Market puts up a resilient show

The indices have once again bounced higher from key supports, indicating strength

India equity markets celebrated Diwali in style, with the Nifty regaining the 8,000 mark and the Sensex moving above 26,800. Equity investors, across the globe, shook off their fears and resumed buying last week; perhaps enticed by the sharp corrections in some stocks.

There was plenty of positive news flow last week. The Modi Government announced a series of policy reforms including diesel deregulation, gas price hike and e-auction of the cancelled coal blocks. The victory of the BJP in the Assembly elections too buoyed sentiments.

Global markets were upbeat as well, with the US and European markets reversing smartly. However, the reason for the reversal isn’t too convincing. It was apparently comments by St. Louis Federal Reserve Bank President, James Bullard — that policy-makers should consider delaying the end of quantitative easing — which caused the turnaround in stock prices.

With the expiry of the October derivative contracts scheduled on Thursday, short-covering by traders could lend further support to the indices.

Volumes on NSE’s derivative segment has spiked towards the weekend and open interest in NSE’s derivative segment has moved above ₹220,000 crore, indicating heightened trading activity. Investors will keep watch on the earnings announcements of companies as well as the movement in crude prices.

The midweek FOMC meeting will be the key to determine the trend in global equity markets. With the bond repurchase programme coming to an end this month, market will keenly await Fed’s next move, especially the impending rise in interest rate.

Foreign portfolio investors reversed their negative stance towards Indian equities last week. After being net sellers since the beginning of the month, these investors turned net buyers.

Momentum indicators in the daily chart of the Sensex are rising to the neutral zone from bearish territory.

This implies that the rally needs to move a little further to signal a reversal in the short-term trend.

That both the Sensex and the Nifty have moved firmly above their 50-day moving average is however a positive sign.

Sensex (26,851)

The Sensex opened with an upward gap last Monday and went on to build on these gains over the week.

The week ahead: The short-term trend in the Sensex has reversed higher. But the index has not made a clean break above the key resistance at 26,820. If the index manages to close above this level on Monday, it will mean that the index can head towards 27,255 or 27,354 in the days ahead.

But the inability to hold above 26,800 on Monday will mean that the index can decline to 26,576 (50-day moving average) or 26,319. Next short-term support is 25,911.

Medium-term trend: The Sensex managed to hold above the 26,000 level last week. The medium-term view is therefore not under any threat. It needs to be seen if the Sensex manages to break above the 27,350 level this time. The inability to do so can keep the index in a range between 26,000 and 27,350 for few more weeks.

We retain the key medium-term supports at 25,000 and 24,500.

Nifty (8,014.5)

The Nifty managed to move above its 50-day moving average and close above the 8,000 mark last week.

The week ahead: The Nifty recovered early last week and has moved to our second target at 8,016. This is a key short-term resistance. The guide-posts for next week’s trade are:

If the Nifty manages to close above 8,000 on Monday, it will mean that the index will attempt to move to 8,160 or 8,180.

Target above 8,180 is 8,360.

The inability to close above 8,000 on Monday will drag the index to 7,915 or 7,848. Traders should desist from initiating long positions on a move below 7,848.

Target below 7,848 is 7,729.

Medium term trend: The medium-term trend for the Nifty stays positive. But the index is nearing a key medium-term resistance. The inability to move beyond 8,150 will make the index move between 7,300 and 8,200 for few months. Medium-term view will be threatened only on a close below 7,300.

Global cues

Global indices advanced from lower levels, beginning a short-term reversal. But this revival needs to sustain another week before we can take it seriously.

Most global indices recorded sharp declines in the middle of the week. But subsequent recovery was sharp.

This leads to the hope that at least one leg of the correction could have been completed last week. Investor sentiment revived sharply and the CBOE VIX declined from the intra-week high of 22.1 to 15.5, reflecting this improvement.

The Dow recovered from the intra-week low of 16,260 to close 450 points higher. But the index is currently poised at its key short-term resistance at 16,812. The index needs to move beyond this level to pave the way for a rise to 17,350.

On the other hand, the inability to move beyond this level will drag the index lower to 15,855 or 15,340.

The dollar index is trying to hold in the band between 85 and 87. Key support that needs to be watched now is at 84. The index needs to decline below this level to signal the end of the rally that began in May.

Reuters Poll - India's growth pace to pick up as reforms draw investment

India's economy will likely grow at its fastest pace in two years in the current fiscal year as Prime Minister Narendra Modi implements reforms to attract investment, a Reuters poll of economists showed on Friday.

