Rupee likely to look up

The Nifty this week closed up around 0.3 per cent on weekly basis. The major sectoral losers were realty and consumer durables, which closed down around 4 per cent and 2.2 per cent respectively. The gainer on the other side was the IT sector which closed up around 6.5 per cent. Bank Nifty closed down around 4.2 per cent on weekly basis.

Nifty has resistance at 5600 to 5800 levels in the near term and immediate supports at 5350 and 5118.

Market regulator SEBI this week came out with new norms for preferential issues. According to the new norms, it is made mandatory that the payment for preferential shares will need to be made only to the own bank accounts of the buyers and the allotments through the demat accounts. Also the identity of the ultimate beneficial owner of these shares will have to be disclosed. SEBI in its notification said that the issuer is required to submit a certificate of statutory auditor to the stock exchange where the equity shares are listed. Besides, the regulator said the specified securities allotted on preferential basis would not be transferred till trading approval is granted for such securities by all the stock exchanges where the equity shares of the issuer are listed.

Rollover of Nifty for the contract ended August 2013 stood at 47 per cent as compared to 59 per cent in the previous month. The highest rollover was witness in JSW Steel (94 per cent), McDowell-N (90 per cent), Titan (90 per cent), Tata MotoDVR (90 per cent) and Tata Global (89 per cent). Uniphos (41 per cent), Powergrid (43 per cent), ITC (45 per cent), Reliance (46 per cent) and Tata Power (48 per cent) were the stocks which witness lower rollover figures. The F&O trading in Sterlite Industries were discontinued on the back of its merging with Sesa Goa. Also new contracts will not be issues in five stocks like Chambal Fertilizers, GSPL, Opto Circuits, Punjlloyd and Renuka for the November month.

To curb the volatility of the rupee, which fell to its record low in the week, the Reserve Bank opened a special window to help the state-owned oil marketing companies meet their daily foreign exchange requirement. Using the forex swap window the central bank will lend the oil marketing companies’ dollars, for equivalent rupees which the companies would return over a period of time. If they cannot return the dollars in the required period the central bank has the option to rolling over the swap. The PSU oil companies are the biggest buyers of dollars, requiring $8-8.5 billion every month for the import of an average 7.5 million tonnes of crude oil.

In the global front, all the markets across the globe were trading lower on concerns that the US may take strict action against Syria on the usage of chemical weapons. Also, concerns over tapering down of the stimulus plan by the Federal Reserve weighed on the markets. But supporting the markets was the better-than-expected GDP data which for the second quarter stood at 2.5 per cent against the estimate of 1.7 per cent on the back of increase in exports. Also weekly jobless claims fell more than expected, another sign of market recovery.

In the coming week, the Markit Manufacturing PMI, Balance of trade, ISM Manufacturing index, Factory orders Nonfarm Payrolls and Unemployment data will be important for the US markets. On the Asian front, Chinese HSBC Markit manufacturing PMI, Chinese Services PMI, and BOJ interest rate decision may be the ones to focus on. In Indian markets, HSBC Markit Manufacturing PMI and Services PMI will be watched. In the Euro zone, the retail sales, ECB interest rate decision and GDP rate will be the major data to be focused on.

Rupee is still weak but is getting support at 66.55 and 67.75. Movements below these two levels can cause further sell-off, but chances are remote and it can move up towards 65.32 and 64.52 in the near term.

Investors should buy Nifty 5600 call options and can buy 5300 put options together.

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 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. 

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