Foreign investors wary of long positions in capital markets. Caution is the watchword, when it comes to the overall global picture
In the last week, markets mainly remained in a flat range tracking global cues. But buying in selected counters and short covering ahead of December F&O expiry helped markets to trade in a range. Nifty may face immediate resistance at 7980 and 8010 and support lies at 7901 and 7836.
Weak global cues kept foreign investors away from taking more long positions in capital markets. As per data from depositories, for the December 1-23 period, the net outflow in the equities stood at Rs 3949 crore while the same for debt markets was at Rs 25888 crore making a total of Rs 6537 crore.
Last month, the foreign portfolio investors withdrew Rs 10826 crore from the capital markets (equity and debt) whereas in October they infused Rs 22350 crore. In the year, overseas investors made a net investment of Rs 16674 crore in equities and R 48756 crore in the debt markets.
In this new year, the derivative segment of NSE may see additions of four stocks. The companies include Jet Airways, Godrej Consumer Products, Container Corporation and Torrent Pharma may be introduced to the F&O segment. In the derivatives segment, the stock market’s wide position limit, that is the total number of contracts a trader may be active at one time for a given underlying should be Rs 300 crore among other criteria.
Along with this, minimum order requirement for a stock to be eligible for introduction in the derivative segment should be Rs 10 lakh. Earlier in November, stocks like Wockhardt, Amtek Auto, Bosch, Indiabulls Housing Finance, Engineers India and Strides Arcolab were introduced to the segment.
For the year, the FIIs remained mostly sellers but they were seen as buyers in a number of counters. According to the latest share holding pattern in S&P 500 index, they sold their stake in around 77 counters while remained buyers in 45 stocks. Some of the counters raised their stakes over the past one year like Lupin, Bharti Airtel, BPCL, JSW Energy, SCI, Welspun India, EIH and Prism cements. The stocks which were sold over the last four quarters include TCS, HDFC Bank, NTPC, Tata motors, M&M, ITC, Tata Steel, PNB, Cairn India, Tata Motors DVR, Cipla and Tech Mahindra.
The F&O rollover for the last month of the year showed a better figure. For December 2015, the rollover was at 73 per cent as compared to 66 per cent in the previous month. The IT and Bank Nifty showed a rollover of 71 per cent and 68 per cent respectively. The largest rollover was seen in stocks like Tata global (95 per cent), Karnataka bank (94 per cent), JSW Steel (94 per cent), Jubilant Food (93 per cent) and Jain irrigation (92 per cent). The least rollover was in Oil India (21 per cent), Rural Electrification (54 per cent) and BPCL (56 per cent).
Due to decline in steel production, India’s core sector contracted 1.3 per cent in November. The fall of core sector which consists of coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity has a weightage of 38 per cent in the IIP data may have a effect in the latter. The data stood at 8.5 per cent growth in the same period last year and was at 3.2 per cent in October.
Steel Production declined 8.4 per cent whereas the sectors like cement (-1.8 per cent), crude oil (-3.3 per cent) and natural gas (-3.9 per cent) also showed lower output. The fertilisers sector rose 13.5 per cent whereas coal output rose 3.5 per cent. The global markets were mainly in the weak zone as dragged by energy stocks. No major news on the global front.
In the US markets, Markit manufacturing PMI, total vehicle sales, balance of trade, non manufacturing PMI, factory orders, unemployment rate, non farm payrolls, initial and continuing jobless claims are the triggers.
Manufacturing PMI, services PMI, inflation rate, core inflation, retail sales, business confidence, industrial sentiment and consumer confidence are the data in Euro zone. In Japanese markets, Nikkei manufacturing PMI and services PMI are major ones. Manufacturing PMI and balance of trade are data on the Chinese front.
Banking stocks will give minor support for the markets at the beginning of the week, and auto stocks will also lend support to the market.
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