Oil's not well

Feb 08, 2016, 09:39 IST | Alex K Mathews

It is slip and dip season as the bourses bleed around the globe

Oil prices remained the culprit last week, too, as it bled the bourses around the globe. Along with this, corporate earnings, which missed estimates also made the markets dip. Nifty has immediate support at 7350 and 7280, movements below it can cause further weakness. Resistance for the Nifty is seen at 7500, 7550 and 7633 levels; chances to move up these levels are very remote.

According to global performance management company, Nielsen, India may continue in the global confidence index for the quarter at 131 points, same as the previous quarter. It may be followed by Philippines (117), Indonesia (115) and Thailand (114). Here, the baseline is 100, which above and below indicates optimism and pessimism. Chinese score in the index was at 107 followed by UK (101) and US (100). The core sector data for December stood at 0.9 per cent, compared to a decline of 1.3 per cent, in the previous month. The uplift in the data was due to the good numbers from coal, cement and fertilizers. The April to December growth was at 1.9 per cent compared to 5.7 per cent, in the same period last year. But the current month crude and natural was low. The sector which consists of eight core industries has 38 per cent weightage in IIP.

Coal production was up 6.1 per cent against 3.5 per cent in November. Cement posted a better growth of 3.2 per cent against a decline of 1.8 per cent in the previous month. Steel production was down around 4.4 per cent in December.

The Reserve Bank of India (RBI), in its sixth bi-monthly monetary policy review, kept its interest rate unchanged to get more ideas from inflation and on the upcoming budget. The repo rate stood at 6.75 per cent, while reverse repo stood at 5.75 per cent. The CRR was at 4 per cent. The RBI has projected a higher growth rate of 7.6 per cent for 2016-17 against 7.4 per cent in 2015-16.

On the back of new business orders, January’s manufacturing activity of the country rose to a four-month high, which was led by the FMCG sector. The Nikkei India manufacturing purchasing managers’ index stood at 51.1 up from 49.1 in December. The data moved above the 50-mark which divides contraction from expansion.

In the week, the country’s service sector data came out, where it stood at its strongest monthly gain in activity for over one -and-a-half years in January. The data was 54.3 in the month under review, compared to 53.6 in the previous month. The reasons in the uplifting of data is the rebound in the manufacturing production as well as the stronger growth of services output. Along with this, the Nikkei India composite output index climbed to an 11-month high of 53.3 in January from 51.6 in December. Tamil Nadu Newsprint and Paper reported a 24 per cent jump in the net profit for the third quarter ended December 2015. The company reported a net profit of R 46.83 crore compared to R 37.66 crore on the total income of R 481.12 crore compared to R 474.59 crore for the period last year.

Hikal last week, announced its earnings for December 2015 quarter where the net profit stood at R 12.4 crore compared to R 9.4 crore on a year on year basis. The total income of the company stood at R 240.40 crore as against R 225 crore in the same period last year. The current markets cap of the company stood at R 1232.18 crore. In the company, the promoters’ holding is at 68.77 per cent while institutions and non-institutions held at 14.27 per cent and 16.96 per cent respectively.

No major positive cues were seen on the global front. Weak oil prices and disappointing earnings were the reasons for the downfall. Mild recovery was seen, end of the week.

In the US markets for the week to come continuing jobless claims, initial jobless claims, retail sales and consumer sentiment are the triggers. Current account data will be in focus for the Japanese front. In the Indian markets GDP data, inflation, industrial production, manufacturing production and balance of trade are the data. On the earnings front, BBTC, AIA Eng, VST Tillers, Butterfly, Prestige, GMDC, Dr Reddy’s lab, Apollo Tyre, IGL, Voltas, SBI, BGR Energy, Union Bank, India Glycoal, BEML, Orient Bell, CESC, M&M, Apollo Hospital, Sun TV, Max India, Bajaj Electricals, ACC, Bata India, Tata Global and Axis are the major ones.

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