Morning Bells (24 Sept 13)

Good Morning Friends.

“Punctuality” us not just about “Being on time”, its basically respecting our own commitments.

It was another shocker on D-Street on Monday, when market closed on Friday with recovery of some 70 points from day’s low people had thought that Monday might be positive day or at least range bound session but against all the hopes market opened gap down and continue to fall.

Reason was simple again – bankex, this time I really missed this prediction when Mr. Rajan went to FM before his first monetary policy announcement, I had to convert it into prediction that right now UPA’s main agenda is to please general public (Aam Aadami) as they have election round the corner so how RBI can go against inflation.

Well, market ended in negative terrain for second consecutive trading session after RBI Governor Raghuram Rajan surprised markets on his policy review by raising interest rates.

In past two trading session the Nifty has plunged nearly 270 points while Bank Nifty lost nearly 950 points in the past two trading sessions.

The banking, realty, capital goods power and the oil and gas stocks were among the top laggards. Even the mid-cap and the small-cap stocks witnessed continued selling pressure. Only the consumer durables, IT and the telecom stocks ended with positive gains.

RATING DOWNGRADE –

Another major reason for fall in banking stock was Fitch, Ratings has y’day downgraded Indian Bank's Long-Term (LT) Issuer Default Rating (IDR) to 'BB+' from 'BBB-' and its Viability Rating (VR) to 'bb+' from 'bbb-'.

imultaneously, Fitch has downgraded Punjab National Bank's (PNB) and Bank of Baroda's (BOB) VR by one notch to 'bb+' while affirming their LT IDRs at 'BBB-'.

The agency has also affirmed the LT IDRs of State Bank of India (SBI), Canara Bank (Canara), IDBI Bank (IDBI), Bank of Baroda New Zealand (BOB NZ), ICICI Bank (ICICI) and Axis Bank (Axis) at 'BBB-', and the VRs of SBI, ICICI and Axis at 'bbb-', Canara at 'bb+' and IDBI at 'bb'.

Currency Outlook –

If you take a look on Rupee it wouldn’t fall much in these 2 days which signalled recovery in coming session and can be considered good for our market. Once Rupee will start trading below 60 level we will many actions like FII inflow will increase, CAD will reduce and that’s inflation will get cool off to some extent and finally policy maker will be able to take some risky decision on part of measure and macro economy. Till Rupee is hovering above 60 levels this volatility may continue.

Reports also says that even in the condition of Fed tapering Rupee wont fall much because we have close to USD 270 billion of foreign reserves with the RBI, close to USD 40 billion additional inflow of capital this fiscal year, a USD 50 billion swap arrangement with Japan. Also a USD 100 billion contingency fund has been signed by BRICS countries.

MARKET OUTLOOK –

Oh damn, now every expert start talking about another rate hike in current calendar and giving reason that there’s no change in fundamental and rising inflation is the key reason and if another rate hike takes place then a major correction is there.

Really? What has changed when market rallied from 5150 to 6150 in just 20 days? Nothing!!! And that’s the reason I hate analyst who are purely technical, if you are holding stocks and want to sell no one can stop you from doing that and same if you want to buy no one can stop you from doing that, even people buy in falling market.

Well, profit booking also seen with 2 simple reasons – first market reached higher levels 6150 and second it rate hike by RBI.

So now fear for another rate hike is there, I guess Nifty can correct from here, not very soon but slowly it may go down, my view is simple – since Repo Rate is increased, election is round the corner Govt’s primary concern would be inflation, now assume if we are expecting relief from RBI in next meeting, people started fearing for another hike. So in such a situation if next policy goes maiden fear would be there. It was only FII who bought Nifty from 5200 level to 6150 level surprisingly. We always seen heavy buying before election but this election is different, we are weaken on fundamental ground, there’s believe that no single party will get majority at their own then why FII has come to buy? Why Indian beauties are getting titles? Mean there’s something we are missing out and may be few experts are misguiding us.

So if it comes to trade in the current series now 6200 seems difficult at the moment and ahead of expiry market seems weakened.

MG’s Nifty trading range –

R – 5950 - 6030 - 6145 - 6180 - 6230

S - 5870 – 5850 - 5780

              

STOCK OUTLOOK -

(Stock that can see some good moves either side)

CALL LOG –

Keep eye on – Wipro, Rcom, RelCapital

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