Commodity Trade Mantra

Nifty at a 2 Year High – Investors at Crossroads

Nifty at a 2 Year High - Investors at Crossroads

Nifty at a 2 Year High - Investors at Crossroads

The 50-unit S&P CNX Nifty regained the psychological 6,000 level swinging above and below this level in Intraday trade yesterday after a survey showed that India’s services sector grew at its strongest pace in three months during December 2012. The week gone by saw Equity Markets rise & the Nifty breaking out of the 5823-5965 trading range that the Nifty was stuck in for the past four weeks. The Nifty hit its highest level in almost two years. The BSE Sensex hit its highest level in almost 21 months. The S&P CNX Nifty was up 6.65 points or 0.11% to 6,016.15. The Nifty Index hit a high of 6,020.75 in Intraday trade, its highest level since 7 January 2011. Reflecting the positive sentiments, market breadth was positive in all the five trading sessions of the week. Week on Week, the Nifty gained 1.82%. With the Nifty ending with marginal gains after bouncing back from the 5980 supports, the bulls continue to have an upper hand. Traders can expect further upsides in the coming week. Immediate upside targets for the Nifty are at 6050-6100. Temporary weakness could emerge if the 5980 supports are broken. Barring FMCG, which fell by 0.8%, all other sectoral indices ended the week on a positive note. The top gainers were Realty, PSU, Oil & Gas and Consumer Durable’s  which gained 5.2%, 4.2%, 4.1% and 3.5% respectively. The BSE Sensex was provisionally up 4.90 points or 0.02%, up 89.69 points from the day’s low and off 27.76 points from the day’s high.

Nifty Movement Triggers:

As alerted, Nifty remains positive till above 5959 & is poised to rise close to 6085 – 6103 range. There can be pressure build-up at these levels as there are no major growth triggers seen as of now. Stock Market Investors and analysts will closely watch the management commentary as Indian companies soon start unveiling Q3 December 2012 results. It also remains to be seen if the Union Budget for 2013-2014 due in February 2013 is a reformist budget or a populist budget. Given that next general elections in India must be held before May 2014, it will be the last full-fledged budget of the Congress-led UPA government at the Center and hence could be a populist one. The RBI – Reserve Bank of India undertakes Third Quarter Review of Monetary Policy 2012-13 on 29 January 2013. RBI kept its key policy rate viz. the Repo Rate unchanged at 8% after mid-quarter monetary policy review on 18 December 2012. The central bank said that in view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onward. Liquidity conditions will be managed with a view to supporting growth as stated in the Second Quarter Review (SQR) of Monetary Policy 2012-13 on 30 October 2012, thereby preparing the ground for further shifting the policy stance to support growth, RBI said. RBI said it is closely monitoring the evolving growth-inflation dynamic and will update the formal numerical assessment of its growth and inflation projections for 2012-13 as part of the third quarter review in January 2013.

India Markets show Promise:

India’s manufacturing sector growth improved further in December, registering the fastest pace in six months, driven by a strong pick up in new orders, an HSBC survey said. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) – a measure of factory production – stood at 54.7 in December, up from 53.7 in November, indicating a further improvement in the health of the country’s manufacturing sector. Output at manufacturing companies in India rose during December, HSBC said, adding that almost one-third of panelists indicated higher production and 18% noted a decline for the period. The growth in the business activity in India’s services sector is at a three month high in December, at 55.6 according to HSBC Services Business Activity Index. In November, the Index reading was 52.1. In December, the HSBC India Composite Output PMI is at 56.3, its highest point since last February. In November, the Index had posted 53.2. After a contraction in business activity in the last two months, this is a clear sign of recovery. There was a steep rise in the private sector output. The rate of growth of the new orders in the private sector was at its peak since February. There was also an ease in the input and output price inflation in the private sector. The service sector provided some holiday cheer with activity fully recovering after two months of deceleration, led by a sharp rise in new business.
The government has imposed around 5% cut in the Rs 1.93 lakh crore defense budget in view of the economic slowdown following which key deals like procurement of 126 multi-role combat aircraft are likely to be pushed to the next fiscal. After the cut, several key acquisition plans of the three forces including the procurement of the combat aircraft for IAF, 197 light helicopters for army and IAF are expected to be pushed for the next fiscal. Under the Rs 1.93 lakh crore budget, Rs 1,13,829 crore is for revenue expenditure including salaries and pensions and Rs 79,579 crore was allocated for modernizing the Armed Forces by acquiring new assets.
India’s current account deficit (CAD) for the second quarter ended September 2012 rose sharply to $22.3 billion from $18.9 billion in Q2 of a year ago higher pace of imports and moderating exports growth. As proportion of Gross Domestic Product (GDP), the CAD shot up to unsustainable level of 5.4% for Q2 of FY 13 from 4.2% for Q2 FY 12.  It is more than double what Reserve Bank of India considers sustainable level (2.5% of GDP) when economy is growing at slow pace. The slow pace of economic growth adversely affected the current account.

SEBI seeks to boost corporate governance – Reuters

Indian stocks to watch – Reuters

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