Sebi’s Ulip order may hurt mood; earnings to be the next big trigger

Sebi’s Ulip order may hurt mood; earnings to be the next big trigger

The insurance industry regulator responded to Sebi’s order by directing insurers to ignore the directive and continue to sell and service Ulips, which offer a combination of insurance and investment. The move by the Insurance Regulatory and Development Authority (Irda) may limit the damage.

Also Read | Earlier columns by Vipul Verma

Sebi’s intention is to get these entities to register with it and sell their products after they receive the market regulator’s prior approval. It does not intend to kill Ulips. So, invoking compliance rather than unsettling insurance companies was called for.

This week is important for the stock markets. On Monday, the markets will focus on industrial output and manufacturing output data that’s due for release. The data will provide cues to investors on the strength of the Indian economy. The expectations are high and if the data maintains the trend of high growth seen in the previous months, there could be a spurt in share indices. Since a hike in interest rates by the Reserve Bank of India (RBI) this month has already been factored into share prices, positive data won’t be countered by pessimism related to monetary policy tightening.

On Tuesday, the fourth quarter earnings season will kick off with Infosys Technologies Ltd announcing its results. A host of other companies are scheduled to release their earnings later in the week.

The markets will be closed on Wednesday.

Economic cues: The Bombay Stock Exchange. On Monday, the markets will focus on industrial output and manufacturing output data. AP

Back home, technically, the markets are likely to start on a cautious note and trading could be range-bound. In terms of the Bombay Stock Exchange (BSE) Sensex, the first resistance is likely to come up at 17,991 points. Any breakout above this level on healthy trading volumes could see gains being extended. The next technical resistance level is expected at 18,131, which could see come consolidation and mild profit-selling. If this level is crossed, accompanied by strong trading volumes, there would be further gains.

On its way down, the first support for the Sensex is likely to come at 17,843 points, followed by 17,676. Any breakout below this level would be a negative sign, indicating more falls, with solid support expected only at 17,373 points.

In terms of the S&P CNX Nifty, the first resistance is seen at 5,399 points. A breakout above this level would spur more gains. The next resistance is likely at 5,448 points, which could see the beginning of a technical correction if northward momentum flags above this level. If this level is crossed, the next resistance would come at 5,513 points.

On its way down, the first support for the Nifty is seen at 5,291, which is a decisive level. Any breakout below this level supported by good volumes would be considered bearish, with targets like 5,256 and 5,191 points for meaningful support levels.

Technically, an important study is suggesting that the markets could see selling pressure from Thursday and may end this week with losses.

Among individual stocks this week, Lupin Labs Ltd, Tech Mahindra Ltd and Reliance Mediaworks Ltd look good on the charts. Lupin, at its last close of Rs1,630.20, has a target of Rs1,659 and a stop-loss of Rs1,604. Tech Mahindra Ltd, at its last close of Rs850.05, has a target of Rs868 and a stop-loss of Rs834. Reliance Mediaworks, at its last close of Rs224.75, has a target of Rs235 and a stop-loss of Rs215.

From my previous week’s recommendations Yes Bank Ltd, Bharat Earth Movers Ltd and ABB met their targets easily.

Vipul Verma is CEO, Moneyvistas.com. Your comments, questions and reactions to this column are welcome at ticker@livemint.com

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