Monday 22 July 2013

Morning Bells (23 July 13)

Good Morning Friends.

Minimum requirements and maximum adjustments are two important steps for happiness in life. Good Morning.

The Indian equity market ended Monday on a flat note as benchmark indices struggle to find any specific direction throughout the day. After opening with a negative gap in early trade, the markets did manage to stage a smart comeback. However, sentiment was hit after capital goods major Larsen & Toubro registered lower-than-expected Q1 FY14 earnings and worst margins in over 12 years.

Larsen & Toubro posted a Q1 net profit of Rs. 7.56bn as compared to Rs. 8.64bn in the same period last year. Total income increased from Rs. 125.63bn to Rs. 130.28bn year-on-year. Operating margin of 8.5% was lower than street's estimates and below our estimate of 8.9%.

The Mukesh Ambani-led company posted a Q1 FY14 profit after tax of Rs. 5,352cr as against Rs. 4,503cr in the same period last year, an increase of 18.9% year-on-year. Revenue dipped 4.6% YoY at Rs. 90,589cr on back of lower output from its flagship KG-D6 gas fields. Gross refining margins came in at $8.4 on turning every barrel of crude oil into fuel as compared to $7.6 per barrel YoY. KG-D6 gas production fell 53% to 49.2bn cubic feet in Q1. The stock closed weak down 1.59% at Rs. 909.05 per share on volumes of 38.76 lakh as against its five-day average of 34.57 lakh.

Gainers –

HDFC, IndusInd Bank, Sun Pharmaceutical, M&M, Bank of Baroda, Punjab National Bank, Hindustan Unilever and Bharti Airtel were among the top gainers.

Losers -

L&T, BHEL, Ambuja Cements, ONGC, Tata Steel, ACC, Ranbaxy, Asian Paints, Reliance Industries and Dr Reddy’s Laboratories lost out in trade Y’day.

Sectoral –

It was great day, not a single sector on the Bombay Stock Exchange ended in the red.

Domestic Front –

Rcom: Nest hearing on July 24 -

Anil and Tina Ambani have moved to the Supreme Court against 2G special court's order for the duo to be summoned as witnesses in the 2G case, said reports. The apex court will hear their case on July 24.

Earlier on Friday, CBI allowed Anil and Tina to be summoned as witnesses in 2G case. 11 other witnesses will be summoned in the case, said reports. Anil Ambani's counsel Majeed Memon then said they will challenge the 2G court order to call Anil Ambani as a witness. The 2G special court reserved order on July 19 on CBI's plea to summon Anil Ambani, his wife Tina Ambani and others as witnesses in 2G case.

The CBI then told a Delhi court that deposition of Reliance ADAG Chairman Anil Ambani and his wife Tina.

Ambani is required in the 2G spectrum case as witnesses as the firm's officials, report said.

There are a number of witnesses from Reliance ADAG who have been examined. No witnesses gave clear-cut answers as to who were the persons who took these decisions.

Rupee slips as govt considers scrapping sovereign bond issue

The Indian rupee weakened against the greenback on Monday after reports suggested that government is considering scapping the issue of sovereign bonds to offshore investors, a move largely aimed at turning Indian currency's fortune with solid dollar inflows.

The rupee closed at 59.72/73 a dollar as compared to its Friday's close of 59.35/36. Rupee fell to a record low of 61.21 on July 8, and hasn't recovered much even as RBI tried to arrest volatility and lower speculation by introducing various norms to mop up liquidity from the system.

Global Front –

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

Stock markets are expected to remain range-bound in the near term and may see cautious trading ahead of RBI's monetary policy, even as investors closely watch first quarter corporate earnings and look at global cues.

Besides, there may be volatility in view of settlement in the derivatives contracts this week.

Apart from corporate earnings, Reserve Bank of India's monetary policy and monsoon session of parliament will provide the next big trigger for the market.

The INDIA VIX on NSE was down by 2.76% and ended at 17.63 against previous close of 18.13.

