Greek situation dictating play

Feb 09, 2015, 08:55 IST | Alex K Mathews

The uncertainty in the European country is causing a lot of upheaval in the global markets

A weak start was witnessed in the domestic markets in tracking global cues. The major sell off in banking, automobiles and capital goods sectors added fire to the downfall. Nifty has resistance at 8840-9050 and had support at 8600-8450 levels.

Investors can buy Nifty 8800 call option 1 lot and can sell 2 lots of 9000 call options. One can buy 8700 put option and can sell 8500 put options to reduce risk. On the hopes that the fixed income securities will continue to benefit from improvement in economic prospects, the mutual funds have pumped in over Rs 33000 crore into the debt markets for January.

The inflow has helped the industry to cross the Rs 11 lakh crore mark in assets under management at the end of the last year. In 2014, the mutual funds invested R 6.2 lakh crore which is higher than Rs 4.85 lakh crore invested in the previous year. As per data, they have invested R 270 crore in the equity market last month.

For the quarter that ended December 31, 2014, PVR’s net profit rose 127 per cent at Rs 31.6 crore against Rs 13.9 crore in the same period last year. The consolidated revenue of the company stood at Rs 421.2 crore as compared to Rs 338.8 crore in the corresponding period last year.

The consolidated EBITDA for the multiplex company for the period under review stood at Rs 84 crore against Rs 51.4 crore in the same period last year. Led by the increase in the new business orders, the services sector activity of the country expanded for January.

The HSBC India services PMI which tracks the changes in activity at Indian service companies stood at 52.4 against 51.1 in December. A level above 50 indicates that the sector is expanding whereas a level below shows contraction. The new business sub-index climbed to 52.1 from 51.8.

The outcome of the growth in the eight core sectors came out last week, where it decelerated to 2.4 per cent in December on a year on year basis as of weak output from steel, crude oil, natural gas and the fertilizer sectors. The data stood at 6.7 per cent in the previous month and 4 per cent in a year ago.

The data for the first nine months of 2014-15 grew 4.4 per cent against 4.1 per cent in the corresponding period last year. Electricity generation was down to 3.7 per cent and the steel production fell 2.4 per cent in December. The natural gas production contracted 3.5 per cent whereas the fertilizers and crude oil contracted 1.6 per cent and 1.4 per cent respectively.

Economic data
Weak economic data was seen weighted on the movements of the US markets. Also, the Greek uncertainty added concerns. But the rebound in the oil prices and higher than expected January car sales report provide support to the markets to a limit.

In Greece, the ECB cancelled its acceptance of Greek bonds in return for funding which showed that the government has to provide its banks with tens of billions of Euros to additional emergency liquidity in the coming weeks. The Greeks proposed a bridging program until the end of May to allow time for debt talks to do anything to avoid default.

The Asian markets were tracking the movements of the US markets and responding accordingly. For the global markets, this week, the Industrial production data, GDP and balance of trade will be important triggers for the Euro Zone area.

For Japanese markets, current account, machinery orders and consumer confidence are data to watch out for in this week. Some of the major earnings for the last week were LT, SBI, Kohinoor, Bank India, Corporation Bank, ABB, Suven Life, BEML, ENIL, India cements, Escorts, BHEL, Max, Sail, Cox & Kings, GSPL, HT media, ADF foods and Oil. The outlook for crude is still weak, but it is oversold and likely to remain sideways to negative for some more time.

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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