OUTLOOK FOR NIFTY ON 12 & REVIEW

CAUTION @ HIGHER LEVELS

Nifty                               8086    -8

Nifty opened better but fell sharply after the opening hour and recovered most of the lost ground to close with minor negative bias. While Nifty has been subdued, broader market is positive with Advance Decline ratio at about 2:!. Nifty spot is expected to encounter resistance at 8125, 8170 and find support at 8045, 8010 for Friday. Nifty’s bullishness would be reinforced only when it crosses 8185. While Global cues  and  Funds flow  are expected to broadly guide the market movement, based on the present market position, market can be expected to face selling at higher levels before noon .

SENSEX FALLS BELOW 27K

Falling for third day, Sensex today slid about 62 points to end at 26,995.87, its weakest level in nearly two weeks, on caution due to lingering worries over early Fed rate hikes and after US President Barack Obama promised to destroy militants in oil producers Syria and Iraq. A heavy sell-off mainly in Sun Pharma, ONGC and Coal India led the BSE benchmark to end below 27,000-mark. In three straight sessions, Sensex has now lost nearly 324 points after hitting record highs on Monday. Similarly, the broader 50-issue CNX Nifty of the NSE eased 8.40 points, or 0.10 per cent, to 8,085.70 -- its lowest close since 8,083.05 on September 2. Jittery global markets, already spooked by earlier than expected US Fed interest rate hike talk, became nervous after Obama's vow. The US President today promised to "degrade and ultimately destroy" the Islamic State (IS) as he announced a major expansion of the military campaign, including American airstrikes in Syria and deployment of 475 more military advisers to Iraq, to achieve this goal. Weak Asian as well as European cues ahead of US jobless claims data and China's subdued inflation last month too weighed negatively on domestic sentiment, brokers said. Leading the laggards in 30-share Sensex, Sun Pharma tanked 4.3 per cent down on reports of a surprise inspection by US drug regulator at its Halol plant in Gujarat. Coal India shares fell 3.53 per cent on speculation government will sell a portion of shares at a discount to market price. Yesterday, CCEA cleared stake dilution in Coal India, ONGC and NHPC via OFS route. ONGC slid 3.58 per cent. Overall, 16 Sensex stocks declined while 14 led by SBI, Infosys, RIL, Axis Bank, BHEL, GAIL and Maruti ended up. The Indian market is now looking forward to a bunch of macroeconomic data --CPI, WPI and industrial production-- to be announced tomorrow and early next week for further cues. The rupee, however, appeared to be rebounding from 1-month lows of 60.95 against US dollar and was last trading at 60.77 levels on good selling of the greenback. 

 

MF EXPOSURE TO BANK STOCKS AT RECORD HIGH

Mutual fund (MF) managers raised their exposure in bank stocks to all-time high of over Rs 56,600 crore in August, making it the seventh consecutive monthly rise in capital infusion. According to the latest data available with Securities and Exchange Board of India, MF investments in bank stocks reached Rs 56,625 crore as on August 31, accounting for 20.10 per cent of their total equity assets under management (AUMs) of Rs 2.81 lakh crore. Since January, MFs have been raising their exposure to banking shares.
Software was the second most preferred sector with MFs, with an exposure of Rs 29,668 crore, followed by pharma (Rs 19,394 crore), auto (Rs 17,754 crore) and finance (Rs 15,116 crore). At current levels, the MF industry has the highest exposure to banking sector since August 2009. Data is not available for sector-wise exposure before August 2009, when the equity funds had deployed Rs 22,587 crore (12.73 per cent) in banking shares.
The previous high was in July this year when investment in the sector rose to Rs 55,086 crore. Mutual funds are investment vehicles made up of a pool of funds collected from a large number of investors. MFs invest in stocks, bonds, money market instruments and similar assets.
According to market participants, MFs have been showing interest in banking stocks since the beginning of the year amid rising equity market.
They believe that the ongoing market rally might see mutual fund assets getting diversified. Meanwhile, the BSE Bankex and the benchmark Sensex witnessed a surge of around three per cent in August. This year has seen a consistent growth in investment in banking stocks by equity fund mangers and fund infusion has grown from Rs 30,339 crore in January to Rs 56,625 crore in August.
In percentage term, exposure has risen from 16.6 per cent to 20.10 per cent during the period.