A glimpse of the Past
Have good times come once again on the Dalal Street? The last week performance of Indian stock markets give indications of a possible revival, especially if we take a look at the Friday's trading. Despite the fall in US indices on Thursday night and bad inflation data, the markets managed to hold themselves pretty well on Friday.

What lies ahead?
Now what's next is the biggest question.

Has time come when one can start investing? Will markets able to consolidate and achieve new highs in the future? These are few questions that every investor must be asking himself.

My view is to "wait and watch" at this moment. One can invest but cautiously. Traders must book profits at the regular intervals. Because, there are several negative factors hovering around the equities that may pull it down.

Crude Oil has fallen sharply in last fortnight and chances do exist that Crude Oil may bounce back a bit to 120-125$ / barrel. If that indeed happens, then equities can see a sell-off once again because High Crude cannot live in harmony with high prices of equities.

Another negative factor is Inflation. Any sustainable bull run in equities cannot occur in the backdrop of high inflation and high interest rates. Hence, my view is that one should not build high hopes till the time, inflation cools down to below 8% levels.

Third negative factor are the elections in USA and India. The UPA government will be taking some steps towards reforms, but these initiatives will turn concrete only if UPA again comes to power. Hence, FIIs or MFs will only be putting money in equities, after seeing the outcome of the general elections next year. Hence, one is advised to maintain a "wait and watch" approach and closely monitor the movement of crude, inflation and elections.

Next week Scenario
The coming week may see some profit-booking. The indices have risen sharply, by about 15% in last 2 months and chances are imperative that some sort of profit-booking could be seen. Hence, my advice is to book some profits as well, especially in banking and real-estate sectors. Monday could be the day to do so, when markets are expected to open positive on account of sharp rally in Dow Jones.

Trading Strategy
Traders can buy 4400 Nifty Puts and 4900 Calls as a strategy. Nifty 4400 Put is trading at around 100 Rs, whereas, Nifty4900 Call is trading around 60 Rs. Thus, the total premium outlay comes out to be Rs 160.

Now, if crude oil goes below 110$ / barrel and no bad news come from US financial sector, then equities could see a fresh round of buying, which may take increase premium on Nifty 4900 Calls to 160-180 Rs. At that time, one can sell both the contracts to get the profit equal to premium in Nifty 4400 Puts.

Investment Mantras
I have been covering Karuturi Networks (KNL) for last few weeks. The stock is currently trading at 23 odd Rs. One can buy this stock with medium to long term perspective and target price of Rs 40-50.

Another stock is Balasore Alloys and Everest Kanto Cyclinder. Balasore Alloys is the subsidiary of Ispat Industries and generating more than expected profits for last few quarters. The stock is currently trading at Rs 55 and has a target of Rs 80-90 in next 6-9 months.

Everest Kanto Cylinder is another stock to look out for. The company is the niche market of manufacturing of cylinders for storing gases and inflammable liquids. The company Order Book is strong. The stock is currently trading at Rs 300 levels and can go till Rs 400 in next 3-4months.

Wishing you a Safe and Profitable Investing!!!