The Speedy Gonsalez of growth

Global conditions and the October F&O expiry, compounded by mixed corporate earnings, kept the markets under pressure last week. On Friday, Nifty closed at 8065, which was down around 45 points.

Nifty has lost key support at 8200 (100 DMA). It is poised to test 8015 (50 DMA) and 8000 in the near term. A decisive move below 8000 can cause intensified sell-off this week. Investors can create bear spread with put options, by buying Nifty 8100 call and selling 7900 call options of November series.

For the quarter ended September 2015, Inox Wind came out with its earnings, where the company's consolidated net profit rose 63.4 per cent. The net profit of the company stood at Rs 89.13 crore compared to Rs 54.52 crore, in a year ago period.

The income from operations during the quarter under preview stood at Rs 1008.22 crore, against Rs 543.13 crore in a year ago period. The company manufactures wind turbine generators.

Growth
The World Bank in its biannual report said that India is now the world's fastest growing economy, which may be set for a modest acceleration in growth in the coming years.

The report pegged India's economic growth at 7.5 per cent in 2015-16, which may be followed by a growth of 7.8 per cent in 2016-17 and 7.9 per cent in 2017-18. It also hinted that softer oil prices together with the structural reforms has given a boost to domestic demand and allowed the country to achieve faster growth despite sluggish exports.

Foreign investors were seen trimming their positions in several companies during the July to September quarter, on the back of global and domestic conditions. FIIs reduced their positions in 19 blue chip companies. Foreign investors reduced their stake in Hindalco by 3.42 per cent to 21.46 per cent.

In Axis Bank it was by 2.38 per cent to 42.13 per cent. They also reduced positions in GAIL, Vedanta, Dr Reddy's Infosys, ICICI Bank, TCS and SBI. They increased their stake in ITC by 5.24 per cent to 20.71 per cent and in Cipla by 4.22 per cent to 22.51 per cent.

They raised their stake in Sun Pharma, Bajaj Auto, Bharti Airtel, M&M and LT. After a decline in the past, September end saw growth time for investments to Indian markets through the P-notes route. SEBI data reveals the total value of P-notes investment into Indian markets (equity, debt and derivatives) increased to Rs 253875 crore from Rs 253310 crore in August.

The investments touched a seven year high in May at Rs 2.85 lakh crore, after that it showed a declining trend in the June to August period. In addition, the quantum (percentage) of FIIs investments via the said route surged to 11 per cent in September, from 10.9 per cent in August.

P-Notes are mostly used by overseas HNIs, hedge funds and other foreign institutions, which allow investors to invest in Indian markets through registered FIIs.

Catalyst
Last week, the main triggers for global markets were the central bank meeting of US and Japan. The Bank of Japan in its meeting, downgraded its projections for the country's growth and inflation. It also said that it would keep its monetary stimulus program unchanged, in order to support the economy, but declined to increase its monetary stimulus.

In the meeting of Federal Reserve, the US central bank kept its interest rates unchanged, and, hinted at an interest rate hike in December. On the Japanese front, this week will see Nikkei manufacturing PMI, services PMI and consumer confidence will be in the watch out list.

Balance of trade, manufacturing PMI and services PMI will be in focus for Chinese markets. Nikkei manufacturing PMI and services PMI will be in focus this week for India.

In the earnings corner, India cements, Escorts, Escorts, Orient bank, Adani ports, Care ratings, Ajmera, Geometric, AD Labs, Tube Investment, Hitech Gear, Fincables, PVR, TBZ, KRBL, Den, Tech Mahindra, ABB, Power Grid, Berger Paint, Sparc, OCL, Punjab Chem, SCI, Pricol, Essar ports, Marico, Godrej Properties, Bata India, JK Paper, KEI, OFSS, JBMA, Tata steel, Tata global, Deepak fertiliser, ABAN, Bajaj electricals, Cummins Ind, Shalimar Paints, Sonasteer, Union Bank, GE Ship, Sail, Ashoka Buildcon, BHEL and Aries are some of the companies which may announce their earnings.

BSE metal index has last support at 7275 and if it moves down then, we can expect further sell-off. BSE FMCG stocks are also looking weak and the sector may face further sell-off in the days to come.

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