The after-glow from Modi's election victory earlier in the year helped India's economy clock a robust 5.7 percent growth rate for the quarter ending in June.

The economy has just lumbered through the longest spell of below-5 percent growth in a quarter of a century, but forecasts are now predicting that the slump has passed.

Hopes of reforms for economic revival from Modi have attracted foreign capital inflows - before the election in May until now - triggering a massive rally in the stock market, making it one of the best performers in Asia so far this year.

That optimism looks set to continue.

"The outlook is improving and that mostly reflects the fact that the new government has pledged to prioritise economic reforms. First we saw an improvement in sentiment and now it is translating to actual pick-up in activity," said Tuuli McCully, senior economist at Scotiabank.

"Obviously, we really need to see more (reforms). But as of now, I am encouraged by how things are moving."

Over the past month, Modi's government has stepped up economic reforms, opening up the coal industry to private investors and freeing diesel prices to market forces from government subsidies.

The latest Reuters poll of 20 economists taken over the past week shows Asia's third-largest economy will likely grow 5.5 percent this fiscal year and 6.4 percent the next, slightly better than 5.3 percent and 6.3 percent expected in the July poll.

"India is transitioning away from stagflation conditions, and the much-needed combination of higher real rates, a more friendly investment environment and structural reforms appear to be slowly coming together," wrote Manoj Pradhan, an economist at Morgan Stanley.

However, without big-bang reforms to propel the economy back to a near double-digit growth, economists say, a broader and sustained economic revival will likely remain elusive.

Also, the global economy is showing signs of weakening and is expected to weigh on overseas demand for Indian merchandise.

Indeed, the economic outlook for two of India's biggest trading partners - China and the euro zone - has dimmed and is expected to drag on the global economy.

Consumer price inflation - the biggest challenge faced by the Reserve Bank of India - cooled to 6.46 percent last month, the lowest level since this series began in January 2012, from a revised 7.73 percent in August.

But the poll showed consumer prices will average 7.5 percent this fiscal year and ease to 7.0 percent next year.

"Despite lower inflation prints and the fall in commodity prices, the communication from RBI suggests it will keep monetary policy restrictive in the near term to achieve medium-term price stability," wrote Rahul Bajoria, economist at Barclays.

The RBI is expected to keep its key repo rate steady at 8.0 percent well into next year, even as a separate Reuters poll in September showed the Sensex would keep setting record highs through to the end of 2015.

Modi govt’s big reform push: Diesel deregulated, natural gas price hiked

Prime Minister Narendra Modi unveiled its biggest reform so far on Saturday, aligning diesel prices with international crude oil costs, a move that will make the key fuel cheaper by Rs. 3.37 a litre and help control inflation. Government also hiked natural gas tariff by 46 percent that will push up fertiliser, power, CNG and PNG rates.

This will be the first reduction in diesel rates in over five years. Diesel price were last cut on January 29, 2009 when they were reduced by Rs 2 a litre to Rs 30.86. Rates had since climbed to Rs 58.97. It will cost Rs 55.6 per litre in Delhi.

The move also eases the government’s huge subsidy burden paid out of the budget. In the first quarter of this fiscal (April-June 2014), the under-recovery burden on oil marketing companies was Rs 9,037 crore which would have required a sharing mechanism between the budget, consumers, OMCs and upstream oil and gas companies.

Against the backdrop of the steep doubling of rates to USD 8.4 recommended by Ranagarajan Committee and cleared by the previous UPA government, the government today approved a 46 per cent increase in natural gas prices that will go up from current USD 4.2 per million British thermal unit to USD 6.17 per mmBtu from Nov 1.

The gas price hike, according to a modified formula approved by the Cabinet, comes to USD 5.61 per mmBtu on gross-calorific value basis and USD 6.17 as per net calorific value – the principle used for calculating current USD 4.2 rate.

RIL will however not get the new gas price for its currently producing Dhirubhai-1 and 3 gas fields in eastern offshore KG-D6 till it makes up for the shortfall in production in the past four years.D1&D3 is producing under 8 million standard cubic meters per day against a committed 80 mmscmd. Consumers of RIL gas will have to pay higher rates but RIL will get only USD 4.2, with the difference being credited to a gas pool account maintained by GAIL.

