On the back of mixed global cues and lack of major triggers from the domestic front, the Indian markets last week, remained sideways. Nifty closed down at around 1 per cent on the weekly basis. Nifty had a strong support at 5952 and if it fell further, it may witness crossing below its 200 DMA, at 5873 and 100 DMA, at 5862. The resistance of Nifty lies at 6025 and 6063. The sectoral losers for last week were Consumer Durables and Pharmaceuticals, which closed down at around 2.2 per cent and 2 per cent respectively.
Securities and Exchange Board of India (SEBI) tightened its regulations on mandatory disclosures made by the listed companies, on the back of large scale discrepancies. The companies were asked to provide details of their promoters, directors and/or key management personnel would be held responsible for ensuring compliance, with the disclosure norms. SEBI said that the stock exchanges would take appropriate actions, including imposing fines on the companies, in case of non compliance. The watchdog has also asked the bourses to set up a separate monitoring cell, with identified personnel, to ensure compliance with new norms. Stock exchanges have been asked to publish these details on their websites, in case of defaults.
In order to speed up the flow of long term investments in various projects, the Finance Ministry is planning to set up a new Infrastructure Trust Fund. The fund may be in the nature of Real Estate Investment Trust (REIT) which is important in the countries like Singapore, Hong Kong and USA. Under this structure, the underlying revenues of projects will be transferred to a trust and the trust will then issue units to the investors, including foreign investors. The government is looking at various options to fund the infrastructure sector which is estimated to require around USD 1 trillion investments by 2017.
Investment through Participatory Notes (P-Notes) rose to the highest level, in two and half years, at nearly Rs 1.84 lakh crore (about $29 billion) in October. The P-Note’s, a preferred route for High Net-worth Individuals (HNIs) and hedge funds, October investment was at the highest level since May 2011. Also the value of P-Notes issued with derivatives as underlying, stood at Rs 1.11 lakh crore, at the end of October 31 2013. But the quantum of Foreign Institutional Investor (FIIs) investments through P-Notes marginally declined to 12.98 per cent in October, from 13.06 per cent, in the previous month. Last month FIIs were seen investing around Rs 15,700 crore ($2.55 billion) in the Indian equity markets whereas they withdrew over Rs 13,500 crore ($2.2 billion) from the debt market.
US markets last week mainly remained in a weak zone with concerns regarding the Federal Reserve’s (Fed’s) tapering of its stimulus plan and negative outlook from some corporates. According to the US central bank’s minutes for the month of October, the Fed said it may start reducing its bond buying programme in the coming meeting. The US jobs data was better than expected which gave US markets a reason to cheer.
On the Asian front, markets were simply tracking the US markets. On the Chinese front, foreign direct investment for the month of October rose 1.2 per cent, on a year on year basis, which came as positive news. But the HSBC’s Chinese flash PMI for the month of November fell to 50.4, from a seven-month high of 50.9, in October. The US pending home sales, GDP price index, CB consumer confidence, durable goods order, continuing jobless claims data will be watched. Also initial jobless claims will be focused. In Japanese markets, watch out for retail sales, Manufacturing PMI and core inflation data.
Rupee is weak and is having target at 63 and 63.20. Counters like SBIN, ICICI Bank, Hero Motocorp and SesaSterlite are weak and if Nifty witness more downside, then stocks may see more sell off, which can be utilized to buy put options.
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).