Morning Bells (14 Jun 13)

Good Morning Friends.

Happiness gives temporary satisfaction but satisfaction gives permanent happiness.

Oooh Lala… It was sixth straight session of losses on D-street on Thursday. It was a seller’s day across the globe including US, EU and Asian market. Our dear financial friend Japanese Nikkei also tumbled 6.4%, hitting its lowest close since April 3.

Participant even ignored two major cheerful news - Fitch’s outlook change on India, which released after market hours on Wednesday, was unable to bring cheer to investors in India. The rating agency revised India’s sovereign credit outlook to stable from negative and affirmed the BBB- rating assigned earlier.

The Finance Minister’s statement on the Indian currency was unable to bring in a wave of cheer. To soothe importer and market concerns, P Chidambaram said, "There is no reason to panic over the rupee's movement. It will not continue to fall versus the dollar.”

I believe that there is no sense in talking various point, so in short, foreign institutional investors have decided to take money off the table on account of the high current account deficit and fast-depreciating rupee. FIIs have been net sellers to the tune of Rs. 204cr in the last four trading sessions.

(This I had informed you when Nifty was above 5940 and had warned that any close below 5940 will put Nifty into deep RED till 5735-40 and 5685, and that’s it was necessary for Nifty to close above 5940 last week itself.)

Gainers –

Hindalco, Bharti Airtel, Jindal Steel, Ambuja Cements, Cairn India, SBI and Hindustan Unilever were among the major gainers in Sensex & Nifty.

Losers -

Punjab National Bank, Bank of Baroda, Gail India, Tata Motors, NMDC, M&M, Sun Pharmaceutical, Sesa Goa, IDFC, BHEL and JP Associates were among the major losers in Sensex & Nifty.

Apollo Tyre was top loser and it fell down around 24% and touch 68 levels.

Sectoral –

The metals, IT, power, FMCG and auto stocks led today’s decline. Even the mid- and small-cap stocks witnessed selling pressure. On the other hand, oil and gas and healthcare stocks led the gainers pack.

Domestic Front –

Don’t buy yellow metal - PC -

FM ruled out any further customs duty hikes on gold imports, saying: "I don't want to become too unpopular." The government, which has to face the electorate in the general elections next year, would not want to antagonise citizens on a strong emotionally-linked investment.

He went on add that economic indicators like the current account deficit will improve drastically if Indians do not import gold for a year.

Chidambaram had suggested all banks that they should not encourage their customers to invest in gold.

Govt. will its best for current account deficit –

The steps taken by the government since August have had desired impact on fiscal consolidation and inflation, says finance minister P Chidambaram.

He says the government has been able to achieve "significant results" the on economic front in the last nine-months.

Speaking at press address, Chidambaram says the government will leave no stone unturned to achieve its revenue target. "We are doing everything we can to revive investment sentiment," he told reporters on Thursday.

Global Front –

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

The two major events lined up ahead are the minutes of the Federal Reserve's Monetary Policy meet on June 18-19 and RBI's policy meet on June 17.

As told about thin silver line for hope of rate cut, now going strengthen because after postpone of Food Security bill Govt. has very limited choice to stop fall in currency as well as to stop FII outflow.

The INDIA VIX on NSE was up 3.1% and ended at 19.44 against previous close of 18.85. The last time the index surged this level was in June, 2012.

The volatility index also known as the fear gauge indicator is a measure of the amount by which an underlying index is expected to fluctuate in the near-term.

FNO PCR was 0.81 against previous close 0.87.

Indian Rupee – Rupee fall arrested now for some time, currently declining by 19 paisa and was trading at 57.98 against its previous close of 57.79.

S&P 500 (US) was trading at 1623.75 up 11.28 then its previous close at the time of writing M Bells.

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

Finally Nifty find support around 5700 level and longs seems to get some breather here ahead of RBI policy on Monday and Fed policy meet.

3 Major support zone are there from where market rebound few times in past. 5665-5685, 5605-5630 and around 5500 level. So at first point of 5685 short covering started taking place and today we may see some GREEN after 6 straight trading sessions.

Still don’t get too bullish, just use bounces to make exit and reduce your losses. Market need to close above 5940 for any further development. Short covering and short term buying in rate sensitive stock can push Nifty towards 5800 level but don’t get confused.

Opening – A small gap up is expected due profit booking in short position ahead of RBI & Fed policy meet.

========================  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

As indicated 281 is the point where short need to book at least part profit. Its closed @282, some bounces are on card but can be short lived. On short side Below 278 chances are high to be in the range of 256-261 with SL 289. Above 289 chances are there for touching 304.

