All eyes abroad

The happenings in Greece and the US were the main scene of high drama, which affected the Indian markets under pressure last week

Following global cues, the markets remained under pressure last week. Domestic markets were below crucial levels. Along with news that US index provider MSCI INC may add China shares into its key index also added pressure. But the deferment of including the Chinese shares by MSCI and oversold conditions supported the markets at the end of the week.

Nifty has support at 7900 and 7850; a move below these two levels can cause further selling. Resistance for Nifty lies at 8161 and 8251. In May, mutual funds attracted nearly R 4200 crore, taking the total net inflow near R 57000 crore in a year. The level was also the 13th consecutive month of net inflows by MF.

According to data released by SEBI, the MF houses infused a net amount of about R 4177 crore in the stock markets in May. The MF were last sellers in April 2014, and sold close to R 2700 crore. MF is an investment vehicle that makes pools of funds collected from many investors and investments into areas like stocks, bonds and similar assets.

World Bank report
In its report, the World Bank said that India is expected to surpass China’s growth in this year. India’s GDP is expected to expand 7.5 per cent in 2015, 7.9 per cent in 2016 and 8 per cent in 2017 according to the report whereas the Chinese economy is expected to slow from 7.1 per cent this year to 7 per cent in 2016 and 6.9 per cent in 2017.

World Bank also cut its global growth forecast to 2.8 per cent this year from 3 per cent estimated in January. It lowered its forecast for US growth this year to 2.7 per cent from 3.2 per cent whereas Euro is expected to grow 1.5 per cent in 2015 from 1.1 per cent.

Central excise collections during the April to May 2015 increased to R 38535 crore from R 20493 crore during the same period in 2014-15 showing a rise of 88 per cent. Customs collections were up in the period rose 19.5 per cent whereas the service tax collections under the April - May 2015 in creased 17.6 per cent annually.

Car sales rose for the seventh month in a row in May but declining motorcycle sales was an area of worry. According to the Society of Indian Automobile Manufacturers (SIAM), the domestic passenger car sales in the month under review stood at 160067 units against 148577 units in a year ago period.

Motorcycle sales were down 3.04 per cent while the light commercial vehicles slid 7.19 per cent from a year ago period. In May, total vehicle sales across the categories registered a decline of 0.58 per cent from the same period last year.

Federal Reserve moves
Early increase of the interest rate by the Federal Reserve impacted the movements of the global markets. Greece debt talks were a concern. Markets found support from US retail sales and the news that Greece is inching towards a deal with creditors made markets rebound. All other markets around the globe were plainly tracking the US markets’ movements.

For the US markets, Industrial production, manufacturing production, current account, inflation, core inflation, continuing and initial jobless claims are the data to look out. For the week to come in the Indian markets, WPI data along with balance of trade will be in focus. Gold is weak due to a strong dollar. Gold has support at $ 1163 and has major resistance at $ 1191 per troy ounce.

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).

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