Morning Bells (18 Mar 13)

Good Morning Friends.

Don’t get upset with people or situations. Both  are powerless without reaction.

The main indices have fallen again. A rise in the prices of vegetable and cereals pushed retail inflation to 10.91% in February. However, IIP data surprised positively with 2.4% growth in January, but it failed to cheer the indices as Nifty closed 1% lower for the week.

While the headline inflation print came higher than expectations at 6.8%, the continued moderation in core inflation kept the market expectation alive that RBI would cut the repo rate by 25bps coming Tuesday. The central bank is likely to take heart from the fact that increase in WPI month-on-month was essentially driven by de-regulation of fuel prices. Further moderation in core inflation during March would enhance possibility of a rate cut on May 3rd also.

Govt. did once again drama just to distract citizens attention from Inflation & Diesel price hike, they lowered Petrol prices. J Good game.

Indian Oil Corporation will slash petrol prices by Rs 2 per litre with effect from midnight, according to reports.

Reports said that Diesel prices are expected to be raised for the third time since January.

RBI Monitory Policy -

Taking cue from declining core inflation levels and sluggish growth trends, the Reserve Bank of India is likely to cut key policy rates by 0.25 per cent in its mid-quarter review on March 19, global investment banking majors have said.

Even if RBI cuts rates on Tuesday, the tone of monetary policy guidance is unlikely to change significantly, they said, adding that policy guidance is likely to be "cautious".

According to global banking giants HSBC, Standard Chartered, Citigroup, Barclays and Credit Suisse, RBI is likely to slash the repo, or short-term lending, rate in its review meeting.

The factors that are likely to act in favour of a slash in rate cuts include a narrower February trade deficit, adherence to the fiscal deficit target in FY 2013, a slowdown in GDP growth to decade-low levels, and a fall in core inflation to below 4 per cent for the first time since April, 2010.

Gainers – Ranbaxy Labs  (up 8.9%), Hindustan Unilever (up 4.8%), Tata Power (up 2.9%), SBI (up 2.4%) and ITC  (up 1.4%) were among top gainers in Sensex and Nifty.

Losers - ICICI Bank  (down 6.3%), Hindalco (down 5.6%), BHEL (down 4.6%), Tata Motors  (down 4.2%) and Bharti Airtel (down 3.9%) were the major losers in Sensex and Nifty.

Sectoral – IT was down (1.6), healthcare remain unchanged, Auto was down 2.3%, Oil & Gas was down 1.5%, Metal was down 2.1% while Telecom sector was the gainer.

On Domestic Front –

1.

RIL - Bank of America Corp has reportedly said Mukesh Ambani will step down from the board.

According to reports, Reliance Industries , Chairman Mukesh Ambani became a director in March 2011 and brought global experience to a bank known for its U.S. consumer business.

Ambani joins former Morgan Stanley executive Robert Scully in announcing plans to leave the bank's 18-member board this spring, says report.

2.

Political Comparison - Former president APJ Kalam was put on a spot by an audience member who asked him to pick Kalam’s version of a leader from the current crop. Speaking at the India Today Conclave 2013, Kalam smoothly sidestepped the question by sharing his experiences of having worked with two prime ministers—Atal Behari Vajpayee and Manmohan Singh during his presidency. He had sufficient words of praise for both. While Manmohan Singh is an expert in his field, Atal Behari Vajpayee took faster decisions, he said.

On being asked to rate India as a democracy on a scale of 1-10, Kalam gave the country a five. When India Today Editor-in-chief, Aroon Purie, responded “That’s not good,” Kalam was quick to point out that it was at least a ‘pass mark’.

3.

India Rating - The worst may be over for India's economy but uncertainty still lies ahead, and qualitative fiscal reforms are necessary to ward off any further bad news, chief of global rating agency Fitch's Indian arm has said.

 "This is the bottom of the pit (for the Indian economy). Now whether we dig a further or deeper pit for ourselves by not implementing the fiscal reforms, or we find steps to climb up, that is where the uncertainty lies," India Ratings Managing Director and CEO Atul Joshi told PTI.

