Monsoon merry

The world’s eyes are trained on the tremendous tumult in Greece

Despite global cues, the Indian markets were up in the week as of mixed economic data. Also the low level buying after a sell off and the easing concerns of the monsoon supported the markets. Now the court decision on the MAT issue which may come out today, may influence market movements.

Nifty has resistance at 8251; above this level it could test 8301 and 8355 (200DMA). Support for the Nifty lies at 8176 and 8100, and a decisive move below this can cause further sell-off. Investors can buy Nifty 8250 call options and can sell 8350 call option one lot each. The other strategy would be buying 8200 call option and put option together in the June series.

Investment
As the government was taking steps to attract more investment, the FDI inflows to the services sector grew over 46 per cent in 2014-15. According to the data by the Department of Industrial Policy and Promotion (DIPP), the services sector FDI stood at USD 3.25 billion as compared to USD 2.22 billion in 2013-14.

The services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, the FDI level stood at USD 4.83 billion in 2012-13. The overall foreign inflows to the country have also jumped by 27 per cent to USD 30.93 billion during the previous fiscal as compared to USD 24.29 billion in 2013 14.

Following the services sector, telecommunications (USD 2.89 billion), automobiles (USD 2.57 billion) and computer software and hardware (USD 2.20 billion) had highest FDI inflows. The consumer based index inflation rose up slightly to 5.01 per cent in May from 4.87 per cent in April 2015. The rise in the overall CPI inflation was due to the increase in inflation for transportation and communication.

The core inflation was at 4.4 per cent from 4 per cent in April 2015, rising for the second straight month. The corresponding provisional inflation rate for the rural areas was 5.5 per cent and urban was at 4.4 per cent, as compared to 5.3 per cent and 4.4 per cent last month. But inflation of food and beverages group declined to 5.1 per cent from 5.4 per cent last month.

Shrinking
The country’s trade deficit fell to a three-month low in May, helped by lower gold imports. According to the trade ministry, the data shrank to $ 10.41 billion in the previous month, from $ 10.99 billion in April. The overall imports fell 16.52 per cent to $ 32.75 billion from a year earlier, whereas the exports also contracted 20.19 per cent on a year-on-year basis to $ 22.35 billion in May.

The gold imports were down 23 per cent from April to $ 2.4 billion last month. According to a study, India’s manufacturing sector growth declined in June, both monthly and on a yearly basis, on the back of declining exports and disappointing corporate earnings. The yearly SBI composite Index which is an indicator for manufacturing activity fell to 53.2 from 56.5 in May 2015.

The monthly index was also down to 46.7 in June 2015 from 53.7, in the previous month. An index value less than 42 shows large decline, while value of 42 to 46 means a moderate decline, 46 to 50 a low decline, where 50 to 52 a low growth and 52 to 55 a moderate growth. The index value above 55 shows a high level of growth.

Greece
On the global front, the major event was Greece and its talk with creditors. In its meeting, the IMF walked out of the meeting, whereas the talks with its creditors also collapsed. After that, investors were also focusing on the two day meeting of the US Federal Reserve to get more indication on its interest rate hike. In its policy meet, the US central bank left its interest rates unchanged at zero.

The FED said that the country is showing gradual improvement, which may lead to an interest rate hike later in the year. The economic data was also mixed. But the Chinese shares saw a sell of, as the market regulator tightened some rules for margin trading.

For Japanese markets, manufacturing PMI flash, inflation, core inflation, unemployment rate and Bank of Japan’s monetary policy meeting minutes will be in focus. In China, the HSBC manufacturing PMI flash will be the major one.

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).

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