Friday 27 September 2013

Morning Bells (27 Sept 13)



Good Morning Friends.

Very true for market – Race can not be won by accelerating on Top Gear but it can be won only by changing gear on right time.

Welcome to October Series –

Sept. series had lot of ups and downs and I personally feel remaining series of this year will have lot of fun. So lets see how these 3 balance expiries take place.

It was a tame end to a volatile month. Many were believing that it would have wild swing on expiry but my thought was either first its going down till 5850 and then to move above 5900 or its going to attempt 5930 first then to settle below 5900. So second thought took place and call writer ate premiums very well.

Currency Moves –
India Ratings & Research (Ind-Ra) says the recent INR depreciation could increase oil subsidy by 0.1% to 0.4% of GDP in FY14 and this alone could push the fiscal deficit over 5.0% of GDP as against the budgeted 4.8%. 

“INR depreciation has resulted in a sharp increase in Indian crude basket price in INR terms. Despite an INR0.5/litre monthly hike in diesel prices, under recovery of three controlled fuels - diesel, liquefied petroleum gas and superior kerosene oil - is threatening the government’s FY14 fiscal arithmetic. Therefore, unless the price of diesel is hiked steeply or those of the three controlled petro products are hiked moderately, the government’s fiscal deficit is likely to cross 5% of GDP,” said Dr. Devendra Kumar Pant, Chief Economist and Head - Public Finance at Ind-Ra.

In the FY14 budget, Rs659bn and Rs650bn were set aside for the fertiliser and oil subsidies, respectively. When these amounts were allocated, INR was fluctuating between 53-54/USD. A sharp INR depreciation since May 2013 has substantially altered the budget’s fiscal arithmetic.

“OMCs’ under recovery will increase by INR1.50bn every day if Indian crude basket price rises by INR1,000/bbl. This would translate into an increase of around INR340bn in the government’s oil subsidy burden,” said Dr. Sunil Kumar Sinha, Director - Public Finance at Ind-Ra.  

Global Fears & Facts (Must read) -
USTreasury Secretary Jack Lew warned Congress on Wednesday that the United States would exhaust its borrowing capacity no later than Oct 17, at which point it would have only about USD 30 billion in cash on hand.

The fresh estimate adds another layer of pressure on lawmakers to raise the USD 16.7 trillion debt limit and comes as Congress struggles to pass a spending bill to keep the government funded beyond Oct 1, when the new fiscal year starts.
The fate of the debt ceiling is up in the air with Democratic and Republican lawmakers once again deeply divided over how to extend the Treasury's borrowing authority.
MG’s view – report says we are still not out of wounds and any rumours can make a knee jerk to whole global market. So we need to play for small range only till Oct. 17.

MARKET OUTLOOK –
On the derivates side, long rollovers were seen in the capital goods, metals and power stocks, while, the banking, real-estate and oil and gas stocks witnessed short rollovers. Pharmaceutical stocks, fast moving consumer goods (FMCG) and IT are seeing long side bias.

So now today will be a test day whether Nifty is declining first or giving attempt to 6000 first. Most probably weakness is there while in other hand liquidity is coming into the market and that is the reason market is holding its levels.

Above all scenario making a tight range for trade in current series which could be right now 5750-6050 i.e. 300 point range and from current levels its 100-150 points either side. So initially its not looking good for call spread. For a break out I think we need to wait till its not enter into 3rd week when US senate meet will take place on Oct. 17. So around end of 2nd week or entering 3rd week we may start initiating call spread.

One of the reasons for my above view is - After two series of very high volatility we may stay in a tighter range than we are expecting. Also at this point upside seems limited with due reason till banking and oil and gas do not start signaling the positive trends, it will be very difficult for Nifty to cross 6050 on the upside.

MG’s Nifty trading range –
R – 5990 - 6030 - 6145 - 6180 - 6230
S - 5870 – 5850 - 5780 – 5750 – 5700
Nifty swing band is 5600-6100 and 4900-5600

STOCK OUTLOOK -
(Stock that can see some good moves either side)

On the derivates side, long rollovers were seen in the capital goods, metals and power stocks, while, the banking, real-estate and oil and gas stocks witnessed short rollovers. Pharmaceutical stocks, fast moving consumer goods (FMCG) and IT are seeing long side bias
Banking (Must read)-
PSU banks are expected to report substantial MTM losses on their non-SLR AFS investments in the current quarter as yields across maturities have hardened materially. We estimate our PSU Banks universe to deliver a near zero earnings CAGR over FY13-15. Don’t see any relent in the multiple headwinds bogging PSU Banks. Valuation to remain under pressure; so no case to BUY. Top Sells are SBI, BOB, Allahabad Bank and Andhra Bank in next series.

