Change in fortune

After some low days, there was an upward trend seen which came as a relief to investors

Tracking the positive global cues, the markets were up at the starting of the last week, but profit booking and Nifty crossing below its 200 DMA kept pressure on the markets.

Going forward Nifty may retest the key resistance at 8296, if it can manage to move above this level with volumes then it can test 8355 and 8521.

On the contrary, if Nifty fails to move above this level then there are chances that it could re-test the previous week’s lows at 8100 or at 7997, the major technical indicators are still giving mixed trend for the market, so it is prudent to stay cautious in the coming days.

Car sales
According to a report, the car sales in India rose by 18.14 per cent in April, the fastest rate of growth in 30 months on the back of improved consumer sentiment and favorable fuel prices. According to the data released by SIAM (Society of Indian Automobile Manufacturers), the domestic car sales in April stood at 159548 units as compared with 135054 in the same month of 2014. The previous fastest level was in October 2012 where the growth was at 21.19 per cent at 169788 units. According to the data, the total sales of commercial vehicles grew by 6.48 per cent whereas the total sales of vehicles across categories registered a growth of 1.91 per cent.

The wholesale inflation came out in the last week, where the data stood at -2.65 per cent in April as compared to 5.55 per cent in the same month last year. The data was at -2.33 per cent in the March 2015. Inflation in food stood at 5.73 per cent in April as compared to 6.31 per cent in March, 7.83 per cent in February and 8 per cent in January.

Wholesale inflation has been in the negative territory for past six months. As a part of semi annual index review for the MSCI changes were made and the same may result in an increase of net inflows from passive foreign funds. All the changes are effective from May 29. The MSCI index and its weight of constituents have an impact on the investment decision of active as well as passive global fund managers. Active global fund managers look into the performance to a MSCI index depending upon the objective of the funds while the passive managers deploy money according to their weights.

Selling stakes
The government has decided to sell its stake in IOC around 10 per cent and 5 per cent ownership in NTPC in order to raise about Rs 13600 crore in the current fiscals disinvestment program. The approvals are a part of the government’s disinvestment target of Rs 41,000 crore. At the current market price, a 10 per cent stake or 24.27 crore shares in IOC would mop up close to Rs 8000 crore at current market price and selling of 5 per cent or 41.22 crore shares of NTPC will raise around Rs 5600 crore to the exchequer. The government currently holds 68.57 per cent in IOC and 74.96 per cent in NTPC.

Pennar Industries came out with its corporate numbers where the net profit of the company rose 470.89 per cent to
Rs 9.02 crore in the quarter ended March 2015 as against Rs 1.58 crore in the same period last year. The sales was up around 16.01 per cent to Rs 242.78 crore in the period under preview as compared to Rs 209.27 crore during the previous quarter ended March 2014. The net profit was up 69.55 per cent to Rs 21.33 crore in the full year ended March 2015 as against Rs 12.58 crore during the previous year ended March 2014 and sales was up 5.75 per cent to Rs 859.18 crore as compared to Rs 812.44 crore during year ended March 2014.

In the beginning of the last week, the strong jobs markets data provided huge support to US markets. Also news that the Chinese central bank stepped down in order to support the economy was positive news for the markets around the globe. But the euro zone area finance ministers meet to discuss a deal for Greece took away some of the attention of the customers. Concerns over the bond sell off in Europe are coming down as expectations of deflations are lower and people are pricing higher inflation as of now.

In the week, for the US markets the major triggers are housing starts, initial and continuing jobless claims, Markit manufacturing PMI, existing home sales, inflation and core inflation. Sectors like passenger car segment, public and private sector banks may take the lead in the next week

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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