Sun Pharmaceutical -

Sun Pharmaceutical ended 3% lower today. The company settled an ongoing litigation regarding generic pantoprazole with Pfizer pending in the US District Court with a lump-sum payment of $550mn. According to Amar Ambani, IIFL's Head of Research, the settlement has come in much higher than the company's provision of around $100mn. "Sun Pharmaceuticals consolidated cash stands at around $1.3bn. This has now reduced its cash balance. For FY14, we expect other income to come in lower. We see some correction in the counter and suggest accumulation at lower levels."

MMTC -

MMTC received bids for 9.81cr shares against the offered 9.33cr at an indicative price of Rs. 61.01 per share. The counter was locked in at the lower circuit of Rs. 189.05. The company had launched its on-day-offer-for-sale today. Its floor price was fixed by the government at Rs. 60 per share.

The stake sale getting over-subscribed by 1.33 times of the shares on offer on Thursday, marking a successful start to its disinvestment programme for this fiscal.

The issue attracted bids for over 12.37 crore shares, or 1.33 times, against 9.33 crore shares on offer even before the close of market hours, according to data from stock exchanges.

Apollo Tyre –

Apollo Tyres fell a scintillating 26% on Thursday after the company announced plans to acquire US-based Cooper Tire & Rubber in a $2.5bn deal. The company made the announcement post market hours. “The valuation at which Cooper Tire & Rubber is being acquired does not appear expensive, but the strain on the balance sheet at the consolidated level would be the biggest risk. In case of an extended slowdown in the US and Europe, debt servicing will be an issue. Volatility in earnings given the high sensitivity to rubber prices would be another headwind.

For some years now Indian companies have been scouting and successfully acquiring companies beyond the shores. Some have been ambitious in taking very leveraged bets. In 2012 there were around 72 acquisitions worth US$11bn as against US$6.7bn in 2011.

L&T Bags new order -

Construction major Larsen & Toubro (L&T) has bagged a Rs 900 crore contract from Wave Group's realty arm Wave Infratech to build residential towers in Noida. 

Wave Infratech is developing a mixed-use project 'Wave City Center' spread across 152 acres, which the company had bagged through an auction for about Rs 6,500 crore. 

The total size of the township is 40mn sq ft and of that 9.5mn sq ft will be constructed in the first phase. Sources said that Wave Infratech has awarded a contract, valued at over Rs 900 crore, to L&T for construction of residential towers at Wave City Center for the first phase of the project. L&T will soon start construction of the first phase that is slated for delivery by 2016, they added. 

Titan –

Titan Industries touched a new 52-week low on Wednesday. It ended of the day's low at Rs. 204.95 per share after RBI clarified on the company's gold import query. There are concerns that the new RBI norms will hit business.

The scrip closed at Rs. 204.95, down Rs 32.25 or 13.6%, on the National Stock Exchange.

The company has initated discussions with RBI officials to obtain clarifications on certain aspects of its gold import notification, which was issued on June 4.

Jet Airways –

Jet Airways scrip surged 6% on Thursday on expectations that the Foreign Investment Promotion Board will approve its 24% stake sale to Abu Dhabi-based Etihad Airways.

HUL

Unilever Plc on Thursday said it would start to increase its stake in  Hindustan Unilever from June 21 after it gained approval from the Indian market regulator.

This would raise the stakes of the parent company in Hindustan Unilever to 75 percent from 52 percent.

Unilever Plc had made an open offer for an additional 22.52 percent stake in the company at Rs 600 per share.

Hindustan Unilever's fourth quarter numbers for FY13 beat street estimates as its net profit rose 15 percent year-on-year to Rs 787 crore, helped by lower cost of key raw materials.

The Hindustan Unilever stock had recovered sharply from its 52-week low of Rs 443.05  on March, 2013. Following the share buyback news, the stock touched a 52-week high of Rs 598.00 on May 31, 2013 and stayed in the same neighbourhood since then. On Thursday, the HUL stock closed flat at Rs 594.75

Reliance Communication –

According to CNBC-TV18, Reliance Communication (RComm) may sell its controlling stake in DTH business to Sun Group.

No official comment has been received from both the companies, however according to sources, the two companies are in advance stages of discussion for the stake sale. If it goes through, the deal will look at merging the DTH business of the two companies.

Sources say the valuation of the stake is around Rs 2,500 crore. The companies will take another 10-15 days before making any official announcement. A term sheet is also likely to be signed, but the deal will be a combination of cash and stocks.

The amount of Rs 2500 crore will be significant for RComm considering that the company is sitting on a debt pile of around Rs 39,000 crore.

The company is looking at bringing down debt to save interest cost.

Overall, RComm will be able to bring down debt by around Rs 10,000 crore.

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

=============== 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 –

Utilize the opportunity, it could be very short lived say max till RBI announcement.

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 (13 Jun 2013)

Good Morning Folks.