Wipro –
Wipro erased all it early gains and ended flat at Rs476. The stock was seen hitting intra-day high of Rs489 on the National Stock Exchange (NSE), ahead of its entry into 50-share Nifty index. Wipro will enter Nifty on September 27, 2013 replacing Reliance Infra, the stock was down 1.6%.

L&T –
Larsen & Toubro ended flat at Rs830. The company announced it has bagged new orders worth Rs26.83bn in the current month across various segments both in the domestic and overseas markets.

Company is reportedly planning to sell 26% stake in the Hyderabad Metro project and 50% stake in Dhamra Port project is close to Rs 4,200 crore.

The company is planning to list L&T IDPL in Singapore stock exchange via the trust route to raise another Rs 4,000 crore, says report.

ITC –
Something strange with ITC and we may know about it in future.

Shares of FMCG major ITC has seen a lot of insider sells in open market. The company’s top management has been selling a lot of shares in the last one month. Around 23 lakh shares have been sold by the management so far.
Read more at: http://www.moneycontrol.com/news/cnbc-tv18-analyst-markets/itc-top-brass-sells-around-23-lakh-sharessept_957387.html?utm_source=ref_article


CALL LOG –
Keep eye on – SesaGoa and Coal India and Steel segment (if Nifty goes flat to positive, stocks to show strength)

============ Join MG on FaceBook ============
For live market commentary & stock advice you can join MG on FaceBook.
(Please PM for membership fee after sending request)

Thursday 26 September 2013

Morning Bells (26 Sept 13)



Good Morning Friends.

Very true for market – Race can not be won by accelerating on Top Gear but it can be won only by changing gear on right time.

Sept. series EXPIRY-
Indian market ended with marginal losses ahead of F&O expiry amid late recovery witnessed in the scrips across the board. The rebound was on the back of long rollovers seen in the telecom, metals and the capital goods stocks. Among the other major contributors to y’day’s recovery were the power, healthcare and select IT stocks.

The recovery was so strong that the Nifty recouped almost 75 points while the Bank Nifty recovered nearly 175 points from day’s low. 

Currency –
Rupee has weakened for the fourth straight day and was trading at 62.80/$ as compared with previous close of Rs 62.77 per dollar.

The Reserve Bank of India  allowed all companies to avail trade credit in favor of overseas supplier from banks not exceeding $20 mn for upto a maximum period of five years for import of capital goods.

Election Drama continue -
What I can say about most of fool people of this country or selfish people of this country. Most of Govt. I remember my village days where politician do corruption for 55+ months and just for 2 months they distribute grains and desi made wine and they get permit for corruption for next 5 years. Very sad but we need to accept the facts.

If we look to current UPA, lot of corruption charges are there, big scams and in last 5 months we are getting no fuel hike, increment etc. And fool people will think for themselves only and will vote for greed. Strange!

Well, The Finance Minister P.Chidambaram in a statement said here today that the Prime Minister has approved the constitution of the Seventh Central Pay Commission.
The fourth, fifth and sixth Central Pay Commissions’ recommendations were implemented as follows:

4th CPC                       1.1.1986
5th CPC                       1.1.1996
6th CPC                       1.1.2006
 
The average time taken by a Pay Commission to submit its recommendations has been about two years.  Accordingly, allowing about two years for the 7th CPC to submit its report, the recommendations are likely to be implemented with effect from 1.1.2016.

The names of the Chairperson and members as well as the terms of reference (ToR) of the 7th Pay Commission will be finalised and announced shortly after consultation with major stakeholders.

Global Fears & Facts (Must read) -
Before reading and writing about it, I just text to Rahul Singh to transform some news into trade decision and found it.

USTreasury Secretary Jack Lew warned Congress on Wednesday that the United States would exhaust its borrowing capacity no later than Oct 17, at which point it would have only about USD 30 billion in cash on hand.

