On top again

The boost by profit bookings saw great positives for the Nifty and Sensex

In the last week, the markets tested a new high on the back of bargain buying by both retail and foreign investors. But profit booking was also seen. Both Sensex and Nifty closed up around 1.4 per cent.

Nifty levels
Nifty has resistance at 8636 and 8676, and we can expect profit booking at these levels, but after minor consolidation we can expect the continued surge up. This can take Nifty higher up. Nifty has support at 8500 and 8436 are the key support levels.

According to a Finance Ministry report, the public debt of the central government increased to Rs 4960472.30 crore as at the end of September 2014 from Rs 4827485.60 crore at the end of June 2014.

The report also revealed that the internal debt constituted 91.7 per cent of the public debt at the end of the July to September quarter, as compared to 91.5 per cent at the end of the the previous quarter and the marketable securities accounted for 83.9 per cent of the total public debt as compared to 83.5 per cent at the end of June 2014.

The report showed that the outstanding internal debt of the government stood at Rs 4549351.3 crore and the external debt were about Rs 4.11 lakh crore. The funds rose by the listed companies through the preferential allotment of shares slipped by 38.5 per cent to Rs 21422 crore during the first seven months of 2014-15 as comparing to the same period last year. According to SEBI’s data last year at the same time, the companies mobilised Rs 34851 crore through the preferential allotment.

On a monthly basis, the funds garnered for September stood at Rs 2821 crore and in October the figures were at Rs 2605 crore. For the fiscal, the highest amount was raised in May (Rs 5142 crore) followed by Rs 3271 crore in June.

Performance upgrade
In the week gone by, the November F&O expiry Nifty showed a better performance. The Nifty rollover stood at 73 per cent against 60 per cent in the previous month.

The Bank Nifty and IT rollover stood at 61 per cent and 56 per cent, respectively. The largest rollover were in the stocks like Glenmark (95 per cent), Tata global (95 per cent) and HindZinc (95 per cent) and the lowest rollover were seen in Bank of Baroda (59 per cent), Heromoto Corp (64 per cent) and Jindal Steel (64 per cent).

NSE introduced six stocks in F&O segment Engineers India, Strides Arcolab, Wockhardt, Amtek Auto, Bosch and Indiabulls Housing Finance. To bring more financial inclusion, RBI announced final guidelines for setting up payment and small banks. The central bank allowed corporate houses, including telecom players and retail chains to set up payment banks and also the option of making joint ventures with commercial banks.

The guidelines for the promoter structure was also simplified; listing is mandatory within three years of reaching a net worth of Rs 500 crore or the requirement to dilute promoter stake to 40 per cent within three years. Besides, the payment banks should have a leverage ratio of at least 3 per cent and there are not allowed to lend and must have a cap of R 1 lakh on deposits which can be invested in government securities.

Foreign markets
On the back of positive economic data, the US markets rose to new record highs in the week. On the economic front, the consumer confidence data rose to a near 7.5 year high and consumer spending rose modestly in October. The Asian markets were mixed through the week. Also, the news that ECB may step forward to help the Euro zone economy impacted the European markets.

In the US markets, the data to watch out for includes Market manufacturing PMI final, construction spending, total vehicle sales, Services PMI final, factory order, initial and continuing jobless claims. For Japanese markets, Manufacturing PMI final and Services PMI are the important triggers.

For the Indian markets, HSBC Manufacturing PMI and Services PMI will be the major triggers. Also, the RBI’s policy meet will be awaited. If RBI reduces the lending rate, then one should buy Auto stocks, which are showing bullish trends during the last week.

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).

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