With the government clearing the crucial — Insurance Bill and the Coal Bill, the Sensex recorded some upward movement last week
Tracking global cues, the markets last week opened on a positive note. But ahead of the December F&O expiry and holiday, profit bookings were witnessed. The markets were seen closing flat as Nifty closed down around 0.3 per cent whereas Sensex ended 0.4 per cent. Bank Nifty and mid cap sector ended up around 0.5 per cent and 0.9 per cent respectively whereas the small cap ended down around 0.2 per cent. Major support for Nifty lies at 8088 and 7990. Resistance levels for Nifty are at 8268 and 8331.
The government last week approved ordinance on two crucial bills — the Insurance Bill and the Coal Bill. The government approved the promulgation of an Ordinance to hike FDI cap in the insurance sector to 49 per cent from 26 per cent and this 49 per cent cap would include both FDI and foreign portfolio investments. The cabinet also approved the re-promulgation of Ordinance to facilitate e-auction of coal blocks for private companies for captive use and allot mines directly to state and central PSUs. The government was also seen allowing 100 per cent FDI under automatic route in medical device sector.
In the current month, the foreign investors pored in over Rs 14000 crore to the Indian capital markets which takes the total inflows for the year to around Rs 2.6 lakh crore. For the period December 1-19, the net investment by the foreign investors into the equity markets stood at Rs 3430 crore (570 million) and in the debt market the inflow was R 10808 crore (1.75 billion) making the total Rs 14239 crore ($ 2.3 billion). For the year, the net investment by the overseas investors into the equity market has reached R 99450 crore ($ 16.5 billion) while in the debt market it stood at R 1.59 lakh crore ($ 26.2 billion) totaling to Rs 2.6 lakh crore ($ 42.6 billion).
For the April-November period of the current fiscal, the direct tax collections rose 5.67 per cent to Rs 3.29 lakh crore over the same period last year. At the same time, the indirect tax collections also rose 7.1 per cent to over Rs 3.28 lakh crore from a year ago period. Thus, the cumulative tax collections for the April - November period stood at Rs 6.58 lakh crore. The government in the current fiscal has budgeted to collect over Rs 13.6 lakh crore as tax revenue which requires 16 per cent growth in direct taxes and a 20 per cent growth in the indirect taxes.
For the last week, some of the stocks were up on the back of order gain news. The first one in the row was Alstom T&D which secured an order worth 23 million Euros (Rs 1.8 billion) from NTPC. Also, VA Tech Wabag gained after the company announced a World Bank funded sewage treatment plant order worth Rs 175 crore. The Private investment entity of the Wipro Chairman has infused R 175 crore into a promoter company of the Future Group in a structured deal as well.
On the back of rebound in the energy stocks and the gains in large cap tech stocks, the US markets were trading up. Also, the strong economic data on the US front supported the markets. On the economic front, the final estimate of the third quarter US GDP growth was revised up to 5 per cent annual pace, which was its quickest in 11 years.
Crude is weak but has support at $ 53.60 per barrel in Nymex. A move below this support level can cause crude to slide down further. Strategy for the Nifty is buying Nifty call options 1 lot at 8200 strike price and selling two lots of 8400 call options. Market Manufacturing PMI is the data to watch out for in the Euro Zone area. On the Chinese front, the data to watch out for includes Manufacturing and Non-manufacturing PMI. For the Indian markets in this week, the HSBC manufacturing PMI will be a trigger to watch out for.
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).