The fresh estimate adds another layer of pressure on lawmakers to raise the USD 16.7 trillion debt limit and comes as Congress struggles to pass a spending bill to keep the government funded beyond Oct 1, when the new fiscal year starts.
The fate of the debt ceiling is up in the air with Democratic and Republican lawmakers once again deeply divided over how to extend the Treasury's borrowing authority.
MG’s view – report says we are still not out of wounds and any rumours can make a knee jerk to whole global market. So we need to play for small range only till Oct. 17.

MARKET OUTLOOK –
We are round the corner of expiry and Nifty is closed below 5930. Interesting to see now how Nifty will behave over next couple of sessions. For me I will trade only intraday with right SL. On down side my SL would be 5870 and on upside its 5990. Range is narrow.

MG’s Nifty trading range –
R – 5990 - 6030 - 6145 - 6180 - 6230
S - 5870 – 5850 - 5780 - 5700
Nifty moving band is 5600-6100 and 4900-5600

STOCK OUTLOOK -
(Stock that can see some good moves either side)

Banking (Must read)-
PSU banks are expected to report substantial MTM losses on their non-SLR AFS investments in the current quarter as yields across maturities have hardened materially. We estimate our PSU Banks universe to deliver a near zero earnings CAGR over FY13-15. Don’t see any relent in the multiple headwinds bogging PSU Banks. Valuation to remain under pressure; so no case to BUY. Top Sells are SBI, BOB, Allahabad Bank and Andhra Bank in next series.

Telecom (Good to know)–
Telecom regulator TRAI today recommended that mobile number portability (MNP) be fully implemented across the country within six months to allow subscribers to retain their numbers even when they shift from one service area to another. Presently, Mobile Number Portability is available only within the subscribers' service area. When MNP is implemented fully, subscribers in Andhra Pradesh, for example, will be able to port their numbers to Karnataka, Maharashtra, Haryana and so on.

OMCs -
As discussed y’day - Shares of state-owned oil marketing companies – BPCL, HPCL and Indian Oil ended lower by ~4% after petroleum minister Veerappa Moily ruled out an increase in diesel and LPG prices for now.

KFA –
Another UC for stock, discussed y’day - Shares of Kingfisher Airlines was locked at 10% upper circuit on reports that the group is in talks with a foreign investor for potential stake sale.

L&T –
L&T is reportedly planning to sell 26% stake in the Hyderabad Metro project and 50% stake in Dhamra Port project is close to Rs 4,200 crore.

The company is planning to list L&T IDPL in tSingapore stock exchange via the trust route to raise another Rs 4,000 crore, says report.

Media report said that Of the sale proceeds, L&T will deploy Rs 6,200 crore in the existing projects.
The company is also plans to sell  assets to raise close to Rs 8,200 crore.

Maruti -
Maruti Suzuki is planning to increase the prices of range of models by up to Rs 10,000 from October first week, according to reports.

Report said that the quantum of price increase will vary according to different models and fuel specifications.
The quantum of price increase will vary according to different models and fuel specifications, and will be effective from the first week of October, he added.

"The amount of price hike will vary between Rs 3,000 and Rs 10,000,"Maruti  Suzuki India (MSI) Chief Operating Officer (Marketing and Sales) Mayank Pareek reportedly said.

The prices of Maruti Suzuki vehicles start from Rs 2.35 lakh and goes up to Rs 10.21 lakh.

RIL –
Reliance Industries has challenged the oil ministry that if it thinks there is more gas in the declining fields, it should direct ONGC to drill additional wells, according to reports.

Last month, Oil ministry prepared a proposal to deny higher prices to RIL for gas produced from D1 and D3 fields of the KG-D6 block.

Moily reportedly said the ministry had not sent its earlier proposal to the Cabinet.

"There are a lot of legal implications, contractual implications," he said.
Based on DGH's view, oil ministry under Reddy imposed a penalty of $1 billion on the company.

CALL LOG –
Keep eye on – HDIL, Maruti & L&T (expecting to move up)

============ Join MG on FaceBook ============
For live market commentary & stock advice you can join MG on FaceBook.
(Please PM for membership fee after sending request)

Wednesday 25 September 2013

Morning Bells (25 Sept 13)



Good Morning Friends.

Dene me khush hone wale ko koi bhi udas nahi kar sakta, magar… lene per bhi dukhi hone wale insane ko sansar ki koi bhi takat sukhi nahi kar sakti.

