Stock market watch: Changing course throughout

Holidays on Monday and Friday meant that there was limited trading last week. The markets saw some highs and lows during this truncated trade time

After a long weekend, the markets opened on a positive note last Tuesday, but were seen reversing their directions on the profit booking after a huge rally. Also, the few trading days in the week and foreign institutional investors selling their holdings were the other reasons.

A jewellery store employee arranges gold necklaces at a newly-launched showroom in Ahmedabad. PIC/AFP
A jewellery store employee arranges gold necklaces at a newly-launched showroom in Ahmedabad. PIC/AFP

The markets remained closed for two days last week; one on the back of Ambedkar Jayanti and the other on account of Good Friday. Nifty closed at 6779 with a flat note on a weekly basis. If more short positions should be covered ahead of the expiry in the coming week, then the markets may revisit 6800 levels in the near term. On the contrary, if there are no major positions of shorts to be covered then Nifty may test 6700 and 6642 before expiry.

MindTree came out with better earnings, reported a net profit of Rs 98.2 crore in the quarter ended March 31, 2014, which was 11 per cent sequential growth from its December quarter and 24.5 per cent rise from a year ago period.

The revenue was also up around 4.2 per cent to Rs 823.7 crore from the previous quarter and showed a 34.5 per cent rise from same quarter last year. The company board announced a bonus issue in the ratio of 1:1. The company also declared a third interim dividend of Rs 5 per share and a final special dividend of Rs 5 per share.

DCB Bank posted almost a 15 per cent jump in the net profit for the March quarter at Rs 39.07 crore as compared to Rs 34.11 crore in the corresponding quarter, a year ago. For the fiscal year 2013-14, the bank's profit rose to Rs 151.36 crore against Rs 102.06 crore in the previous financial year.

For the fourth quarter that ended March 31, the gross non-performing assets of the bank came down to 1.69 per cent from 3.18 per cent a year ago. The net interest margin rose to 3.59 per cent in the quarter under review and the deposits grew 7.6 per cent in the quarter. The bank also got board approval to rise up to Rs 300 crore as tier-1 capital.

The retail inflation rose for March on the account of a rise in fruit and vegetable prices. The inflation data rose to 8.31 per cent from 8.03 per cent in February. The corresponding provisional rates for rural and urban areas for the month under review were at 8.89 per cent and 7.51 per cent respectively, whereas the final inflation rates for rural and urban area for the previous month were at 8.43 per cent and 7.55 per cent respectively. The food inflation increased to 9.1 per cent in March from 8.57 per cent in the previous month.

The IIP data, which came out in the previous week for February 2014 dipped 1.9 per cent reversing the 0.8 per cent growth recorded in the previous month. The sharp decline in the manufacturing sector output in February was mainly the reason for the fall in the IIP.

In the beginning of last week, the US markets were up on the positive economic data and corporate earnings. The US retail sales posted its biggest gain in 18 months in March and also posted a better than expected industrial production data.

But the markets got momentum after the comments from FED chair's comment that FED is committed to keep the interest rates low even after ending its bond buying program, as long as inflation remains below target and the unemployment elevated.

Some of the major earnings for the coming week are HDFC Bank, Tata Elxsi, Tinplate, Rallis, Hindustan Zinc, AP Paper, Biocon, ACC, Mastek, Maruti, ICICI Bank, IDFC, Granules, Infotec ENT, L&T Finance and SKF India.

Gold is trading very close to its support level at $1299 (200 DMA), and facing resistance at $1319 and having support at $1277. Movements above and below these levels will decide the future trend of the yellow metal. For the option players can buy Nifty 6900 call options and 6800 put options together ahead of the expiry.

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).

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