Morning Bells (18 Jun 13)

Good Morning Friends.

Life is not qualified by Fluent English, Branded Clothes or Rich LifeStyle, it is measured by the number of faces that smile when they hear your name.

Finally, Reserve Bank decided to keep key interest rates unchanged. RBI Governor D Subbarao stated that only a durable fall in inflation will open the space for policy easing.

RBI had no choice but to maintain status quo on account of the 9% depreciation in the rupee since the beginning of May. India has the second largest current account deficit in the world in absolute terms and faces the risk of further depreciation of its currency. It decided to view the impact of the fall in inflation and fallout of the government's steps to reign in CAD. In any case, significant monetary transmission of the cumulative 75 basis point cut in 2013 are yet to take place. Going forward, RBI’s focus will be to reduce the liquidity deficit, which stands at over Rs. 1 lakh crore.

Another dampener was the disappointing trade data. The trade deficit widened to $20.1bn in May as against $16.9bn the same period last year. Exports declined 1.1% to $24.51bn in May after four months of marginal growth. On the other hand, imports increased 7% to $44.65bn with bullion imports rising 89.7% to $8.3bn.

However, positive cues from Europe post lunch boosted sentiment and helped the benchmark indices end in the green.

Gainers –

BHEL, M&M, Bharti Airtel, Bajaj Auto, Reliance Infrastructure, Axis Bank, Maruti, HCL Technologies, Sun Pharmaceutical and SBI were among the major gainers in Sensex & Nifty.

Losers -

Ranbaxy, Hindalco, GAIL, NTPC, Sesa Goa, Jindal Steel, Dr Reddy’s Laboratories, Power Grid, NMDC and DLF were among the major losers in Sensex & Nifty.

Sectoral –

Auto, capital goods, consumer durables, oil and gas, FMCG, healthCare and power gained.

Domestic Front –

Poll-Toll begins : PM Inducts 8 new faces

Eight new faces inducted into the Union Council of Ministers.

Sisram Ola, along with Girija Vyas and KS Rao, have been inducted as Cabinet Ministers.

May 13 Trade deficit at 7 month high –

The trade deficit for the month of May widened to $20.1 bn as against $17.8 bn in April.

While import for April-May stood at $86.6 bn.

While May exports stands at $24.51bn.

May imports were reported at $44.65 bn, up 7% year-on-year.

Global Front –

Fed Meet –

There are rumour mills are churning reports that US Federal Reserve expects substantial passage of time between the end of bond-buying program and raising short-term interest rates. In this respect, the apex body plans to hold its benchmark lending rate low for a considerable amount of time after it scales down its QE program.

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

Now focus shifted to Fed and participant ignored RBI’s disappointment.  Markets will still remain perplexed regarding the longevity of bond buying program. There were mixed signals during Bernanke's last testimony to the Congress, whereby the central bank seemed to be indecisive on the duration of QE program.

Bernanke once again failing to provide clarity on the monetary policy, we could see gold prices deriving strength and moving higher.

This week is also important as near term direction will be determined by the Iranian elections.

Point to remember here - FIIs, which have been the driving force behind the market, will turn cautious after the dramatic fall in the Indian rupee. Near-term picture for the market looks bearish and uncertain. "There could be some corrective rallies but FIIs would be very cautious.

The INDIA VIX on NSE was down 1% and ended at 18.18 against previous close of 18.35. The last time the index surged this level was in June, 2012.

The volatility index also known as the fear gauge indicator is a measure of the amount by which an underlying index is expected to fluctuate in the near-term.

FNO PCR was 0.89 against previous close 0.87.

Indian Rupee – Rupee was down by 36 paisa and was trading at 57.87 against its previous close of 57.52.

S&P 500 (US) was trading at 1644.71 up 17.98 then its previous close at the time of writing M Bells.

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

Many now believes that 5750 & 5700 would act as strong support for the entire series and upside as told repeatedly Nifty need to close above 5940, i.e. now this level would act as stiff resistance. So on broad basis Nifty seems in the range of 5700-5750-5940 unless there’s no further shocking news from Fed or any other global market.

Still I am cautious on market and will take only intraday to 1-2 session positions only.

Opening – Again seems flat (10 point +/- can not be considered as gap up or gap down or positive or negative) and market may trade in narrow range till global cues i.e. EU cues.

========================  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.)

TM

The Tata Motors Group global wholesales in May 2013, including Jaguar Land Rover, were 81,783 nos. Cumulative wholesales for the fiscal were 163,024 nos.

Global wholesales of all commercial vehicles - Tata, Tata Daewoo and the Tata Hispano Carrocera range - were 38,641 nos. Cumulative commercial vehicles wholesales for the fiscal were 78,610 nos.

Still it need to cross 306 to make a decisive move further, its all depend now on RBI policy outcome.

L&T -

Larsen & Toubro Ltd will bid for four Indian coast guard contracts worth Rs 40 bn ($695 million), MV Kotwal, president of the company's heavy engineering department reportedly said.

Reports stated that the company also plans to bid for two landing platform docks that will be awarded by the government.

L&T has tried to expand defence manufacturing business and emerged as the lowest bidder for a contract to make army vehicles, report was quoted as saying.

Telecom sector : TRAI favour telecom consumers -

TRAI has reduced ceilings for national roaming calls and SMS and instituted a new regime for providing flexibility to telecom service providers to customise tariffs for national roamers through STVs and Combo Vouchers. TRAI has also mandated two types of free national roaming plans to be provided by all telecom service providers. These changes will come into effect from 1st July 2013.

National roaming service is the facility provided to a subscriber to use his cell-phone to make and receive voice calls and SMS when travelling outside the geographical coverage area of his home network, by using a visited network. In the Indian context, national roaming refers to facilities for making and receiving calls and SMS when the subscriber is travelling in a State which is different from the State of his residence.
The present exercise to review national roaming tariffs was initiated by TRAI earlier this year in the context of decline in costs and the declared intent in the New Telecom Policy-2012 to move towards One Nation-Free Roaming throughout the country.

The ceiling tariffs prescribed by TRAI in the year 2007 were Rs. 1.40 per minute for outgoing local calls and Rs.2.40 per minute for outgoing STD calls while on national roaming. These ceilings have been reduced to Re. 1.00 per minute and Re. 1.50 per minute respectively. Similarly, the ceiling tariffs for incoming calls while on national roaming have been reduced from Rs. 1.75 per minute to Re. 0.75 per minute.Tariffs for outgoing SMS while on national roaming which were earlier under forbearance have now been capped: outgoing SMS-local at Re. 1.00 per SMS and outgoing SMS-STD at Rs. 1.50 per SMS. Incoming SMS will remain free of charge.

Media Segment –

The Indian Broadcasting Foundation has agreed to implement the Telecom Regulatory Authority of India's order on restricting TV advertisements to 12 minutes per hour from the prevailing 15-20 minutes. Depending on genre, this will lead to a reduction in advertising inventory by 20-40% and would culminate into an increase in ad rates.

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

HDFC 860CE – @12 TG 20+ Today’s updated SL 5 after first hour trade (Max 2 lots)

=============== 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 58,800)

June 2013 = -8500

Billionaire Club from Jan 13 to May 13 (Total 1,22,200)

June 2013 = +9,900 – 8500 = +1400

(Booked loss at 1.5 = -6500, Union Bank – 230CE @4.75 TG 7+ SL 2 (Max 2 lots)

(Booked loss at 3.5 = -2000, TS 310CE – @5.5 TG 10+ SL 288 in Cash (Max 1 lots)

Today’s MG Mantra –

Got breather, now you can feel relax and you would have covered most of losses.

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.