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Going strong

Despite weak global markets, Indian markets rallied and Nifty closed up around 4.7 per cent on the weekly basis. The Mid-cap and small cap sectors were up around 2.8 per cent and 1.8 per cent respectively.

The large cap gainers were IndusInd bank and SBI which closed up around 13 per cent and 10.5 per cent respectively. HCL Tech and TCS were losers, down around 5.4 per cent and 4 per cent respectively. Nifty has immediate target at 5800 and 5858; if Nifty moves above these two levels, further aggressive buying can be expected. Support for the Nifty lies at 5621 and 5658.

Inflation data
WPI based inflation data for March 2013 was released. The data stood at 5.96 per cent against a three year low of 4.95 per cent in December 2009. The data stood at 6.84 per cent in February and 7.69 per cent in March 2012. The Food inflation declined to 8.73 per cent in March as compared to 11.38 per cent in February on the back of vegetable price decline.

Corporate earnings
The main large cap company which declared its earnings was IT major HCL Tech. The earnings beat street estimates. The net profit saw a 73 per cent rise in quarterly basis driven by the growth in infrastructure and enterprise application services. The net profit stood at Rs 1039.9 crore for the quarter ended March 31, 2013 as compared to Rs 602.50 crore in a year ago period. The income rose 23.2 per cent to Rs 6424 crore in the third quarter from Rs 5215.6 crore in the same quarter last year.

Realty firm Purvankara Projects also revealed its earnings, reporting a 71 per cent increase in the consolidated net profit to Rs 79 crore for the fourth quarter ended March as against Rs 46 crore during the same quarter last year. The consolidated revenue rose 79 per cent to Rs 416 crore for the quarter under review compared to Rs 232 crore in the corresponding period last year.

Exports fall
India’s exports for the period 2012-13 declined 1.76 per cent to USD 300.6 billion against USD 307 billion during the period 2011-12 on account of global slowdown and negative growth in the engineering and textile sectors. This pushed the trade deficit during the current fiscal to USD 190.91 billion from USD 183.4 billion in the previous year. For boosting exports, the government announced a set of measures including extension of the Export Promotion Capital Goods (EPCG) scheme to all sectors and sops for special economic zones.

Global front
In Asia, the markets were down, tracking the weaker than expected Chinese GDP data. The data expanded by 7.7 per cent on a year on year basis in the three months to March, down from 7.9 per cent in the quarter. Also the Chinese industrial growth grew 8.9 per cent in March below the level of 9.9 per cent in February. The US markets were up on the better than expected earnings and strong economic data in the beginning of the week. But by the end of the week, markets changed to the negative terrain on the back of weak commodity space.

Up ahead
For the Indian markets, the major trigger will be the corporate earnings. Major firms who will reveal their earnings this week are ICICI Bank, HDFC Bank, Maruti, Hero Moto Corp, LIC Housing and the mid-cap stocks IDEA and Castrol. Also, Thinksoft and M&M Fin may come out with their earnings.Crude is weak below USD 91.50 and it may find support at USD 85.50 or 84.05 in the short term.

Investors who want to trade in the Nifty futures market, can buy one lot 5800 Call option and can sell 2 lots of 6000 call options. Most of the Auto stocks are also looking positive; these stocks were up on expectation of a possible rate cut. Mahindra and Mahindra, and Tata Motors are looking very positive on the charts.

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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