Surprise season

Mar 09, 2015, 08:22 IST | Alex K Mathews

Peak and troughs made it a mixed bag. More upheavals are likely to follow

Higher level profit booking was seen in the markets in the last week. Buying by FIIs in the cash segment though kept the markets away from more downside. The markets made a new lifetime high on Wednesday but again, it was the sell off that ruled.

Going forward, the market can move up further towards 9050 and thereafter we can see sideways movement for another one or two days. After that, all round buying can lift the Nifty towards 9300-9500 levels. Nifty has support at 8791 and 8751.

In a surprise move, the Reserve Bank of India (RBI) reduced its key interest rates with immediate effect citing that the fiscal consolidation was better than the number showed. The central bank in its second inter meeting in the year cut the repo rate by 25 basis points to 7.5 per cent from 7.75 per cent.

Earlier, the Reserve Bank was seen lowering its interest rate on January 15. The reverse repo may get adjusted to 6.5 per cent whereas the cash reserve ratio was kept unchanged at 4 per cent.

The negative growth in the crude oil and natural gas made the growth in the eight core industries slow to the lowest in 13 months in January. The data was at 1.8 per cent against 2.4 per cent in December 2014 and 3.7 per cent in the same period last year.

The production of crude oil and natural gas contracted by 2.3 per cent and 6.6 per cent respectively during the period, and, on the other side, the coal and refinery products output grew by 1.7 per cent and 4.7 per cent respectively against 1.2 per cent and a contraction of 4.2 per cent in the year ago period.

The core sectors have a weightage of 38 per cent in the overall industrial production. Improving domestic demand made India’s services sector industry expand at a faster pace in eight months. The HSBC services Purchasing Managers' Index rose to 53.9 in February from 52.4 in the previous month, which was its highest level since June 2014.

A level of above 50 shows growth, while below shows a contraction. The new business sub-index, which measure the demand, jumped to an eight month high of 54.1 from 52.1. The composite PMI, which combines both services and manufacturing sectors climbed to 53.5 from 53.30 in January.

SEBI for new individual investors announced a 'Saral' or simplified account opening form which eased them from the process of submitting address proof documents. Under this scheme, individual investors can open a trading account and demat account by filling up a simplified Account Opening Form (AOF) termed as 'SARAL AOF'.

Here, investors have to submit only one documentary proof of address (either residence/correspondence or permanent) while opening a trading account. The spectrum action where companies are bidding to acquire airwaves in four bands began, which may fetch the government over Rs 82000 crore.

A total of 380.75 MHz of spectrum in three bands, the premium 900 MHz bank, 1800 MHz and 800 MHz along with 5 MHz in the 2100 MHz band are put on sale. It is mandatory for the companies to bid for spectrum if they have to continue offering mobile and other telecom services.

On the global front, in China, the central bank lowered its interest rate; cut the one year deposit rates by 25 basis points and one year lending rate which made the Asian markets rise.

But the mixed data from the US front kept the markets under pressure. In US markets, the coming week, major triggers are retail sales, initial and continuing jobless claims, PPI, core PPI and consumer sentiment data.

In Japan, current account, GDP data, industrial production and bank of Japan’s monthly report are the major triggers. This week, the main data to watch out includes inflation data, industrial and manufacturing production data for Indian markets. Crude is consistently trading above $50 mark may gain minor support at lower levels.

Pharma, IT, FMCG and Private Sector banking are the key sectors which can give support to the market. On the other hand metal and selective auto stocks may remain sideways to negative in the coming days.

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