The overall market to remain volatile, with a slight positive bias, amidst bouts of profit booking: Like the last week concentrate on the Mid, Small and select Large Cap Counters and select large caps: The broader market lacks definite triggers:

[Excerpts from the Sunday Report send to teh Premium and Quickie Group members]

Indian markets began last week on a pessimistic note on weak global cues. Markets last week felt the heat as the US sub-prime mortgage crisis continued to plague global equity markets. However, positive developments in the political arena and better than expected results from the US heavyweight Wal-Mart helped assuage worries leading to the highest single-day gain in the Sensex on Wednesday. Both Nifty and Sensex closed above 4% to end this week. FMCG was the lead runner in the markets while IT continued to remain lackluster over the week. There was a restoration of positive sentiment that sustained Indian markets to outperform its counter parts. Banking, Oil & gas also led the rally that outperformed the markets. Sentiments seem to be shifted towards Midcap and Small cap that closed to end above 6% on WoW basis. The Index of Industrial Production (IIP) rose 6.4% in September 2007 compared to 12% growth in September 2006. IIP growth was 9.2% in April- September 2007 compared with 11.1% growth in April-September 2006. Annual inflation, based on the wholesale price index (WPI), moved up 3.11% in the week ended 3 November 2007 compared to a rise 2.97% in the week ended 27 October 2007. Incidentally, FIIs remained net sellers in the cash as well as the derivatives segment. Domestic institutional investors, on the other hand, remained net buyers during the week. Domestic markets may continue to remain volatile ahead on global as well as domestic cues. The markets are expected to continue to consolidate at the current levels with action shifting to the small, mid and select large cap counters. Stock specific movements will be witnessed amidst intermediate bouts of volatility and profit booking at higher levels. All eyes are on the how the US fed deals with the Sub-prime crisis, which continues to unveil skeletons from the cupboards and also on the Indo-US nuclear deal which will be discussed in the Lok Sabha on 27 November 2007. According to Parliamentary affairs minister Priyaranjan Dasmunsi the government has also proposed discussion in the Rajya Sabha on 28 November 2007. Unless strong fund flows are witnessed the markets are unlikely to display a run away rally. The overall trend is likely to remain rangebound with stock specific activity. On the upside, if the Sensex manages to sustain above the 19650 level, it is likely to test the 20160 followed by the 20580 level. The Sensex has support at the 18740 level followed by the 18420 level. If the Nifty manages to sustain above the 5890 level, then it is likely to test the 6064-6090 level followed by the 6250level. Refinery shares are likely to extend gains on hope of strong refining margins in Oct-Dec, as demand for oil products is seen buoyant. Crude oil prices have eased to $92 a barrel from their lifetime high of close to $100 hit last week. . It is learnt that SEBI is considering a proposal to introduce a uniform face value of Re.1 per share of all listed companies. This proposal was mooted by SEBI’s Primary Market Advisory Committee and shall come up for discussion and approval at SEBI’s next board meeting. The uniform face value of shares will make the on screen comparison between scrips more meaningful. It will not only increase liquidity and also allow very small investors to take positons in these counters. SEBI in consultation with the Ministry of Finance is also planning to introduce half a dozen new products in the derivatives segment. Some of the new products are mini-contracts in equity indices, equity derivatives and equity futures, a volatility index, a bond index and an options contract with a life of three to five years instead of the current three months. Currently, the contract size is Rs.2, 00,000 but the government is likely to reduce it to Rs.40, 000 to enable small investors to participate in the derivatives segment. But the Monetary tightening, an appreciating rupee and an adverse effects of free trade agreements have pulled down industrial growth in as much as 17 sectors during the first six months of the current fiscal. The impact of the new found initiatives by the Left, on the Indo-US nuclear deal could be visible in NTPC, BHEL, Areva, ABB, Siemens etc. which will be the key companies in developing nuclear power projects. Premier Explosives Ltd has already moved up in anticipation of better days ahead. The small-cap and mid-cap stocks took over comprehensively for the first time during the calendar year 2007. Any dips in the Sensex can by used as a buying opportunity. It is unlikely that the Sensex would break 19, 000 levels. I am looking at a Sensex of 22, 000 by December, 2007.

Note: I have recommended Trend Electronics Ltd at the CMP, with a price target of Rs.100 plus. The previous name of the company is Videocon Communications Ltd. It is surprising that one is gettting the shares of Videocon Group at throwaway price. Grab the scrip before it hits the circuits.