FNO PCR was 1.24 against previous close 1.22.

Indian Rupee – Rupee declined by 37 paisa and was trading at 59.72 against its previous close of 59.35.

S&P 500 (US) was trading at 1694.42 up 2.33 than its previous close at the time of writing M Bells.

Buzz Q1 Nos –

23 July – Century,

24 July – Yes Bank, Ambuja Cement, Cairn, Central Bank, HeroMoto, Indiabulls Real Estate, Uniphos

Dabur

25 July – Maruti Suzuki, Sterlite, ITC, Biocon, Gail, ACC

26 July – BOI, PNB, Wipro, HUL

ITC, Maruti Suzuki (India) , Sterlite Industries , Hindustan Unilever , Punjab National Bank , and Wipro are among the major firms slated to announce earnings this week.

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

As discussed 2 successive close will take Nifty to 6050/6100 level. The major hurdle in between was 5990, this would again act as crucial level and if Nifty goes below this level then market will see further selling pressure.

Opening – As earning session just kicked off, we may see opening on positive note. Nifty finding resistance around 6050 level and today it may attempt to next resistance level of 6090. But cautious approach is required and keep eye on 5990 as major support or big battle zone.

======================== 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.)

Lupin get USA FDA nod for Glumetza Generic –

Pharma Major Lupin Limited Pharmaceuticals, has received final approval for its Metformin Hydrochlonde extended release tablet (HCI ER) 500 mg and 1000 mg from the United States Food and Drugs Administration (FDA).

Liupin's Metformin HCI ER Tablets, 500 mg and 1000 mg strengths are the AB-rated generic equivalent of Santarus, Inc's Glumetza HCI ER Tablets, 500 mg and 1000 me strengths. Metformin HCI ER tablets is a biguamde and is indicated as an. adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes rotilitus.

Lupin believes that it is the first applicant to file an ANDA for Glumetza* HCI ER Tablets, 500 mg & 1000 mg strengths and as such will be entitled to ISO days of marketing exclusivity.

ING Q1 net up 35% but stock close on negative note -

The Net Profit of the Bank has grown 35% this quarter compared to the same quarter last year with NIMs improving to 3.56% from 3.29%, core cost income ratio at 53.0% , operating profit growing at 50% y-o-y and a significant improvement in Return on Assets to 1.33% from 1.11%. Customer assets grew 18%. Gross NPA reduced to 1.75%, Net NPA steady at 0.19% with provision coverage ratio of 89.1%.

ING Vysya Bank has added 5 new branches & 42 ATM’s during the quarter. The branch network (including extension counters) & ATM stood at 547 and 542 respectively.

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

TRACK for short to medium term (After expiry outlook involved) –

Tata Chemicals – CMP 284, it may see some pressure but then seems to touch 325+ levels and SL can be placed 281.5/275 for short to medium term respectively.

Hexaware – CMP 107. Its doing good since 89 level, stock has stem to touch 130+ levels. T1 114 T2 116 T3 132+ while SL can be placed 97.

Bajaj Auto – CMP 1966 No.s are good, stock seems to moving further to 2050+ while SL comes around 1920 for short to medium term.

BHEL – CMP 174, seems to continue its downward journey and can touch 163 levels while its facing resistance around 190 levels.

=============== 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 June 13 (Total 58,800)

July 13 = +800

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

July 13 = +1100 + 3750 = +4850

(Booked profit in L&T 1000CE at 16 bought 11.5, 2 lots)

Today’s MG Mantra –

Keep eye on successive breach of 5990 level, if yes, then exit longs.

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.

Morning Bells (22 July 13)

Good Morning Friends.

What is life – Days begin with hopes and ends with dreams. / Everyday starts with some expectations but everyday surely ends with some experience.

The week started off with a high. On Sunday, petrol price were hiked by a steep Rs 1.55 a litre, the fourth increase in rates in six weeks, as falling rupee made oil imports costlier. This is the fourth increase in rates since June. Oil firms had on June 1 raised prices by 75 paisa, excluding VAT, and followed it with a Rs 2 per litre increase on June 16 and Rs 1.82 on June 29.

