Morning Bells (3 Sept 13)

Good Morning Friends.

Thought - Word and emotion don’t have teeth but they still BITE hard.

So it was another green day on D-street. Lets start with IIP.

IIP - The Eight Core Industries have a combined weight of 37.90% in the Index of Industrial Production (IIP).  The combined Index of Eight Core Industries stands at 156.4 in July, 2013, which was 3.1% higher compared to the index of July, 2012.

PMI – falls for first time in over 4 years. Business conditions in the Indian manufacturing sector deteriorated during August for the first time in over four years, with both output and new orders falling at faster rates. Export orders also declined, ending an 11-month sequence of growth.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index™ (PMI™) fell from 50.1 to 48.5 in August, indicating a moderate deterioration of business conditions. The latest index reading was the lowest in four-and-a-half years and the first sub-50.0 reading since March 2009.

Currency –

The rupee weakened on Monday because of weak GDP numbers which was announced on Friday.

The rupee was trading at Rs 65.95 per dollar compared with previous close of Rs 65.71 per dollar.

The GDP for the first quarter stood at 4.4% compared with 4.8% for the fourth quarter of the previous fiscal. 

It has posted its biggest monthly fall in at least 18 years. The rupee is down nearly 19% so far this year.

MARKET OUTLOOK –

Market outlook remain same for some time till we don’t enter into any specific range. For me trend is still on downside because on all fronts say on the economy front, on corporate earnings front, on liquidity front nothing is there to stabilize the market and the newslfow seems to be worsening every day.

Market outlook remain same as per our previous view, Nifty to find support at 5440 and resistance at 5510-20 and a small resistance at 5550. Next resistance comes to 5650 (mid term and believes that would tough for this series) and finally 5710 (mid-long run). On downside if Nifty closes below 5440 then again chances are high to see 5150 and then 4900.

So what could be strategy is to sell on rise with SL 5650 / 5710 for a target of somewhere 5450 / 5150 and if broken and close below then 4900 is possible. And above 5510 take some longs for TG 5650 with SL 5450.

MG’s view – Don’t confuse with relief rallies, my mid term view is still on downside for few simple reasons, we see inflation shooting up, input cost going up and news wont stabilize the market we need some serious steps specially to stop FII outflow and to recover CAD.

KEY DATA-

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) –

JSPL -

Shares of Jindal Steel & Power plunged 9% to close at Rs221 on Friday. The board approved buy-back at a price not exceeding Rs 261 a share, up to an aggregate amount not exceeding Rs 10bn from the open market through the stock exchanges, provided that such buy-back shall be equal to or less than 10% of the company's total paid-up equity capital and free reserves.

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.

Q1 NOs. –

Tata Motors –

Tata Motors’ total sales (including exports) of Tata commercial and passenger vehicles in August 2013 were 49,611 vehicles. The company’s domestic sales of Tata commercial and passenger vehicles for August 2013 were 44,717 nos.   

Bajaj Auto –

The total sales stood at 3.12lk units in Aug 13, down 9%

Maruti Suzuki –

The company has posted domestic sales at 76,018 units, up 51%.

RInfra –

(RInfra), part of  the  Reliance Group,  announced completion of  widening of the entire 136 km Salem-Ulundurpet road in Tamil Nadu through its Special Purpose Vehicle (SPV) - SU Toll Road Pvt. Ltd. 

Built at a cost of Rs. 1,061 crore,  the SU corridor connects major tourist destinations, industrial zones  in Salem district  and the Chennai international airport.  The popular hill station Yercaud in Tamil Nadu will also be easily accessible through this corridor.

L&T –

The Water & Renewable Energy Business of L&T Construction, a leading player in the water infrastructure and renewable energy sectors in India, has secured new orders worth Rs1141 Crores in August’13 in various business segments.

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Morning Bells (02 Sept 13)

Good Morning Friends.

We make them cry who care for us. We cry for those who wouldn’t care for us. And we care for those who would never cry for us.

So finally The Indian equity market ended near day’s high on Friday extending its winning streak for the third consecutive trading session. Today’s rally was led by the banking, healthcare, FMCG, IT and the telecom stocks. On the other hand, metals, capital goods and the realty stocks were among the top laggards.

It was highly volatile day and Nifty swung over 130 points or say Nifty was in see-sawed mode. Nifty opened positive on Friday but soon it went into a tailspin as the Prime Minister started speaking in the Rajya Sabha. The PM said India needs to be perceived as creditworthy, bankable and viable.

In the coming week, the auto stocks will be in action as market participants will focus on August auto sales numbers. Among the other important data are, the August HSBC markit manufacturing and service PMI data.

Currency –

We are again banged on currency outlook, when it was near 69 we had discussed that now currency will see a sharp recovery and finally the rupee closed at 65.70/71 per dollar and rose below 66 level in afternoon trade against the US dollar  in view of steps taken by Reserve bank of India.

It has posted its biggest monthly fall in at least 18 years. The rupee is down nearly 19% so far this year.

Gold -

The government has raised the import tariff value of gold to $461 per ten grams and of silver to $803 per kg, according to reports.

Report said that the notification, issued by the Central Board of Excise and Customs, came after when gold prices touched the new high of Rs 34,500 per 10 grams in the national capital.

