Morning Bells (07 June 13)

Good Morning Friends.

Two places are most valuable in the world – The nicest place is to be in someone’s THOUGHTS, and safest place is to be in someone’s PRAYER.

Today was the day for RIL AGM but it failed to lift the market, participant were also awaiting ECB and now will hold breaths for US job data today.

The market ended off the day’s high on Thursday with the Nifty striking resistance at the 5940 mark. The opening gap down was foreseen on account of overnight losses in the US and weakness in Asian markets. Early selling pressure saw the Nifty hit an intra-day low of 5,869. But strong buying at lower levels led to a 90 point bounce back on the Nifty and 200 point Sensex rally. The recovery was led by banking, realty and capital goods stocks.

However, 5,940 turned out to be vital resistance for the Nifty with huge short positions being built up.

In today's major corporate action, Reliance Industries at its 39th annual general meeting announced plans to invest Rs. 1.5 lakh crore over the next three years. The retail arm is looking at 50% profit growth and aims to do revenues of Rs. 40,000-50,000 crore. The stock ended down 1.25% at Rs. 792 per share.

Gainers –

Reliance Infrastructure, HCL Technologies, Axis Bank, Ambuja Cement, Bank of Baroda, UltraTech, ICICI Bank, DLF, Maruti and Punjab National Bank were among the major gainers in Sensex & Nifty.

Losers -

Bharti Airtel, Wipro, Lupin, Infosys, L&T, M&M, Sun Pharmaceutical, NTPC, Dr Reddy’s Laboratories, Ranbaxy, BHEL and GAIL were among the major losers in Sensex & Nifty.

Sectoral –

Healthcare, oil and gas, power, metals and telecom stocks were some of the major laggards.

Domestic Front –

Cabinet clarifies retail FDI norms; bans franchisee route –

In response to the DIPP's plea for clarity on FDI policy in multi-brand retail (MBR), the Cabinet issued clarifications which allow only 30-percent sourcing for front-end stores and forbid the MBR entity from conducting any other form of distribution.

The sourcing conditions are only for manufactured store-products and does not apply to the procurement of fresh produce. MBR entities are to make fresh investment for back-end infrastructure and can only invest in greenfield assets.

The government also clarifies that no acquisitions were permitted for back-end assets and the FDI-in-MBR entity cannot take undertake wholesale activity.

Chidambaram urges banks to cut rate, discourage gold buying -

Finance Minister P Chidambaram urged banks to pass on the benefits of policy rate cuts to their borrowers. At the same time, he stressed on scarping the fetish for gold investment. Higher imports of gold is fuelling the widening current account deficit.

"Since 2012 the Reserve Bank of India cut repo rate by 125 basis points. However, commercial banks have reduced their rates only by 30 bps. Moreover, banks have a role to play in dampening the enthusiasm for gold. Gold is like another metal, which shines a little more than copper or glass," he said while addressing a conference held by India Banks' Association in Mumbai.

Global Front –

ECB holds rates, expecting recovery soon-

The European Central Bank kept its main interest rate on hold at a record low 0.5 percent on Thursday as it waits to see whether early signs of stabilisation in the euro zone will blossom into an economic recovery.

Economic data improved in May and ECB President Mario Draghi said this week he still sees "a very gradual recovery" starting later this year, taking pressure off the ECB to act again, as it had promised to do if necessary after cutting rates in May.

(All news - MoneyControl.com)

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

Now next big triggers CPI, WPI Inflation on 12 and IIP on 14 or 15 and then RBI monetary policy review on 17^th.

Today US unemployment and jobless claims data to take centrestage.

The INDIA VIX on NSE was up 0.57% and ended at 17.35 against previous close of 16.78.

FNO PCR was 0.93 against previous close 0.88.

Indian Rupee – Rupee declined further by 12 paisa and was trading at 56.84 against its previous close of 56.72.

S&P 500 (US) was trading at 1612.54 up 3.64 then its previous close at the time of writing M Bells.

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

Though Nifty manages to close in green but market is not yet out of danger. So just avoid taking long positions till the Nifty closes above 5,940 on a weekly basis. This is a critical level as it is from here that it broke out in late April. If the Nifty closes below 5,940 on a weekly basis, it is likely to find support at its 200 daily moving average. The 200-DMA is an indicator used by traders to determine the market trend. In theory, stocks/indices continuing to close above the 200-day line is considered healthy.

200 DMA comes around 5785.

If weakness continue then rate sensitive stocks will lead, specially banks will be on sellers radar.

Opening – Again seems down and under pressure ahead of weekly closing as well as later today US jobless data is there.

========================  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

TM again hovering in the range of 306-312 which is no trade zone, however its showing good strength and if market closes above 5940 then it will try to hit previous highs.

