Morning Bells (5 Mar 13)

Good Morning Friends.

3 great philosophies – Ability can never remain hidden. No injury is deeper than insult. The birth of tension is the death of talent.

Another day for Nifty which dragged Nifty lower. As we had discussed now trend seems down and downside seems 5550-5620-5650, yes there could be some bounces which can take Nifty to 5760-5800-5840.

The clarifications and analysis post the Union budget have not brought any relief to the Indian equity market, which ended in the red. Negative global cues pulled the indices at start and the market failed to regain all its lost ground on account of selling in the Metals, Realty, Consumer Durables and the Capital goods stocks. The Mid-Cap and the Small-Cap remained under pressure again dampening the broader indices. Bucking the negative trend was the S&P BSE Banking index, which was up 0.3%.

It was an extremely volatile trading session as the market closed on soft note with a downward bias. The Sensex ended the day at 18877.96, down 40.56 points while the Nifty lost 21.20 points to close at 5698.50.

Selling pressure was seen in metals and cement stocks. BSE Metal Index fell 2.5% as China's Shanghai lost 3.65% after Beijing introduced a fresh set of curbs on the property market to cool home prices. Some of the losers among the metal stocks include Hindalco, SAIL, Jindal Steel, JSW Steel and Sesa Goa shedding around 3-4.5 percent each. ACC (down 3.8 percent), Shree Cement (down 3.1 percent), Ambuja (down 2.3 percent), UltraTech Cement (down 2 percent) were among the losers in the cement space.

High beta stocks like DLF and Reliance Infra (down 3.4 percent each) also dragged the indices during the day. Bajaj Auto fell around 2% on lower than expected sales numbers in February

State-owned hydro power company NHPC  fell as much as 19 percent despite the management's clarification on fall in shares. Shares dropped more than 37 percent in three consecutive sessions amid hefty volumes.

Slipping 11.41 percent, Essar Oil closed the day at  Rs 72.65 on the BSE, despite receiving phase III environmental clearance for its coal bed methane gas field at Raniganj, West Bengal. With the environmental nod granted by the government of India's Ministry of Environment and Forests, the company is allowed to increase drilling to 650 wells.

Meanwhile, on the gainers side were Dr Reddy's Lab, Bharti Airtel, HDFC Bank, TCS and ITC gaining around 1 percent.

Venkys (India) rose 5.4  percent after the company decided to undertake expansion-cum-modernisation programme at an estimated cost of Rs 125 crore.

Finance Minister P Chidambaram has reportedly said that Budget making is a continuous process. The Objective of Budget to signal growth on path of fiscal prudence, says FM. FM also reported that Fiscal Deficit for FY13 likely to come in at 5.2%. Need to ensure foreign investment flow into India, FM reportedly said.

SEBI Chairman to meet FIIs to discuss outstanding issues. Current account deficit is more worrying deficit, FM said. FM is expecting further reforms soon, says report.

Gainers – RIL, TCS, Dr Reddy’s Lab, SBI, ICICI Bank, Tata Motors, Coal India, Bharti Airtel, HDFC Bank, ITC, Hero MotoCorp were among gainers in Sensex and Nifty.

Losers - Infosys,  Wipro, Tata Power, ONGC, BHEL, NTPC, Tata Steel, M&M, Hindalco Inds, Gail India, Sun Pharma were the major losers in Sensex and Nifty.

On Domestic Front –

Financial literacy and financial inclusion are integral to each other and are important because they are integral to attacking poverty. They are two elements of an integral strategy; while financial inclusion provides access, financial literacy provides awareness”. This was stated by Dr. D. Subbarao, Governor, Reserve Bank of India today at the RBI-OECD-World Bank Regional Conference on Financial Education in New Delhi. The Conference has been organised by the Reserve Bank of India in collaboration with the Organisation for Economic Co-Operation and Development (OECD) and the World Bank during March 4-6, 2013.  

On Global front –

1.

Stock market in China plunged on Monday after Beijing introduced a fresh set of curbs on the property market to cool home prices. The Shanghai Composite index fell by 3.7% for its worst percentage drop since August 2011. The losses came after the State Council, the Chinese government's cabinet, announced measures, including higher down-payments and mortgage rates on second homes in cities that have seen steep rises in property prices.

2.

The Stock market in Europe was under pressure on Monday, tracking weak sentiments in Asia. Shares of mining companies posted some of the biggest losses in the pan-European index, after the Chinese government announced fresh measures to cool the property market.

The FTSE index in UK was down 0.3%. Shares of HSBC fell over 2% in London on Monday after the investment bank reported a 2012 net profit of US$14.02bn, down from US$16.8bn a year earlier.

3.

Mark Konyn of CCAM told CNBC-TV18 that investors feel that there is fundamental and structural weakness in India. He believes that market is not yet convinced that additional revenues can be raised sucessfully as hoped by the Union Budget 2013-14.

According to him there are certain sectors, which have been affected more and at this stage. "The investment money in India is loading up and overemphasizing the risk aspect there," he told the channel.

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

Overall trend is down, Nifty may move closer to 5550-5600 level in days to come. Going forward, only global cues will be seen as a trigger for any bounce back.  Reserve Bank of India (RBI) policy will be the next domestic trigger, there one can expect 25 bps cut based on the Budget.

The INDIA VIX on NSE slipped 2.7% and ended at 13.67 against previous close of 14.06.

FNO PCR is 0.82 against previous close 0.79.

