Morning Bells (30 Aug 13)

Morning Bells (30 Aug 13)

Good Morning Friends.

Quote of the day – Great minds have purposes, others have wishes.

So it was handsome recovery on D-street y’day and we bang on expiry target, my target was around 5300 if only short covering takes place and if there’s some other steps to recover currency then it was between 5350-5400.

Well now we are into fresh series, its difficult to express precise view but as per my previous view now Nifty need to close above 5450 some relief rallies, these relief rallies can take Nifty to 5650 kind of levels while down side range now shifted to 4900 which was my earlier target after breaking 5200 mark. So most probably now participant will try to move Nifty higher to settle vix & oversold zone status.

Well come to market commentary - The Indian equity market ended with strong gains on Thursday amid F&O expiry. Overnight gains in the US and the Asian markets propped up the benchmark indices to open with a positive gap. From there on the benchmark indices just continued rallying on account of short covering across the markets.

Sector-wise, major short covering was witnessed in the realty and infra stocks as the Congress was now eyeing for the contentious Land Acquisition, Rehabilitation and Resettlement Bill. Parliament is likely to take the Land Bill for discussion. The Land Acquisition Bill seeks to provide a fair compensation and rehabilitation to land owners in both rural and urban areas for land that is acquired for developmental projects.

On the currency front, the slide in the rupee came to a halt after the RBI decided to open a foreign exchange swap window to meet the daily dollar requirements of the three public sector oil marketing companies which guzzle US$8-8.5bn every month, for the import of an average of 7.5 mn tonnes of crude oil.

S&P Rating agency outlook –

Standard and Poor's has warned that large deficit economies, including India, could face more economic problems in the near term, says report.

Report said that India's CAD rose to an all time high of $88.2 bn or 4.8 per cent of the GDP in 2012-13.

"The road may be rocky in the near term, particularly for the largest deficit countries - India and Indonesia," said S&P's report.

High CAD is also impacting the value of rupee which slipped to an all-time low of 68.75 to a dollar in intra-day trade on Wednesday.

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.

MARKET OUTLOOK –

Now some situations are changed and are favourable for market in short term. First Syria tension seems eased which lead to cooling off of global crude prices. Secondly direct swapping window for dollar demand of state run OMCs. Third market is very near from where FIIs had started entering Indian market aggressively i.e. first they entered around 4900 level and then around 5200 level, so when Nifty touched 5100 mark some inflows are seen in equity market as investors bought equities at lower valuation.

So if my above belief is true and this continue for few sessions then Rupee is going to recover sharply and we may again see Rupee around 62 levels in this series itself.

Here remember (I am sorry but many of you don’t read MB carefully and then asked me on FB for smaller things, I don’t irritate by your asking but I lose my enthusiasm for preparing MB, it give me thought that my efforts are going waste. This doesn’t mean you stop asking me, I just want to say if ask some intellectual things then I enjoy it and if you ask something which I have already mentioned I get disappointed, well so no worry, keep asking) so remember, if currency recovers sharply then rate sensitive stocks to rally as they are already below their 52week low. Keep eye on stock like JPA, JI.

Above story doesn’t tell we are bottom out, Nifty need to cross many hurdles or say exams, first one is 5450 (for short term) then 5510 (short term) then 5650 (mid term) and finally 5710 (mid-long run).

So what could be strategy is to sell on rise with SL 5450 / 5510 for a target of somewhere 5100 and if broken and close below it then 4900. And above 5510 take some longs for TG 5650 with SL 5450.

My sense say after such a free fall initially we may see some relief rally if Nifty closes above 5450.

So just wait and see how this series starts.

KEY DATA-

Market participants will look forward to the GDP data which is scheduled to be released on 30th August.

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

The INDIA VIX was down 9% at 29.41. It hit a day’s high of 32.44 and low of 28.83.

STOCK OUTLOOK (Stock that will see good volume this week) –

Reliance -

Reliance Industries and its partner BP Plc won approval to invest $3.18 bn in R-Series gas field in KG-D6 block, says media reports.

Report said that RIL-BP plan to bring satellite fields in KG-D6 block to production.

REC –

Rural Electrification Corp is planning to raise Rs50bn through issue of taxfree bonds. The issue opens on August 30 and closes on September 23, says report. REC will use the capital raised through this bonds for lending purposes.

Report said that the lead managers to the issue are ICICI Securities, A K Capital Services, Axis Capital and Edelweiss Financial Services, says report.

Idea –

The DoT may soon issue new telecom licences to Idea Cellular which had earlier refused to accept guidelines related to 3G roaming pacts in the unified license, sources said. The new licence agreement between DoT and Idea may also incorporate certain clauses proposed by Idea, they added.

The Department had said that it was illegal for telecom operators to sell 3G services in areas where they do not have spectrum. Telecom companies Airtel , Vodafone and Idea Cellular had contested the DoT's point and the matter is now sub-judice.

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Morning Bells (28 Aug 13)

Good Morning Friends.

The only thing I learn in long run is – you should have patience and some money to put on risk with same stock repeatedly till you don’t get desired result. If you don’t have that much money then you should get out of market else sooner or later market will kick a** you.

So, it was absolute ruckus on the street as the Nifty closed near its lowest level since September 6, 2012 even as the BankNifty ended at its lowest level since January 11 2012.

The main reasons attributed are the rupee’s continued weakness and the Lok Sabha approval of nearly US$20bn plan to provide cheap grains to the poor. Heightened concerns are that India’s fiscal deficit will balloon further.

And now view is – due to CAD now you under downgrade queue, and if happens instead of your reducing CAD it will increase by another approx 3-5%. What’s the impact? TRAHI-TRAHI because I don’t know whether you people know it or not, my internal study says – Govt. don’t have funds, they are just managing their current turn till next election by disinvestment PSUs stake. So new term will kick start with heavy taxes, increased fuel prices which itself mean you have to pay more and whatever you will earn you will take home less.

Fitch Ratings also has warned of a downgrade if the country is unable to meet fiscal deficit target. It said reining in the fiscal deficit at 4.8% of GDP would be a difficult task.

Now Rupee also seems to hit 58-69 during the year and most believes that it will bottom out near 69, mean another 10% fall is on card. (For more details please read y’day MB)

More bad news are on the way – CRISIL is also planning to exit our market. (Read stock outlook section)

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.

MARKET OUTLOOK –

Once the negative sentiment grips then it has its own momentum and many efforts goes out of the way, this is what now happening with our market. I was repeatedly opposing steps taken by Govt. to curb the Rupee fall and finally we have seen what I had warned about currency.

Well as discussed y’day market will not fall much atleast till the expiry and we will see actual actions in next series, it may be possible we may see some big actions on coming Friday.

So this time of expiry and no technical works, I can just say we may see expiry around 5300 level or may be between 5350 to 5400. (But not sure, today’s market will reveal the story)

For Nifty to face resistance around 5500 (in view of next series) while it will find support around 5240.

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.

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) –

IDFC -

IDFC shares hit its four-year lows in the day's trade and closed at Rs. 79.45 down a whopping 16.15% or Rs.5.30 from its previous close as the overall foreign shareholding limit in the company has been reduced to 54% from 74%.

CRISIL –

CRISIL shares slipped by Rs. 10.95 or 0.97% after the company announced that plans to sell its 49% stake in India Index Services & Products Limited (IISL), its Joint Venture with National Stock Exchange of India Limited (NSE).

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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.

MARKET OUTLOOK –

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.

IF YOU ARE SHORT KEEP SL 5530 AND IF YOU ARE LONG KEEP SL 5440.

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 –

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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