Negative outlook

The outcome of the US elections failed to give markets globally a much-needed push, even as the Indian government introduced new policies

Negative outlook

In the past week, the markets remained in a negative terrain and also closed on a negative note. Nifty and Sensex ended with a weekly loss of around 0.19 per cent and 0.38 per cent respectively. In the Midcap session, IDBI and ALBK remained gainers whereas India Cements and CESC were top losers. The major resistance for the Nifty lies at 5,765 level. In the beginning of the next week, the market may remain subdued and after the Muhurat trading, markets may tank towards 5,600 levels.

New rules
The cabinet has agreed to impose a one-time spectrum charge on all mobile phone companies. The telecom ministry had planned two separate auctions for airwaves used by GSM- and CDMA-based mobile phone companies. Those companies that have 2G spectrum holdings beyond 4.4 megahertz (MHz) have to pay an auction-determined price. For CDMA carriers the limit is 2.5 MHz, but the one-time spectrum fee for beyond that has been postponed as there are no bidders for CDMA spectrum.

To speed up clearances in infrastructure projects, the government has decided to create the National Investment Board (NIB), a body which will be headed by the prime Minister. Once the body is formed, it will monitor big projects where the investment is more than R1,000 crore in roads, mining, power, petroleum, natural gas, ports and railways.

Major gainers
Tech Mahindra came out with its quarterly numbers which stood at R160.13 crore for the quarter ended September 30, 2012, showing a jump of 46.57 per cent from R109.25 crore on a year-on-year basis. The company’s revenue also increased 18.98 per cent to R1,507.87 crore from R1,267.27 crore in a year ago period. Auto components maker Motherson Sumi’s net profit showed a jump of 467 per cent on a year-on-year basis. The net profit for the quarter ended September 30, 2012 stood at R138 crore as against R24 crore in the same period last year. The consolidated net income rose by 153 per cent to R5,800 crore from R2,290 crore in the corresponding period last year.

Plywood maker Greenply reported a three-fold jump in the net profit for the quarter ended September 30, 2012 where the net profit rose to R31.85 crore on a yearly basis and the net income rose by 25.19 per cent to R517.80 crore.

Global cues
On the global front, several nations were waiting for the outcome of the US presidential elections. President Barack Obama ran for a second term against Republican Party candidate Mitt Romney. Obama won, but US markets and other markets across the world remained at a low point throughout the week due to concerns of the fiscal cliff of the country and of the European economy.

Chinese HSBC Services PMI declined to 53.5 in October from 54.3 in the previous month. In Greece, Prime Minister Antonis Samaras mustered the support of enough lawmakers to secure approval of austerity measures needed to unlock bailout funds.

Crude is slightly firm after the major sell-off in the last week; it has support at USD84.05 and it is targeting USD87.35 in the near term.

In the stocks segment, FK Oncology and Oriental Bank of Commerce can be bought for short term. In the stock option segment, investors can buy ICICI Bank 1040 put option, and can buy 1600 put option of L&T. Buying Cipla 400 call option can also give decent returns to investors in the short term.

This week, Indian markets may remain closed for two days, November 12 and 13 on account of Diwali, but there may be a one-and-half hours trading on Tuesday. The main earnings to watch out for include DLF, JP Associate, HMT and Rajesh Exports. Other major data to be announced this week are the IIP and inflation data.

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).

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.u00a0

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