Morning Bells (04 July 13)

Good Morning Friends.

When one door of happiness closes, another opens. But we look so long at the closed door that. We don’t see the one which is opened for us.

Nothing new to say today, all are repeated story. Market to play volatile in sync with global news (specially from US) and to act according to Rupee act.

As told profit booking at higher levels continue for second consecutive day, Indian equity market ended in the red, extending its losing streak to the second consecutive day. It started weak and continued that trend with the surfeit of negative news. Any signs of a pullback from lower levels were met with huge selling pressure.

The weakening rupee continued to play spoilsport by falling 90 paise in trade today. It slipped below the 60 per dollar mark after hitting an intra-day low of 60.44. This is the first time since June 27 that the Indian currency has fallen below the 60 level. On June 26, it touched an all-time low of 60.76 against the dollar.

Rupee – a sport spoil :

Its been long time when Rupee is playing with market sentiment. Experts are expecting further depreciation but then now I don’t see any major impact on market.

I have very few simple reasons, if you would have remember when Rupee started declining around 54-55 levels market reacted sharply around two years back, then it was accepted by market that Rupee can fall further. Same story is repeating here, now everybody is expecting Rupee to touch around 62-63 level, then what next?

Secondly Rupee depreciation and CAD disappointing FIIs, they have pull out majority of their investment, and limited fund is in free market, so another 150 pts aprx can be played at any time, again then what next?

So I think now participant will play stock specific and now pressure would be on defensive stock like FMCG and Pharma and IT (IT only if Rupee depreciate further or remain above 60)

Gainers –

Lupin, Jindal Steel, Sun Pharmaceutical, Ambuja Cement, ITC, HCL Technologies and Grasim were among the gainers.

Losers -

JP Associates, Bank of Baroda, IDFC, Punjab National Bank, Sesa Goa, Tata Steel, Tata Power, SBI, DLF, Hindalco and BPCL lost out.

Sectoral –

Among sectors, barring defensives like pharmaceuticals and FMCG, all other sectoral indices ended in the red. The top losers were realty, metals, consumer durables, oil and gas, power, and capital goods stocks.

Domestic Front –

Cabinet clears ordinance on Food Security Bill -

The Cabinet cleared the Ordinance on the National Food Security Bill on Wednesday, said reports.

Cabinet note on Ordinance was circulated to all ministers and the item has been listed for discussion on Thursday.

The Bill was tabled in the Budget session of Parliament, but could not be taken up for discussion.

The Bill, tabled in the Lok Sabha, promises legal entitlement for subsidised food to almost 800 million Indians, out of a total e stimated population of 1.2 billion, says media reports.

The bill will cover 67% of population and include 800 million people in the food security safety net.  

Global Front –

China Growth -

On the global front, China's services sector showed weak growth in June. The June services Purchasing Managers' Index fell to 53.9 from May's 54.3. It remained above the 50 level dividing expansion from contraction.

Crude –

Crude prices surged on account of political tensions in Egypt. The country, though not an oil producer, controls the Suez Canal. It is one of the world's busiest shipping lanes through which majority of the world's energy passes. Oil marketing companies witnessed intense selling pressure with stocks like BPCL, HPCL and IOC plummeting nearly 4%.

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

Now week all eyes will be on ECB meet on interest rates and unemployment data from the US and Eurozone will be tracked closely. 

Now since rupee played sport spoil market will remain volatile and rangbound in a short term and investors are advised to focus on being invested in defensive sectors like pharmaceuticals and information technology.

Interestingly Nifty has not broken earlier year’s lows or we have not gone beyond earlier year’s highs. This give sense that market will remain in the range but yes it would be highly volatile.

As warned repeatedly for a bullish trend Nifty need to close above 5935 for 2 successive days.

So what you will do in such a highly unpredictable and volatile market - In such volatile environment, investors can start building positions especially defensive and currency or accurately dollar-related stocks like technology or pharma.

The INDIA VIX on NSE was up by 3.84% and ended at 18.91 against previous close of 18.21.

FNO PCR was 0.97 against previous close 0.94.

Indian Rupee – Rupee declined by 56 paisa and was trading at 60.22 against its previous close of 59.66.

S&P 500 (US) was trading at 1615.41 up 01.33 than its previous close at the time of writing M Bells.

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

As per y’day suggestion finally Nifty seen some decline when it attempt to breach 5900. Now DMAs have been changed. Now Nifty had to struggle around 5935 and trend changer level comes to 5975 around level. So if there’s nothing major bad news we may see some more positive moves.

5750 was on card and was suggested one day back. Nifty need to remain above this level to avoid panic selling pressure.

Opening – Don’t know what will happen but during the day had informed on FB that now next 2 sessions I am expecting flat to positive, so start could be flat to positive.

========================  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.)

Oil India –

Oil India closed at Rs. 554.30 per share, down Rs. 12.15 or 2.1%, despite the company announcing plans to invest Rs. 120bn by 2017. The state-run oil major is looking to invest in various projects in the north-east involving expansion of exploration work and diversification of business.

Tata Powre –

Tata Power ended weak at Rs. 82.80, down Rs. 3.9 or 4.5%. The company plans to tie-up funds for the 95 MW South Africa's Tsitsikamma wind energy project, estimated to cost about Rs 1,750 crore.

HUL –

I am strongly expecting HUL to a level of Rs 545-Rs 550 from Rs 587 currently since past expiry (I have expressed my thought on FB too), post buyback offer as quarterly earnings may also disappoint. 

New Banking Licence : 10 companies are hopeful to get nod from RBI –

With 26 public and private sector companies applying for bank licences, Finance Minister P Chidambaram has said that there was no ceiling on the number of entities which can be permitted to operate a bank.

"I don't think there is a ceiling. I don't think there is a number in mind. It all depends upon how many applicants are eligible applicants. The fact that somebody applies doesn't mean he is an eligible applicant," he told PTI in an interview.

Top Contender -

Following are the top contender – JM Financial, Bajaj Financial Services, L&T Fin. Holdings, Reliance Capital, LIC Housing Finance, Religare Enterprise, PFC, Aditya Birla Nuvo, IDFC, SREI Infra,

Among above all companies like L&T Finance Holdings , IDFC  have a good chance of getting the licence as these are extremely respectful names in terms of governance and experience, says experts.

Interesting to know –

The Foreign Institutional Investors (FII) ownership in consumer companies has risen steadily in the past three years and now it is at an all-time high.

Jubilant FoodWorks  -  almost 42%, Marico – above 30%, Godrej Consumer, Dabur, TTK Prestige, Colgate, United Spirits in all this companies FII stake is more than MSCI weight while in United Breweries, HUL and in Asian Paints FII ownership compared to the MSCI weight is substantially lower, in HUL, it is 10 percent lower. In ITC its also much lower.

In short, FII can affect above stocks where its exposure is higher and can affect less where its weight is lower.

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

Today’s Call –

IDFC – As told market remain RED, so we haven’t entered IDFC.

Apollo Tyre – 62.5CE @2.75 SL 2 TG 4+ (Max 1 lot)

TRACK –

ICICI and Yes Bank, while avoid PSU Banks.

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

Billionaire Club from Jan 13 to June 13 (Total 1,25,600)

Today’s MG Mantra –

Book at least part profit on longs and wait for Nifty to break 5935.

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.