Morning Bells (19 Jun 13)

Good Morning Friends.

Any great relationship is based on 2 important things – First is to find out the similarities & Second to respect the difference.

Today nothing much is there to write as all eye is on Fed outcome, so today’s first half is dedicated to Fed.

The benchmark indices took a breather Y’day after rallying for two consecutive trading sessions. The session was choppy with indices changing direction multiple times.

The rupee continued to haunt sentiment while market participants preferred to take some money of the table ahead of the US Federal Reserve meet. Investors are hoping the meet provides some signs on how long the Federal Reserve will continue with its bond purchase program.

The telecom sector was in focus today. Vodafone India has reduced data charges by up to 80% in three circles. The new cheaper rates will be rolled out nationally in a phased manner. The telecom operator reduced 2G data charges to two paisa per 10 KB from 10 paisa per 10 KB in Karnataka, UP West, and Madhya Pradesh and Chhattisgarh circles.

Shares of peer Reliance Communications zoomed over 11% on national roaming norms.

Gainers –

Tata Steel, Infosys, Sesa Goa, Bajaj Auto, Kotak Mahindra Bank, Hero MotoCorp, Tata Power, ACC and Coal India were among the major gainers in Sensex & Nifty.

Losers -

Losers pack led by Ranbaxy, NTPC, IndusInd Bank, Punjab National Bank, UltraTech Cement, Bank of Baroda, Axis Bank, ONGC, GAIL India, L&T, IDFC and NMDC  were among the major losers in Sensex & Nifty.

Sectoral –

Banking, which has an about 25% weightage on the Nifty, led the decline. Stocks like HDFC Bank, Axis Bank, SBI and ICICI Bank lost out . The other major laggards were capital goods, power, and oil and gas stocks.

Domestic Front –

FIPB clears 16 FDI Proposals -

According to reports, the Government has approved 16 projects envisaging foreign investment worth Rs 16.47bn.

The board, headed by Economic Affairs Secretary Arvind Mayaram, also cleared the Rs 9.62bn proposal of Vijay Television for acquisition by foreign promoters.

The government also approved Korea Western Power Co’s proposal to invest in an Indian company to the tune of Rs 270 crore.

Reports stated that proposals which were cleared by the FIPB include that of ABG Container handling, Belgium-based Celio International and pharma firms Mylan Laboratories and Terumo Mauritius Holding Ltd.

Global Front –

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

Now focus shifted to Fed and participant eagerly waiting for outcome. If it goes positive then global market will see a cheer, if not then world market will react sharply. Regarding Indian market I feel we have already corrected much in first 2 weeks of this series so we have little impact, also discussed around 1-1.5bn money is more there which can be taken out by FII and its impact wouldn’t be more than 100-150 points.

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 up 0.6% and ended at 18.29 against previous close of 18.18. The last time the index surged this level was in June, 2012.

FNO PCR was 0.83 against previous close 0.89.

Indian Rupee – Rupee ended all time low and was down by 91 paisa and was trading at 58.78 against its previous close of 57.87.

S&P 500 (US) was trading at 1651.12 up 12.08 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 for 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 – As per Fed outcome but wouldn’t be a big gap up or down.

========================  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.

Apollo Tyre -

AT was about to come up of shock of 2 days fall of almost 30% and stock was showing some sign of relief was there, stock was up and all of sudden discussion started about Moody’s review of Cooper tire and it turned 1.5% RED from 2% green.

Moody's Investors Service placed the ratings Cooper Tire & Rubber Company's ("Cooper Tire"), including its B1 Corporate Family and B1-PD Probability of Default ratings under review for possible downgrade following the announcement that Apollo Tyres Ltd. ("Apollo Tyres") and Cooper Tire executed a definitive merger agreement under which a wholly-owned subsidiary of Apollo Tyre will acquire Cooper Tire in an all-cash transaction.

The transaction, representing a 40% premium to Cooper's 30-day volume-weighted average price, is valued at approximately $2.5 billion and is anticipated to close by the end of this year.

So further downside is not ruled out, stock may settle around 58-60 levels if today it continue to fall else its heading above 65 once again.

HUL -

As the countdown to Hindustan Unilever open offer nears, the FMCG major is pulling out all stops to ensure its open offer is a success. Parent Unilever plans to increase its holding in the Indian arm to 75% from 52.48% via a voluntary open offer. The tender period will start June 21 on July 4.

However, reports suggest that Life Insurance Corporation and Aberdeen Asset Management have opted to sit out of this open offer citing a weak share price.

Given the limited upside, funds are not to enthusiastic on tendering their shares at HUL's open offer price of Rs. 600 per share. The stock is currently trading at Rs. 595 per share.

Also, investors looking to tender in the open offer will lose out on long-term capital gains, even if held for over a year, as the tax-free status applies only to shares bought and sold over the stock exchange. As per current tax norms, the gains will be taxed at 10% percent without indexation or 20% after indexation.

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)

Stock is testing our patience repeatedly, I am still bullish that stock may see 860+ levels in this series unless there’s no panic selling in market.

=============== 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 –

Stay away from options right now, range bound and changing in multiple direction can wash out premiums.

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.