RIL will get the higher price if it is able to prove legally that output fall was not deliberate and was due to geological reasons as it claims.

Higher gas prices would increase the expense of running power stations and fertilizer plants, raising infrastructure and food costs and accelerating the rate of inflation.

Every dollar increase in gas price will lead to a Rs 1,370 per tonne rise in urea production cost and a 45 paise per unit increase in electricity tariff (for just the 7 per cent of the nation’s power generation capacity based on gas).

Also, there would be a minimum Rs 2.81 per kg increase in CNG price and a Rs 1.89 per standard cubic metre hike in piped cooking gas.

Gas price increase had been deferred on three occasions previously.

The previous UPA government had in June last year approved a price formula suggested by a panel headed by C Rangarajan and re-confirmed it in December 2013 with certain conditions for Reliance Industries’ eastern offshore KG-D6 block.The formula was to be implemented from April 1, 2014, when the tenure of USD 4.205 per million British thermal unit price fixed for KG-D6 gas was to expire, but before a rate could be notified, general elections were announced and Election Commission asked the then government to defer it till completion of polls.

On June 25, the new BJP-led government deferred it for a further three months to September-end saying the issue required “comprehensive consultations.”

The revision was again deferred by 45 days on September 24 as the government seemed wary of taking an unpopular decision on just before assembly election in crucial states of Maharashtra and Haryana.

The formula, which was notified on January 10, will more than double the current USD 4.2 per million British thermal units. The new gas price was to be applicable to both state-owned ONGC produced fuel as well as private sector RIL’s gas.

The delay in gas prices had most affected Reliance Industries and state-owned Oil and Natural Gas Corp (ONGC). RIL and its partners BP plc of UK and Canada’s Niko Resources on July 6 slapped an arbitration notice on the government seeking implementation of a gas price revision which was due to them on April 1.

For ONGC, the nation’s largest gas producer, the postponement of price increase was seen as a dampener to its stock valuation particularly when the government had plans to sell a 5 percent stake in the company to help narrow budget deficit.

India’s offshore oil and gas industry is “at risk” in the absence of higher gas prices, BP CEO Robert Dudley had said on June 17.

RIL has been selling gas from KG-D6 at the same price since it started production in April 2009. The government increased ONGC and Oil India Ltd’s selling price to match RIL’s in May 2010.

IOC to cut petrol prices by 1.2 rupees from Wednesday

Indian Oil Corp will cut retail gasoline prices by about 1.78 percent or 1.21 rupees a litre from Wednesday as global prices of the fuel have eased since the last revision, the company said in a statement late on Tuesday.

The three state-run fuel retailers -- IOC, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd -- tend to move their prices together.

($1 = 61.42 Indian Rupees)

India's trade deficit widens to $14.25 billion in September

 India's trade deficit widened to $14.25 billion in September following a jump in oil and gold imports, government data showed on Tuesday.

The deficit stood at $10.84 billion in August.

Merchandise imports surged nearly 26 percent last month year-on-year to $43.2 billion. Exports, meanwhile, grew a tepid 2.73 percent on year to $28.9 billion.

Gold imports in the month under review increased manifold to $ 3.75 billion compared to $682.5 million in same month last year.

Indian Markets Outlook for the week – 13.10.2014 to 17.10.2014

Benchmark share indices are expected to move within a narrow range next week as investor’s eye key economic data and companies' earnings reports for Jul-Sep. Data on Consumer Price Index inflation for September will be released on Monday. We see it at 7.2% against 6.75% a month ago.

IndusInd Bank and Reliance Industries will detail their financial results for Jul-Sep on Monday.

We expect IndusInd Bank to post a net profit of 4.17 bln rupees, up 26.23% on-year and see net sales at 8.27 bln rupees, up 3.3% on-year. Reliance Industries' net profit is seen at 53.75 bln rupees, unchanged from a year ago and net sales at 944.74 bln rupees, down 8.95% from a year ago.

Other Nifty companies which will detail their earnings next week are Bajaj Auto, HeroMotoCorp, Tata Consultancy Services, Axis Bank, HCL Technologies and Zee Entertainment Enterprises.

Investors will also keep a close eye on global developments. Any further fall in prices of crude oil may fuel a fall in shares of upstream oil companies. Cairn India is expected to be hit the most if crude prices continue to slip. The sentiment in the US, Asian and European markets will have a bearing on Indian equities as concerns surrounding the health of the global economy continue

to persist.

