Climbing steadily

Highs have been the order of the day at Dalal Street for sometime now and the same was true even in the last week

The Indian markets were seen hitting new highs on account of buying by both retail and foreign buyers. The Nifty on Friday closed at 8337, around one point down. The outlook for Nifty remains positive, and it is all set to test 8565 in the near term. Nifty has support at 8300 and the next major support is at 8200 levels.

Profit jump
On the back of container cargo volumes and steady pick up in bulk cargo volumes, Gujarat Pipavav Port Ltd reported a 103 per cent jump in the net profit in the September quarter. Net profit for the period under consideration increased to Rs 89.50 crore from Rs 44.10 crore a year ago and the revenue increased 35 per cent to Rs 170.10 crore.

The margin on earnings before interest taxes, depreciation and amortisation (EBITDA) rose to 56.4 per cent from 48.6 per cent, a year ago. Essel Propack reported a 34.05 per cent increase in its consolidated net profit for the second quarter that ended September 2014.

The net profit of the company stood at Rs 38.46 crore as compared to Rs 28.69 crore in the corresponding period last year. Total consolidated income from operations during the same quarter also increased from 13.13 per cent to Rs 595.15 crore as compared to Rs 526.07 crore in the last year.

For the first half of the 2014-15 fiscal, the consolidated net profit increased 24.24 per cent to Rs 64.83 crore as compared to Rs 52.18 crore in the corresponding period last year. The total income from operations in the first half increased 13.69 per cent to Rs 1143.84 crore from Rs 1006.08 crore in the same period last year.

More jobs
The country’s factory activity expanded in October slightly as stronger demand led manufacturers to add jobs. The HSBC manufacturing Purchasing Mangers’ Index rose to 51.6 in October. The index level above 50 shows expansion while below level shows contraction.

In September, the output of core industries stood at an eight month low of 1.9 per cent down from 5.8 per cent in August. The data showed that infrastructure industries had slowed down the most since January when production grew 1.6 per cent. Infrastructure production grew 4 per cent in the first half of 2014-15, lower than 5 per cent in the same period, last year.

Production of crude oil, natural gas, refineries and fertilisers contracted in September as output of coal, cement, steel and electricity rose but growth remained lower than the previous month. Electricity generation grew 3.8 per cent in September but stood less than 12.6 per cent in August and the cement production grew 3.2 per cent against 10.3 per cent in the previous month.

For the US markets in the coming week, retail sales, Reuters Michigan Consumer Sentiment Preliminary, Business Inventories, Initial and continuing jobless claims are important data. Inflation rate, PPI, Industrial production and retail sales are important ones on the Chinese watch out list.

Future expectations
For the coming week, major corporate earnings are Adani ports, Adani power, Apollo tyres, Archies, Aarti Drugs, BEML, Britannia, CARE, CESC, Cox & Kings, Educomp, GE Shipping, PTC India, SBIN, Tata Motors, TVS Motors, Arvind remedies, Bajaj Electricals, Bombay Dyeing, Hathway, Hindalco, NCC, SAIL, SSWL, Tata power, Voltas, Amaraja Batteries, MOIL, Prestige Estates, Tata chemicals, Timken, Sunil Hi-tech and Omax Autos.

Also, on the economic data front, Balance of Trade, Inflation rate, manufacturing production and Industrial production are important ones. Counters like Dr. Reddy, Sun Pharma, Lupin Lab and Aurobindo Pharma are positive and may test new 52 week highs. ICICI Bank, Axis Bank, Kotak Bank and SBI are also positive. HUL and Infosys can also give strong support to the market.

Investors can buy these stocks in the medium term perspective. Crude has support at $ 75 per barrel; movements below this could trigger further sell-off. Crude has resistance at $ 78 and $ 82 per barrel.

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 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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