On Global front –

1.

Fitch Ratings has lowered its projection for India’s economic growth to 6% for the next financial year, from forecast of 7%, according to reports.

Standard & Poor’s had pegged India’s economic growth at 6.4% for 2013-14, as forecast by the Union Budget.

The Finance Ministry has targeted to reduce the Centre's fiscal deficit at 4.8% of GDP during 2013-14 from 5.2% in the current financial year.

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

As told on Tuesday that PCR at 1.35 isn’t good signal for market, CPI also diluted hopes of rate cut and y’day we had seen the impact of that.

The INDIA VIX on NSE slipped 9.5% and ended at 14.66 against previous close of 16.20.

FNO PCR is 1.05 against previous close 1.31.

Indian Rupee – Rupee gain on Friday and was trading at 54.01 against its previous close of 54.47.

S&P 500 (US) was trading at 1560.70 down 2.53 then its previous close at the time of writing M Bells.

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

Technically, Nifty extended its weakness and closed below its 100-DMA (5,857), confirming a breakdown in the index after last week’s recovery. The undertone remains cautious and there is no point to taking any risky bets ahead of the RBI policy meet next week

As per current outlook Nifty range is 5600 on downside while upside is 6200.

Intraday Resistance – 6009 – 5977 – 5925 and Support – 5840 – 5808 – 5755 (Pivot 5893)

Weekly/Monthly Resistance – 6144 – 6057 – 5965 and Supports – 5785 – 5698 - 56006

Opening – Seems flat and seems range bound session. On upside major resistance 5910 / 5925 / 5950 whiles support comes to 5800 / 5750.

========================  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.)

Banking Sector –

HDFC Bank paid Rs 7bn against Rs 6bn, while ICICI Bank has paid nearly 25% higher advance tax for the March quarter, according to reports.

The bank paid Rs 5.50bn as advance tax this quarter against Rs 4.25BN paid in the same period last year.

Reports said that While Yes Bank paid Rs 1.65bn against Rs 1.10bn as advance tax.

Profit to Dip –

Indian banks are yet to get rid of financial bruises.  In 2012-13, their profitability is likely to "decline sharply" due to two reasons: stricter regulatory requirements and stress assets, according to a survey done by Confederation of Indian Industries (CII) taking feedback from 15 lenders including five state-owned, three private sector and seven foreign entities.

"From an average growth of 23 per cent witnessed during the last year (FY 2011-12), the surveyed banks have projected an increase of 14 per cent in profit after tax (PAT) for FY 2012-13. However, it is interesting to note that this has been forecasted to rise to 21 per cent in FY 2013-14, reflecting increased optimism of banks for a change in scenario positively," the survey report said.

However, the CII survey did not specify the names of those surveyed banks. The CII Survey christened as "Health of Indian Banking sector in current regulatory environment" assessed the prevailing market conditions vis-à-vis asset quality, capitalisation of banks and growth estimate of the banking sector while focusing upon the current regulatory environment and its impact on bank business and profitability.

Axis Bank –

Private sector lender Axis Bank  today said it has asked 16 concerned officials to report to administrative offices, pending investigation which has been initiated with regard to alleged money laundering activities.

"The bank has initiated an internal enquiry. Pending outcome of the enquiry, we have asked 16 concerned employees to report to administrative offices," sources in the Axis Bank said.

ITC –

There are reports that ITC clocked in the lowest increase in advance tax collection at Rs 675 crore.

Auto Sector –

Bajaj Auto paid over only 2% higher tax, while M&M paid Rs 2.05bn against Rs 1.78bn.

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

(Book profit in your 50% holdings and keep balance with SL 119, on 18 Mar 13)

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 Since Jan 13 (Total 36,850) + Mar 13 = +12,200

Billionaire Club Since Jan 13 (Total 67,700) + Mar = +21,150 + 4K (SAIL PE gain) = +25,150

Today’s MG Mantra –

Range bound to welcome.

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.