To stem the rupee's slide, the Reserve Bank announced few measures to curb speculation in the currency market and address exchange rate volatility with an aim at restricting liquidity in the banking system. With these measures, the central bank aims to make the debt market more attractive for foreign investors. The move, however, didn’t have the intended effect.

It turned cautious post that. The central bank did not want interest rate to rise sharply as that could create more problems for the economy. RBI rejected bids that quoted higher yields for its Rs 12,000-crore bond sale programme, netting a paltry Rs. 2,532cr.

But the major newsmaker of the week was the easing of FDI caps with an eye to boost dollar inflows and stimulate a moribund economy. The Centre has eased foreign direct investment caps in 13 sectors like insurance (from 26% to 49%, would require Parliament approval), commodities as well as stock exchanges (unchanged at 49% but allowed through automatic route instead of Foreign Investment Promotion Board's consent), tea (100% allowed; up to 49% under automatic route), telecom (from 74% to 100%), courier services, defence productions, asset reconstruction companies, credit information companies and others.

In a string of measures to tighten the liquidity and bring stability in the rupee, the Reserve Bank of India (RBI) on July 15 announced that it will not allow overnight lending of more than 1 percent of the total deposits (Rs 75,000 crore) in its daily repo window. The additional money will be lent at the marginal standing facility (MSF) at 10.25 percent. It also decided to sell bonds in the open market to drain Rs 12,000 crore.

As a result, bonds fell by about Rs 5 and the dollar rupee fell by 75 paise at the maximum to 59.20. The Treasury bill auction and the bond sales were allowed to be a flop. It raised eyebrows in the market whether the central bank was really resolved to address the problem or was it worried about the collateral damage on the economy.

Interesting to know –

The volatility in the rupee can only be addressed if the structural problems in the economy are solved, says former RBI governor and current director of research at Brookings Institute, Subir Gokarn. He believes that RBI's measures to arrest rupee fall will work only if there is a parallel plan in place to solve the structural issues such as the high current account deficit.

"If we don’t have a simultaneous movement on structural issues; steps that are actually addressing the causes of the problem, will peter out over a period of time," said Gokarn

Gainers –

Hindustan Unilever, Asian Paints, Ambuja Cements, NTPC, ITC, Tata Power, ACC and Reliance Industries were among the top gainers.

Losers -

Tata Steel, Bank of Baroda, Axis Bank, Ranbaxy, HDFC Bank, Cairn India, NMDC and IndusInd Bank lost out in trade Y’day.

Sectoral –

It was great day, not a single sector on the Bombay Stock Exchange ended in the red.

Domestic Front –

India’s forex reserve marginally up -

The country's foreign exchange reserves rose by USD 21.1 million to USD 280.19 billion, the Reserve Bank said today.

The total reserves had dipped by USD 4.48 billion to USD 280.16 billion in the previous reporting week.

Foreign currency assets, a major component of the forex reserves, were up by USD 33.5 million to USD 252.14 billion for the week ended July 12, Reserve Bank said on Sat.

After a heavy USD 1 billion plus fall last week, the gold reserves were unchanged at USD 21.55 billion, the apex bank said.

Global Front –

Fed -

On the global front, Federal Reserve Chairman Ben Bernanke kept up with his guessing game on when the massive $85bn monthly bond buying program will be tapered. In his address to the US House of Representatives Financial Services Committee, Bernanke said the Fed expects to start scaling back its massive asset purchase program later this year. This was the prime reason for the rangebound market pre-lunch.

Detroit –

The city of Detroit synonymous with the American automobile industry has had a difficult ride and is now filing for bankruptcy.

The city, which filed for Chapter 9 bankruptcy protection in federal court on Thursday is the largest US city to do so. The bankruptcy filing is an attempt to bail out a city that is sinking under billions of dollars in debt and decades of mismanagement.

