Profits rule the roost

The markets last week saw profit booking ruling as investors were focusing on the earnings season and on global cues. On a weekly basis, markets ended down around 5.5 per cent and the Nifty closed down around 1.4 per cent. Nifty lost its support and is likely to come down towards 7447 levels in the near term.

Investments
Expecting more bets, the overseas investors poured in more than $ 5 billon in the month which made their total investment over $ 25 billion since January. According to the data, the net investments made by the FIIs from July 1 to July 25 in the equity markets were $ 2.2 billion (R 13,166 crore) whereas in the debt markets were $ 3 billion (R 17,829 crore) making a total of $ 5.2 billion (R 30,995 crore).

The government's recent initiatives also helped this inflow. In the past week, the government has hiked the FDI cap in the insurance sector to 49 per cent which may raise an inflow of as much as R 25,000 crore foreign funds. Also, the hiking of the FII limit in government securities by $ 5 billion boosted the inflows. Since the beginning of the year, there was a net investment of R 72961 crore in equities and R 80,663 crore in debt market taking the total investment to $ 25.5 billion (R 1.53 lakh crore).

India's factory activity in July saw an expansion at its fastest pace in 17 months on the back of new orders' inflow. The HSBC manufacturing purchasing Managers' Index rose to 53.0 in July from 51.5 in the previous month. The reading above 50 shows expansion whiles the reverse a contraction. The new orders sub index rose to 55.9, it's highest since February last year and also the biggest monthly jump in the row in eight months.

Profits
Strides Arcolab reported a 12 fold jump in its standalone net profit for the quarter ended June 2014, on the back of improved margins across all segments. The net profit stood at R 26.79 crore against a standalone net profit of R 2.15 crore in the same period last fiscal. The net sales also rose to R 187.95 crore against R 150.83 crore during the corresponding period last fiscal. Operating profit was up to R 19 crore from R 6 crore and the company also generated 28 per cent and 30 per cent of its revenue from institutional businesses and emerging markets.

DCM Shriram posted a 33 per cent rise in the net profit on yearly basis on the back of growth in its Bioseed and Chloro-Viny business. The consolidate net profit for the quarter that ended June 2014 stood at R 203 crore as compared to R 114 crore in the same period last year. The net revenues were also up 9 per cent at R 1704 crore as compared to R 1561 crore in the same quarter last year. The operating profit margins improved by nearly 300 basis points to 15.81 per cent from 12.91 per cent.

Overseas
In the US markets, corporate earnings were the major triggers. The Federal Reserve meeting was also under scrutiny, with the Fed stressing on concerns about slack in the labour markets. The US central bank in its meeting cut its monthly asset purchases to $ 25 billion from $ 35 billion.

Gold is on the verge of a major fall, lost support at $1285 and likely to test $1278 and $1265 per troy ounce and it has resistance at $1299.

Companies like HCL-TECH, Tech Mahindra, L&T, NTPC declared a poor set of numbers.

For this week, the corporate earnings in Indian markets includes AIA Eng, Tata Comm, Marico, Punj Lloyd, IGL, Aptech, KPR Mill, Tata Chem, Jubilant, EIHotel, Bata India, KRBL, Crompton Greaves, Amaraja Batteries, GATI, ABCIL, ABCIL, FACT, Adani Power, Apollo Tyre, Adani Ports, Trent, Jubilant Foods, Puravankara, Bombay Dyeing, MAKE, M&M, Daawat, Chambal Fert, Finolex Cables, Godrej Industries and Emami Ltd.

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).