L&T –

Larsen & Toubro closed marginally up after its Saudi Arabian arm secured a large engineering contract from the Saudi Arabian Oil Company (Saudi Aramco) on Wednesday.

RCom -

Reliance Communications gained 1.4% on reports that South Africa’s MTN could buy a substantial equity stake in the company. In a related development, reports suggest Reliance Jio and Reliance Communications may ink a tower sharing deal on Friday

3^rd Spectrum auction in Aug.13 –

Even as companies like Bharti Airtel , Vodafone and Reliance Communication stayed away from spectrum auction held in March, the Department of Telecom is gearing up for another round of spectrum auction in August. Spectrum EGoM will be meeting by the end of this month to finalise the reserve price for the third auction round, CNBC-TV18's Malvika Jain reports.

The auction will be for 800, 900 and 1800 Mhz spectrum. Sources say the DoT will make it compulsory for all telecom players to participate in the auction. They say no licence extension will be given unless telcos bid for spectrum. That means, if telcos have to continue with their business, they will have to bid for spectrum.

Telecom players like Bharti Airtel , Vodafone and Idea argue that since they were given spectrum under an earlier regime, their licenses should be extended along with spectrum. Their licenses are coming up for renewal in 2014 in some circles.

In March, none of the telcos participated in the auction, especially for 900 Megahertz (Mhz) band spectrum, which is considered to be more efficient spectrum band.

Banking sector - RBI May disappoint -

Reserve Bank of India today said food prices will remain at a higher level despite average inflation in the country being expected to moderate to around 5.5 per cent this fiscal. "We see food prices continue to remain high, partly because income levels have gone up. Increasing real informal wages has been a major drive of inflation," RBI Executive Director Deepak Mohanty said here.

"We have higher inflation. We are also a developing nation and so it's good to have some amount of inflation," Mohanty said.

New Banking Licence -

The first committee of the Reserve Bank of India (RBI) does an interim scrutiny by September-October.

On the new bank-licence clarifications announced by the RBI on Monday and the stocks that might be impacted Mahindra and Mahindra (M&M) & Tata Capital and L&T Finance .

On the PSU side - Power Finance Corporation (PFC) & Rural Electrification Corporation (REC)

have a good chance of getting bank licences. However, since the process is long-drawn it is not a very near-term trigger. But when the licences are issued, it will be a big positive for those that do get the licences.

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

Union Bank – 230CE @4.75 TG 7+ SL 2 (Max 2 lots)

TS 310CE – @5.5 TG 10+ SL 288 in Cash (Max 1 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 = 00

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

June 2013 = +13,900

(Booked profit in AT 90CE bought 3.25 sold 4.85 = 6400, Bata Future @867 sold 897 = 7500)

Today’s MG Mantra –

Nifty find hard to close above 5940, as told today it need to close above 5940 to move further else weakness may persist. On downside 5860 could act as support else 5785 200DMA is the point where Nifty can stabilize.

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.

============ Join MG on FaceBook ============

Join MG on FB for live update – www.facebook.com/mudraguru.india

Please make sure you need to send a message on FaceBook – “I am blog reader” as currently I am not accepting FB request from unknown person.

Morning Bells (06 June 13)

Good Morning Friends.

Don’t mix bad words with your bad mood, you will have many opportunities to change your mood but you will never get the opportunity to replace the words you spoke.

The Indian equity market barely managed to close in the green on World Environment Day. After opening with a negative gap, the benchmark indices remained under pressure. In the first half, the Nifty even slipped below 5900 mark on the back of a sell-off in IT, telecom and FMCG stocks.

However, the markets bounced back and managed to end above 5900 after May HSBC Services Business Activity Index came in at 53.6, up from 50.7 in April. This points to a solid expansion in output, the fastest in three months. This is in sharp contrast to the fall registered in manufacturing output, which is at a 50-month low.

The post-noon rebound was led by oil and gas, realty, metal, and capital goods. Even mid- and small-cap stocks ended with marginal gains. 

Oil marketing companies and sugar stocks were in focus today.

Gainers –

Reliance Industries, DLF, ONGC, Hindalco, Sun Pharmaceutical, Reliance Infrastructure were among the major gainers in Sensex & Nifty.

Losers -

Maruti Suzuki, GAIL India, JP Associates, Ranbaxy and Jindal Steel. Wipro, HDFC, ITC, Bharti Airtel, Ambuja Cements, Infosys, HDFC, ACC, ITC, UltraTech, Axis Bank, Bajaj Auto, BHEL and ICICI Bank were among the major losers in Sensex & Nifty.

