Morning Bells (19 Mar 13)

Good Morning Friends.

Beautiful fact about the World - Once they stop talking to you, they start talking about you..

So finally the day has come for which market was waiting eagerly. Today RBI has to announce monitory policy review outcome. Meanwhile Cyprus bailout issue took centre stage and market seen global sell off in equity market. Overall Cyprus issue lowered the sentiment of RBI announcement, now it need favourable decision from RBI else market may go for more sell off in equities.

The Indian equity market joined the global sell off. Market participants also remained jittery ahead of the RBI policy meet scheduled to be held tomorrow.

The Euro zone struck a deal to hand Cyprus a bailout worth 10bn euro, but demanded depositors in its banks forfeit some money to avoid bankruptcy. Cyprus is the fifth in line after Greece, Ireland, Portugal and Spain to run to the Euro zone for financial aid. Euro zone ministers forced Cyprus’ savers, to pay up to 10% of their deposits to raise almost euro 6bn.

Coming back to the domestic market, after opening gap down, market remained under pressure throughout the day. The S&P BSE Metal index led the decline; the index was down 2.3%, followed by S&P BSE PSU index down 1.6%. Among the other major laggards were the S&P BSE Auto index down 1.4% and S&P BSE Realty index was down 1.2%.

RBI Monitory Policy -

Taking cue from declining core inflation levels and sluggish growth trends, the Reserve Bank of India is likely to cut key policy rates by 0.25 per cent in its mid-quarter review on March 19, global investment banking majors have said.

Even if RBI cuts rates on Tuesday, the tone of monetary policy guidance is unlikely to change significantly, they said, adding that policy guidance is likely to be "cautious".

According to global banking giants HSBC, Standard Chartered, Citigroup, Barclays and Credit Suisse, RBI is likely to slash the repo, or short-term lending, rate in its review meeting.

The factors that are likely to act in favour of a slash in rate cuts include a narrower February trade deficit, adherence to the fiscal deficit target in FY 2013, a slowdown in GDP growth to decade-low levels, and a fall in core inflation to below 4 per cent for the first time since April, 2010.

From Budget 2013-2014 –

The Union Budget for 2013-14, presented in Parliament by Finance Minister,  P. Chidambaram in the ongoing Budget Session has enhanced the outlay to support schemes to build rural infrastructure and strengthen social safety nets. 

The Ministry of Rural Development steers a number of flagship programmes and it has been allocated Rs 80,194 crore in 2013-14 as compared to Rs 55,000 crore in the previous year, marking an increase of 46%. 

Gainers – Hindustan Unilever, HDFC Bank, Hero MotoCorp, Cipla, Sun Pharma were among top gainers in Sensex and Nifty.

Losers - RIL, Wipro, Coal India, Gail India, ICICI Bank, ONGC, Dr Reddy’s Lab, Tata Motors, SBI, ITC, L&T, HDFC were the major losers in Sensex and Nifty.

Sectoral – S&P BSE 0.7%, Consumer Durables index 0.3% and Healthcare index up 0.3%. were the gainers, Even the S&P BSE Mid-Cap and Small-Cap index was down 0.29% and 0.67% respectively.

On Domestic Front –

1.

Moody - Last Wednesday, India (Baa3 stable) released its February wholesale price index, which showed that food prices increased by 11.4% year over year, raising overall inflation for the period to 6.8%, despite a deceleration in core (non-commodity) inflation to 3.8%. India’s food prices have averaged 12% annual growth in the past three years, compared with 3% between 2003 and 2005. Sustained food inflation is credit negative because it exacerbates India’s macroeconomic challenges of slowing growth, high inflation and large fiscal and current account deficits.

2.

FM on FDI – Finance Minster P. Chidambarm met the chiefs of the public sector banks on Mondya and later addresed a press conference.

Today's meeting with chiefs pertained to NPAs, direct benefit transfer and deteriorating asset quality and credit growth amid moderating growth and slowdown in investment.

FM after meeting the chiefs of PSU banks declared that capital infusion in PSU banks is almost complete. The government earlier promised to infuse Rs.140bn in the PSU bank system. FM expressed hope that banks will take steps to recover NPAs.

On Global front –

1.

The European markets also were trading lower as bailout foe Cyprus issue haunts stocks across Europe. The FTSE index in UK was down 0.7%, the CAC index in France was down 1% and the DAX index in Germany declined by 1%.

2.

Crude-oil futures plunged in electronic trading on Monday, by a surge in the dollar as worries spiked over a Cyprus bank levy and its implications for Europe. Crude oil for April delivery plunged US$1.04, or 1.1%, to US$92.41 per barrel.

