Phoren flavour and favour

Published: 30 December, 2013 07:22 IST | Alex K Mathews |

Ending upbeat thanks to global cues and foreign investment

Last week, the markets ended in a positive zone on the back of positive global cues and buying by foreign investors. Nifty in the week closed up, around 0.6 per cent. Bank Nifty was seen closed up around 1.4 per cent, on a weekly basis. Mid cap and small cap sectors closed up around 2.5 per cent and 3.6 per cent, respectively. Nifty is showing resistance of 6365 above the level at 6400.

Foreign investors in India, made net inflows of around Rs 1.10 lakh crore (nearly USD 20 billion) during 2013. The investment has taken the country's equity market to a record level of close to USD 150 billion. The FIIs purchased stocks worth Rs 7.8 lakh crore in 2013 gross and sold equities to a total of Rs 6.7 crore translating to a net inflow of Rs 1,10,792 crore (USD 19.7). This is the second consecutive yearly inflow by foreign investors after taking out a net amount of Rs 2,714 crore (USD 358 million) from the markets in 2011. This is the third time in history that the foreign inflows for a year have crossed the Rs 1 lakh crore mark.

The F&O expiry this time also saw most of the stocks showing a better rollover. The future and options for the December month expiry showed Nifty's rollover stood at 65 per cent compared to 68 percent in the previous month expiry. The largest rollovers were witnessed in the stocks like UPL (97 per cent), MCDOWELL-N (96 per cent), Jain irrigation (94 per cent), Century Textiles (91 per cent) and JSW Steel (91 per cent). The lowest rollovers were seen in the stocks like Power Grid (35 per cent), IOB (40 per cent), HDIL (44 per cent), Oriental Bank (53 per cent) and HDFC (57 per cent). The F&O series are introduced in two the January series.

In order to revive the primary market, SEBI made the grading of initial public offers by credit rating agencies voluntary. The IPO market had been dormant almost for the past three years and this new move may reduce the dependency on rating agencies. In its meeting, SEBI also allowed companies to file shelf prospectus for corporate bond issues. A shelf prospectus enables the companies to issue corporate bonds utilizing the same documents more than once, which will help to cut costs and save. SEBI extended the facility to file the same for issuing non-convertible debt securities for non-banking finance companies, including infrastructure debt funds, along with public sector financial institutions, public sector banks and scheduled banks.

On the global front, the markets around the globe were trading higher on the back of better US economic data. The US economy grew at its fastest pace in almost two years at a 4.1 per cent annual rate in the third quarter, which was also well above the estimate. The International Monetary Fund (IMF) also improved its outlook on the largest economy as the Federal Reserve's tapering its bond buying, given strong future growth was supporting news. Also, consumer spending and employment data announced by the commerce and labour department were supportive. All the other global markets were tracking the US markets for direction.

Manufacturing and non-manufacturing PMI data in the Chinese markets will be the major trigger to watch out for. In the US, pending home sales and consumer confidence data will be in focus. Also, the market manufacturing PMI, construction spending and total vehicle sales data will be in focus. In the Eurozone area, keep an eye on inflation data and manufacturing data. The rupee has support at 62.16 and 62.56 levels and resistance for the rupee stood at 61.75 and 61.10. The outlook for gold is positive and giving support at 1204 and 1192 levels. The resistance for the yellow metal is at 1226 and 1235. The stocks which one can focus on are Mcleod Russel, HINDALCO and Ambuja Cements, which can be bought for a short-term perspective.

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).

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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