Nifty witnessed a weak closing on Friday, closed at 5684 down around 39 points. The major support for the Nifty stood at 5665 and below it may test 5635 levels. The resistance stood at 5763 level.
During this week, HCL Technologies’ first quarter showed a 78 per cent rise in the net profit to R885 crore on a year-on-year basis. Revenue in the July–September quarter also showed a 31 per cent rise, up to R6091 crore from a year ago. In dollar terms, the company's net profit rose 51 per cent to USD 162 million and the revenue was 11 per cent up, to USD 1.1 billion on a year-on-year basis. Another heavy weight ITC announced its earnings on Friday. The company’s net profit rose by 21.3 per cent to R1836.42 in the quarter ended September 30, 2012. Net sales also grew 19.61 per cent to R7,146 crore in September from R5,974.18 crore a year ago period.
Rise in inflation
This week, the inflation data for the month of September was released. It was the highest in the 10–month period due to the impact of the price hike in diesel and other fuels, wheat, cereals and other edibles. The WPI stood at 7.81 per cent, marginally higher than the 7.55 per cent it was in August. But it was lower than last year’s 9.46 per cent.
Foreign investors have increased their stake in a majority of Sensex companies, in the July-September quarter. The companies that saw a increase of FII holdings include Infosys, HDFC, ICICI Bank, GAIL, Jindal Steel, BHEL, HUL L&T and HDFC Bank. But a decrease of holdings in the stocks of Hero Motors and Coal India was also seen.
Fall in exports
India’s engineering exports declined by 8.2 per cent on a year-on-year basis to USD 4.4 billion in September which was due to slowing demand from the US and European markets. The engineering items exported by India include transport equipment, capital goods, castings, forgings and fasteners.
A report released by the concerned UN agency said India is likely to become the second largest economy by 2050 but for short term, the growth may slow down to 5.9 per cent in 2012-13 from 6.5 per cent in 2011-12.
What to expect
Due to festival season there may be some buying seen in the jewellery stocks. Stock like Rajesh Exports can be bought with a target of R146. The stock is trading with a P/E of 9.43. For the high-risk appetite traders, it is advisable to sell Nifty Nov futures with a stoploss above or buy 5600 Nov put options for a holding period of five days. Oct series put options of ICICI Bank 1060, M&M 820 can be bought.
The Karnataka Bank’s 186 per cent year-on-year basis rise of the second quarter earnings has made the stock attractive, which can be bought for a short term target of R180. Also Persistent Systems can also be bought for a target of R540. No new investments are advisable in DLF and HCC.
Outlook of Rupee is weak against Dollar as it has moved below its 200 DMA of 53.11. It may further fall to 54.24 levels. The immediate resistance for rupee will be at 53.11.
The weaker–than–expected corporate earnings from IT stocks such as Microsoft and Google made the markets around the globe to trade lower. In a two-day meeting in Brussels, EU leaders reached a deal to set up a joint supervisory body for the euro zone banks which aims to prevent banking risks. This will also provide a way for permanent bailout fund to recapitalise the troubled banks.
A correction can be expected in Nifty after the October F&O series expiry. Another major trigger to be watched is the RBI policy which will be announced on October 30, 2012. More corporate entities such as ICICI Bank and Cairn are likely to announce their earnings in the coming 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 firstname.lastname@example.org. 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.
Johnson turns green
H&R Johnson (India) has decided to promote green building concepts in the country. With this aim, it recently unveiled a new brand of tiles with Zero Volatile Organic Compounds (VOC) and sanitaryware that saves water. The company has also tied-up with the Indian Green Building Council to build environmental consciousness in its business operations as well as product development initiatives, thereby making environmental management a fundamental part of its overall business strategy. Anoop Sreekumar, the company’s Senior GM (Marketing) said in a press statement, “It’s not just what you make anymore but how you make it. Our green business approach will adopt a holistic outlook touching every aspect of our business process right from product development to manufacturing processes.” The company has already begun to re-engineer its manufacturing operations in line with its green business outlook. Raw material procurement, recycling manufacturing waste, use of alternative energy sources and increase in energy efficiency are some of the areas that have seen changes in policy. The products have been developed to ensure that they are non-toxic, non-hazardous, non-inflammable and have low heat conductivity.
Swiss cos to invest in infra
With investment of around USD 1 trillion necessary for infrastructure projects in the next five years, India has invited Swiss companies to participate in the project. The National Highway building programme alone is expected to draw an investment of USD 70 billion dollars in the same time period, according to the Union Road Transport and Highways Minister, C P Joshi. The projects require modern technology and technical expertise and the government is working towards putting together a plan that will address all the related issues such as bridges and signals. Swiss consultancy company, Renardet SA, is working as Supervision Consultant in joint venture with Indian Consultants for 12 road packages. Of these, 7 packages have been completed and the rest are under implementation. The country has a road network of about 47 lakh km.