HOT STOCKS FOR THIS FUTURES EXPIRY

HOT STOCKS FOR THIS FUTURES EXPIRY

Index Outlook: Over to you, Governor

LOKESHWARRI S. K.

 

 
October 26, 2013:   

It was a suspenseful week for the Indian stock markets as the two benchmarks — the Sensex and the Nifty — did a tantalizing jig, an arm’s reach away from their life-time highs. The overwhelming pessimism in the market made the Sensex wobble nervously every time it neared the 21,000-mark and the Nifty too failed to get past 6,300. 

The stage is now set for a big week, with the RBI’s monetary policy meeting, US Federal Open Market Committee meeting, F&O expiry and a Muhurat trading session thrown in. The short-term trajectory of the market will be decided by the RBI Governor Raghuram Rajan’s next move. 

Continuation of the policy to bring down the Marginal Standing Facility ratewhile hiking the repo rate, will result in status quo. But if the Governor chooses to do something different this time, then the indices can go to a new high or crash; depending on the nature of the surprise. 

Global markets are also in a festive mood with many benchmarks, including the S&P 500, at a new life-time high. Ben Bernanke also needs to do his bit and maintain an enigmatic silence on the QE tapering to enable the rally to continue. Any hint at a new schedule for winding down the stimulus programme, can result in a fresh bout of turbulence. 

FIIs are pouring in money into the Indian market. This is part of a global flow of funds into emerging markets. According to EPFR Global, flows into emerging market equity funds jumped to a 37-week high for the week ending October 23. 

This was due to strong flows in to emerging Asian country funds. The BRIC theme is, however, yet to find favour and the BRIC funds have now posted outflows in 137 of the 146 weeks since the beginning of 2011. 

Oscillators on the daily chart are declining in line with the short-term weakness perceived last week. Negative divergence in the daily price rate of change oscillator reflects lack of short-term momentum. 

Weekly oscillators are attempting to cut higher from the bearish zone into bullish territory. But this has not yet been accomplished. 

These oscillators have been meandering sideways since April 2013, following the range-bound move in the indices during this period. 

Sensex (20,683.5)

The Sensex was in a gentle slide through last week, but for the flurry of excitement on Thursday, when it crossed 21,000 briefly. The short-term trend deciding level is 20,371. 

Investors can buy during declines as long as the index trades above this level. If this support holds, the Sensex can attempt to move higher to 21,299, 21,467 or 22,146 in the sessions ahead. 

The short-term outlook will turn negative if the index closes below 20,000. 

The medium-term outlook for the index turned positive when the Sensex reversed from the low of 17,449. 

Extrapolation of this move gives us the targets of 21,299 and 22,537. We will stick to these targets unless the index closes below 19,960. 

The Nifty ( 6,144.9) too, recorded the intra-week high of 6,252 and then went on to lose 44 points during the week. Key support for the week is at 6,045. 

Investors can continue to buy for the short term as long as the index trades above this level. 

Subsequent supports are at 5,980 and 5,917. The short-term trend will reverse lower only if the index closes below 5,917.

If the Nifty manages to hold above 6,044 next week, it will be able to rally to 6,252, 6,338 or 6,385 in the days ahead. 

The medium-term trend in the Nifty will not be threatened unless the index goes on to close below 5,800. 

Global cues

Global markets are also in an indomitable mood. The S&P 500, the DAX, KLSE Composite Index recorded new life-time highs last week and the Nasdaq is at a level last recorded in 2000. 

The dollar index recorded a low of 79.1 on Friday.

Weakness in this index denotes higher risk-appetite and the possibility of increased fund flows to riskier asset classes, such as emerging market equities. 

The Dow managed to close 181 points higher last week, around 200 points short of a new life-time peak. The sideways move in the narrow band of 14,500 and 15,500 will be construed as positive for the index. 

It can break out to the medium-term target of 16,600, if the support at 14,500 holds. 

lokeshwarri.sk@thehindu.co.in

(This article was published on October 26, 2013)

Sep 03, 2013, 06.20 PM IST

Sebi revises circuit limit system for Sensex, Nifty

Stock exchanges now have to calculate circuit limits on a daily basis. Currently the stock exchanges calculate the circuit filters on the basis of the level attained by Sensex and Nifty at the end of every quarter and the same limits are applicable for every day of trade for the next three months.

Market regulator Sebi today asked stock exchanges to calculate circuit limits - the maximum permissible movement allowed to Sensex or Nifty in a trading session - on a daily basis as against the current practice of doing the same on a quarterly basis.

Also Read: IMF tells Sebi: Adopt reassess and rearm mantra

Currently the stock exchanges calculate the circuit filters on the basis of the level attained by Sensex and Nifty at the end of every quarter and the same limits are applicable for every day of trade for the next three months. The new calculation would apply for 10 percent, 15 percent and 20 percent circuit limits in Sensex and Nifty, the two benchmark indices of Indian stock market, with effect from October 1, 2013. While 10 percent and 15 percent limits result into temporary trading halts, a 20 percent movement triggers into trading getting halted for the entire day.

The move assumes significance in the wake of rising volatility in stock markets. For example, the 10 percent circuit limit for Sensex in the current quarter is fixed at 1,950 points, while 15 percent limit is at 2,900 points and 20 percent limit is 3,875 points.

These limits were fixed as per the closing value of Sensex at the end of previous quarter, April-June 2013. However, the circuit limits would be much lower if they are calculated on the basis of previous day closing levels. For example, the Sensex today closed at 18,235 points and therefore the 10 percent circuit filter would stand at 1,823 points for tomorrow's trade.

Announcing the new guidelines, Sebi said: "The stock exchange on a daily basis shall translate the 10 percent, 15 percent and 20 percent circuit breaker limits of market-wide index variation based on the previous day's closing level of the index".

Sebi further said that the stock exchange should resume trading in stocks with a 15-minute pre-open call auction session, after any trading halt. In order to accommodate such pre-open call auction session, the extant duration of the market halt would be suitably reduced by 15 minutes, Sebi said.

Under the circuit breaker system, a rise or fall of 10 percent in Sensex triggers into the trading being halted across the market for one hour, if such a movement takes place before 1 pm, while halt is of 30 minutes is a 10 percent movement happens between 1 pm and 2.30 pm. pm. In case the movement takes place at or after 2.30 pm, there is no trading halt at the 10 percent level.

In case of a 15 percent movement of either index, there is a two-hour market halt if the movement takes place before 1 pm. If the 15 percent trigger is reached between 1-2 pm, there is a one hour halt, while trading is halted for rest of the day if a 15 percent trigger is reached on or after 2 pm. In case of a 20 percent movement of the index, the trading is halted for the remainder of the day.