Tuesday, 27 August 2013

Morning Bells (27 Aug 13)

Morning Bells (27 Aug 13)
Good Morning Friends.

Two sentences are coming in mind repeatedly – First “Satya Parajit Ho Sakta He Magar Pareshan Nahi” and second one – “Are we entering to recession?”

We have discussed the term recession few days ago. Why this is coming in mind (I have explained it when we had discussed it in MB). Ask yourself few simple questions –

(a) Govt. is busy with its Food Security bill in parliament because they want to clear it well before they would announce election calendar.

(b) What changes are made in our current economy? Anything related to micro economy, to reduce import, to increase export or any environmental change in policies to boost the WPI.

(c) US beating whole global economy then what we did to secure our currency?

(d) What’s the reason FII should not exit Indian market?

When first time I expressed my view for 5477 (Nifty was 5900+) may were surprise, then again our Nifty TG was dot which was 5200-5250 after breach of 5477. And around 5650 (when Nifty bounced from 5500) we discussed about recession.

Why I am discussion it here, (if some of you remember I had made this statement in continuously for more than 3 days in MB – “remember this range and points discussed for next few months”) because time is not right for our market, co-incidentally or whatever, but time is running against us, US economy is growing and at the same time our election deadlines on the door, Govt. need to announce some popular policies ahead of election and economy growth in dead condition. So just remember once again all this what we have discussed and don’t fall under any big over confidence. Market may be rebound or show some strength here but time is not right. Just wait for expiry and then we may see where market is going because all these bounces are just technical bounces ahead of settlement day.

Well come to market –
After enjoying two consecutive days of gains, a highly volatile session ended on a flat note on Monday. The NSE Nifty which managed to surge above the 5500 mark during the day, just manged to end above the 5450 mark.

After opening with a gap up in early trades the benchmark indices slipped sharply and remained under pressure throughout the day. Markets did manage to stage a smart comeback in the mid afternoon trades. However, it was short lived as selling pressure in the banking, oil and gas, PSU stocks dragged the markets to end near day’s low.

Among the top gainers were, power, capital goods, healthcare and metals stocks.

Major Hurdle CAD -
Chairman, Economic Advisory Council to the Prime Minister (PMEAC), Dr C Rangarajan on Monday said that Current Account Deficit (CAD) is likely to be around 70 billion dollar by end of Current Fiscal 2013-14 and expressed hope that rupee and growth will become stable in short term due to recent measures initiated both by government and RBI. The CAD for the year 2012-13 is estimated at about US$ 88 billion.

The government would be able to reduce CAD as out come of recently increased import duty on gold said Dr Rangarajan, fuelling optimism that current year would end with the growth rate of 5.5%, which will accelerate at 7.5% in the coming times as a result of recent decisions taken by the government, the impact of which will become visible in ensuing months.

For year ended March, CAD deficit widened to USD 87.8 billion, or 4.8 percent of GDP, from USD 78.2 billion in 2011-2012, or 4.2 percent of GDP.

But above all my view is - Financing in this particular year remains a much bigger problem. How do Govt. will stop FIIs exit and when we wont be able to stop existing funds from where we will get new fundings.

Good News for Infra & Power Sector –
The Cabinet Committee on Investment (CCI) today met to discuss 28 stalled mega power projects for expeditious clearance.

According to sources, apart from 28 projects, there were other projects as well which have been considered by the CCI today. All of them have been given a go-ahead. The total number of projects that were considered today stood at around 36 which meant an investment of about Rs 1.9 lakh crore.

Within next 60 days, ministries will sort out all the remaining issues regarding the power projects, the highway projects and all other infra sector related projects, for example 18 fuel-supply agreements (FSAs) will be resolved by September 6. As far as the GMRs project from Ahmedabad to Kishangarh is concerned, it is Rs 7700 crore highway project and the proposal can be taken up by the Cabinet regarding premium rescheduling in the next week itself.

Currency –
The rupee has lost around 15 percent to the dollar, hitting record lows almost daily, since the US Federal Reserve hinted in May that it would soon begin paring back its massive economic stimulus programme. Rupee seems weaken further, consensus showed it will likely weaken to 69 per dollar before rising, implying a further 7 percent fall from Monday's spot rate of 64.10.

Experts believe Rupee will bottom out after Sept. series.

Interestingly you should know it –
With elections due in 2014, New Delhi's subsidy programme, most recently the food security bill, could blow a hole into the country's weak finances -- one of the biggest causes of the rupee's thrashing.

Policymakers are struggling with both trade and current account deficits.
Despite that and the clamour for easy monetary policy, the RBI will be expected to maintain its tough stance on inflation and check currency volatility.

Raghuram Rajan, a widely acclaimed economist, takes over as governor of the RBI from incumbent Duvvuri Subbarao on September 5, at a time when the Indian economy is facing its worst crisis since 1990-1991.

Next Triggers -
New RBI Governor and monetary policy in September will be the next trigger. Market is also expecting big hike in Diesel prices which would definitely give market a boost.

Now Nifty to face resistance around 5500 (may be 5510-20). Here 5500 is hard to breach specially in this series. So now its not right time to go short and even not right time to go long. While it will find support around 5450.

Market is in intraday trading zone, just swim with flow, and old suggested quote is here – close your position before market close and in some selective stock go BTST or STBT.

As per technical outlook – Nifty to find support around 5375 while resistance seems around 5440. Short term trend was positive with resistance 5500-5520. On higher side it may touch 5650 and on downside 5254.

For medium term or next series, outlook is still negative till Nifty doesn’t close above 5504. 20DMA is 5646 and 40DMA is 5710.


STOCK OUTLOOK (Stock that will see good volume this week) –
Hexaware -
Hexaware was in the limelight, the stock surged over 6% and closed at Rs128.5 after the board of the company approved the purchase of a controlling stake in itself by Baring Private Equity Partners Asia for about US$400mn. Commenting on the same, Amar Ambani Head of Research at IIFL said, “Conclusion of Hexaware's stake sale last week gives an indication of the sustained long term growth prospects for niche mid-tier IT players with well established and long term client relationships”. He added we are positive on Indian IT and within the mid-tier IT space we like Mindtree and KPIT Technologies.

Jindal Steel –
Jindal Steel and Power stock inched up by Rs.4.95 or 2.06% to close at Rs. 245.50 after acquiring a 52% majority stake in Gujarat NRE Coking Coal. The deal would enable it to secure resource supply and minimise risk in prices, stated reports.

VIP Industries stock jumped 8.1% or Rs. 4 to close at Rs. 53.50 after reports came out that billionaire investor Rakesh Jhunjhunwala bought 1.03mn shares of the company via open market, upping his stake in the company.

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