Bank shares are expected to recover if data on industrial output and inflation turn out to be positive. Shares of information technology and pharmaceutical companies are expected to rise as well. Shares of fast moving consumer goods companies may continue to fall next week.

Markets Weekahead - Earnings, inflation in focus as global markets reel

Worries are growing India will be hit by tumbling global markets.

Investors fear the prospect of a global slowdown and the end of U.S. monetary stimulus.

India has attracted a net $34 billion in foreign investment this year.

Domestically, earnings of blue-chips such as Reliance Industries  and Tata Consultancy Services  key for shares.

Nifty seen in 7,800 to 8,000 range.

Consumer inflation data on Monday key for bonds and rupee.

September CPI forecast to have risen 7.2 percent year-on-year vs 7.8 percent in August - Reuters poll.

India to also report wholesale inflation during the week.

Trade data is also possible, although no date has been set.

Benchmark 10-yr bond yield seen in a 8.40-8.55 percent range.

The rupee seen in a 60.80-61.30/dollar range.

KEY EVENTS TO WATCH

No date: Sept trade data (tentative)

Mon: Sept consumer price inflation (1730 India time/1200 GMT)

Reliance Industries, IndusInd Bank  earnings

Tue: Sept. wholesale price inflation (1200/0630 GMT)

Bajaj Auto's results.

Wed: Markets closed due to Maharashtra state elections

Thu: Federal Bank, Tata Consultancy Services, Hero MotoCorp's earnings

Fri: HCL Tech, Axis Bank , Zee Entertainment Enterprises' earnings.

600 Million Reasons to Keep Your Eyes on India

In the wake of his rock star reception at Madison Square Garden last Sunday, Prime Minister Narendra Modi emphatically announced to our nation's top corporate and political leaders that India is now open for business. Between September 26 and 30, he met with not only President Barack Obama and other high-profile politicians but also the CEOs of some of our nation's largest and most successful companies: Google--which we own in both ourAll American Equity Fund (GBTFX) andHolmes Macro Trends Fund (MEGAX)--Boeing, PepsiCo and General Electric, among others.

The only thing missing was a ribbon cutting ceremony.

Although U.S. Global Investors typically doesn't invest in India, the country has recently found itself in the driver's seat of global resources demand and production. This is a tailwind for our Global Resources Fund (PSPFX), which maintains heavy exposure in the industries that India will increasingly need to support its more than 1.25 billion (and counting) citizens: oil and gas, chemicals, energy services and infrastructure, precious metals and food.

India's culture is ancient, dating back more than five millennia, but it has a disproportionately young population. As the world's second-most populous country, India is home to roughly 600 million people under the age of 25. That's close to half of its own population and a little less than twice the entire U.S. population. Over the next few years, this one generation will largely be responsible for charting the country's trajectory into its next stage of economic development.

As old as India's culture is, millions of its citizens seek the contemporary American dream of opportunity and prosperity. They rely on their new leader, former tea merchant Narendra Modi, as their ambassador of "hope for change," as he put it in his September 25 Wall Street Journal op-ed.

India Opening Its Wallet to International Sellers

At its current rate of population growth, the South Asian country will in the coming years be in need of biblical amounts of natural resources to meet the ambitious economic and social plans the newly-elected prime minister has laid out.

Among other goals, Modi envisions "affordable health care within everyone's reach; sanitation for all by 2019; a roof over every head by 2022; electricity for every household; and connectivity to every village."

The energy infrastructure alone will require staggering amounts of copper conductors, iron, electrical steel and oil. As I wrote back in May, Modi has a proven track record for bringing electricity to Indians who previously never had it.

The prime minister also asserts: "The number of cell phones in India has gone up from about 40 million to more than 900 million in a decade; our country is already the second-largest market for smartphones, with sales growing ever faster."

China is currently the world's largest smartphone market.

Most smartphones require a combination of many precious metals, minerals and other materials, including gold, aluminum, glass, steel, lithium and various rare earth elements you might never have heard of such as yttrium, praseodymium and dysprosium.

Since Modi's election in late May, the consumer outlook index in India has risen nearly 8 percent. At 45.2, however, it's still about five points shy of 50, the pivotal threshold that indicates, on balance, that more consumers perceive the economy to be improving.

Planes, Trains and Automobiles

As population mounts and business and manufacturing activity increases, India's need for additional cars and trucks has accelerated this year. Vehicle production uses not only many of the materials already mentioned but also palladium, lead, zinc and others.