Sectoral –

Domestic Front –

Govt. hikes gold import duty to 8% from 6% –

The finance ministry today announced to hike gold import duty to 8 percent from current 6 percent in order to curb extremely high demand for the yellow metal.

This is the second hike in gold import duty since January. Gold import duty has been hiked to 8 percent from 2 percent in past two years.

In April, 2013, gold and silver imports surged by 138 percent to USD 7.5 billion, as against USD 3.1 billion a year ago. The World Gold Council (WGC) expects India's gold import to touch a record level at 300-400 tonne in April-June quarter.

Higher gold imports has been a key reason for the widening current account deficit which touched a record high 6.7 percent of GDP in the December quarter.

HSBC PMI –

India's services sector activity expanded in May and the pace was the fastest in three months, driven by up tick in new orders, an HSBC survey said today.

The HSBC/Markit purchasing managers’ index for the services industry today inched up to 53.6 in May, pointing to a solid expansion in output, one that was the fastest in three months.

Global Front –

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

Next few months will be action-packed for stock indices as there will be several key events that will lay future trend for the trade. The onset of monsoon, Reserve Bank of India's policy, global cues and general election would be some of the major triggers for the markets going ahead,

Now next big triggers CPI, WPI Inflation on 12 and IIP on 14 or 15 and then RBI monetary policy review on 17^th.

The INDIA VIX on NSE was down 0.48% and ended at 16.78 against previous close of 17.26.

FNO PCR was 0.88 against previous close 0.98.

Indian Rupee – Rupee declined by 29 paisa and was trading at 56.73 against its previous close of 56.44.

S&P 500 (US) was trading at 1613.35 down 18.03 then its previous close at the time of writing M Bells.

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

Though Nifty manages to close in green but market is not yet out of danger. So just avoid taking long positions till the Nifty closes above 5,940 on a weekly basis. This is a critical level as it is from here that it broke out in late April. If the Nifty closes below 5,940 on a weekly basis, it is likely to find support at its 200 daily moving average. The 200-DMA is an indicator used by traders to determine the market trend. In theory, stocks/indices continuing to close above the 200-day line is considered healthy.

200 DMA comes around 5785.

If weakness continue then rate sensitive stocks will lead, specially banks will be on sellers radar.

Opening – Seems with small gap down and under pressure as EU & US market declined further.

========================  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

Data released by most automakers over the last few days shows sales across two-wheelers, passenger vehicles and commercial vehicles remained weak in May.

TM is right now in no trade zone, chances were very high to make a new high (if Nifty remain flat or positive) as it has broken its major resistance of 312.

L&T –

A Joint Venture Company of L8tT - Larsen Toubro Arabia LLC, has achieved a major breakthrough in the Kingdom of Saudi Arabia by securing a large EPC contract from the Saudi Arabian Oil Company (Saudi Aramco). Larsen Toubro Arabia is one among multiple joint ventures of L&T in the high- growth markets of the GCC countries.

The contract is for setting up gas processing facilities, for the Midyan Gas Fields, with a capacity to treat 75 MMSCFD of gas and 4500 BPD of condensate, and the laying of over 90 km of gas and condensate product pipelines. The project is scheduled to be completed in 37 months.

The purpose of the facilities is to efficiently meet the Kingdom's energy demands in the west coast region.

Just Dial -

Just Dial finished 14% higher on its debut day on the bourses Wednesday. The local search engine company raised Rs. 9.5 billion in its IPO recently. Company's founders and global private equity company sold stock in the company's IPO earlier which saw a subscription of 11.6 times.

The stock closed at Rs. 612.35 up by Rs. 75 or 14.15% on the National Stock Exchange (NSE) Wednesday. The stock touched a high of Rs. 631.90 and a low of Rs. 581.15. Total volumes traded at the counter stood at 76.3 lakhs.

Total 4.16 million shares or 33.39% just dial stock is marked for delivery, according NSE data.  

RIL –

Reliance Industries Limited will announce its 39th Annual General Meeting on June 06, 2013 for FY2012-13.

In the last AGM, the company proposed a capex into different quantum across sectors.

The stock closed at Rs800, up Rs19.95 or 3%. The stock has hit a high of Rs803 and a low of Rs780.

Shares of Reliance Industries' ( RIL ) closed Wenesday up 2.56 percent, ahead of its 39th Annual General Meeting on Thursday. The street is expecting new announcements in its telecom arm Jio Infocomm along with capex and outlook in its other business divisions.

TCS -

Tata Consultancy Services has reportedly said that it has raised the chief executive N Chandrasekaran's maximum salary limit by 50% to Rs 15 lakhs a month with effect from April 1, 2014.

TCS CEO was paid around Rs12 crore, in the year to 31 March 2013.

