Saturday, October 5, 2013

LEAD EARN...  Yet another earning season.....


Domestic macroeconomic data, political developments in the United States amid a partial shutdown of the US government, trend in investment of foreign institutional investors (FIIs) and second quarter corporate earnings will dictate near term trend on the domestic bourses. 

The next major trigger for the market is the second quarter September 2013 corporate earnings which will start tricking in next week. Analysts will scrutinize the results and management commentary accompanying individual company earnings for revision, if any, in their earnings forecast for the current full year and next year.

Infosys starts the earnings season when the IT major reports Q2 results on Friday, 11 October 2013.

On the macro front, the government will unveil industrial production data for August 2013 on Friday, 11 October 2013.

Notwithstanding the US shutdown, the Indian equity market started off the month on a high with the NSE Nifty and the BSE Sensex registering healthy gains of 1.3% each during the week. Also better than expected monthly auto sales numbers and current account data (CAD) boosted the sentiment.

The Reserve Bank of India which announced the current account deficit was inline with market expectations. CAD increased to 4.9% of GDP to US$21.8bn in the April-June quarter of the current fiscal. 

Meanwhile, the HSBC Services Purchasing Managers’ Index (PMI), slipped from 47.6 in August to 44.6 in September, its weakest since April 2009. That marked its straight third reading below 50. The HSBC India Manufacturing Purchasing Managers' Index for the
manufacturing industry stood at 49.6 in September, higher from 48.5 in August.

Market participants would look forward to the August industrial production data and the September import and export data which is scheduled to be released on October 10. In addition results season also kicks off with IT bellwether Infosys coming out with its second
quarter earning numbers on 11 October.

Investors across the globe are monitoring political developments in the United States as a partial government shutdown dragged on for the fourth day on Friday, 4 October 2013, as lawmakers remained at an impasse over funding for the country's budget. The standoff comes just weeks before a crucial deadline to raise the nation's borrowing limit, a measure which also must be approved by lawmakers. Failure to raise the debt limit has the potential to be catastrophic, the Treasury Department warned in a report on 3 October 2013 that said credit markets could freeze and the value of the dollar could plummet.

Key benchmark indices closed in the positive terrain this week . the rally was led by the realty stocks followed by banking stocks ,auto stocks, IT stocks and so on. 

The BSE SENSEX closed at 19916 or higher by 0.96 % for the week ended 5th October,2013. Whereas the CNX NIFTY saw a dramatic pullback after testing a low of 5700.95, to close higher by 1.27 % during the week at 5907.

The market breadth indicating the overall health of the market was positive.

Markets extended Tuesday’s positive momentum forward with over 2% rally in yesterday’s trade and managed to post closing above 5,900. In the past Nifty has failed to sustain above 6,000 levels on a sustained basis and hence more confirmation is needed with breakout above 6,000 levels in order to reinforce the positive stance.

Nifty negated its bearish head & shoulders pattern and closed above its 200-DMA for the week. However, in order to confirm a trend reversal, Nifty needs to cement its position above 6,000 levels. As long as Nifty sustains above 5,800 levels, we expect the recent outperformance from mid-caps and small-caps to continue.

Nifty futures has seen fresh long addition in last 2-3 trading sessions.The weighted average price for Nifty is at around 5940 and that for Bank nifty is at around 10500.The highest Open
interest is in 5700put and 6100Call.Huge put writing is seen in Nifty 5800 strikes.The VIX is likely to trade in 22.3 - 28.5 levels. Nifty is likely to trade in 5800-6050 in the short term. Bank Nifty might trade in 9800-10600 in the short term

  • Nifty future which added ~1.13mn shares in open interest.
  • Bank Nifty future which added ~0.11mn shares in open interest has seen fresh addition of long position.
  • Nifty October 5,900 call which shed ~0.36mn shares in open interest has seen unwinding.
  • Nifty October 5,800 put which added ~0.84mn shares in open interest has seen writing.
  • Fresh long has been seen in Banking, Auto and Cement sector.

Indian ADRs closed mixed on Friday.
  1. In the technology space, Infosys rose 0.3 percent to USD 49.40 per ADR and Wipro gained 0.57 percent to close at USD 10.58.
  2. Among banks, ICICI Bank lost 0.8 percent to USD 31.29 and HDFC Bank slipped 0.09 percent to USD 33.31.
  3. Tata Motors rallied 0.8 percent to USD 28.85 and Dr Reddys Labs advanced 0.3 percent to USD 38.95.

Highlights : 

  1. The Telecom Commission has given its inprinciple approval to the Telecom Regulatory
    Authority of Indias recommendation of allowing spectrum trading.
  2. Facing a cash crunch, railways has decided to increase passenger fare by about 2 per cent for the second time this year to offset additional financial burden of more than Rs 1200 crore arising out of the increased fuel and power cost. 
  3. The Reserve Bank of India said on Friday that its committee on comprehensive financial services for small businesses and low-income Households has invited suggestions from stakeholders on development of financial services delivery model.
  4. The Reserve Bank of India (RBI) has set up a three-member committee led by former Governor Bimal Jalan to scrutinise applications for new bank licences, which are expected to be awarded by January.

Overall market positive & upside
10-10-13 & 11-10-13
IIP Data & INFY would rock



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