Profitable times

In the week Nifty closed with a positive note with a weekly gain of around 0.5 per cent.

The major support for the Nifty lay at 5608 and the major resistance stood at 5750 level. Wipro (up around 8 per cent), Maruti (up around 7.26 per cent) and Bajaj Auto (up around 6.14 per cent) were the large cap gainers. BHEL (down around 5.45 per cent), HUL (down around 3.37 per cent) and ONGC (down around 3.19 per cent) were the top losers.

Stable deficit
India's fiscal deficit for the April-September period rose to 65.7 per cent of the total budget amount, which was almost unchanged from the last month level but was lower than same period last year. The deficit stood at 68 per cent of the budget target during the same period last year. The finance minister said the government will work to restrict the deficit to 5.3 per cent of the GDP in the current financial year and reduce it to 3 per cent by 2016-17. The fiscal deficit was 5.8 per cent in 2011-2012.

FIIs' impact
Market-friendly steps taken by the government made the FIIs bullish on the Indian markets. According to a report, FIIs increased their stake in 75 top companies by 1.4 per cent, which is a six-year high as of September 2012. The maximum buying was seen in the energy sector while selling was in the consumer discretionary sector. Heavy buying was seen in Cairn India which was up to nearly 16.17 per cent from 8.50 per cent. Also buying was seen in Axis Bank, Yes Bank, HDFC and Cipla which showed a stake rise of around 3-6 per cent. Stake reduction was seen in Indiabulls Financials, Federal Bank and McDowell by 4.78 per cent, 3.89 per cent and 3.63 per cent respectively. But on the other side, promoters and domestic institutions have reduced their holdings. RBI announced its second quarter policy meet, which left the repo rate unchanged and the reduction of CRR by 25 basis points. Also the Central Bank raised its inflation projection for March FY13 to 7.5 per cent from 7 per cent.

The major earnings for the week was the result of IT major Wipro which reported a 23.8 per cent jump in the consolidated net profit for the second quarter ended September 30, 2012. The net profit stood at Rs 1,610.6 crore for the second quarter. Total income was also up around 17.16 per cent and stood at Rs 1,0620.3 crore as against Rs 9,064.5 crore in the same period last year. The company also announced demerger of its non-core business. It is a welcome step and the stock gained on this front. Midcap stock Titan also came out with a good set of numbers. Company reported a rise of 21.35 per cent in the net profit to Rs 1.80 billion for the quarter ended September 30 as compared to Rs 1.49 billion in the same period last year. Net sales increased 8.57 per cent to Rs 22.76 billion.

Gold may remain subdued and it may get support at USD1662 and USD1650. On the raising channel, gold has resistance at USD1725 and USD1740. Low levels buying can be initiated ahead of festival season in India. Investors can create long positions in Union Bank, Uco Bank, Dena Bank, SML Isuzu and Nilkamal Industries for short-term perspective. On the option segment, buying call options of 210 Ambuja cement, 780 HDFC, 620 HCL-Tech, 410 Tata Steel, 1750 Larsen and Toubro is preferable for short-term trading purpose. Next week, the traders may also watch out for the revelation of more second quarter earnings, which includes those of Tech Mahindra, Tata Motors, Bharti Airtel, Coal India, Sail, ONGC, Hindalco and Tata Power.

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). u00a0