Morning Bells (25 Feb 13)

Good Morning Friends.

I know some people Hates me because I am not so good. But some people Loves me because they know that I am not too bad.

Finally we are into expiry week. Still there’s no clue which direction market wanna go on expiry.

The global sell-off took its toll on the Indian equity market, which ended at its lowest level in the calendar year this week. Weakness in the global markets was seen after Fed meeting minutes indicated it could slow its bond buying program. The policy, which involves increasing the Fed's balance sheet to buy bonds, has been credited with pumping money into the equity market and withdrawal of such stimulus is seen a big negative for markets.

Uncertainty will continue to prevail in the coming days as investors prefer to remain cautious ahead of the Union Budget to be presented in the Parliament on 28 February 2013. It’s going to be a make or break budget for the Indian market as expectations would be sky high from the government. Attempts to revive the industry cycle, infrastructure and deepening the corporate bond market are some of the market-friendly measures likely to be taken up. Railway budget and F&O expiry are also due next week.

Over the last two decades, the Reserve Bank of India (RBI) licensed twelve banks in the private sector. This happened in two phases. Ten banks were licensed on the basis of guidelines issued in January 1993. The guidelines were revised in January 2001 based on the experience gained from the functioning of these banks, and fresh applications were invited. The applications received in response to this invitation were vetted by a High Level Advisory Committee constituted by the RBI, and two more licences were issued.

Seeking to avoid bunching of PSU stake sales towards the end of this fiscal, government has decided to kick off disinvestment programme in the April-June quarter of 2013-14 by offloading equity in Hindustan Copper (HCL), THDCIL and NEEPCO.

"Draft CCEA note has been moved for inter-ministerial comments for 10 per cent stake sale in THDCIL and NEEPCO.

These are small issues and to be pushed for the first quarter itself," official sources said.

Gainers – DLF  (up 13.2%), Wipro  (up 4.2%), ACC  (up 3.3%), Ambuja Cements (up 3.3%) and Reliance Industries (up 2%) were among gainers in Sensex and Nifty.

Losers - Tata Motors (down 3.8%), Tata Steel  (down 3.1%), ITC  (down 2.9%), ICICI Bank  (down 2.6%) and HDFC Bank  (down 2.6%) were the major losers in Sensex and Nifty.

Sectoral – On weekly basis – IT up 2%, Healthcare up 2%, Auto Index down 1.2%, Oil & Gas up 1.5%, Telecom was major loser, Realty was up 3.8%, Metal was down 3.5%.

BUDGET –

Experts believe that - the FM cannot afford a Budget which is termed as a non-event. The Budget is likely to be balanced and devoid of any ambiguous provisions to help maintain investor confidence. 

Not everything is hunky-dory as India's finance minister P Chidambaram readies for the UPA's final Budget in this term. His financial wizadry in crafting the fiscal consolidation roadmap will be widely watched by his national and international audience. 

Analysts suggest maintaining fiscal deficit at 5.3 percent will be a challenge for the finance minister. In his roadshows, finance minister P Chidambaram had gallantly said: "Watch the upcoming Budget closely: it will prove that we mean business. Under no circumstance will I agree to a breach of the fiscal deficit target of 5.3 percent of GDP," This view was bolstered after the government cancelled its last FY13 bond auction and is said to have an estimated cash surplus of Rs 90,000 crore.

On Domestic Front –

1.

The Minister of State for Petroleum & Natural Gas Smt. P. Lakshmi informed the Lok Sabha in a written reply today that the Public Sector Oil Marketing Companies (OMCs), namely, Indian Oil Corporation Limited (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have estimated (based on previous year consumption data) that 90% of cylinders will be sold at subsidized rates and annually only 10% of cylinders will be sold at market prices at current cap level of 9. This translates to saving fiscal subsidy and under recoveries on around 0.92 crore cylinders @ Rs.503.58/cylinder.

2.

The gap between inflation calculated at WPI (Wholesale Price Index) and CPI (Retail Price Index) has been found widening in the recent months, said an analysis conducted by PHD Research Bureau of PHD Chamber of Commerce & Industry.  

Monthly variation between CPI and WPI inflation during January 2012 to January 2013 shows that the direction of the differential is on the rise.

The average differential is estimated at 2.1 percentage points, ranging from 0.5 percentage points in January 2012 to 3.4 percentage points in December 2012.  

WPI inflation has been decelerated to 6.62% in January 2013 from 7.2% in January 2012, however, inflation measured by the consumer price indices (CPI) tells a different story. It has entered double digit trajectory once again. CPI Inflation has been increased from 7.7% in January 2012 to 10.8% in January 2013.

On Global front –

1.

Overseas investors have poured in more than USD 4 billion into Indian equities in February, taking the investment tally to USD 8.4 billion for calendar year 2013 so far.

Foreign Institutional Investors (FIIs) infused a net amount of USD 4.31 billion (about Rs 23,035 crore) in Indian equities in February so far, taking the total for the year to USD 8.4 billion (Rs 45,094 crore).

Market analysts attributed strong FII inflows to signs of RBI easing interest rates and the subsequent impact of improved liquidity position.