India, the world's largest importer of weapons, also has its eyes on American-made military aircraft--more than $3 billion worth. The Asian country is already the U.S.'s leading defense market, and companies such as Boeing, Lockheed Martin and Sikorsky are no doubt pleased to hear that Modi's government is committed to ramping up its defense spending.

According to the Wall Street Journal, among the possible purchases Prime Minister Modi discussed during his visit to the U.S. were 22 Apache attack helicopters, 15 Chinook heavy-lift helicopters and 24 Harpoon anti-ship missiles.

Below is a video courtesy of National Geographic that illustrates just how many metals, chemicals and other materials go into the assembly of a single Apache helicopter. 

Going Long in India

Many economists and pundits have already likened Prime Minister Modi's transformative pro-business position to that of Ronald Reagan and Margaret Thatcher--and his media darling status to that of Barack Obama circa 2008.

Even before Modi's election, India was drawing the attention of global investors seeking growth and opportunity. Last month the portfolio manager of our China Region Fund (USCOX), Xian Liang, had the pleasure to attend a presentation in Hong Kong by CLSA's Chris Wood, recognized as the one of the best strategists in Asian markets. During his speech, Wood maintained that India has been and continues to be his favorite market in the region, now more than ever since Modi's ascent:

"I have, in fact, allocated 41 percent of my long only portfolio to India... I am not going to pull out because I am viewing India as a five-year story given the fact that Modi has been elected for five years. Modi is the most pro-business, pro-investment political leader in the world today."

Wood went on to argue that among the four BRIC countries--Brazil, Russia and China included--India is the best place for investors to be right now.

But with Brazil's economy limping along at less than a 1-percent growth rate and Russia's wounded by international sanctions, it's hardly an intellectual feat to declare India the BRIC country with the greatest potential.

The chart below places India in context with other emerging Asian countries. As you can see, whereas the economies of China, Indonesia and the Philippines are flat or slowing, India's is growing rapidly and projected to have a 7.2-percent growth rate by 2016, a 60-percent jump since 2012.

With Modi actively seeking partnerships with some of America's largest companies, it appears more and more likely that India can realize this optimistic growth rate.

The Challenges Ahead

Despite all of the good news, India faces many economic and political challenges that must be overcome before it can truly take off and achieve legitimate powerhouse status. According to the World Bank Group, the country ranks 134 in its Ease of Doing Business 2014 Rank, just below Yemen and Uganda. And out of 144 countries, India ranks 71 in the World Economic Forum's recently-released Global Competitiveness Report 2014-2015, scoring 4.21 out of 7.

Tortuous trade barriers, which Modi has expressed his resolve to liberalize, still hinder constructive international business dealings. Gold import duties remain in effect, which has allegedly led to an increase in smuggling.

Also, although India's manufacturing sector in September showed modest growth for the eleventh consecutive month, the pace at which it grew is the slowest we've seen since December 2013. For the first time since March, the one-month moving average for the country's purchasing managers' index (PMI) crossed below the three-month. This move contributed to the J.P. Morgan Global Manufacturing PMI's recent cross below the three-month, which, as I discussed recently, could be a headwind for commodities and commodity stocks.

But such challenges don't appear to daunt the new prime minister.

"India is going to march ahead at a very fast pace," Modi told his nearly 20,000 attendees at Madison Square Garden on Sunday. "The 21st century will be that of India. By 2020, only India will be in a position to provide workforce to the world."

We at U.S. Global Investors wish Prime Minister Modi, his new government and the 1.25 billion Indians all the best.

By: Frank Holmes Author:  Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure.

India poised to overtake China as world’s largest coal consumer

India is set to overtake China as the world’s largest importer of coal used in power plants, as the country battles chronic power shortages that are crippling its growth while domestic sources of natural gas are being depleted at an alarming rate.

That was the main outcome of the Financial Times’ inaugural Commodities Retreat in Singapore held last week, the newspaper reports (subs. required).

Miners and traders gathered at the convention agree that the country, alongside Korea, is emerging as one of the few bright spots in the 1bn tonne a year seaborne thermal coal industry, FT reports.

Currently the world’s third-largest consumer of coal, behind China and Japan, has imported 43% more coal than it did a year ago

India, currently the world’s third-largest consumer of coal, behind China and Japan, has imported 43% more coal than it did a year ago, as demand from power stations and steelmakers increases, data from the World Coal Association shows.

