Morning Bells (1 Mar 13)

Good Morning Friends.

You can always promote yourself but do not demote others. Good Morning.

It was like a massacre on D-Street y’day. The fall was on card, just a day before y’day we had discussion that now 5550-5650 range is on card when Nifty had broken its strong support 5780, since there was no major hurdle in between this gap, we seen that effect y’day.

Well, it was more due to failure of budget, but in my words due more expectations. Govt. can’t do magic everytime, they also have to face general election in 2014.

The Indian equity market plunged on Thursday after the Finance Minister P. Chidambaram failed to bring any cheer to the sentiment on Dalal Street. Infact market participants gave the Union Budget thumbs down. Other than small gestures like reduction in Securities Transaction Tax and investment allowance for infrastructure there were no major encouraging announcements in the budget.

Increase in surcharge, taxing the super-rich, increase in bank’s convention interest rate subvention were among the unexpected statements made by the Finance Minister.

If the disappointment from the Union Budget was not enough, F&O expiry played its part as VWAP selling towards the last half hour of the trading session dragged the NSE Nifty below the 5700 mark for the first time since November 2012. And all this selling was witnessed on high volumes as selling was accompanied by highest ever turnover of 4.39lakh crore.

Shares from the power, capital goods and banking sectors were battered the most, as the Budget did not give any clear roadmap as to how economic growth and the investment cycle would be revived.

Among the positives in the Budget, the Finance Minister delivered on the fiscal consolidation and a stable tax regime. But market was expecting much considering that the Finance Minister had marketed the Budget aggressively to foreign investor.

Bank shares, especially public sectors ones, were battered as market viewed the higher agriculture credit target and continuation of interest rate subsidy on short term crop loans and extending it to private sector banks as well, as  negatives. But investment experts said market may have overreacted to these proposals. Yet, if growth does not pick in the coming months, banks could have a serious problem in terms of non-performing assets.

Shares of SBI, PNB, Axis Bank, Bank of Baroda and ICICI Bank fell between 4-6 percent. ADAG stocks were badly hammered today, losing around 8-10%. Out of the pack, Reliance Infra fell 9.3%, Reliance Communication dropped 11.8% while Reliance Industries slipped 2%.

Midcaps continued to get pummeled, with many players suspecting the slide to be triggered by sale of pledged shares/speculative positions that had been created to ramp up the stock price. The BSE Midcap index fell 2.5 percent, and the BSE Smallcap index nearly 2 percent.

Shares of Core Education, which have fallen over 80 percent this week, extended its losing streak, shedding another 9 percent to close at Rs 54.

And while the Budget may have had many announcements for attracting domestic/foreign money into the stock market, none of them appeared solid. Shares from the IT, FMCG and healthcare sectors fared better as investors sought refuge in defensive stocks.

Well, another bad is news is on the door today –

India's economy grew at a worse-than-expected 4.5 percent in the quarter ending December 31, hurt by a slowdown in agriculture, mining and manufacturing, government data showed on Thursday.

Analysts polled by Reuters had forecast growth of 5 percent. The country's economy grew at a lower-than-expected 5.3 percent in the quarter ending in September.

The Indian economy has lost momentum in recent years. Preliminary estimates earlier this month showed the economy is on track to grow just 5 percent in the current fiscal year to March.

The manufacturing sector grew an annual 2.5 percent during the quarter while farm output rose just 1.1 percent, the data showed. Mining fell by 1.4 percent.

Gainers – TCS, Dr Reddys Lab, Bharti Airtel, Tata Motors, Bajaj Auto, ONGC, Sun Pharma were among gainers in Sensex and Nifty.

Losers - RIL, Infosys, Wipro, SBI, ICICI Bank, Tata Steel, Hero MotoCorp, NTPC, Sun Pharma, BHEL, HDFC, Hindalco Inds, M&M were the major losers in Sensex and Nifty.

Sectoral – Barring the BSE Consumer Durables, IT and Teck index all the other sectoral indices ended in the red. The BSE Power index was the top loser, down 4.2% followed by BSE Banking index declined 3.6% and BSE Capital Goods index fell 3.3%.

BUDGET –

FMCG -

The move will hit companies like ITC  and VST Industries  in the short-term as volumes are likely to get impacted. However, the companies almost always are able to pass on the duty hike on to customers, and so there is unlikely to much impact in the medium-to-long term.

Last year, the government had levied a 10% retail price-based excise on cigarettes longer than 65mm.

ITC shares closed unchanged at Rs 294.80 on NSE, while rival VST Industries ended down 0.2% at Rs 1600.20. Godfrey Phillips was down 0.5% at Rs 3,015.80.  

That apart, there was not much positive coming out of the Budget for the FMCG sector. The companies were hoping for a clear timeline for GST implementation. However, that didn't happen.

AutoMobile -

Increase in tax of imported Completely Built Units (CBU) is likely to promote domestic auto manufacturers, hike in excise duty on sports utility vehicle was completely unanticipated.

However there still not absolute clarity on what category of SUVs will face higher excise duty.

Banks –

The fact that that the interest subvention has been extended to private sector banks is a good news because private sector banks have been given a level-playing field vis-à-vis the public sector banks.

So, the issue is that so far private sector banks were not able to do this kind of business at all because there was no level-playing field. In that sense it is a positive enabling factor. (Chanda Kochhar, CEO ICICI Bank)

On Domestic Front –

FM said there are lot of new announcement in coming days.

