Nifty saw action with profit bookings putting pressure on turnovers
High level profit booking in the last week kept markets under pressure. Selective buying in the beaten down stocks were seen but the March F&O expiry and holidays in this week kept investors away from taking long positions. The Indian markets may remain closed on Thursday and Friday on account of Mahavir Jayanti and Good Friday.
Nifty lost support levels at 8710 (50 Day moving average) and 8525 (100 day moving average) and is likely to remain subdued this week due to banking and exchange holidays. Nifty has immediate support at 8300 and 8162 (200 day moving average).
For February, Indian market investment through Participatory notes (P-notes) rose to a highest level in seven years at Rs 2.72 lakh crore ($ 43.6 billion).
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According to SEBI data, investment (in equity, debt and derivatives markets) stood at R 268033 crore in the preceding month and was the highest since February 2008, where the total investment stood at R 3.23 lakh crore. P-notes are usually used by the overseas high net worth individuals, hedge funds and other foreign institutions which allows them to invest in Indian markets through registered Foreign Institutional Investors.
Report card
In the March F&O expiry, the rollovers remained better with Nifty posting a rollover of 74 per cent. The figure but remained below, the previous month level of 79 per cent whereas the January expiry figure was at 75 per cent. The highest rollovers were seen in counters like Indiabulls real estate (94 per cent), Strides Arcolab and Karnataka Bank with a rollover of 93 per cent each. The lowest figure was seen in Colgate (59 per cent), Sun TV and Mindtree each with 62 per cent. Nifty and IT rollover for the month stood at 63 per cent and 37 per cent respectively.
Capital markets regulator in the last week came out with new a rule which makes the voluntary delisting easy for the companies. In the new regulation, the time taken for the completion of the process will be reduced and a relaxation will be provided on a case-to-case basis. The timeline for completing the delisting process has been reduced to 76 working days from 137 calendar days (about 117 working days). Besides, SEBI retained the reverse book building process for discovering the prices of shares for the purpose of delisting and the process will be considered as successful only if at least 25 per cent of the public shareholders participate in the reverse book building process.
The mutual fund managers continued their bullish stand in banking sector which made the exposure to the said sector to a historic high in February. For the month under review, the MF managers raised their exposure to the sector to Rs 77805 crore, accounting for 21.32 per cent of their total equity Assets Under Management (AUM) of Rs 3.65 lakh crore, according to the data available from SEBI. The investment in the banking stocks were at R 32225 crore in same period last year. Software sector remained in the second place with an exposure of R 38514 crore followed by pharmaceuticals (Rs 23980 crore).
Currency fluctuations
The rise in the dollar against the euro made the US markets to sink as the investors’ focus was shifted towards the currency fluctuations and its impact on other markets and corporate earnings. Some of the losses were pared on the back of robust US jobless claims and services sector data. The Asian markets remained tracking the US indices.
On the global front, US markets, consumer confidence, pending home sales, ISM manufacturing PMI, construction spending, total vehicle sales, balance of trade, initial and continuing jobless, factory orders, unemployment rate and non farm payrolls are the important triggers. In the Euro zone area, economic and industrial sentiment, consumer and business confidence, core inflation and inflation are important data.
IT, Pharma and OMC stocks will remain the focus this week, but cyclical stocks will offer investors long term entry level points.
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 alex@geojit.com. 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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