3

Fitch - Fitch Ratings says that the recent recovery in financial market conditions has not been matched by the real economy, so far. Q412 saw the weakest quarterly GDP growth in the eurozone and the US since the 2009 recession, while spreads on risky assets have tightened and some major stock markets are near historic peaks. In its latest quarterly Global Economic Outlook (GEO), Fitch forecasts global growth of 2.2% in 2013 and 2.8% in 2014 (based on market exchange rates), down from 2.4% and 2.9% in the previous GEO.

The agency forecasts growth of just 1.0% for major advanced economies (MAE) in 2013, followed by only a modest and gradual acceleration to 1.9% in 2014.

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

As told on Tuesday that PCR at 1.35 isn’t good signal for market, CPI also diluted hopes of rate cut and y’day we had seen the impact of that.

The INDIA VIX on NSE was up 5% and ended at 15.85 against previous close of 14.66.

FNO PCR is 1.05 against previous close 1.31.

Indian Rupee – Rupee weakened by 16 paisa and was trading at 54.17 against its previous close of 54.01.

S&P 500 (US) was trading at 1554.61 down 6.09 then its previous close at the time of writing M Bells.

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

Technically, Nifty extended its weakness and closed below its 100-DMA (5,857), confirming a breakdown in the index after last week’s recovery. The undertone remains cautious and there is no point to taking any risky bets ahead of the RBI policy meet next week

As per current outlook Nifty range is 5600 on downside while upside is 6200.

Intraday Resistance – 5888 – 5869 – 5852 and Support – 5816 – 5797 – 5780 (Pivot 5833)

Weekly/Monthly Resistance – 6144 – 6057 – 5965 and Supports – 5785 – 5698 - 56006

Opening – Seems flat and market go firm ahead of RBI outcome, also global market recovered in late trade. On upside major resistance 5910 / 5925 / 5950 whiles support comes to 5800 / 5750.

========================  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.)

Jet – Ethiad Deal –

Etihad Airways has called off deal with Jet Airways, according to reports.

Earlier reports said that Etihad was in talks to pick up a 24% stake in Jet Airways for up to $330 mn (around Rs.1,780 crore).

Earlier Etihad Airways President & CEO James Hogan said the carrier, which reported 200% jump in net profit for 2012 to US$42 mn, will present the due diligence report on Jet Airways to its board next week.

On January 31, Etihad delegation led by Hogan, and Jet Airways promoter Naresh Goyal had met Civil Aviation Minister Ajit Singh and Commerce Minister Anand Sharma in New Delhi.

The very next day, top brass of the two carriers also met Finance Minister P Chidambaram.

Axis Bank –

A thorough internal enquiry is already underway to look in to all aspects of the matter and the findings are expected shortly.

Pending the enquiry, the Bank has advised 16 concerned employees to report to respective administrative offices.

A senior level committee has been constituted to monitor and supervise the entire investigation process on a daily basis.

IT Sector –

The report discusses the trends in IT enablement of Indian businesses and lays down the opportunities, challenges and the role of different stakeholders – IT providers, end-user industries and the government need to play in faster and better penetration of IT.

Speaking at the summit, Sibal stressed on the need for the Indian industry and the Government to work in tandem for realizing new horizons and opportunities in Indian IT sector. Sibal emphasized the need for a consistent policy framework for the IT sector from along term perspective which will help transform the business landscape with enhanced IT adoption, and in turn create a significant contribution to India’s GDP. He added that the government triparte policies on IT, Electronics Systems & Design and Telecom will enable the End-users, IT service providers and Government to partner with each other and leverage information technology to achieve and maintain the desired economic growth rate.

Baja Auto –

Bajaj Auto paid over only 2% higher tax, while M&M paid Rs 2.05bn against Rs 1.78bn.

Bajaj Auto is targeting 27-30% share of the local motorcycle market, according to reports.

Bajaj Auto February total sales stood at 332,387 units as compared to 3,43,777 units in February 2012, down by 3%.

The total exports stood at 135,149 units as compared to 122,727 units in February 2012, a growth of 10%

M&M –

Mahindra & Mahindra has launched e2o, an all-electric four seater passenger car in Delhi at Rs 5.96 lakh (on road, Delhi), according to reports.

Reports stated that the e2o will be the cost efficient car to own in India.

The car will use generation lithium ion batteries and have a minimum range 100 kms per charge, says report.

According to reports,  the car will be built at the Bangalore plant, which has the capacity of produce 30,000 cars per annum.

==================== 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)

(Book profit in your 50% holdings and keep balance with SL 119, on 18 Mar 13)

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 Since Jan 13 (Total 36,850) + Mar 13 = +12,200

Billionaire Club Since Jan 13 (Total 67,700) + Mar = +25,150 + 9,600 (Y’day profit) = +34,750

(Profit in Coal India & SAIL PE)

Today’s MG Mantra –

Range bound to welcome.

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.