On Global front –

Global market trading firm.

=====================  MARKET OUTLOOK  =====================

So finally Nifty battered, now next strong supports seems around 5550-5600 and between this no major hurdle seen as of now. So Nifty may test this level in coming days. Yes there could be some short covering & some upmove.

The INDIA VIX on NSE slipped 8% and ended at 14.86 against previous close of 16.23.

FNO PCR is 0.78 against previous close 0.77.

Indian Rupee – Failed 49 paisa and was trading at 54.35 against its previous close of 53.86.

S&P 500 (US) was trading at 1517.68 up 1.69 then its previous close at the time of writing M Bells.

=======================  NIFTY OUTLOOK  ========================

Now we are in New series so not much to say here, will just follow the trend. Short term range 5550 – 5650 – 5940.

Note it – 5650-55 can give small support to Nifty, if broken then next support comes around 5565.

Intraday Resistance – 5982 – 5916 – 5804 and Support – 5626 – 5560 - 5448

Opening – Seems a bit under pressure as GDP is also came below expectations.

========================  STOCK OUTLOOK  ======================

(Stock outlook needs to watch stock movement carefully and then one can bet after having a look, I tried to put related info which will help you in taking positions.)

Shares of Suzlon plunged by 30%, Shares of Pantaloon Retail have nosedived 15% Reliance Infra and PNB and SBI have lost over 7% each.

HDFC Bank-

Country's second largest private lender HDFC Bank today hit the foreign debt markets with a USD 500-million bond issue, according to merchant banking sources.

"HDFC Bank is raising USD 500 million through a five- year US dollar denominated bonds (senior unsecured notes). The final pricing guidance has been fixed at 235 basis points (2.35 percent) above the US treasury," a merchant banking source, who did not wish to be identified, told PTI here.
The bank had on Monday launched a road-show in Hong Kong, Singapore and London for this, the source added.

Meanwhile, global rating agency Standard & Poor's said it has given a BBB- rating to the HDFC Bank senior unsecured notes.

It can be noted that 2013 saw many large corporates like Reliance Industries, ICICI Bank , Exim Bank, PowerGrid, Tata Communications , raising foreign debt.

While on January 7 this year, Exim Bank had raised USD 750 million in a European bond sale at the cheaper ever rate of 4 per cent for a 10-year money, which got an over-subscription of 8.5 times, within a week, the state-run distribution utility Power Grid had raised USD 500 million at 3.87 percent for a 10-year USD issue which received an over-subscription of 19 times.

In the same week, the largest private lender ICICI Bank mopped USD 225 million from a seven-year Singapore bond sale programme on January 10.

The last week of January saw Reliance Industries hitting the market with a USD 800 million perpetual bond issue, the first by a domestic company.

The last week of the past month also saw Tata Communications becoming the first domestic un-rated corporate to tap overseas financial markets by selling bonds worth 250 million Singaporean dollars at a coupon of 4.25 percent, which got an over-subscription of 14 times the offer. This makes the overall fund raising by leading domestic corporates USD 2.525 billion this year so far.

Last Monday, the largest telco Bharti Airtel had hit the overseas market with a road-show to mop up USD 1 billion. Interestingly more and more domestic companies are raising funds from Asia as investors in the region have high regard for Indian debt, say merchant banking sources. Last year, domestic corporates had raised USD 8.15 billion from Asian markets, while the rest of Asia mopped up a record debt of over USD 208 billion through 353 deals.

Also more domestic borrowers are expected to access overseas markets for their funding needs as the rupee funds are still a costly affair.

(MoneyControl.com)

==================== OPEN CALLS ====================

# Please remember when I make special remark with any position then one should need to take care of that else you can make loss instead of profit.

# Be with strict SL and don’t hesitate to book even small profit if Nifty doesn’t shows strength.

Hexaware – Place order for March 75PE @1 to 1.2 (max 4 lots) first buy 2 lots and then buy another 2 lots at 20 paisa below. SL 0.5 TG 2.5+ (Remember its Positional, Active from 26 Feb 13, not executed yet)

TM March 260PE – Bought @2.75 TG 5+ SL 1.5 (Active from 27 Feb 13)

Booked profit @3.4, gain +650.

=============== INVESTMENT BASKET ===============

(Stock in this section is with view of 3 months to 1 year)

Mahindra Holiday – @334 TG 375+ (Active from 15 Dec 12)

Satyam Computer – @103 TG 130+ SL 112 (Active from 15 Dec 12)

On Mobile – @44 TG 60+ Updated SL 39 Qty 2K (Active from 01 Jan 13)

============ PL Sheet (started from Jan 2013) ============

(If someone find any error in PL, please draw our attention)

MG Blog (Jan+25,900) + Feb Ser. = +10,300 + 650 (TM gain) = +10,950.

Billionaire Club (Jan +51,000) + Feb Ser. = +17,200 – 500 = +16,700

Today’s MG Mantra –

New series, everybody scared, follow the trend and make tons of money.

Have a Profitable day – MG

Disclaimer –

1. I have shared my view as per my limited knowledge; please use your own skills to make a wise decision before execution of trade or consult your financial advisor.

2. Those that don’t have patience and are not willing to book loss also in cases don’t enter this market.