Eye on the upside

Apr 29, 2013, 07:15 IST | Alex K Mathews

Falling gold price positive for Indian economy, says report

Markets in the week were seen extending their rally. This was partly due to the good set of earnings and of short covering as of April F&O expiry. Markets closed up around 1.5 per cent on a weekly basis.

A man throws a can at anti-riot policemen clashing with demonstrators trying to besiege the Spain's Parliament (Las Cortes) during an anti-government demonstration. A thousand of people, mostly youths, gathered recently near the Spanish parliament in Madrid in response to a call by a hardline protest movement for demonstrators to ‘Besiege Congress’ indefinitely to force the government to quit

The sectoral gainers were the auto sector and capital goods sector, which closed up around 4 per cent and 3.3 per cent respectively. The immediate resistance of the Nifty lies at 5986. If Nifty moves above this level with volumes then we can see more upside. Nifty has support at 5862 and 5800 and it may consolidate at these two support levels before moving up.

According to the Bank of America Merrill Lynch report, falling gold prices are positive for the Indian economy and if the gold price settles at the current level then current account deficit will be likely to be 3.9 per cent in 2013-14. CAD has stood at a historic high of 6.7 per cent of GDP in the quarter ended December 2012. Also, the Japanese brokerage firm Nomura said that the fall in oil and gold prices would elevate the current account deficit to 4.3 per cent in 2013.

Due to the economic slowdown, India received FDI worth $1.79 billion in February 2013, a decline of 19 per cent from a year ago period. In February 2012, the country received FDI worth $2.2 billion and in January 2013 the amount stood at $2.15 billion. Also in the April-February period of 2012-13, FDI stood at $ 20.89 billion, declined 38 per cent from $ 33.49 billion during the same period previous fiscal. Large FDI inflows were in the sectors like services ($ 4.74 billion), hotel and tourism ($ 3.21 billion) and metallurgical ($ 1.39 billion).

HDFC Bank came out with its quarterly numbers, which rose 30 per cent supported by the growth in advances and fee income. The bank posted a 30.1 per cent rise in the net profit to Rs 1889.84 crore for the quarter ended March 31, 2013 as compared to Rs 1453.08 crore for the quarter ended March 31, 2012. The total income also rose 21.1 per cent from Rs 9189.93 crore for the quarter under review last year to Rs 11127.54 crore for the quarter ended March 31, 2013.

The bank recommended a dividend of Rs 5.5 per share. Net profit of LIC Housing Finance rose 24.67 per cent to Rs 316.16 crore in the quarter ended March 2013 as against Rs 253.60 crore during the previous quarter ended March 2012. The sales also rose 24.58 per cent to Rs 2028.13 crore in the quarter ended March 2013 as against Rs 1628.08 crore during the previous ended March 2012. Last week, Gulf carrier Etihad Airways said it is taking almost a quarter stake in Jet Airways at Rs 754.74, a 3.17 per cent premium to the share's closing price on Tuesday. Etihad also said to invest an additional $ 150 million in the Jet's flyer programme and spend $70 million to buy the company's three pairs of Heathrow slots.

The US markets last week were seen swinging in between positive and negative terrain. Most of the corporate earnings were positive which supported the markets. But the factory goods data fell in March. Bank of Japan in its policy meet maintained a pledge to double the nation’s monetary base in two years. On the global front, the major data to be watched are the US pending home sales, Initial Jobless claims, Trade Balance and FED interest rate decision.

Recently, tea prices increased nearly 11 per cent. Tata Global, McLeod Russell and Jayshree Tea can move up smartly in the near term. Crude is recovered from low levels and made its base at around $91.78 and $89.65. It has resistance at $94 and $97 in the short term. For the Indian markets, the investor’s focus will still be on corporate earnings. Sterlite, Syndicate Bank, Bharti Airtel, Canara Bank, ACC, IOB and HUL may be the major ones announcing their earnings.

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).

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. 

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