GENERAL MARKET CONDITIONS

Last Friday we had mentioned that traders will either square off or go long in precious metals and energies, we were right. Volumes this week will fall and trading will be volatile. Window dressing by fund managers along with position building for the first quarter of 2008, particularly in the options markets will dictate the markets. There is nothing new to comment and it will be technical trade for the rest of the week.

Crude oil floating over $90 a barrel as the year comes to a close. Crude oil has given the best return in 2007, which will draw more and more investor going long in crude oil. I am skeptical about rise in crude oil prices after August 2008. The reason, 2008 is US elections year and higher energy prices will become a political issue which could result in speculators cutting some of the longs in crude oil ahead of the US elections. Unless there are major hurricanes in the Gulf of Mexico in 2008, we remain bearish on crude oil before US presidential elections. I did rather take a chance and buy some puts between July and November 2008.

Emerging market stocks like India had a great and memorable 2007. This will continue into 2008. However it will not be a one way traffic like 2007. There will be some fluctuations. India stock markets and India companies will benefit from interest rates cuts from other central banks as cost of funds decline. However the sectors which performed in 2007 may be the laggards in 2008. We prefer to buy interest rate sensitive sectors like Automobiles and others (apart from infrastructure) for 2008 as lower global interest rates and lower commodity prices will benefit them. Apart from interest rate sensitive stocks, agro - commodity stocks (apart from sugar) is also a good long term investment as higher prices are here to stay.

GOLD -- FEBRURAY FUTURE -- INTRA DAY PIVOT:$723

Gold has to break $825 for gains to $848, else it will fall to $808 and $798 once again.

NYMEX CRUDE OIL -- FUTURE -- INTRA DAY PIVOT: $92.10

Crude oil needs to break $95 else it will fall to $90.50 and $88.90 once again. As long as crude oil floats over $90.50 downside will be limited.