Bright prediction for India

Weak global cues were the main reason for losses in the domestic markets last week. Also, markets crossed below physiological levels which added pressure. Buying in selected counters supported the markets to an extent.

An anti-austerity banner depicting former (l-r) Greece Prime Ministers George Papandreou, Antonis Samaras and current Prime Minister Alexis Tsipras reads ‘We have bled enough, we have paid enough,' hangs off the tallest building in the port of Piraeus, near Athens

Nifty is facing resistance at 8390 (200 DMA), if Nifty manages to close at least two days above this level it can take it towards the 8540 and 8500 level in the short term. Support for the market is at 8315, a decisive move below this level can cause intensified sell-off.

New launches
In order to capture the movements on the top 30 mid-cap and 60 small-cap companies, the Asia Index, a BSE and S&P Dow Jones Indices joint venture in the last week launched two indices. The two indices are S&P BSE Midcap Select and Smallcap Select and the constituents are selected from the S&P BSE MidCap Index and S&P BSE SmallCap Index respectively.

IMF has predicted that the Indian economy will be the fastest growing one in the coming year. PM Narendra Modi poses for a family photo during the 7th BRICS summit in Ufa, Russia with his political counterparts

The stocks must have a listing history of six months and the maximum number of stocks is limited to ten scripts. These indices are reconstituted twice annually, in March and September and the index values are available in Indian Rupees and US dollars. The IMF which even lowered its 2015 global economy growth said that India will be the world's fastest growing economy for the second consecutive year in 2016.

In its World Economic Outlook Update, the IMF retained the country's growth for the current year at 7.5 per cent which will be higher than China's 6.8 per cent. For 2016 also, it maintained 7.5 per cent for India while China's stood at 6.3 per cent. While the growth forecast remained below the estimates of the Finance Ministry and RBI at 8.85 per cent and 7.6 per cent respectively for 2015-16.

The global growth projection for 2016 has been retained at 3.8 per cent. On the economic front, TCS came out with its earnings where the company profit after tax rose 48 per cent sequentially, to R5709 crore for the June quarter of 2015-16. The revenue was up 6 per cent to R25668.11 crore.

But the company has given a one time bonus of R2628 crore in the January-March quarter. If taken into account, this will make the net profit to fall sequentially by about 3.33 per cent. Rupee revenue at the same time increased 6.1 per cent on quarter to R25700 crore and the dollar revenue was up 3.5 per cent to $4036 million during the period under review.

Monsoon session
One of the major triggers for Indian markets will be the monsoon session. There are many bills which are waiting for approval, such as Land Acquisition Bill, Goods and Services Tax (GST) bill. Markets around the globe were waiting for the Greece referendum. In its referendum, Greeks voted against accepting more austerity from its international creditors, which fuelled its chances of exit from the Euro region.

In China, some of the companies stopped trading and the regulators came up with new measures to prop up the value of the small cap stocks made the Chinese indices sink. A technical issue in the New York exchange caused trading to halt for more than three hours. In the Indian markets this week, quarterly numbers will be a major trigger.

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).