If you want to gain knowledge – Add something every day to your mind, but if you want to gain Wisdom, remove something every day from your mind.

Finally the fear of braking 5940 comes true in past 2 days, I was hoping 5785 which is also breached decisively and now all eye on 5665. As discussed and informed about it on Tuesday, FIIs have sold around 3.25mn and now around 1-1.5mn is on card, so effect of 3.25 was fall of 250+ points so, effect of 1.5 mn could be another 100 points and formula can be proved i.e. 5665.

As discussed during the day, only think line of hope is now Govt. also came to protect Rupee and today it appreciated good enough instead of negative session and succeeded to bring it below 58 after breaching 59. If it appreciate further then we can hope that further outflow can be limited for time being.

Here’s some text for whom that interested in deep study of market, specially about FII activity, please remember its not bear market, its actually FII’s offloading, it’s a big difference if you mean it, bear market means stay in market and create short positions while this is the case of switching to other stable market i.e. purely exiting from current market and to enter into another market. Still not got it, if you are a trader and market turned negative you will wont sit aside instead you will sell your longs and the will try to take some short position and will try to make some profit i.e. money will remain in the same market, but if situation goes worst or if you feel this market not good for you and you take all your cash from this market and then go for other market like China or US means money which was in the Indian market is now in other market. GOT IT???

So take a look at story – have look to past 5-6 month, especially around Feb. of this year, FII have remained active in the index future segment, they were short in index futures quite heavily. They started covering their positions in the month of April. Then in the month of May they started forming long positions in the index futures and now this month it is starting. It is a continuous closure of open interest (OI) by the FIIs index futures. Therefore, if you look at the Nifty and Bank Nifty OI levels, which were almost at 10-month high in the starting of this series, they are almost at the multi-month low levels. Such kind of liquidation we have seen in the OI. It is not a short built up yet in the index futures.

So its purely heavy cash unwinding in the debt market by the FIIs, so its purely unwinding and not short position. So at this juncture we have already fallen 125 points and may be another 100 points of fall is on card and between 5665 to 5,630 we may see unwinding of short positions in the market, or one can say bottom fishing can take place. (As per FII activities only and not included any other institution)

Well, The Index of Industrial Production for April came below market expectations at 2% as compared to 2.5% in March. Consumer price for May came in at 9.31% as against 9.39% in April. This too disappointed as the street was expecting a sharper moderation month-on-month. Consumer food price-based inflation came in at 10.65% versus 10.61% MoM.

Gainers –

Jindal Steel, IndusInd Bank, JP Associates, IDFC, Lupin, DLF, Punjab National Bank, M&M, HCL Technologies and Cipla were among the major gainers in Sensex & Nifty.

Losers -

Reliance Infrastructure, Axis Bank, Coal India, Tata Power, Tata Steel, Hero MotoCorp, Bajaj Auto and Hindalco were among the major losers in Sensex & Nifty.

Jindal steel was top loser and it fell down around 24% and touch 190 levels but in later part it recovered from days low.

Sectoral –

The metals, IT, power, FMCG and auto stocks led today’s decline. Even the mid- and small-cap stocks witnessed selling pressure. On the other hand, oil and gas and healthcare stocks led the gainers pack.

Domestic Front –

Fitch revised India outlook to stable from negative -

Well good news come in the favour of India - The rating agency has revised outlook on the country's long-term foreign and local-currency debt at 'BBB-'.

Fitch Ratings has revised India's Outlook to Stable from Negative and affirmed its Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BBB-'. The agency has also affirmed the Country Ceiling at 'BBB-' and the Short-Term Foreign-Currency IDR at 'F3'.

Rupee scenario –

The Rupee appreciated on Wednesday and closed at Rs. 57.79 against the greenback despite disappointing April industrial productivity which came at 2% versus 2.5% in March.

On Tuesday, the Reserve Bank of India stemmed the Indian unit's slide from its all-time low of 58.98 per dollar. This was confirmed by Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, in a TV interaction with business channel CNBC-TV18 on Wednesday.

Global Front –

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

The two major events lined up ahead are the minutes of the Federal Reserve's Monetary Policy meet on June 18-19 and RBI's policy meet on June 17.

As told y’day about thin silver line for hope of rate, now today some experts also started feeling like what MG think, few experts feel that RBI may still cut repo rate by 25 basis points at its monetary policy review on Monday, despite the pressure on the rupee, rupee tumbled to a new low, and the slower-than-expected decline in consumer inflation for May appears to have further reinforced that view.

The INDIA VIX on NSE declined 3.2% and ended at 18.85 against previous close of 19.49. The last time the index surged this level was in June, 2012.

The volatility index also know as the fear gauge indicator is a measure of the amount by which an underlying index is expected to fluctuate in the near-term.

FNO PCR was 0.87 against previous close 0.93.

