Short and sweet

The markets were seen hitting fresh highs thanks to support from FIIs and strong global cues. But mild profit booking and the long weekend kept the markets away from 8000 levels.

Happy days could be here for investors. Pic/Bipin Kokate

Nifty closed at 7954 up around 0.34 per cent on a weekly basis. Going forward, Nifty can reach targets of 8000 to 8100 levels. On the lower side, support arises at 7862 and 7783. The Indian markets were closed on Friday on account of Ganesh Chaturthi.

Overseas investment
In August, the overseas investors poured in about Rs 13,000 crore into the markets. Latest data shows foreign investors were gross buyers of debt securities worth Rs 31639 crore till August 22 and sold securities worth Rs 18649 crore resulting to a net inflow of Rs 12990 crore ($ 2.14 billion).

FIIs have pumped in a staggering Rs 98802 crore ($ 12.76 billion) into Indian bond markets so far this year, which is higher than investments of Rs 76705 crore ($ 16.4 billion) into equity markets.

Sanghi Industries for the quarter that ended June 2014 reported a turnaround where net profit stood at Rs 35.46 crore compared to a net loss of Rs 35.74 crore. Sales rose 30.30 per cent to Rs 288.24 crore in the period under review against Rs 221.22 crore, during the previous quarter.

For the year that ended June 2014, the net profit was at Rs 49.58 crore against Rs 45.88 crore in the previous year. Sales stood at Rs 1045.92 crore in the year which ended June 2014 against Rs 989.93 crore in the year which ended June 2013.

Coal call
In the last week, huge selling was seen mainly in the metal and power sectors after a Supreme Court verdict on coal allocations. The apex court said coal block allocations by the government to various private and public firms' from 1993 to 2009 were illegal.

On last Monday, after the verdict came out, a major sell off was seen in metal stocks which made the metal index of BSE end 4.34 per cent lower. Metal and power companies depend heavily on coal to run smelters and generate electricity. Banking stocks also showed some sort of selling due to the loans given to the power, mining and steel companies.

India Index Services & Products LTD, a subsidiary of NSE strategic investment Corporation LTD announced some changes in NSE various indices. In Nifty Midcap 50 index, stocks like RCOM, Adani Power and Adani Enterprises will be removed from September 26. In their place, Arvind LTD, JustDial and L&T Finance Holdings will be introduced.

In the CNX Midcap Index the stocks to be excluded are Adani ENT, Adani ports, McLeod Russel and UCO Bank while IOC, Ranbaxy, HDIL and IRB Infra will be included.

Adani power, HDIL, IRB, MTNL, Polaris, SKS Micro and TVS motors will be replaced by First Source solutions, Jaypee infra, Kaveri seed, McLeod Russel, Monsanto, Tata Elxsi and UCO bank in CNX small cap Index.

The US factor
Last week, the US markets saw little changed after the FED chair's comment that the central bank will move cautiously.

But better economic data supported the markets. Investors can create long positions in the option segment, by buying Nifty 8000 call options. Aggressive traders can buy one lot of 8000 call options and they can sell two lots of 8200 call options.

Crude is weak and has support at $ 92, if it moves down then it can test $ 89 per barrel. It is facing resistance at $ 93.85 and $ 94.60. In this week, Indian markets HSBC manufacturing PMI and services PMI are the data to watch out for.

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).