In the 1930s, Detroit was known as the City of Champions for its successes in individual and team sport. It was even called D-Town and then Hockeytown before being know as Rock City after the Kiss song "Detroit Rock City."

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

Besides, there may be volatility in view of settlement in the derivatives contracts this week.

Apart from corporate earnings, Reserve Bank of India's monetary policy and monsoon session of parliament will provide the next big trigger for the market.

The INDIA VIX on NSE was down by 0.77% and ended at 18.13 against previous close of 18.27.

FNO PCR was 1.22 against previous close 1.20.

Indian Rupee – Rupee declined by 32 paisa and was trading at 59.35 against its previous close of 59.67.

S&P 500 (US) was trading at 1692.09 up 2.72 than its previous close at the time of writing M Bells.

Buzz Q1 Nos –

22 July – L&T

23 July – Century,

24 July – Yes Bank, Ambuja Cement, Cairn, Central Bank, HeroMoto, Indiabulls Real Estate, Uniphos

Dabur

25 July – Maruti Suzuki, Sterlite, ITC, Biocon, Gail, ACC

26 July – BOI, PNB, Wipro, HUL

ITC, Maruti Suzuki (India) , Sterlite Industries , Hindustan Unilever , Punjab National Bank , and Wipro are among the major firms slated to announce earnings this week.

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

Opening – We may see opening on negative note after visiting 6050 mark some cautious approach and profit booking was obvious.

======================== 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.)

RIL –

Mukesh Ambani-led Reliance Industries has posted a Q1 FY14 profit after tax of Rs. 5,352cr as against Rs. 4,503cr in the same period last year, an increase of 18.9% year-on-year. Revenue dipped 4.6% YoY at Rs. 90,589cr on back of lower output from its flagship KG-D6 gas fields. Gross refining margins came in at $8.4 on turning every barrel of crude oil into fuel as compared to $7.6 per barrel YoY. KG-D6 gas production fell 53% to 49.2bn cubic feet in Q1.

Bajaj Auto -

Bajaj Auto Ltd has posted results for the first quarter ended 30th June, 2013.

The net profit stands at Rs7.38bn, up 2.7% YoY. The total income from operations was at Rs49.11bn.

Total Income has increased from Rs 50476.30 mn for the quarter ended June 30, 2012 to Rs 50866.90 million for the quarter ended June 30, 2013.

L&T –

Larsen & Toubro will declare its Q1 FY14 results on July 22. Rajiv Mehta, Associate Vice-President - Infrastructure at IIFL, sees Larsen & Toubro posting a net sales of Rs. 137.49bn, a gain of 15% year-on-year.

On the operating profit margin front, Mehta sees a 21 bps YoY rise at 9.3%. He forecasts a 1.6% YoY drop in net profit for the engineering behemoth at Rs. 8.87bn.

In Q4 FY13, the engineering major reported a 7% YoY decline in net profit at Rs. 17.88bn as against Rs. 19.2bn in the year-ago period. Net sales improved by 10% to Rs. 202.94bn from Rs. 184.61bn YoY.

On Friday, the stock closed at Rs. 974, down Rs. 11.3 or 1.15%% on the National Stock Exchange. Volumes on the counter stood muted at 12.48 lakh as against its five-day average of 17.54 lakh.

MG’s View -

I am watching stock since long and seen that there’s no direct correlation to the Nifty movement in L&T on the downside, but the stock is proving to be a good hedge against the market fall. So which shows that in coming days stock can touch 1100 level.

Insurance Sector –

The Indian insurance industry is holding its breath and crossing its fingers. Key companies in the sector are on the verge of a turning point. If the foreign direct investment (FDI) limits in the sector are hiked, increased competition will just be one of the many benefits

The government's proposal to hike the FDI cap in insurance from 26 to 49 percent under the automatic route has raised hopes in the insurance sector. While insurance companies wait with bated breath for parliament to sign off on the hike, they are not quite succeeding in holding back a smile.