In reverse gear

All eyes on winter session of Parliament

The week saw overall negative movements in domestic markets, tracking mainly global cues. But the oversold situation in both the overseas and national front, made the markets reverse direction to some extent.

Nifty is facing resistance at 7985 (50 DMA), and 8163 (100 DMA). Support for the Nifty lies at 7765 and 7632. Investors can buy 7850 Nifty put options along with 7950 call options ahead of expiry.

On the economic front, India's wholesale price inflation came out which fell for a 12th straight month on the back of softer commodity prices. The WPI inflation for October stood at (-) 3.81 per cent from a year ago period. The data stood at (-) 4.54 per cent in the previous month. The wholesale inflation in food articles rose to 2.44 per cent in October from 0.69 per cent in September.

In a move to support the economy, the government approved a production subsidy to sugarcane growers. The cabinet decided that the farmers will be paid R 4.50 per quintal of cane crushed by mills, which will be directly paid to the farmers on behalf of the mills, and, will be adjusted against the cane price payable to the farmers towards the Fair and Remunerative Price (FRP). The FRP is the government mandated minimum to be paid by mills for procuring cane.  The production subsidy is a performance incentive and will be provided to those mills which export at least 80 per cent of the quota prescribed to them.

The US-India business council (USIBC) said that the liberalization of India's FDI policy will further improve ease of doing business and boost investments in the country.  The report suggested that the putting more FDI proposals through the automatic route is a signal that the government is pushing up investments to the country. If this continues, India will surpass  $ 41 billion in FDI from the US companies.

Winter eye
A major trigger for Indian markets will be the winter session of the Parliament. The session will begin on November 26 and end on December 23, 2015. Many bills are pending for approval. Some of these are the GST bill, Land bill, the Real Estate Regulation and Development bill and negotiable instruments arbitration bill. There are a total of eight pending bills in the Lok Sabha and 11 in the Rajya Sabha. The government has started its disinvestment programme by approving the stake sale in Coal India. The cabinet in the week approved to sell 10 per cent equity stake in the company where the government currently owns 79.65 per cent equity shareholding. The foreign institutional investors have a stake of 9.04 per cent, while domestic institutional investors have 8.44 per cent holding as per September 2015. In January 2015, the government sold 10 per cent stake in the company besides of 10 per cent stake selling in IPO. The cabinet also approved an initial public offering of Cochin Shipyard.

World view
On the global front, the Bank of Japan in its monetary policy meet maintained its current pace of stimulus. Also, the European central bank in its last month’s policy minutes expressed concerns that their stimulus measures were not enough to support the economy and were prompting them to signal for more monetary plans. The minutes from the US central bank was also in focus, where its left its interest rates near zero and hinted that the raise in its interest rate will be done in gradual process. On the US front, existing home sales, GDP, durable goods orders, market composite PMI, consumer confidence, new home sales, initial and jobless claims are the data. Market manufacturing PMI, composite PMI, services PMI, Industrial sentiment, economic sentiment, consumer confidence and business confidence are the data in the Euro zone area. For Indian markets, the November month F&O expiry along with winter session of the parliament will be a major trigger.  Crude outlook is also weak below $ 43.75 per barrel and it is likely to test $ 39.75 in the short term.

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 or trading decisions, based
on information published here. Any reader taking decisions based on any information published here does so entirely at his or her risk.

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