The IT company expects to beat IT industry body Nasscom's 2013-14 growth expectations.

There will be a proportionate increase in benefits related to his salary, the company reprotedly said in its annual report for the year 2012-2013.

MMTC –

Metals and Minerals Trading Corporation of India (MMTC) Offer-for-sale for 9.3% disinvestment on June 13. An Empowered Group of Ministers will fix base price on June 12, said reports. Government on May 29 announced that it plans to divest 9.3% stake in MMTC in next 15 days. The government expects to raise Rs. 2.50-3bn through the stake sale, says report.

Hindalco –

Hindalco Industries  plans to raise Rs 5,000 crore to refinance high cost debt, for which State Bank of India ( SBI ) may be appointed as lead manager, exclusive sources told CNBC-TV18. Currently, the aluminium maker has a debt of around Rs 13,000 crore.

Of the total, the company will raise Rs 2,000 crore by issuing bonds which will hit the market by September quarter. It will borrow loans of about Rs 3000 crore to repay high cost debt at its Utkal Alumina. The Aditya Birla group company plans to double capacity to three million tonne at this unit.

M&M –

Mahindra & Mahindra Ltd. (M&M), a part of the US $16.2 billion Mahindra Group, today unveiled its eagerly awaited sub 4 metre, compact car, the Verito Vibe. Designed and developed in-house by Mahindra, the Verito Vibe marks Mahindra’s entry into the high volume compact car market. The Verito Vibe redefines the compact car segment in terms of its spaciousness, reliability and unique crossover style for the Indian consumer.

Powered by Renault’s renowned 1.5 litre dCi diesel engine known for its durability and delivering mileage of 20.8 KMPL*(ARAI certified), the Verito Vibe also comes fitted with a state-of-the-art Driver Information System, which gives customers real time updates on mileage, temperature, distance to empty and more, making the Vibe a very dependable compact family car.

Real Estate Regulatory Bill -

CREDAI welcomes the Cabinet approval of the long awaited Real Estate Regulatory Bill, Says Credai President Mr.C.Shekar Reddy.  He also said that, we have worked closely with the ministry on the previous draft bill, however, we have not been able to see the final version.  We had certain strong reservations on some of the clauses of the bill and we will keep on working with the ministry and the States, so that our members are not unnecessarily victimized and License Raj does not come back.

CREDAI National President, C Shekar Reddy further mentioned that from Industry perspective it is important that the bill maintains equilibrium between the developer’s community and the end users. Certain provisions in the bill are required to be amended / removed otherwise it will result in substantial increase in the cost to the home buyers and in long run will shatter Governments dream to have “Housing for all” and will also impact “Affordable Housing” initiative.

C Shekar Reddy categorically mentioned that the provisions like revocation of registration would certainly put the projects in limbo for months and years due to litigation which will act against the intent of the consumer.

Regulation is required for any developing market but to make the regulation effective the bill should regulate the entire real estate industry covering all the stake holders like the competent authority, local authorities, financial institutions, electricity board, water board, fire department etc.

(IIFL.com)

New Banking Licence -

Rajiv Takru, financial services secretary, told CNBC-TV18 that the number of banking licenses to be issued could be clear only after the first committee of the Reserve Bank of India (RBI) does an interim scrutiny by September-October. He added that the clarifications issued by the RBI on Monday were clear and the regulator had been as fair as possible.

On non banking financial companies (NBFCs) finding it tough to comply with the norms on reserve requirements and priority sectors, he said that there would be no compromise on the lending to such sectors. He added that if the companies found it difficult to meet norms, they could reconsider their decision to apply for licenses.

On the new bank-licence clarifications announced by the RBI on Monday and the stocks that might be impacted, Roy expects a few of the non-banking financial companies sponsored by corporate houses to be strong contenders for banking licences."The stocks that might be affected include Mahindra and Mahindra (M&M), Tata Capital and L&T Finance . On the PSU side, NBFCs sponsored by state-owned units such as the Power Finance Corporation (PFC) or Rural Electrification Corporation (REC) have a good chance of getting bank licences. However, since the process is long-drawn it is not a very near-term trigger. But when the licences are issued, it will be a big positive for those that do get the licences."

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

Union Bank – 230CE @4.75 TG 7+ SL 2 (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 = 00

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

June 2013 = 00

Today’s MG Mantra –

Nifty to hold 5915 if not then 5860. After breach of 5915 a 75-100 point fall is on card, so be carefull.

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.

============ Join MG on FaceBook ============

Join MG on FB for live update – www.facebook.com/mudraguru.india

Please make sure you need to send a message on FaceBook – “I am blog reader” as currently I am not accepting FB request from unknown person.