Oops, they're slipping

Weak was the word as global cues made one go whew

The markets remained weak last week, making the Nifty slip below the 7000-mark on Thursday. Global conditions, along with no major triggers on the domestic front, were the reasons for the slip. The Nifty has resistance at 7090 and 7210. Above these two levels, the index may face resistance at 7471, but chances of a move above 7210 are very unlikely. Support for the market is seen at 6852 and 6580. On the back of fall in crude oil prices and on concerns of a global slowdown, overseas investors mainly remained sellers in the current month. According to data available from depositories, for February 1-18, foreign portfolio investors (FPIs) sold Rs 4,503 crore in equities and they were sellers of R 96 crore in the debt market, which caused a net outflow of Rs 4,599 crore ($673 million). In January 2016, they were sellers in equities worth Rs 13,381 crore, but they infused Rs 3,274 crore in debt. In 2015, FPIs had bought in a net Rs 17,806 crore in equities and Rs 45,856 crore in bond markets.

The Economic Survey 2016 which was tabled in Parliament in New Delhi during the Budget session. Pic/PTI
The Economic Survey 2016 which was tabled in Parliament in New Delhi during the Budget session. Pic/PTI

Sale mode
The Government sold 5 per cent of the total paid up equity share capital or 412.2 million equity shares of the country’s largest power producer NTPC last week, through the offer for sale (OFS) route. The Government had 74.96 per cent stake in the company and the floor price was fixed at Rs 122 a share, which was at a discount of 3.82 per cent of the closing price on Monday. After selling, the Government will hold a majority stake of 69.96 per cent in the company. During the current financial year, the Govt. has sold stakes in IOC, PFC, REC Ltd, Engineers India and Dredging Corporation.

The Nifty may see major changes from April 1. Three stocks are to be removed and four of them are to be included. The ones to be excluded from the index are PNB, Vedanta and Cairn India. Meanwhile, Aurobindo Pharma, Bharti Infratel, Eicher Motors and Tata motors DVR will take in their place making the number of stocks in the index to 51. However, the total number of companies will continue to be 50, as the equity shares with differential voting rights are eligible to be included in the indices as an additional security subject to the fulfillment of eligibility criteria.

Banking allocation
Mutual funds lowered allocation to banking stocks by R 6,662 crore to about R 78,600 crore in January on the back of rising bad loans. According to data available from the Securities and Exchange Board of India (SEBI), the deployment of equity funds in bank stocks stood at R 78,644 crore compared to R 85,306 crore in the previous month.

After banks, IT was the next preferred sector with an investment of R 43,115 crore followed by pharma (R 33,785 crore) and auto (R 26,653 crore).

According to a study, the manufacturing activity in the country has entered expansion territory. The yearly SBI composite Index for February is at 51.3 compared to 47.3 in the previous month. The monthly index declined to 49.5 in February from 52.4 in January 2016. The index above 50 shows growth over previous respective period and less than 50 suggest a contraction over a respective period.

Mixed signals
Globally, the markets were mixed. The mixed data along with buying interest in selected counters gave support to the markets. On the economic front, the US flash services PMI came out which showed that the data fell to 49.2 in February from 53.2 in January. Also, the US manufacturing data was better. Pending home sales, markit manufacturing PMI final, total vehicle sales, non manufacturing PMI, balance of trade, composite PMI, factory orders, services PMI, unemployment rate, initial jobless claims and non-farm payroll date are the data in focus.

Inflation, core inflation, manufacturing PMI, unemployment rate, markit services PMI, composite PMI and retail sales are the triggers in the Euro zone area. For Japanese markets Industrial production, retail sales, construction orders, unemployment rate, Nikkei manufacturing PMI and services PMI are the data.

Manufacturing and services PMI will the watch out data on the Chinese front. For Indian markets, Nikkei manufacturing PMI, services PMI and infrastructure output will be in focus. Investors can buy Nifty 6900 two lots of put options and one lot of 7000 call option together.

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