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A 'gain' ful quarter

The markets ended in the negative with a weekly loss of around 1 per cent. In the large cap stocks, Infosys was the major gainer – up around 15.4 per cent – and the losers were Ambuja Cement and Ultratech Cement, down around 9.6 per cent and 7.75 per cent respectively. Polaris Financial Technology remained the gainer in the midcap sector with a weekly change of 2.5 per cent and the losers were PC Jewellers and Balrampur Chini which were down around 16.5 per cent and 11.5 per cent respectively.

Corporate earnings
The corporates have begun to unveil their earnings. The first one in the row was IndusInd bank, whose net profit for the quarter ended December 31, 2012 rose 30 per cent on the back of loan growth. The net profit of the bank rose to R267 crore from R206 crore in the same quarter last year. The net interest income also rose 34.2 per cent to R578 crore from R431 crore. Once these results were revealed, there was renewed buying by foreign institutions.

The IT major Infosys revealed that its earnings for the quarter stood at R23.69 billion against R23.7 billion in a year ago period. The revenues rose 12 per cent to R104.24 billion from R93 billion in same period last fiscal. The company raised its sales forecast for FY13 to atleast USD 7.45 billion.

IIP data
The IIP data, which was announced during the week, contracted to 0.1 per cent for the month of November against a level of 8.3 per cent in the previous month of October and against 6 per cent in a year ago period. Weak investments due to festive season was cited as the reason. The manufacturing sector showed a growth of only 0.3 per cent as against 9.6 per cent and electricity showed a growth of 2.4 per cent as compared to 5.5 per cent in the month of October. But the capital goods sector showed a decline of 7.7 per cent against a growth of 7.5 per cent in October.

Disinvestment options
For reaching its disinvestment target, the government is considering selling some shares of ITC, Axis Bank and L&T which are held by the Specified Undertaking of UTI (SUUTI). The government might create a basket of three stocks and sell it through the secondary market. During the week, the government approved 10 per cent stake sale in Engineers India which may fetch the government around R800 crore. The government has a disinvestment target of R30,000 crore in this fiscal and has only raised around R7,000 crore through the stake sale in Hindustan Copper and NMDC.

Global matters
There was no major news from the global end as investors in the US were waiting for the revelation of corporate earnings. The earnings season started with the declaration of results of largest aluminum producer Alcoa which beat market expectations. The Chinese trade data was also released, which showed that the trade data surplus rose to USD 31.6 billion from a surplus of USD 19.6 billion in November and was also above the forecast of USD 19.7 billion.

The country’s exports grew 14.1 per cent in December whereas the imports grew 6 per cent on a year on year period. Also the Japanese government unveiled a USD 226.5 billion stimulus package to support the country. In the ECB meeting this week, the central bank kept its key rates unchanged at 0.75 per cent despite the high unemployment and economic contraction.

Nifty has support at 5918 and 5817 levels and resistance at 6018 and 6040 in the short term. HUL, M&M, L&T, JP Associates, Reliance Industries and ICICI Bank lost major support levels and investors with low risk appetite can buy their put options. Rupee is weak against dollar and it is likely to trade towards 55.2443. It has resistance at 54.40 and 54.3615. Major firms that may release their earnings in this week include Reliance, TCS, Axis Bank, HDFC Bank, Bajaj Auto, Hero Motocorp, ITC, HCL Tech, Wipro and TTK Prestige. Also the inflation data will be closely monitored.

Alex K Mathews is the author of Financial Services And Systems, as well as Option Trading: Bear Market Strategies published by Tata McGraw Hill. He is also the technical and derivatives research head of Geojit BNP Paribas Financial Services Ltd. The author may have a vested interest in investments he has recommended. Feel free to e-mail him at alex@geojit.com. Geojit BNP Paribas has membership in, and is listed on, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is for educational and information purposes only and under no circumstances should be used for actual trading or making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at his or her risk.  

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