A variety of factors propelled activity at Dalal Street as new highs were reached in the last week, though volatile movements can still be expected
The markets last week were up despite mixed global cues on the back of bargained buying by heavy weight counters. The markets reached new highs as the IMF’s comment that the Indian economy will be the fastest growing major global economy outpacing China by 2012-17 was well received.
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Also, the expectations of new measures in the general budget made more funds to flow into the markets. Sensex and Nifty ended up around 4 per cent and 3.7 per cent respectively on a weekly basis.
At present, the market is slightly overbought but it does not mean that the market is on the verge of a correction, but we can expect volatile movements in the days to come and it may last till the expiry.
The FIIs holding in some of the Indian companies have risen to their highest level in at least six and a half years. Out of the 50 in Nifty, 34 companies’ aggregate FII holdings for the December quarter rose to 20.74 per cent from 20.36 per cent in the previous quarter.
They hiked their stakes in state run refinery companies, HPCL, BPCL and IOC to 18.83 per cent, 15.2 per cent and 2.61 per cent respectively from 14.01 per cent, 12.57 per cent and 2.45 per cent at the end of the September quarter. Some other companies which saw a revision in their holding includes ZEEL and Heromoto corp to 51.91 per cent and 39.34 per cent respectively from 50.84 per cent and 34.34 per cent respectively.
Jump in earnings
Symphony LTD came out with its earnings, where the company reported a jump of 45.30 per cent in its standalone net profit for the quarter that ended December 31, 2014. The home appliances firm which follows a July to June period as the financial year reported a net profit of R 36.02 crore as compared to a net profit of R 24.79 crore in the same quarter last year.
The net sales showed an increase of 31.40 per cent to R 151.41 crore against R 115.22 crore in the corresponding period. For the first half of 2014-15 fiscal, the standalone net profit rose by 47.40 per cent to R 57.65 crore as compared to R 39.11 crore in a year ago period and the net sales was up 35.67 per cent to R 254.12 crore against R 187.30 crore. The company has also declared an interim dividend of R 4 per equity share.
In the beginning of last week, the Chinese markets were under pressure after the regulators took measures to rein margin trading at three of the nation’s biggest securities firm.
Also, the global economic growth forecast lowering by the IMF added fuel to the fire. But the better than expected economic data from the China provided support to the markets. In its policy meet, the bank of Japan maintained its monetary stimulus and expanded a loan programme aimed at encouraging banks to boost lending was another reason. Also, the ECB’s move to buy 60 billion euros worth assets per month to support the economy was the major one in the list.
On the global front, in the Chinese markets, the look out will be for manufacturing PMI. For US markets, Consumer sentiment data, FED interest rate decision, new home sales, pending home sales, initial and continuing jobless claims are important data to consider.
The companies which may announce their earnings in this week include Titan, Nucleus, Maruti, Idea, Karnataka Bank, Union Bank, Amaraja Battery, Emami LTD, Ranbaxy, Havells, HDFC, Essel Pack, Asian Paint, Hitachi Home, Sesa Sterlite, IDFC, Wonderla, ICICI Bank, Berger Paint, Tata global, Dabur, HCL Tech, Tech Mahindra, Astra Micro, Eclerx and Bank Baroda.
Sectors like Auto, Pharma, OMC and FMCG sectors are likely to remain positive in the coming trading sessions. Mid-cap and small cap sectors may remain either subdued or may correct further.
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 email@example.com. Geojit BNP Paribas has membership in, and is listed on, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).