Shaky cues

Feb 03, 2014, 08:23 IST | Alex K Mathews

Negative territory is the resting place right now

The Indian markets mainly remained in negative territory on the back of weak global cues and the FIIs being sellers on most days of the week. Nifty and Sensex closed down around 3per cent on a weekly basis. The immediate support for the Nifty will be at 5964 (200 day simple moving average) and resistances are at 6167 and 6232.

After being net sellers in the bond markets for 2013, foreign investors pumped in almost Rs 19,000 crore in the debt market. According to SEBI, the FIIs were gross buyers of debt securities worth Rs 30,266 crore and sellers of bonds worth of Rs 11,450 crore till January 24, resulting in an inflow if Rs 18,816 crore (USD 3.05 billion).

Foreign Intuitional investors bought a net Rs 3473 crore (USD 563 million) in the equity market in the same period which took their total investment in debt and equity to about Rs 22,289 crore (USD 3.61 billion). In 2013 they withdrew a net Rs 50,487 crore (USD 8 billion) from the bond market and infused a net Rs 1.13 lakh crore (USD 20.10 billion) in equities.

Symphony announced its quarterly numbers last week, reporting a 48 per cent jump in net profit on the back strong performances in all business verticals. The net profit for the quarter ended December 2013 stood at Rs 25 crore compared to Rs 17 crore, a year ago. The net sales of the company stood at Rs 115 crore up around 31 per cent from Rs 88 crore in the corresponding quarter of the previous fiscal.

For the six-month period ended December 2013, the company reported a net profit of Rs 39 crore against a net profit of Rs 19 crore last year. The net sales for the same period jumped by 67 per cent to Rs 187 crore from Rs 112 crore in the same period last year. The company also declared an interim dividend of 100 per cent at Rs 2/equity share of Rs 2/- each.

The empowered group of ministers on Telecom decided to fix the spectrum usage charge (SUC) at 5 per cent of the annual gross revenue for the new radio waves that the company may acquire in the forthcoming auction beginning next month. But for the earlier acquired spectrum, the operators have to pay the weighted average of their existing SUC, while there is no change in the SUC being paid by the broadband wireless access (BWA) operators.

The EGoM has decided to retain the SUC for BWA operators at 1 per cent but have to pay an SUC of 5 per cent for the new spectrum they acquire. Also these companies have to report the revenues from the BWA spectrum and the new spectrum separately. Under the current rule, SUC varies from 3 per cent to 8 per cent. The move may benefit the big players, as financial burden will be lowered. The decision made will now go to Cabinet for final approval.

The major event awaited last week was the Federal Reserve's (FED) meeting, which may decide the fate of its stimulus. In the two-day meeting, the US central bank is set to reduce its economic stimulus programme, which was a blow to the markets. The FED announced a $ 10 billion cut in its $ 75 billion a month bond purchasing programme in February. Earlier, the US central bank has made a reduction of $ 10 billion in stimulus in December. But it kept the key interest rates near zero. Along with this, weak manufacturing data from China also added fuel to the fire.

In the mid-cap segment stocks like Apollo Tyres, Arvind Limited, Biocon, Motherson Sumi, Aban and Bharti etc. are likely to move up sharply. Gold will remain sideways after the Federal Reserve's move to reduce stimulus. Gold has support at $1232 and $1212, and resistance at $1258 and $1275 per Troy ounce.

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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