It will affect major gold importers like Titan.

Fuel –

Finally much awaited fuel hike took place, Petrol price was hiked by a steep Rs 2.35 per litre, and diesel by 50 paise per litre.

However its not as per expectations as many experts were believing that hike in Diesel price will be more but its as per structure.

If you remember I had warned much in advance – are entering to recession? Govt. has lost all the income and now living only on taxes and disinvestment, next term would be more critical for any Govt. and if we talk about mid to long term view on Indian economy, I am sorry but picture is gloomy.

This is the sixth increase in rates since June and in all petrol prices have gone up by a massive Rs 9.17 per litre, excluding VAT.

Today's hike in the eighth since the January 17 and most of the losses on diesel sales should have been wiped off by now to make the fuel market priced. But the fall in rupee, around 25 percent since April, has worsened the situation and oil firms are losing Rs 12.12 per litre despite prices being raised by a cumulative Rs 4.75 this year.

MG’s view - Market participant may be happy by earning small profit due to such steps or news but a nations like India don’t run on such steps and reforms. We don’t need high quality roads or say big shopping malls, we need food and cloths and a house to live. I always laugh and tell my favourite dialogue “yeh desh bhagwan bharose hi chal raha he, jis din lagegi to bhagane ki jagah bhi nahi milegi becoz we don’t have any fundamental structure”

Fiscal Deficit –

According to reports, the Centre’s fiscal deficit for the first four months of this financial year soared to Rs 3.4 lakh crore.

The deficit was 51.5% of the Budget estimate for 2012-13.

While non-Plan expenditure accounted for 33.5% of BE, at Rs 3.71 lakh crore, says report.

Earlier, Finance Minister P Chidambaram said THAT the target of reining in fiscal deficit at 4.8% of GDP this financial year was a red line.

The plan expenditure increased fiscal deficit in April-July period and stood at Rs 1.49 lakh crore.

Company Bill –

The new Companies Bill has received President's assent, which will make it into a law replacing the nearly six-decade old regulations that govern corporates in the country. 

The Companies Bill 2013 received assent from the President Pranab Mukherjee on August 29, a government official said.  

The new Bill, providing for sweeping changes in the way companies operate and are regulated in the country, received Parliamentary approval earlier this month. It would replace the Companies Act 1956.

The Corporate Affairs Ministry is in the process of making the rules for the new legislation. The draft rules, expected to be ready in two weeks, would be put out on the Ministry's website. After this, stakeholders and general public, among others, would have up to 60 days to provide their comments.     

Corporate affairs minister Sachin Pilot had earlier said the government plans to adopt a transparent and interactive process to finalise a detailed set of rules to be adopted under the new Companies Bill.     

The new Bill requires companies to spend on social welfare activities, empowers investors against any frauds committed by promoters, encourages companies to have women directors, and seeks to bring in greater transparency in corporate governance matters. It also provides about three dozen new definitions, including for terms such as frauds, promoters, turnover, small companies, associate companies and employee stock options.

(MoneyControl.com)

Land Bill – Some facts –

The newly revised Land Acquisition Bill is beneficial to land owners. The scope of minimum required approval has been increased to 80 percent of the affected families. This consent is mandatory only for private enterprises.

Secondly, the Government's role in land acquisition has been curtailed as far as private enterprises are concerned. These enterprises can now enter into their own negotiations and arrive at the price to be set for acquisition.

Thirdly, different techniques for arriving at the compensation to be paid have been provided. With the intention of providing land owners with compensation which is closer to the existing market rates, the Bill now stipulates that local circle rates will now need to be doubled and further multiplied by a factor of two when it comes to land parcels in rural areas.

This means that that the acquisition price for land in rural areas will effectively be four times that of the local circle rates. In urban areas, the circle rates will need to be doubled in order to arrive at the acquisition price.

The new Bill also requires a Social Impact Assessment (SIA) study to be carried out. This study will have to outline how the acquiring parties intend to use the land, and how the original inhabitants or owners will be rehabilitated. The Act now also puts very definite timelines on project completion and entire land utilization.

For developers, the cost of land is going to increase significantly, impacting their project costs and therefore margins. Land valuations are already high and by further increasing them, land acquisition becomes even more difficult. Anyone without an existing land bank will now be looking at vastly increased entry costs.

(MoneyControl.com)

MARKET OUTLOOK –

Market outlook remain same as per our previous view, Nifty to find support at 5440 and resistance at 5510-20 and a small resistance at 5550. Nest resistance comes to 5650 (mid term and believes that would tough for this series) and finally 5710 (mid-long run). On downside if Nifty closes below 5440 then again chances are high to see 5150 and then 4900.

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.

MG’s view – Don’t confuse with relief rallies, my mid term view is still on downside for few simple reasons, we see inflation shooting up, input cost going up and news wont stabilize the market we need some serious steps specially to stop FII outflow and to recover CAD.

KEY DATA-

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) –

JSPL -

Shares of Jindal Steel & Power plunged 9% to close at Rs221 on Friday. The board approved buy-back at a price not exceeding Rs 261 a share, up to an aggregate amount not exceeding Rs 10bn from the open market through the stock exchanges, provided that such buy-back shall be equal to or less than 10% of the company's total paid-up equity capital and free reserves.

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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