Coming week is crucial
Despite weak global cues, the markets this week ended with a positive note on weekly basis. On weekly basis Nifty and Sensex closed up around 1.4 per cent and 1 per cent respectively. The bank Nifty also ended up around 3 per cent.
Indian markets are holding well above its crucial support at 5838 (200 Day simple moving average). If there is a heavy sell-off, then Nifty has to breach two technical levels, i.e. one at 5838 and other one at 5700. On the other hand a move above 5938 can lift the Nifty towards 6031 plus in the short term. On Friday speculators have taken huge short positions at around 5938.
Ranbaxy and Bajaj Auto were gainers in the stock segment, closed up around 8 per cent and 6 per cent respectively. NTPC and ONGC were the losers which closed down around 3.5 per cent and 3.4 per cent respectively.
The country's services data came out in the week fell to its fastest pace in more four years in the month September. The HSBC Services Purchasing Managers’ Index stood at 44.6 against 47.6 level in the month of August, which was its weakest level since April 2009. The data stood well below the 50 mark which distinguish the growth and contraction. The PMI’s new business index fell to 45 in the month of September from 46.6 in the previous month which was its weakest reading since February 2009.
The Reserve Bank of India announced the country’s current account deficit which rose to $21.8 billion or 4.9 per cent of GDP for the period of April - June 2013 due to a rise in imports and shrinking exports. But the figures were still slightly above the market estimates and are further expecting to narrow in the coming quarters on the back of gold import curbs. The data was at $ 16.9 billion or 4 per cent of GDP for the period of April -June 2012-13. The balance of payments for the June quarter stood at $ 346 million against a surplus of $ 2.68 billion in the March quarter.
SEBI is likely to recommend merging the foreign investors -- FIIS, Sub-Account and Qualified Foreign investors into a single and new investor class called Foreign Portfolio Investors (FPIs). FPI will be divided into three categories. Category I includes Government and Government-related entities, such as foreign central banks, sovereign wealth funds and multilateral organizations. Asset management companies, broad-based funds such as mutual funds, investment trusts, insurance and reinsurance companies, university funds, pension funds and university-related endowments already registered with SEBI come under Category II. Category III would consist of those not falling under the above two.
In the global front, the US markets slipped on the back of concerns regarding the US government shutdown. But the Asian and the European markets recovered from their lows as the investors assessed the impact of a partial shutdown of the US government and of the positive Chinese data. China's non-manufacturing PMI data rose to 55.4 per cent in September as compared to 53.9 per cent in the month of August which shows an expansion.
In the Chinese markets, the major data to watch next week includes inflation and balance of trade data. Also the GDP growth rate and Industrial production data will be in focus. FOMC minutes, continuing and initial jobless claims are the major data in US markets.
For the Indian markets the coming week looks to be crucial as it is the start of the earnings season. The major one that is announcing its quarterly numbers in the week is Infosys on October 11. Also Gruh Finance and TTK Prestige are the other ones to announce the earnings in the same week.
Stocks like Thermax, Glenmark Pharma, CESC, Ramco cements and MindTree are showing strong buy and can buy for the short term.
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).