Sunday, 3 February 2013

Morning Bells (4 Feb 13)

Good Morning Friends.

Trees get new leafs in place of fallen leafs… There is always something better to replace what is lost!! Life goes on…. Never stops… So always be happy.

The Indian equity market ended with losses for the second straight trading session on the back of constant offloading in the interest rate sensitive like the realty and the Auto stocks. Among the other major laggards, the Metals, Telecom, Capital Goods and the PSU stocks were among the other losers. Even the Mid-Cap and the Small-Cap stocks were under pressure.
However, bucking the negative trend were the Consumer Durables, Pharma, Oil & Gas and the FMCG stocks.

Diesel prices will be hiked by 40-50 paise per litre every month till losses on the nation’s most used fuel are completely wiped out, Oil Minister M Veerappa Moily reportedly said. Reports said that Diesel is currently sold at a loss of over Rs. 10.80 per litre. On January 17, oil firms hiked diesel price by 45 paise. Moily reported that the decision to raise diesel prices in small doses every month will stand “until further orders”.

The General Budget for the year 2013-14 will be presented on February 28. Railway budget will be presented on 26th Feb,2013 and the Economic Survey will be tabled on the next day.
sell order resulting from a software error at Religare Capital Markets caused shares of Tata Motors and UltraTech Cement to crash by 10% each for a few seconds during the last hour of trade on NSE on Friday.

The error, according to market sources, cost the brokerage a Rs 12-15-crore loss. A Religare official said there was no broker error and no loss to any clients.
sell order resulting from a software error at Religare Capital Markets caused shares of Tata Motors and UltraTech Cement to crash by 10% each for a few seconds during the last hour of trade on NSE on Friday.

The error, according to market sources, cost the brokerage a Rs 12-15-crore loss. A Religare official said there was no broker error and no loss to any clients.

Brokerage house Merrill Lynch has said that state-owned banks, especially Punjab National Bank  , Indian Bank  and Oriental Bank of Commerce   could be hit the hardest by the revised loan recast norms proposed by the RBI. The brokerage is of the view that private banks would be least hit.

The biggest impact may be for PNB, Indian and OBC having around 10% of loans in restructured category; in contrast, SBI followed by Union Bank may be less impacted. While, the impact on earnings may be somewhat less as some of these loans could get upgraded, we est. at least 3-8% of earnings hit for the banks through FY14-15. Banks with higher provision cover (like BOB, Union) may have some cushion to offset the earnings hit. Private banks would be least impacted, with impact estimated at less than 1/2%

Gainers – TCS, Tata Power, Bajaj Auto, Sun Pharma, Maruti, Cipla, Dr Reddys Lab, Coal India and Gail India  were among gainers in Sensex and Nifty.

Losers - RIL, Infosys, Wipro, HUL, NTPC, Bharti Airtel, Hero MotoCorp, BHEL, HDFC. SBI, ICICI Bank, M&M, HDFC Bank and Tata Motors were the major losers in Sensex and Nifty.

Sectoral – Banking, Oil & Gas, IT and the telecom sectors were among the top losers while Realty, PSU, Consumer Durables and the FMCG sectors were among the top gainers.

On Domestic Front -
The Reserve Bank of India (RBI) in its Third Quarter Review of Monetary Policy for 2012-13 has cut the repo rate by 25 basis points (100bps is equal to 1%) from 8% to 7.75%. The repo rate is the rate at which the RBI lends to commercial banks. The central bank has decided to reduce the cash reserve ratio (CRR) of scheduled banks by 25bps from 4.25% to 4% of their net demand and time liabilities (NDTL) from the fortnight beginning February 9, 2013. This reduction in the CRR will inject primary liquidity of around Rs. 180 billion into the banking system. The CRR, which now works out to 4%, is the lowest since December 1974. The RBI has lowered the growth projection for the current fiscal to 5.5% from 5.6% projected earlier. The central bank has also cut the growth forecast for the next financial year to 6.5% from 6.6%. After 9 months, RBI has finally announced a Repo cut which could be the beginning of further cuts this year.

On Global front –
U.S. stocks climbed to five-year highs on Friday. The Dow rose to 14,000 for the first time since mid-October 2007 and the S&P hit its highest since December that year. 

The Dow Jones rose 137.21 points or 0.99 percent, to 13,997.79, while S&P 500 gained 14.81 points or 0.99 percent, to 1,512.92, Nasdaq Composite added 34.76 points, or 1.11 percent, to 3,176.89. 

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

In the very short-term we might see some pressure. 6040-6050 on the upside of the Nifty is certainly resistance. We will test 5940 sometime down this week.

Now focus is shifted to budget which is probably schedule from 21 Feb 13. More clear view in coming days.

The INDIA VIX on NSE was down 2.62% and ended at 13.76 against previous close of 14.13.
FNO PCR is 0.98 against previous close 0.94.

Indian Rupee against USD appreciated 0.09 paisa and was trading at 53.19 against its previous close 53.22.

S&P 500 (US) was trading at 1513.17 up 15.06 then its previous close at the time of writing M Bells.

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

Now immediate Nifty range is 5900 – 6200 but on downside could be more on profit booking at higher levels as its till date is liquidity driven rally.

Nifty is in range of 5900-5960-6040-6150-6190 for current series.

