Intense pressure

Multiple factors caused a lot of strain on the Nifty and Sensex

The markets in the last week remained under pressure due to selling by Foreign Institutional Investors. Nifty crossed well below its 200 DMA and this added fire and pressure. On Friday, the markets opened and remained in the positive zone as of selling witnessed in almost all counters and of the strong global peers.

WINNER TAKES ALL: David Cameron (r) and his wife Samantha are applauded by staff upon entering 10 Downing Street in London after visiting Queen Elizabeth II, a day after the British general election win for the PM’s party
WINNER TAKES ALL: David Cameron (r) and his wife Samantha are applauded by staff upon entering 10 Downing Street in London after visiting Queen Elizabeth II, a day after the British general election win for the PM’s party

Nifty has support at 8121 and 8000; a move below these two levels can cause further pressure on the market. Resistance for the Nifty will be at 8276 and 8400. FMCG sector, and banking; especially the private sector banking stocks will lead the rally in this week.

Credit rating
Global rating agencies, Moody’s and Fitch said that India’s credit rating is unlikely to affect the back of sales, of shares and bonds by the foreign investors. Fitch has affirmed its “BBB-minus” and “stable” outlook on India, whereas Moody’s revised the country’s “Baa3” sovereign rating outlook to “positive” from “stable” last month. Moody’s said that the uncertainty about the tax policy was “negative” for investor sentiment where on the other side Fitch said that the long term impact of foreign fund outflows was “not yet clear”.

Tube Investments of India has posted a two fold rise in its consolidated net profit on the back operational margins. The last quarter of 2014-15, the net profit of the company stood at Rs 147.52 crore as compared to a consolidated net profit of R 69.18 crore during a year ago period. The consolidated total income from operations for the period under review rose to R 2367.35 crore from R 2282.56 crore in the corresponding period last year. The board has recommended a final dividend of R 0.50 per equity of R 2 each for the year to March 31, 2015.

riveni Turbines announced the earnings; net profit of the company climbed by 52.5 per cent to Rs 29.4 crore for the quarter that ended March 31, 2015 as against Rs 19.3 crore in the same quarter last year. The total income rose by 48.5 per cent to Rs 196 crore in the same period from Rs 132 crore in the same quarter last year. For the financial year, the net profit stood at Rs 91.08 crore as compared to Rs 68.45 crore whereas the net sales from the operations stood at Rs 625.52 crore showed a jump of 23 per cent. The company has also recommended a final dividend of 60 per cent (R 0.60/equity share of R 1 each).

HSBC survey
According to the HSBC survey, the country’s manufacturing sector output eased in April as of slower pace of orders. The HSBC India Purchasing Managers’ Index (PMI) stood at 51.3 in April from 52.1 in March. The level however, stood above 50 mark, where a figure 50 indicates that the sector is expanding while the below shows contraction. An index of new business fell to 51.9 in April from 53.2 in last month.

Positive economic data along with strong corporate earnings were leading the US markets. But the crude oil above the $ 60 per barred, which fuelled concerns of rising inflation and interest rates. Greece's debt payment made the markets to erase some of its gains. Also, most of the European markets were trading in green on Friday after an initial report showed that David Cameron’s Conservative Party may govern the UK for another term.

Industrial production and retail sales are important triggers in the Chinese markets in this week. Current account, Industrial production, GDP and consumer confidence are the events on the Japanese front. In the Euro zone, industrial production and GDP are the important ones. Retail sales, core PPI, housing starts, manufacturing production, industrial production, consumer sentiment, initial and continuing jobless are the triggers for the US markets.

In this week, for the Indian markets, Industrial Production, inflation data, manufacturing production and Balance of trade are major data. Along with earnings of companies like Havells, Eveready, DEN, Bank of Baroda, Care rating, TV Today, UCO Bank, Dr Reddy, Deepak Nitrate, NCC, Jubilant Food, Prism cement, HDIL, Cox & Kings, Dena Bank, Orient Hotels, JK Paper and Tata Coffee will be in focus.

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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