Additionally, a slew of measures taken by the government, including the postponement of GAAR (General Anti Avoidance Rules) implementation by two years to April 1, 2016 and partial decontrol in diesel prices, have also attracted foreign investors.

During February 1-22, FIIs were gross buyers of shares worth Rs 65,941 crore, while they sold equities amounting to Rs 42,906 crore, translating into a net investment of Rs 23,035 crore (USD 4.31 billion), as per Sebi data.

2.

Moody's Investors Service has downgraded the domestic- and foreign-currency government bond ratings of the United Kingdom by one notch to Aa1 from Aaa. The outlook on the ratings is now stable.

The continuing weakness in the UK's medium-term growth outlook, with a period of sluggish growth which Moody's now expects will extend into the second half of the decade; The challenges that subdued medium-term growth prospects pose to the government's fiscal consolidation programme, which will now extend well into the next parliament; And, as a consequence of the UK's high and rising debt burden, a deterioration in the shock-absorption capacity of the government's balance sheet, which is unlikely to reverse before 2016.

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

The stock market is likely to witness high volatility this week as investors are treading the cautious path ahead of the Union Budget 2013-14, experts say.

Market players said the short-term momentum is clearly negative for the market as market participants are cautious ahead of the Union Budget and are not increasing their positions amid expiry of derivatives next Thursday.

The Budget Session of Parliament that began on February 21 would conclude on May 10, 2013.

The Railway Budget for this fiscal would be presented to the Lok Sabha on February 26 and the economic survey would be laid in Parliament on February 27, 2013, followed by the Union Budget on February 28.

There could be chances for a small bounce on account of encashment of shorts and just a little hope with budget. So probably Nifty should hold 5820/5780 till main budget day. And after the Budget it may be a different story if the global markets continue to correct and we have seen the fund flows beginning to reduce significantly. One could think of a bigger correction after the Budget.

The INDIA VIX on NSE was up 0.89% and ended at 16.79 against previous close of 16.94.

FNO PCR is 0.84 against previous close 0.95.

Indian Rupee – Recovered a bit and was trading at 54.18 against its previous close of 54.47.

S&P 500 (US) was trading at 1515.60 down 13.18 then its previous close at the time of writing M Bells.

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

Nifty is in range of 5780 – 5820 (100 DMA) - 5840 - 5900-5950-6040-6150-6190 for current series.

Resistance – 5908 – 5891 – 5870 and Support – 5832 – 5815 - 5794

Opening – Seems flat and market can be firm as global cues are firm. Some small bounces are not ruled out.

========================  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.)

The combined market capitalisation (m-cap) of five of the country's top 10 companies plunged by a hefty Rs 26,000 crore last week, with state-owned Coal India Ltd emerging as the biggest loser.

During the week ended February 22, five companies - CIL, FMCG major ITC, SBI, ICICI Bank and IT giant Infosys - saw value erosion of Rs 26,650 crore collectively.

On the other hand, ONGC, Tata Consultancy Services (TCS) and Reliance Industries Ltd (RIL) together added Rs 12,637 crore to their m-cap.

Mortgage lender HDFC slipped out of the top 10 list, while power producer NTPC moving in.

State-owned coal entity CIL was the biggest loser during the week, shedding Rs 10,927 crore from its m-cap at Rs 2.09 lakh crore. It was followed by ITC, which lost Rs 6,110 crore in value at Rs 2.30 lakh crore.

ICICI Bank's m-cap dropped Rs 3,667 crore at Rs 1.25 lakh crore, while that of Infosys plunged Rs 3,479 crore at Rs 1,62,886 crore. Besides, SBI saw its valuation tumbling by Rs 2,467 crore to Rs 1.47 lakh crore.

On the other hand, energy giant RIL was the biggest gainer adding Rs 5,152 crore to its m-cap to Rs 2.78 lakh crore.

TCS continued at its numero-uno position by adding Rs 2,610 crore in its valuation to Rs 2.84 lakh crore. State-run ONGC saw its valuation climbing by Rs 1,925 crore to a total of Rs 2.77 lakh crore.

In terms of ranking, TCS topped the list, followed by RIL, ONGC, ITC, CIL, Infosys, HDFC Bank, SBI, ICICI Bank and NTPC.

TV 18 –

TV18 has corrected significantly in the recent past.  At current levels, this looks good. Exposure can be taken in TV18.

Mirza Internatioinal –

Mirza International has improved performance over the last few quarters.  However it is better to stick to established large cap and mid cap stocks in current situation.

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

=============== INVESTMENT BASKET ===============

(Stock in this section is with view of 3 months to 1 year)

Mahindra Holiday – @334 TG 375+ (Active from 15 Dec 12)

Satyam Computer – @103 TG 130+ SL 112 (Active from 15 Dec 12)

On Mobile – @44 TG 60+ Updated SL 39 Qty 2K (Active from 01 Jan 13)

============ PL Sheet (started from Jan 2013) ============

(If someone find any error in PL, please draw our attention)

MG Blog (Jan+25,900) + Feb Ser. = +10,300

Billionaire Club (Jan +51,000) + Feb Ser. = +20,400

Today’s MG Mantra –

Next trigger for either direction is budget day which is same day of expiry.

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.