Indian Rupee – Rupee gain today further by 60 paisa and was trading at 57.79 against its previous close of 58.39.

S&P 500 (US) was trading at 1615.68 down 10.45 then its previous close at the time of writing M Bells.

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

Finally Nifty closed below its 200DMA.

Market still under pressure and now 5700 is on card, or exactly 5675-5685 is next stop. Here 3 things can give small support to Nifty which is – RBI intervene Rupee so chances for further slide in June series is low and secondly market looks oversold, also some experts start feeling of repo rate cut on June 17, so some bounces are also on card but trend is down. So now one can use small bounces to exit their longs. Only close above 5940 is the trend changer.

Opening – Again seems down, seems 5735 around level is possible.

========================  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 currently in trading range of 289-302, for fresh position one need to wait for breakout either side. If you are short keep SL 302 and watch the level 289 as first major stop for fall and then 281 as ultimate SL for near term.

Havells -

Havells closed up 5.2% on reports that the promoter, QRG Enterprises, is planning a foray into the healthcare business. According to business daily Economic Times, Havells plans to set up a chain of hospitals over a period of five years at am estimated cost of Rs. 10bn.

Cement Companies – SC orders to pay 10% CCI penalty by June 24, 2013 -

The Andhra Pradesh high court today gave its nod for the merger of Mahindra Satyam and Tech Mahindra. The court's decision paves way for the creation of the fifth largest IT company in India, following TCS, Infosys, Wipro and HCL Tech.

It is a great relief for Mahindra Satyam. It has been long pending for more than a year because a bunch of unsecured lenders have challenged the amalgamation process in Andhra Pradesh High Court. They have been asking the Andhra Pradesh High Court to settle the issue of Rs 1250 crore receivables from Mahindra Satyam before the merger process is initiated.

MMTC floor price fixed to Rs. 60 per share –

The Empowered Group of Ministers on disinvestment has fixed the floor price for the MMTC stake sale. The government has decided to sell-off 9.33% stake in Metals and Minerals Trading Corporation of India at Rs. 60 per share.

"The promoter proposes to sell 9,33,12,000 equity shares of the face value of Re. 1 each aggregating to 9.33% of the total paid up equity share capital of the Company on June 13, 2013" said MMTC in a statement.

The panel was headed by Finance Minister P Chidambaram. The government currently holds 99.3% in the star trading house and the stake sale is planned to meet the Securities and Exchange Board of India (SEBI) public shareholding norms.

The government hopes to raise Rs.2.5-3 billion through the stake sale,

Government on May 29 announced that it plans to divest 9.3% stake in MMTC. The government expects to raise Rs. 2.50-3bn through the stake sale.

MMTC closed at Rs. 206 down by Rs. 0.10 or 0.05% on Wednesday.

L&T Bags new order -

Construction major Larsen & Toubro (L&T) has bagged a Rs 900 crore contract from Wave Group's realty arm Wave Infratech to build residential towers in Noida. 

Wave Infratech is developing a mixed-use project 'Wave City Center' spread across 152 acres, which the company had bagged through an auction for about Rs 6,500 crore. 

The total size of the township is 40mn sq ft and of that 9.5mn sq ft will be constructed in the first phase. Sources said that Wave Infratech has awarded a contract, valued at over Rs 900 crore, to L&T for construction of residential towers at Wave City Center for the first phase of the project. L&T will soon start construction of the first phase that is slated for delivery by 2016, they added. 

Titan –

Titan Industries touched a new 52-week low on Wednesday. It ended of the day's low at Rs. 204.95 per share after RBI clarified on the company's gold import query. There are concerns that the new RBI norms will hit business.

The scrip closed at Rs. 204.95, down Rs 32.25 or 13.6%, on the National Stock Exchange.

The company has initated discussions with RBI officials to obtain clarifications on certain aspects of its gold import notification, which was issued on June 4.

Apollo Tyre –

Apollo Tyres Ltd will acquire Cooper Tire & Rubber Company ("Cooper"), a company listed on the New York Stock Exchange, by means of a merger of such subsidiary into Cooper in an all-cash transaction valued at approximately $2.5bn.

At the meeting of the Board of Directors held today, the Board gave their approval for execution of a definitive merger agreement under which a wholly-owned step subsidiary of the Company

This strategic combination will bring together two companies with highly complementary brands, geographic presence, and technological expertise to create a global leader in tire manufacturing and distribution.

Cooper is the 11th largest tyre company in the world by revenue and today supplies premium and mid-tier tyres worldwide through renowned brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.

==================== 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+ SL 9 (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 = -8500

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

June 2013 = +13,900 – 4000 = +9,900

Today’s MG Mantra –

After 2.30 factor is working fine since past couple of days, lets see if today it also follow same pattern.

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.