Resistance – 6040 – 6081 – 6109 and Support – 5970 – 5941 - 5900

Here I would like to highlight - Nifty is forming bearish patterns and 5941 is the level to watch carefully and today or sooner Nifty can test this level and breakdown of this level can give strength to bears for drag the Nifty.

Opening - seems flat and then one can range bound session.

========================  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.)

New Banking Licence Guidelines -
Finance minister Palaniappan Chidambaram has reportedly said that he does not see any reason why companies that fulfil all RBI criteria should be denied banking licenses.

The Reserve Bank of India is expected to issue final rules on new banking licenses to private entities within a few weeks.

"The RBI has drawn up draft guidelines, guidelines say that more licenses will be given to the private sector, " Chidambaram reportedly said
Reports said that the government believes that the opening the sector will pave the way for the creation of some world-size banks.

Tata Motors –
Tata Motors' total sales (including exports) of Tata commercial and passenger vehicles in January 2013 were 61,660 vehicles. The company's domestic sales of Tata commercial and passenger vehicles for January 2013 were 57,780 nos.  Cumulative sales (including exports) for the company for the fiscal were 675,410 nos.

M&M –
M&M registers 33% growth in passenger vehicles in January 2013. The 4 wheeler commercial segment which includes the passenger and load vehicles registered a sale of 14451 units

BHEL Q3 net profit at Rs11.80bn, Total Income has decreased from Rs. 108985.10 mn for the quarter ended December 31, 2011 to Rs. 105520.90 mn for the quarter ended December 31, 2012.

Union Bank –
Total Income has increased from Rs. 59894.80 mn for the quarter ended December 31, 2011 to Rs. 69593.70 mn for the quarter ended December 31, 2012.

Net interest income rose 2.6 percent to Rs 1,891.4 crore from Rs 1,843.6 crore during the same period.

Gross non performing asset (NPA) improved by 30 basis points quarter-on-quarter to 3.36 percent and net NPA fall by 36 basis points QoQ to 1.7 percent in the October-December quarter.

State-run Oil and Natural Gas Corp will raise $900 million through overseas bonds to fund an acquisition in Azerbaijan, Chairman Sudhir Vasudeva told reporters on Thursday.

ONGC Videsh, a unit of India's largest energy explorer was planning to raise up to USD 900 million to fund the buy, a company executive said in November. Two sources said separately the company had hired banks for the fund raising.

Oil India -
Oil India Ltd share sale was fully covered on Friday, according to NSE data. The OFS received bids for 9.4 crore shares against 6 crore shares on offer, according to reports.
The indicative price bid price is seen at Rs 517.80 per share, say reports. The government had set a floor price of Rs510 per share for bids.

MSX-SX (with Financial Technology) –

Multi Commodity Exchange of India Ltd (MCX), India’s No.1 commodity exchange and the nation’s first listed exchange, announced its unaudited financial results for the third quarter ended December 31, 2012. Net Profit for the quarter ended December 31, 2012, increased by 10% to Rs. 75.87 crore from Rs. 68.79 crore for the corresponding quarter ended December 31, 2011.

Stocks that can show good strength in coming days –

Availability of coal and gas to fire extant and upcoming power projects, (2) monetization of Mumbai airport’s real estate and (3) sale of some of its assets can help to meaningfully reduce leverage (Rs 15300 crore debt against Rs 13300 crore of equity in 1HFY13).

GVK Power & Infrastructure –
Increased availability of gas could help to improve plant load factors (PLFs), revenues and profits of its power segment, (2) monetization of real estate at the Delhi airport and (3) entry of investment partners (or buyers) of some of the operating road projects can help GVK to reduce its consolidated debt burden of Rs 15500 crore (1HFY13) and increase its equity valuation

Adani Power –
A small increase in A tariff hike of Rs 0.50/kWh to offset costs in the Mundra power plant could add Rs 37 to current estimated fair value of Rs 111. We do not think a review of the PPA may be feasible. Nonetheless, reduction in fuel costs by around 20% through higher blending of low-cost coal could accrue Rs 26 to our fair valuation.average tariffs (Rs 0.25/kWh) across its projects can add 140% to our current estimated fair value of Rs 33. (2) pooling of coal prices can reduce costs by Rs 400 crore (and increase our estimated fair value to Rs 53) and (3) ramp up of Bunyu coal mine production to 10 mtpa can double the fair value estimate of APL.

Lanco Infratech –
A sustainable merchant tariff of Rs 4.0/kWh could add Rs 6 to our fair value estimate of Rs 12. In addition, allowing cost-plus tariff at Amarkantak could add Rs 3 to fair value estimates; utilization of 90% at Kondapalli could add Rs 2 to our fair value estimate.

==================== 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.

=============== 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)

=============== HOT SHOT ===============
Keep eye on following stocks, if Nifty shows strength then these stocks can give you reasonable return in very short term –

Be on board for next clue.

============ PL Sheet (started from Jan 2013) ============
(If someone find any error in PL, please draw our attention)

MG Blog Jan Series Total Profit = +25,650 (Cash +9,650.00 & FNO = +16,250)

Billionaire Club Jan Series TOTAL Profit = +51,000

Today’s MG Mantra
New series, new fun, new ideas, stay on blog for more clues.

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.


  1. Sirji...need your opinion on Tata Global. I keep my SL at 145 on closing basis. Seems its going to hit today. Shall I book the loss (call 160 at 2.25)?

    1. 143 (on closing or in decisive mode) is its last hope in recent, it should bounce from there else we may see 10-12 rs further downside.