On the Ascent
Better than expected earnings and positive global cues give some reason for cheer
The markets closed higher on better than expected INFY earnings and positive global cues. Nifty closed up around 2.4 per cent on a weekly basis. Nifty has resistance at 6185 and 6300 and support emerging is at 5965 and 5925.
The major trigger for last week was earnings of the IT major, Infosys, which came out with results on the last day of the trading week which caused the stock to jump around 15 per cent. The June quarter numbers beat the street estimates on the back of new contract wins and foreign exchange gains. Net profit of the company fell 0.8 per cent to Rs 2,370 crore but remained above the estimates. The net profit for the March quarter was at Rs 2,394 crore and that of the June quarter 2012 was at Rs 2,289 crore. Total revenues grew 7.8 per cent on a quarterly basis to Rs 11,267 crore in the quarter under review as compared to Rs 10,454 crore in the previous quarter. The dollar revenue was seen up around 2.7 per cent, which stood at $ 1991 million against $ 1956 million in the last quarter.
The regulators of the country joined hands in order to save the Rupee from further bleeding. RBI, last week, barred authorised banks from doing proprietary account trades in the currency futures and options segment while SEBI doubled the margin requirement for traders. SEBI said that the gross position of clients cannot exceed 6 per cent of the total open interest or $10 million, whichever was lower. For non-bank trading members, the limit has been fixed at 15 per cent, or $50 million, whichever is lower. The margin requirement was raised to 8 per cent from 4 per cent. RBI said that the announcement would be effective immediately while the SEBI’s modification was effective from July 11, 2013.
The government hiked import duty on sugar to 15 from 10 per cent. The import of sugar was putting pressure on domestic prices and the recent move’s aim is to curb sugar import. However it is likely to raise the sugar prices across the country.
The key economic data which indicates the health of the economy may now onwards release after the market hours. According to the Ministry of Statistics and Programme Implementation website, the data like Gross domestic product, Consumer Price Index Inflation and IIP data will be released at 5.30 pm in the evening of the day inorder to save the markets from drastic movements in the either direction on the announcement day.
On the global front, markets were trading higher on the positive non-farm payroll data. Non-farm payrolls growth stood at 195,000 against estimates of 165,000. But concerns remained about China because of weak trade data and Italy’s credit downgrade by S&P. Exports fell 3.1 per cent in June from a year earlier and imports also fell 0.7 per cent annually which showed a weak demand for Chinese goods and also a subdued domestic demand. The FED Chairman B Bernanke’s comment of maintaining its stimulus plan again cheered markets. It made US markets trade in record highs. Positive US earnings were supportive.
This week, watch out for US retail sales and building permits data. Inflation and Business inventories data will be watched. Euro Zone current account, inflation and core inflation data will be in focus. In India, inflation data will be the major trigger to watch out for. Earnings this week include TTK Prestig, V-Guard, Axis Bank, Kotak Bank, Mind Tree, Bajaj Finserv, Bajaj Auto, Century Textiles and Asian Paint. Counters like Reliance Industries, HDFC, HDFC Bank, Tata Motors, Lupin, Sun Pharma, Dr. Reddy, ICICI Bank and Axis Bank are either in the buying zone or they have already breached key resistances and can give decent returns to the investors. It is advisable to buy call options of these stocks.
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 email@example.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.