After sharp falls in the past two trading sessions, the Indian indices ended on a flat note on Tuesday. For a brief while the NSE Nifty surged past the 5930 levels. However, the gains were short-lived as selling pressure was witnessed at higher levels.

The capital goods, auto, power, consumer durables, healthcare and FMCG were among the top gainers. On the other hand, metals, PSU, telecom and oil and gas stocks were among the top laggards.

As discussed y’day about Govt’s policy ahead of election (read RBI’s move when Rajan went to meet FM) now again y’day Mr. Moily announced for no rate hike in Diesel prices. As the inflation would remain key agenda in next general election Govt. had to decide whether it want to take steps to reduce CAD or Inflation and obvious choice was inflation. Once election will be over Govt. would have 5 years to do it.

Oil Minister M Veerappa Moily reportedly said that government has no plans to raise diesel and other key subsidised fuel prices at present. He’s announced measures aimed at saving $5 billion from the country's huge fuel bill.

Moily has outlined measures including public awareness campaigns.
Moily has said that he could save $8.5 billion in foreign exchange outflows by raising imports of Iranian crude.

Egypt –
Three years has seen the overturn of two government, the deaths of thousands of people and the destruction of much of the Egyptian economy. In the end, the mobs have changed nothing, except to make their own lives more miserable.

It was a year ago in August of 2012 that the Morsi government approached the International Monetary Fund for a 4.8 billion dollar loan. That was an increase from the 3.2 billion dollars that the interim military government had sought and that the Muslim Brotherhood members of the parliament had opposed.

Getting the loan was critical. If Egypt could raise the funds, it would be in a better position to borrow from other sources. The IMF calculated that Egypt needed at least ten to twelve billion dollars to survive for another year. (Source: IIFL)

Why we discussed it here because it will affect crude prices in near future and we are world’s major buyer for that. Increase in crude prices will definitely increase our CAD, increased CAD means to increase in inflation or to pay more taxes.

Economy –
At glance around the current economic happenings. • The economy of the country is taking a beating. The economic fundamentals are in a deplorable condition. • The rupee is in a state of unhindered free-fall and inflation is moving up faster than a shooting star. • GDP growth is experiencing turmoil and corporate performance is at best average. • The stock market is uncertain and sluggish and is experiencing tremors every now and then. • The employment situation is not at all encouraging as there has been across the board job cuts all around. • EMIs’ are moving in tandem with inflation and fuel costs like a luxury item. So what does one do about the economy?

MARKET OUTLOOK –
We are round the corner of expiry and Nifty is closed below 5930. Interesting to see now how Nifty will behave over next couple of sessions. For me I will trade only intraday with right SL. On down side my SL would be 5870 and on upside its 5990. Range is narrow.

MG’s Nifty trading range –
R – 5990 - 6030 - 6145 - 6180 - 6230
S - 5870 – 5850 - 5780 - 5700
Nifty moving band is 5600-6100 and 4900-5600

STOCK OUTLOOK -
(Stock that can see some good moves either side)

Telecom Sector-
Fair trade watchdog CCI says it will take into account the telecom regulator TRAI's proposal to slash spectrum floor price, before deciding on a formal probe into alleged cartelisation among mobile operators.
The Competition Commission of India (CCI) is looking into whether the mobile operators acted as a cartel during the recent airwave auction that had elicited tepid response, but is yet to order a formal investigation into the matter.
CCI Chairman Ashok Chawla said that the Commission would take a final decision in this matter after taking into account the Telecom Regulatory Authority of India's (TRAI) recent recommendation to lower the floor price for spectrum auction.

Cement Sector -
Cement stocks were buzzing in trade y’day. According to experts best time ahead of all the cement companies for next six-eight months because you won't be having any problem because this is now just the passing phase of the monsoon. We have seen good monsoon happening. All the cement makers will be having really very good time till June.
KFA –
Shares of Kingfisher Airlines shot up by 10% to close at Rs5 after reports stated that it was in talks with a foreign investor for a potential stake sale.

CALL LOG –
Keep eye on – Wipro, Rcom, RelCapital

============ Join MG on FaceBook ============
For live market commentary & stock advice you can join MG on FaceBook.
(Please PM for membership fee after sending request)