Waiting for the cue

Jul 27, 2015, 08:34 IST | Alex K Mathews

Domestic and global investors are looking out for triggers

The Indian markets in the last week remained mainly choppy as investors were waiting for more cues from the domestic and global front. The monsoon session of Parliament which began on July 21 was a major trigger. Also, the corporate earnings were the focus of the week.

The rains making a comeback in Mumbai were a positive for the markets. Pic/PTI
The rains making a comeback in Mumbai were a positive for the markets. Pic/PTI

If there is no major trigger for the market then we can expect Nifty to test 8484, 8450 and 8300 levels in the days to come. Investors can buy 8500 put options of Nifty and they can sell 8300 put options on anticipation of much more deeper correction. Selling 8500 call options and buying 8600 call for protection is also advisable.

Investment indicators
The investments into the country through Participatory notes (P-notes) fell in June after touching a seven year high in the previous month. According to SEBI’s data, the total value of P-note investments into Indian markets (equity, debt and derivatives) declined to Rs 2.75 lakh crore from R2.85 lakh crore at the end of May.

In May, the figure was at R3.23 lakh crore. The quantum (percentage) of FII investments through P-Notes decreased to 11.5 per cent last month from 11.8 per cent in May. P-notes are mostly used by overseas High net worth individuals, hedge funds and other foreign institutions which allow them to invest in Indian markets through registered Foreign Institutional Investors.

In order to follow, the SEBI’s directive, BSE said that the lot size for derivatives contracts in the equity derivative segment would be fixed in the manner that the contract value of the derivative as of October 30, 2015 within Rs 5 lakhs and Rs 10 lakhs.

According to the official data, the FDI into the country rose to a four month high of $3.85 billion in May 2015 as compared to $3.60 billion in the same period last year. In April 2015, the level was at $ 3.60 billion and the earliest highest level was at $4.48 billion in January 2015.

During April-May of the current fiscal, the FDI was up around 40 per cent to $7.45 billion as compared to $5.30 billion in the same period last year. In the sectors, the maximum FDI was received by computer software and hardware of $2.27 billion during the two months followed by automobile ($1 billion) and trading ($664 million).

Foreign happenings
In Greece, the parliament voted to approve a second package of reforms measures. For US markets, durable goods order, Markit composite PMI, services PMI, pending home sales, GDP and initial jobless claims are the data to focus. Unemployment rate, consumer confidence, business sentiment, inflation and core inflation are triggers in the Euro zone area.

For Indian markets, infrastructure output may be triggers. Earnings will be in focus. Major ones in the list are TRF, KEC, Century tex, Century Enka, HDFC, Blue Starco, Syndicate Bank, GSFC, PNB, Union Bank, APL Apollo, Maruti, Dish TV, Vedanta, UPL, Titan, LT, Philip Carbon, Raymond, NTPC, ITC, Kotak Bank, ICICI Bank and Glaxo.

Alex K Mathews is author of Financial Services And Systems, as well as Option Trading: Bear Market Strategies published by Tata McGraw Hill. He is also 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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