A Herculean task

Published: 07 November, 2011 09:39 IST | Alex K Mathews |

Last week we heard the Prime Minister of Greece calling for a referendum on whether to accept the bailout package

Last week we heard the Prime Minister of Greece calling for a referendum on whether to accept the bailout package. We even heard the leaders of France and Germany warn Greece of cutting further aid. An international aid of $11 billion to debt-ridden Greece is also on hold. A day before the vote of confidence there were reports that the Prime Minister George Papandreou will step down and the referendum won't happen. This brought some cheer to the markets worldwide ahead of the G-20 summit. For Greece to remain in Euro, it has no other option but to accept the bailout and bring to effect the agreed upon austerity measures.

Nifty may trade in a tight range of 5200-5400, a breakout above or below can give further direction to Nifty.  Aggressive traders can buy Nifty 5400 put options when Nifty comes very close to 5375 levels.
Writing options are not at all advisable because volatility may remain very high in the days to come. Investors can reduce long positions even when Nifty comes closer to its resistance level.

Auto majors recorded mixed sales. Hero Motors reported a 1.32 per cent jump in October sales while Yamaha reported a 26.82 per cent rise in October sales. In the four wheeler segment Tata Motors reported a 5.02 per cent rise in sales at 68009 units while Maruti reported a 52.2 per cent fall in October sales due to the strike at its Manesar plant.

During the previous week the Telecom Regulatory Authority of India (TRAI) had recommended in its submission to the Supreme Court that the termination charges should be completely removed by 2014. At present termination charge is 20 paise per minute, which is included in the tariffs.

The removal of termination charges will be a blow to the incumbent mobile service providers while newcomers won't be much impacted.

The government is planning to introduce two new bills . One is the Right to Grievance Redressal Bill, which concerns the delivery of services of the government and includes a wider spectrum of accountability. Secondly the government is planning to introduce Micro Finance Bill, which will make it mandatory for all micro finance institutions to be registered with the RBI and entrust the central bank with the job of regulating the sector. Both these bills are expected to be introduced in the winter session of the parliament.

Food inflation rushed to 12.21 per cent for the week ended October 22 against 11.43 per cent in the previous week due to the rise in the price of vegetables, pulses, fruits and milk. Vegetables became 28.89 per cent costlier on a year-on-year basis.

Towards the end of the week, the PSU oil marketing companies increased the petrol price by `1.82 per litre taking the petrol price to around `70 per litre and in some parts of the country even above that.

There are fears that Israel with full support from the US and the UK may initiate an offensive against Iran. Short-term resistance for crude is at $94.65 and $96.60 and if it can stay above this, further upside is expected. On the other hand, there is support at $90 and $89.1.

Investors with medium term perspective can buy crude futures. Gold is looking slightly overbought with seven day RSI at 70 but the outlook remains positive.

Gold has support at $1729 and $1700 levels while resistance is at $1800 levels.

Last week we saw some good results, which gave the markets lower level support. Good ones among them were ACC -- netprofit up 67.49 per cent, PNB -- netprofit up 10.57 per cent, Hatsun Agro -- net up 148.8 per cent, Manappuram Finance -- net up 124.83 per cent and Triveni Glass -- netprofit up 510.8 per cent. Investors can buy these stocks with medium term, at every decline.

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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