Stock talk: You win some, you lose some

Strong FII buying and a pre-election rally, supported the markets as it made new highs each day. At the end of last week though, weak global cues and profit booking made the markets pare some of its gain. NIFTY closed at 6694 down around 0.50per cent on a weekly basis.

Police advance near red flares left by demonstrators as they clash with anti-austerity protesters and block access to the venue of the European Union Informal Meeting of Ministers for Economic and Financial affairs in Athens. Eurozone officials urged France's incoming government to stick to reform pledges, and Greece to capitalise on its austerity sacrifices in return for a long-delayed 6.3-billion-euro slice of bailout cash

If NIFTY falls below 6681 and 6597, then we can assume that the uptrend is under threat. On the contrary, if NIFTY moves above 6750 the ongoing rally may continue. One should wait till getting a firm outlook, before creating a large position.

In order to attract more inflow, the RBI has simplified the registration process and operating framework. The bank said that the portfolio investor registered with SEBI guidelines shall be called Registered Foreign Portfolio Investor (RFPI). The existing portfolio investor class registered with SEBI, namely Foreign Institutional Investor and Qualified Foreign Investor shall be included under RFPI.

The RFPI may purchase and sell shares and convertible debentures of an Indian company, through registered brokers on recognized stock exchanges in the country, as well as purchase shares and convertible debentures which is offered to public in accordance with SEBI guidelines.

Invest
These entities are also eligible to invest in government securities and corporate debt, subject to limits specified by the RBI and SEBI from time to time. It also said that all the investments made by the FII/QFI prior to the registration of RFPI, shall continue to be valid and such investors would be permitted to trade in all exchange traded derivative contracts on the stock exchanges to the position limits as specified by SEBI from time to time.

Inflation
The retail inflation for farm workers and rural labourers eased to 8.14 per cent and 8.27 per cent respectively in February, from 9.08 per cent and 9.21 per cent in the previous month, mainly on the back of decreased in the prices of food items.

The inflation based on food index of consumer price index -- agricultural labourers (CPI-AL) and consumer price index -- rural labourers (CPI-RL) were at 6.85 per cent and 6.99 per cent in the month under consideration. The all India CPI - AL and CPI - RL for February figures were 757 points and 759 points respectively.

Output
The core sectors output for February, rose to a five month high which spurs the hope of a stronger recovery in industrial growth. The eight core industries grew 4.5 per cent in the month under review, from 1.6 per cent in the previous month.

The core sectors constitute almost 38 per cent of index of Industrial production. The coal output rose marginally by 0.1 per cent against a contraction of 0.7 per cent in the previous month whereas the natural gas output fell 4.4 per cent from 5.2 in January. Electricity generation rose 10.4 per cent which was the highest since September.

Highs
On the global front, in the beginning of last week, markets were positive on positive US data and the hopes of a Chinese stimulus. Also, the comments from the Federal Reserve that the central bank has "extraordinary" commitment to boost the economy made the US markets hit new highs.

On the economic data front, manufacturing data and manufactured goods order were strong. But coming to the end of last week, markets slipped on profit booking as the investors' focus shifted towards the US monthly jobs report.

Earnings
For the Indian markets in this week, balance of trade, Industrial Production and Manufacturing Production Data will be the major triggers. Also the earnings of some of the major companies may start unveiling in the week. The major ones in the list are INFY, IndusInd Bank, MindTree, CMC and Goa Carbon.

Crude
Crude is getting support at $100.52 per barrel, and if crude stays above this crucial level for more than two days then it will test $104 in the near term. In the Options segment, aggressive traders can buy 6700 put options for the near month. Short term delivery can be initiated in SKF India, Hexaware, M&M, Tata Steel and Tata Motors.

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).