Indian Rupee – Rupee remained almost unchanged and gained 0.04 paisa and was trading at 54.86 against its previous close of 57.90/91.

S&P 500 (US) was trading at 1512.73 down 5.47 then its previous close at the time of writing M Bells.

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

Now we are in New series so not much to say here, will just follow the trend. Short term range 5550 – 5650 - 5835 – 5940.

Note it – 5650-55 can give small support to Nifty, if broken then next support comes around 5565.

Intraday Resistance – 5805 – 5772 – 5740 and Support – 5086 – 5663 – 5627

Weekly/Monthly Resistance – 6047 – 5963 – 5841 and Supports – 5634 – 5550 - 5428

Opening – again seems down and then market goes for range bound session. Only hope that it may recover after EU opening if global market supports.

========================  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.)

Shares of Suzlon plunged by 30%, Shares of Pantaloon Retail have nosedived 15% Reliance Infra and PNB and SBI have lost over 7% each.

NHPC-

Shares of NHPC plunged by 23% to close at ~19.70. The company clarified that, "as far as the fundamentals of the Company, there is no change which affects the major price movement. In our opinion, there is no issue in the Finance Bill which has any adverse effect on hydro sector." 

HDFC Bank –

Shares of HDFC Bank gained by almost 1% after the second largest private lender successfully sold a US$500mn five-year bond at 3% coupon, its lowest yet.

Hero MotoCorp –

Stock of Hero MotoCorp edged lower by 0.3% to close at ~1642. The two-wheeler manufacturer reported a decrease of 4.2% in its sales at 5,01,271 units in February 2013.. Hero Motocorp sold 5,23,465 units in February 2012.

State Owned Banks -

PNB and Karnataka Bank ended with losses after the state-run banks raised deposit rates on select maturities by 0.25%. Punjab National Bank raised deposit rates by 1.25% to 8.75% for term deposits of less than Rs 1 crore for maturities between 6 months and less than 1 year.

Cairn India -

Cairn India has approached the government to declare the airspace near its oil fields in Rajasthan out of bounds for all aircraft, commonly called no-fly zone.

The Vedanta group firm moved to the government after a crash of an Indian Air Force fighter jet on February 12.

The company’s oil pumping and processing facilities are spread over an area of 4,549 acres at a distance of 13km from the IAF station in Uttarlai.

Barmer is close to the border with Pakistan. Cairn has requested the oil ministry to recommend the no-fly zone to defence and aviation ministries.

GMR Infra –

The GMR Group changed its strategic direction last year to an Asset Light - Asset Right approach after a detailed analysis of the trends in the infrastructure sector. This approach builds upon our strengths as a developer, and consequently we follow the principle of "Develop, Build, Create Value, and Divest", We believe this is a sustainable long term business model for Indian infrastructure developers,In line with this, we conduct regular portfolio reviews to identify the assets where we have already created maximum value as a developer and are right for divestment, Consequent to this, the GMR Group has entered into a Share Purchase Agreement ("SPA") on March 4, 2013 to sell its 70% interest in GMR Energy (Singapore) Pte Ltd ("GMRE") to FPM Power Holdings Limited ("FPM Power") for a total equity value of S$ 660 Mn.

Out of this, FPM Power will invest 5$ 60 Mn in GMRE as the Balance Equity. This sale translates to an Enterprise Value (100% basis) for GMRE of 5$1,612 Mn (US$1,293 Mn) on project completion by end 2013. The transaction is subject to approval from Project Finance lenders to GMRE and is expected to close by end of March, 2013.

This divestment of our stake results in a profit of Rs. 1356 Crores (S$ 307 Mn) and releases capital amounting to Rs, 1616 Crores (S$ 366 Mn).

Essar Oil –

Shares of Essar Oil  slipped 11.71 percent to close at Rs 72.75 on Monday despite receiving phase III environmental clearance for its coal bed methane gas field at Raniganj, West Bengal.

With the environmental nod granted by the government of India's Ministry of Environment and Forests, the company is allowed to increase drilling to 650 wells.

"This environmental clearance allows the full field development of the Raniganj block, excluding forest area, and will enable Essar Oil to increase production to the targeted level of around 3 million standard cubic metres of gas per day (scmd), up from 60,000 scmd currently," the company said in its release sent to exchanges.

So far, 135 wells have been drilled at Raniganj, of which 57 are in production.

Shares tanked more than 15 percent intraday on Bombay Stock Exchange today.

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

Hexaware – Place order for March 80PE below 1.5 (max 4 lots) first buy 2 lots and then buy another 2 lots at 20-30 paisa below. SL 0.5 TG 2.5+ (Remember its Positional, Active from 26 Feb 13, not executed yet)

Note – Unfortunately we missed it y’day. Lets see if buying opportunity comes once again.

Cairn India – Bought 280PE @4 (max 2 lots) SL 2.5 T1 6 T2 8 (Active from 1 Mar 13, Book 1 lot at T1 and balance on T2)

Booked profit 2500, 1 lot exited @5.5 and balance lot @5

Note – Further downside is not ruled out, and we are looking it to buy again.

=============== 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 Since Jan 13 (Total 36,850) + Mar 13 = +2500.

(Profit in Cairn India)

Billionaire Club Since Jan 13 (Total 67,700) + Mar = +5100

(Profit in Cairn India future shorted 293.4 booked @288.5)

Today’s MG Mantra –

Its time to play a bit carefull.

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.