In the year ended March 2013, India imported 20% of its total coal requirements, a number that is expected to grow to 23% by 2017, according to a BP Plc. report.

The demand for power station fuel is estimated to rise 43% to 730 million tons by 2017, while the supply from domestic sources is expected to jump 38% in the same period.

In China instead the future looks more and more like a coal-free one. While the nation remains the biggest user of coal, Beijing is struggling with high pollution levels brought on by an excessive use of thermal power plants, and has been taking drastic measures to reduce its reliance on coal and shift to cleaner sources like natural gas for its energy needs.

Sensex Awaits The July-September Earnings Reports

As investors preferred to remain cautious in the holiday-shortened week, the Reserve Bank of India (RBI) decided to keep the key rates unchanged in the monetary policy announced last week.

Though this wasn’t out of sync with market expectations, broader indices went through a bout of volatility during the session.

The mid- and small-cap stocks experienced a relief rally and the respective indices closed the week on a positive note.

Indices representing rate-sensitive sectors such as BSE Bankex and Realty fell 1.8 per cent and 3.5 per cent respectively for the week.

But the IT Index surged 3.6 per cent recording a new high on the back of stronger dollar to support margins. Quite a few IT stocks also registered new highs for the week.

US markets found their base and rallied intra-week, trimming recent losses in the Dow and S&P 500 index, as the US jobless rate fell to a six-year low of 5.9 per cent in September.

It was a better-than-forecast payrolls report; an expansion in service industries also strengthened the investors’ confidence. However, both the US and European indices closed the week in negative zone.

Domestic markets will remain closed on Monday on account of Bakrid; the opening on Tuesday could set the tone for the week. The July-September earnings reports will kick off with Infosys scheduled to report its quarterly results on October 10.

Foreign investors have been wary through the week, remaining net sellers for much of last week. Their action is also a factor to watch out for in the ensuing week.

Oscillators in the daily chart are sloping down after a minor rise indicating that the short-term trend could weaken from here.

The weekly oscillators extended the decline. The negative divergence in this chart shows possibility of the medium-term outlook turning uncertain too.

The weekly price rate of change oscillator is just above the zero line. A fall to negative terrain will indicate short term bearishness.

Sensex (26,567.9)

The Sensex was choppy as it zipped between the intra-week high of 26,851.3 and low of 26,481.3.

The week ahead: The index has been moving sideways over the past one month. If it fails to rally above 26,887, it will signify that the Sensex can decline to 26,220 or 26,032 in the week ahead.

To alter the short-term trend, the index needs to decline below 25,233. However, a strong surge above 26,887 can take the index higher to 27,354 and 27,531.

Medium-term trend: As long as the index continues to hold above the key support level of 26,000, the view remains positive. The next key medium-term support will be at 24,500. On the upside, a decisive close beyond 27,400 can take the index to 28,400 in the medium term.

Nifty (7,945.5)

The Nifty hovered between the intra-week levels of 7,923 and 8,030.9 and closed 0.29 per cent lower for the last week.

The week ahead: The Nifty is hovering just above its 50-day moving average line at about 7,900.

The inability to rally above 8,032 once again will be the cue for traders to initiate short positions with a stop-loss at 8,050 levels.

Targets are 7,790 and 7,718. A conclusive break of 7,718 will indicate that the index can trend downwards to 7,540 levels. Nevertheless, a strong rally above 8,032 can push the index higher to 8,180 and 8,236 in the short term.

Medium-term trend: As long as the Nifty holds above 7,000, the medium-term outlook stays positive. Key support is placed at 7,800.

Global cues

The global markets witnessed a sell-off during the initial part of the week. However, only the US indices recovered sharply on Friday. The European and Japanese markets saw steep declines, closing below the key support levels. This emits short-term bearish signals.

CBOE volatility index closed on a flat note in the midst of volatility. The Dow recouped most of the intra-week loss on Friday to close marginally above the key support at 17,000 levels.

Immediate supports are at 16,800 and 16,650. Resistances are at 17,150 and 17,350. We reiterate that a fall below 16,300 will weaken the short-term uptrend.

The Dollar Index extended its uptrend by gaining 1.3 per cent last week. Now, it is headed towards the resistance at 89. Supports are at 86 and 85 levels.

FII inflows in equities hit 7-month low of Rs 5,100 crore in September 2014

Overseas investors have pumped in a little over Rs 5,100 crore in Indian equity markets in September, making it the lowest net investment in seven months.

