Morning Bells (3 May 13)

Good Morning Friends.

Thought of the Day - With faith, you can move mountains, while with doubts you can create them.

So finally everyone come into market like a free lottery ticket on distribution, a surprised rally was on D-Street y’day, I was expecting it around 5970-6000 to cool down there but it attempted to breach 6000. As told y’day people are guessing RBI will do more than 25 bps, some says 50 bps is there and some are saying 100 is also possible. Lets see what happens because FII are more powerful and they get news more frequently then us, and if they have bought on huge volume then there could be something,.

As I discussed last week – traditionally May isn’t good for the health of stock market and I had put my view that may be FII can try to put you wrong this time in first half. So it may be that kind of thing also, and also its not bad if big investors pull up the market and then go for profit booking at higher level, becoz when they come for sell you wont even get time to exit your position even on cost to cost, within seconds they put stock 5-10% down, and they have tested it earlier.

Well, market rallied to a new three-month high on hopes of a rate cut at Friday’s Reserve Bank of monetary policy meet.

The hope of a rate cut was spurred further by lower HSBC Purchasing Managers' Index (PMI). Growth contracted to 50.4 in April from 51.6 in March.

Dealers say the market is pricing a 50 bps repo and 25 bps CRR rate cut. The repo rate is the rate at which banks park money with the central bank while the cash reserve ratio is the mandatory funds that banks have to park with the central bank.

The market ignored weak Chinese manufacturing data and stalling of the reform process in Parliament due to disruption by Opposition parties.

Now its day of RBI, so no comment about market, just talk about RBI only.

RBI cuts FY14 inflation forecast to 6.5% from 7% -

The Reserve Bank of India released the Macroeconomic and Monetary Developments in 2012-13. The document serves as a backdrop to the Monetary Policy Statement 2013-14 to be announced on May 3, 2013.

Overall Outlook - Macro-financial risks require cautious monetary policy stance ahead

Global Economic Conditions - Global growth likely to stay sluggish, commodity price inflation soft

Indian Economy – Output - Slowdown persists in the economy with services sector witnessing moderation

Aggregate Demand - Investment cycle downturn continues, consumption moderates

NOW WHAT I TOLD YOU ALL ABOUT RBI DECISION Y’DAY IS HEADLINE TODAY -

1. The Reserve Bank of India on Thursday warned of "very limited" space for further easing of monetary policy, striking a hawkish tone a day before it is widely expected to cut interest rates by 25 basis points for the third time this year.

2. The Reserve Bank of India’s Macroeconomic Survey has cautioned that inflation was likely to remain rangebound around current levels in the current fiscal (FY14), but above RBI’s comfort levels. The central  bank sees inflation rising again during the second half of this fiscal due to increase in diesel, power and coal prices. This will limit the elbow room for cutting interest rates going forward, the Survey said.

3. The Reserve Bank of India’s macro economic report released Thursday said that for economic growth to revive, the government needed to do much more in terms of removing infrastructure bottlenecks and improving governance.

It made it clear there was limited room for cutting interest rates in FY14 because of multiple global and domestic risks, notably inflation.

The RBI report has forecast a slow paced economic recovery this fiscal, with the RBI's survey of professional forecasters lowering its growth forecast for FY14 to 6.0 percent from 6.5 percent.

4. Reserve Bank of India’s annual policy scheduled on Friday is unlikely to astonish market participants as they have already factored in 25 bps repo rate cut; however the central bank’s commentary, especially its tone-hawkish or dovish is more likely to decide street’s mood going forward, experts believed.  

(Source – MoneyControl.com)

Gainers –

Reliance Industries, Tata Consultancy Services, Infosys, Wipro, NTPC, Sun Pharmaceuticals, Maruti Suzuki, Tata Steel, HDFC Bank, ICICI Bank, ONGC were among the top gainers.

Losers -

BHEL, Tata Power, Bajaj Auto, Dr Reddy’s Laboratories, Tata Motors, Hero MotoCorp, Hindustan Unilever, Coal India were among major losers.

Sectoral –

The consumer durables index was the top gainer, up 2.5%, followed by realty, power and IT up 1.6%, 1.1% and up 1.5% each. The metal index ended a tad weaker, down 0.9%.

 Were

Domestic Front –

Global Front –

ECB Monetary Policy -

The European Central Bank has cut interest rates for the first time in 10 months on Thursday.  Sharply falling inflation and rising unemployment has forced the apex bank's governing council to lower its main interest rate by a quarter percentage point (25 bps) to a new record low of 0.5%.

The rate determines the cost of more than 850 billion euro in outstanding ECB loans.

The move was on expected lines as ECB President Mario Draghi said the bank was ready to act last month. Economists also expected the ECB to act as inflation in April fell to 1.2%, way below its target of about 2%.

The big question is whether this symbolic move can lift morale in the Eurozone and if it is enough to jolt the continent out of its longest recession in its history.

Fed bond buying –

Overnight, the Federal Reserve promised to continue with its bond buying program. The apex body said it could either increase or decrease its bond buying from the current pace, depending on the changes in the labor market and inflation.

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

No outlook today, lets see how market reacts, as today is big even and its Friday too.

The INDIA VIX on NSE was up 7.81% and ended at 16.28 against previous close of 15.10.

FNO PCR was 0.96 against previous close 1.07.

Indian Rupee – Rupee gain 15 paisa and was trading at 54.23 against its previous close of 54.38.

S&P 500 (US) was trading at 1598.48 up 15.78 then its previous close at the time of writing M Bells.

RESULT CALENDER –

29 April – HUL, Exide Industries, Sterlite Industries,

30 April - Infrastructure output data for March due around noon, Fiscal deficit data for March

Result – Dabur India, Petronet LNG, TVS Motors,

1 May – Market closed for Maharashtra Day, Result IDFC

2 May – RBI to release macro-economic review at 17.00 IST

Result - Bharti Airtel, Canra Bank, Kotak Bank

3 May- RBI Monetary Policy Review decision at 11.00 IST

4 May – JP Associate

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

No outlook.

Opening – Seems a bit positive or flat, then will be holding its breath till 11.00 AM, a high voltage drama i.e. volatility could be there.

========================  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.)

Rate sensitive stocks may see high volatility. Realty, Auto and Banking sectors are on radar today, better stay away till RBI outcome.

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

TV18 – Bought @28.5 TG 34+ SL 25.5 (Qty 1K)

Infy 2300CE – Bought @30 TG 45+ Updated SL 15 (Qty 2 Lots)

(Booked profit @42)

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

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

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

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

MG Blog Fronm Jan 13 to April 13 (Total 56,050)

May 2013 - +3000 (profit in Infy calls, 2 lots)

Billionaire Club from Jan 13 to April 13 (Total 1,10,950)

May 2013 - +6000 (profit in Infy calls, 4 lots)

Today’s MG Mantra –

Stay away till RBI outcome or go with call straddle.

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Have a Profitable day – MG