The release of the inflation data and speculation about the RBI cutting its repo rate, had the markets in a flurry last week
The markets closed with a weekly gain of 2 per cent. In the stocks, BPCL and ONGC were up around 17.1 per cent and 15.4 per cent respectively. The losers were M&M and Wipro which were down around 5.98 per cent and 5.41 per cent respectively. In the midcap sector, Polaris Technology and IGL, which were up around 14 per cent and 9 per cent respectively, remained the gainers.
The markets were waiting for data regarding inflation, which slowed to a three year low in the month of December. The Wholesale Price Index (WPI) data, which came out this week, showed that the inflation stood at 7.18 per cent as compared to 7.24 per cent for the month of October 2012 and against 7.74 per cent in the same month last year.
The data easing made the markets think that the central bank might issue a rate cut. But on the other side, retail inflation inched back to double digits. The inflation data stood at 10.56 per cent for the month of December 2012 as against 9.90 per cent for the previous month. The corresponding provisional inflation rates for rural and urban areas were at 10.74 per cent and 10.42 per cent respectively for December. They were driven by rising food prices.
Profits for firms
The private sector bank, Yes Bank, released its earnings. The bank’s net profit rose 35 per cent to Rs 342.3 crore in the third quarter from Rs 254.1 crore in the same period last year on the back of higher interest, fee income and improved margins. The net interest income also rose 37 per cent in the quarter from Rs 427 crore a year ago to R584 crore.
HCL Tech came out with its quarterly numbers, which showed a 68.5 per cent rise in the net profit. The consolidated net profit of the company for the second quarter ended December 31 stood at R965 crore as compared to Rs 573 crore in the same period last year. The revenues also rose 19.6 per cent to Rs 6,274 crore from Rs 5,245 crore on a year ago period. The major companies that will reveal their earnings this week include ICICI Bank, HDFC, Bharti Airtel, Cairn, NTPC, ABAN, Syndicate Bank, Kotak Bank, Asian Paints and Zee Entertainment.
Not so good
India’s services export for the month of November fell 2.5 per cent to USD 12.03 billion from USD 12.35 billion in the previous month. The imports of services also fell marginally to USD 6.62 billion from USD 6.70 billion in the month of October. The services sector contributes about 55 per cent to the GDP data. To overcome the subsidy burden, the government allowed the oil marketing companies to change diesel prices by a small margin from time
to time depending on the market conditions. The cabinet also approved a 50 per cent cut in the auction reserve price of 800 MHZ spectrum (CDMA spectrum) to encourage the bidders participating in the auction process.
Around the world
On the global front, the US markets remained in an overall green territory due to the better than expected earnings and economic data. The Chinese GDP rose to 7.9 per cent from a year ago period beating the projection of 7.8 per cent. Also the industrial output for the month of December rose 10.3 per cent from a year ago period.
International gold is looking very strong and is likely to test its 200 DMA at USD 1716 in the short term. Gold has support at USD 1685 and USD 1672.75. Domestic gold may exhibit sideways in the early part of the week and thereafter we can expect sharp uptrend.
The major support for the market lies at 6008-6000 levels. The outlook for the NIFTY is positive; it is likely to surpass 6100 in the near term and may slowly and steadily move up towards 6181 levels in the coming days. Counters like ONGC, BPCL, Reliance Industries, Cairn India, Bank of Baroda and Infosys are counters with buying indications.
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).
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