High on joy

During the last week, Nifty crossed the 6100 mark and closed up around 1.1 per cent. CPI-based inflation data declined sharply on the back of drop in the prices of vegetables, edible oil and protein-based items. The inflation data stood at 9.39 per cent in April as compared to 10.39 per cent in the month of March and 10.91 per cent in the month of February 2013.

A vendor displays his wares near ¬†Beijing, as official figures showed that China’s economy expanded at its slowest pace in 13 years. Pic/AFP

The retail inflation in the urban area declined to 9.73 per cent in April from a level of 10.38 per cent in March. Also, the rural area CPI data fell to 9.16 per cent in the month under review from 10.33 per cent in the previous month. The inflation in vegetables eased to 5.43 per cent from 12.16 per cent in March. But the highest inflation was seen in cereals, which stood at 16.65 per cent in April.

Zydus Wellness came out with its fourth quarter earnings. The net profit showed a 59 per cent increase on yearly basis. The consolidated net profit stood at Rs 37 crore on the quarter ended March 31, 2013 as compared to Rs 23.5 crore in the year ago quarter. The consolidated sales also rose 26 per cent to Rs 108 crore from R85.8 crore in the same period last year. The company also announced an interim dividend of Rs 6 per share of Rs 10 each.

Pharma company Arvind Remedies released very strong earnings for the quarter ended March 31, 2013 which rose 2657.78 per cent. The net profit stood at Rs 12.41 crore in the quarter under review as compared to Rs 0.45 crore in the same period last year. The net sales also rose 65 per cent to Rs 173.98 crore as against Rs 105.6 crore in a year ago period. The full profit stood at Rs 40.62 crore in the year ended March 2013 against Rs 19.41 crore during the year ended March 2012, registering a growth of 109.27 per cent. Sales also rose 51.93 per cent to Rs 663.26 crore as against Rs 436.57 crore in the previous year.

The government notified the implementation of a new drug price policy, which may lead to reduction in the prices of many life saving drugs by around 20 per cent. The National Pharmaceutical Pricing Policy, which caps prices of 652 formulations under 27 therapeutic areas, was cleared by the Union Ministry in November last year and the new price will be effective from July 01, 2013. The new drug policy uses a market-based pricing method that is the simple average method for determining ceiling price of all the drugs under a particular therapeutic area with over 1 per cent market share.

Meanwhile, the US markets were seen setting new highs each day as investors turned to buyers. The US retail sales rose 0.1 per cent in April. But the Federal Reserve officials’ call to reduce the purchases of bonds resulted in the markets trading flat. The Chinese industrial production rose to 9.3 per cent in April which was below the expectations of 9.5 per cent increase, following an 8.9 per cent rise in the previous month.

This week, the major global economic data to watch out for includes US’ Existing Home Sales, Initial Jobless Claims and FOMC minutes. Also the Bank of Japan’s monetary policy statement and Interest rate decision will be in focus. Companies such as Adani Ent., Tata Steel, BHEL, IFCI, Britannia, JK Paper, Bharat Forge, Zee Entertainment, Voltas, MOIL, FDC, Tech Mahindra and Dish TV may come out with their earnings. Nifty is likely to reach 6230 and 6250 levels in the days to come. Nifty has strong support at 6128 and 6081.

Crude is also likely to test USD 95.05 and USD 93.95 in the near term. Weak rupee may support these two commodities to a certain extent. Investors who are likely to trade in the option market can buy 6200 call options and put options together, or can buy 6200 put option and sell 6000 put options together.

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).

Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is for educational and information purposes only and under no circumstances should be used for actual trading or making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment. 

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