Trading inconsistencies

Global markets saw a slow start and then a pick up, which was a good sign for investors going into this week

Trading inconsistencies

Tracking the global market conditions, the Indian markets traded weak in the beginning of the last week. Sensex falling during the week and selling by foreign investors also added to tension. In the new F&O series, the markets reversed its direction and closed above its 200 DMA on sustained bargained buying.

The Greek government under Prime Minister Alexis Tsipras has no money to make a series of repayments to the IMF that are due beginning June 5, totalling 1.6 billion euros

If the macroeconomic data is positive, then we can expect Nifty to move above 8550 in the short term. On the other hand, if Nifty falls below 8320, then we can expect further sharp down trend.

Numbers
For the last week, Igarashi Motors announced its numbers, where its net profit rose 71.43 per cent to Rs 17.04 crore in the quarter that ended March 2015 as compared to R 9.94 crore during the quarter that ended March 2014. The sales also rose 10.37 per cent to Rs 101.84 crore in the period under review against Rs 92.27 crore during the same period last year.

For the full year that ended March 2015, net profit rose 6.09 per cent to Rs 48.95 crore as against Rs 46.14 crore during the previous year that ended March 2014. Sales were up 6.60 per cent to R 385.08 crore in the year that ended March 2015 as compared to R 361.23 crore in the previous year that ended March 2014.

For the quarter that ended March 2015, KEI Industries posted better earnings, where the net profit rose 193.44 per cent to Rs 12.53 crore as compared to Rs 4.27 crore during the same quarter last year. The sales were also up 35.70 per cent to R 630.54 crore in the period under review as against R 464.65 crore during the quarter that ended March 2014.

The net profit rose 195.26 per cent to Rs 34.25 crore in the full year that ended March 2015 as against R 11.60 crore during the previous year that ended March 2014. Sales were up 26.07 per cent to Rs 2020.06 crore in the same period as compared to Rs 1602.35 crore during the previous year that ended March 2014.

Trading
For easy trading, India Index Services & Products (IISL), an arm of NSE has decided to reduce the number of stocks in its benchmark index for the IT sector. From May 29, the said sector may contain 10 stocks from the previous number of 20. The ten scripts to be available for trading in the IT index will be Infosys, TCS, HCL Tech, Tech Mahindra, Wipro, OFSS, MindTree, Info Edge, Cyient and Just Dial.

Meanwhile the IISL has also capped the maximum weightage of a single stock at 25 per cent. The parameters for maintaining stocks were, the companies with more than 50 per cent of their turnover from IT related activity stocks.

Along with this the companies must rank in the top 500 on average free float market capitalisation and aggregate turnover for the last six months and their stocks’ trading frequency should be at least 90 per cent in the last six months.

In the May expiry, Nifty saw a best performance in rollover by posting 66 per cent. The largest rollover were witnessed in stocks like IB real estate (96 per cent), Amtek Auto (95 per cent) and Tata Chemicals (94 per cent) whereas the least rollovers were seen in OFSS, PNB each 57 per cent and HUL(59 per cent).

The Bank Nifty and IT posted a rollover of 62 per cent and 52 per cent respectively. From the new month, 14 additional securities are included in the F&O series and they are Ajanta Pharma, Amaraja Batteries, Bajaj Fin, BEL, Britannia, Castrol, Ceat LTD, Dewan Housing, Kaveri Seed, Oil India, Page Ind, Pidilite, South Indian Bank and SRF.

Abroad
On the global front, the first news was from the Federal Reserve chairwoman’s comment on its interest rate. The chairwoman said that she expects the central bank to raise interest rates in 2015 as the US economy was on course to bounce back from a sluggish first quarter.

Also in Greece, the policy makers warned it has no money to repay the IMF on time in June unless it reaches a deal with its creditors. The Chinese markets saw a sell off after the brokers tightened margin trading requirements for clients and on the central bank's move to mob up excess liquidity in the interbank market.

On the US front, in the week ahead, the data to watch out includes Markit manufacturing PMI final, construction spending, total vehicle sales, non farm payrolls, and initial, continuing jobless claims. Crude is weak below $ 60 and it is likely to remain weak in the coming days also. Support for crude will be at $ 57.14.

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 alex@geojit.com. 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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