal Street on the back of US sub-prime mortgage concerns and unwinding of Yen carry trades. Incidentally, FIIs remained net sellers in the cash and derivatives segment. Domestic institutional investors however remained net buyers. The situation in the last Friday morning took an ugly turn on the back of overnight weakness in Dow and Nasdaq, when the Yen breached the 113 level against the US dollar. But then slowly after the opening of the European markets, the situation changed a bit and the Nifty rebounded from the lower levels to travel past 200 day moving average of 4060. I had earlier mentioned in my blog that in the worst case scenario, the Nifty could touch 3800. But now it seems all are history, looking at the positive closing of both Dow and Nasdaq. The situation is made further fluid by the news that the US Federal Reserve is likely to lower interest rates, which might give some relief to the US financial markets and world markets in general. The Bank of Japan meeting is also scheduled on August 23 to decide on interest rates. Earlier, it was believed that BoJ’s (Bank of Japan) would raise interest rates by 25bps, but now it seems it is unlikely, since this move could trigger unwinding of Nikkei.. In the domestic front the market sentiments continued to be positive; with the positive data emanating on Inflation from & the Indian economy expected march at a scorching pace of 8 % plus. Last Friday most of the Asian Markets also recovered, after the opening of the European markets. This showed that Indian Bourses are now more or less integrated with the rest of the globe. Technically, the markets look weak but regular bouts of short covering will be witnessed. Any positive global news will help the markets in bouncing back. The markets would shed some of its volatility in the next week and consolidate at these levels, before moving up. Though large scale buying is not advised but accumulating scrips using staggered approach, will be the next theme in the markets. The Sensex has support at the 14000, 13765 and the 13300 levels. On the upside, the Sensex faces resistance at the 14538 and 14900 levels. The 4100, 3850 followed by the 3663 level are important support levels for the Nifty. It faces resistance at the 4187 and 4387 level. It was financial stocks, which were leading the rally, metals and other industries were following suit in the US. Following that trend in the US markets, tomorrow we could see a rally in Steel, Information Technology, Banks, Infrastructure/ Real Estate and Financial companies (India Bulls, India Infoline, H B Portfolio Ltd, J M Financials etc), export Oriented Counters (Textiles, Flower Exporting companies) etc. Rayalaseema Alakalies which gets a good portion of its revenues from overseas exports, could zoom tomorrow. Also some of the auto ancillary companies could bring in surprise for the investors. Overall tomorrow the markets are expected to OPEN with a positive Gap up and we could see a rally of at least 200 points in the Sensex in the initial trade. But one thing which I cannot help mentioned is that unless the India makes, rupee fully convertible the problem of plenty in terms of foreign reserves, will continue to haunt the Indian economy, pushing up inflation and appreciating the INR. The full convertibility of the INR, is more a matter of compulsion than choice for the government. India's Forex reserves are increasing faster than the government can manage. This is pushing the rupee on the higher side, impacting Indian companies' interest in the international market. Government wants to maintain the dollar-rupee-rate at a decent level so that exports do not take a beating; which has been at the receiving-end in the recent past. Full convertibility of the INR would see some money going out of the country, easing the liquidity problem. This would also help inflation to remain at an acceptable level. I fell that this is the right time to go for the same, since the Forex Reserves are piling up everyday, due ECBs and FDIs. Further fear of sudden outflow of Forex is unlikely, owing to full convertibility. As India has continued to grow at more than 8-per cent rate, foreign players want to remain invested. Hence RBI should seriously think on this line instead of going for cosmetic measures like increasing the CRR or putting a cap on the ECBs to reign in Indian Economy. Moreover, with Motilal Oswal IPO opening for subscription from tomorrow, we could see a rally in the financial stocks. It is worth noting that, with the starting of the festive season, from the next month, we could see some rally in Sugar sector also. Auto Sector which is remaining silent for a long time could see smart rally in anticipation of better performance during the festive season. Metal and Infrastructure counters could also, show smart rallies in the view of coming of Autumn, when the Construction activities are expected to pick up steam. JUST SIT BACK AND RELAX, GOOD DAYS ARE AHEAD FOR THE INDIAN BOURSES. [Excertps from the Report send to Premium Members of SumanSpeaksPremium]---Suman Mukherjee