Foreign investors were gross buyers of equities worth Rs 93,493 crore last month, while they sold shares amounting to Rs 88,391 crore - translating into a net investment of Rs 5,102 crore ($845 million) for the period, as per the latest data.

This was the lowest net investment by foreign investors in equity markets since February when they had infused Rs 1,404 crore.

Market analysts said the government's decision to defer gas price hike coupled with the Supreme Court's verdict on cancellation of coal blocks provided foreign investors some reason to offload shares.

Foreign investors are still upbeat on the Indian equity market, they added.

However, overseas investors (Foreign Institutional Investors, sub-accounts or foreign portfolio investors) continued to bet on the debt market and poured in close to Rs 16,000 crore ($2.6 billion) in this segment.

Since the beginning of this year, foreign investors have infused a net amount of Rs 83,438 crore ($14 billion) into the share market, while they invested a net of Rs 1.18 lakh crore into the debt market ($19.6 billion).

Strong inflows in the previous months have taken the cumulative net investments of foreign investors into Indian capital markets (equity and debt) to $204 billion, or Rs 9.88 lakh crore, in nearly 22 year period.

Indian markets closed Oct 2-6

Indian markets will be closed from Thursday to Monday, with trading to resume on Tuesday.

The Sensex fell 0.23 percent, or 62.52 points, to end at 26,567.99 on Wednesday. The broader Nifty lost 0.24 percent, or 19.25 points, to end at 7,945.55.

The partially convertible rupee ended at 61.61/62 per dollar compared with Tuesday's close of 61.7450/7550.

The benchmark 10-year bond yield closed down 3 basis points on the day at 8.48 percent.

NSE FUTURE & OPTION LOTS FROM NOVEMBER CONTRACT

NIFTY 50 25

CNXMDCAP 150 75

ASHOKLEY 11000 8000

AXISBANK 1250 500

GMRINFRA 10000 9000

HAVELLS 1250 1000

IFCI 9000 8000

NHPC 12000 10000

UNITECH 17000 9000

—————————————–
ADANIENT 1000 500

ADANIPORTS 2000 1000

ALBK 4000 2000

AMBUJACEM 2000 1000

ARVIND 2000 1000

AUROPHARMA 500 250

BANKBARODA 500 250

BHARATFORG 1000 250

BHARTIARTL 1000 500

BHEL 2000 1000

CENTURYTEX 1000 500

CIPLA 1000 500

COLPAL 250 125

CROMPGREAV 2000 1000

DABUR 2000 1000

DISHTV 8000 4000

DIVISLAB 250 125

FEDERALBNK 4000 2000

GAIL 1000 500

HCLTECH 250 125

HDFCBANK 500 250

HDIL 8000 4000

HINDPETRO 1000 500

IGL 1000 500

INDIACEM 4000 2000

IOB 8000 4000

IRB 4000 1000

KOTAKBANK 500 250

MOTHERSUMI 1000 500

ONGC 1000 500

ORIENTBANK 2000 1000

PFC 2000 1000

PNB 500 250

RANBAXY 1000 500

RELCAPITAL 1000 500

SIEMENS 500 250

SRTRANSFIN 500 250

SSLT 2000 1000

SUNPHARMA 500 250

SYNDIBANK 4000 2000

TATAMOTORS 1000 500

TATAMTRDVR 2000 1000

TATASTEEL 1000 500

TVSMOTOR 2000 1000

UNIONBANK 2000 1000

UPL 2000 1000

VOLTAS 2000 1000

YESBANK 1000 500

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UBL 250 500Revision of Market Lot of Derivative Contracts on Indices

NIFTY Present Market Lot 50 Revised Market lot 25
Nifty Midcap 50 Present Market Lot 150 Revised Market lot 75

All contracts in the above mentioned 

Indices shall have the new market lot with effect from October 31, 2014

DEPARTMENT : FUTURES & OPTIONS Download Ref No : NSE/FAOP/27733 Date : September 30, 2014
Circular Ref. No : 069/2014

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DEPARTMENT : FUTURES & OPTIONS Download Ref No : NSE/FAOP/27734 Date : September 30, 2014
Circular Ref. No : 070/2014

INDIAVIX Present Market Lot 550 Revised Market lot 800
The revised lot size shall be applicable to contracts with expiry date October 28, 2014 and onwards

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