Morning Bells (6 Mar 13)

Good Morning Friends.

Time decides whom we meet in life. Our heart decides whom we want in life… But our behaviour decides who will stay in our life.

So finally as discussed day before y’day about a bounce, and y’day it was a surprise on D-Street, all were expecting a little bounce but FM’s statement helped in gaining confidence. Reason was simple, when Feb series last 3 days shaded Nifty by around 200 points 5700PE was opted as hedge and huge calls were written, then in the beginning of this series 5500PE has increased OI. So my logic was simple, whenever investors go for over hedge it react as ceiling (i.e. major support) for short term trend which is 5630 – 5550 for Nifty. So when Nifty was hovering around 5650 it was clear that from here there should be a bounce. So try to understand this formula and don’t misguide with other cues and trend which is still unsure and down. So around March expiry or say after RBI announcement market will have pace for either direction, it could be new high or new low of 2013.

Stock market in India bounced back on Tuesday tracking positive cues from the international equity markets. After opening with a gap up, markets surged throughout the day led by all round buying witnessed in scrips across the sectors.

All the S&P BSE sectoral indices ended in the green, the interest rate sensitive stocks like realty, Banking and Auto were among the top gainers, followed by Oil & Gas and the IT stocks. Even the S&P BSE Mid-Cap index and S&P BSE Small-Cap index rose by 1.6% and 1.1% respectively. 

The Metals stocks were in demand after China announced that it has maintained its economic-growth target at 7.5% for 2013, while setting a lower inflation goal of 3.5%.

Gainers – Sterlite gained 5%, Hindalco gained 5% and Tata Steel was up 2.8% while RIL, Infosys,  Wipro, TCS, SBI, ICICI Bank, Tata Steel, Sun Pharma, HDFC Bank, Gail India, M&M , Dr Reddys Lab, Coal India, NTPC, Tata Power, ONGC,  Hero MotoCorp were among gainers in Sensex and Nifty.

Losers - Bajaj Auto, BHEL, ITC, HDFC were the major losers in Sensex and Nifty.

Sectoral - Shares of Airline companies surged higher after Aviation regulator notified new FDI norms. Kingfisher stock surged higher by ~5%, while Jet Airways gained by 2.5% and Spicejet stock was also up 1%.

On Domestic Front –

1.

Although there are still some prevailing uncertainties regarding how the GAAR will be implemented in 2016-17, the post budget declarations from the Indian Ministry of Finance contain some positive elements.

Mauritius has taken note of the measures announced by the Indian Minister of Finance, the Honourable P. Chidambaram, during the presentation of the 2013-14 budget to the Indian Parliament on Thursday 28 February 2013.

The Minister announced, amongst others, that the Indian Income Tax Act would be amended to provide that Tax Residency Certificate (TRC) would constitute a necessary but not sufficient condition to avail of the benefits under double taxation avoidance agreements. 

This announcement has created much confusion among investors in India and internationally, including those using Mauritius to do business with India. The amendment has been interpreted as providing wide powers to the Indian tax authorities to question the Tax Residency Certificate produced by a resident of a contracting state.

2.

Mukesh Ambani has retained his title as India's richest person for sixth year in a row, while Mexican business tycoon Carlos Slim has emerged as wealthiest in the world for the fourth consecutive year. 

There are a total 55 billionaires from India on the list of 1,426 persons from across the world having a minimum networth of $ 1bn.

Mukesh Ambani is ranked 22nd, while Indian Lakshmi Mittal is at 41st position with a networth of US$16.5 bn, according to annual ranking published by business magazine Forbes.

3.

Indias record high current account deficit is the countrys biggest concern, Finance Ministrys chief economic adviser Raghuram Rajan reportedly said.

Country's current account deficit widened to a record high of 5.4% of GDP in the September quarter, according to reports.

The current account deficit is expected to stay at record high for the entire 2012-13.

Rajan also reported that food inflation persisting at a high level was not easy for the central bank to manage.

On Global front –

1.

The Shanghai Composite index in China rebounded strongly as the National People’s Congress — the country’s parliament — began its annual session. However, property developers fell further under the lingering influence of fresh restrictions imposed on the sector late last week. The rebound came as outgoing Premier Wen Jiabao kicked off the annual session of the NPC by announcing an economic growth target of 7.5% for 2013, in line with expectations.

2.

The European market was trading higher on Tuesday after the final reading of the euro-zone composite purchasing-managers' index, for February was revised up from a preliminary estimate. 

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

Nothing much to say here, market seems range bound with a bit volatility, now all eyes will be on Reserve Bank of India (RBI) policy which will be the next domestic trigger, there one can expect 25 bps cut based on the Budget.

The INDIA VIX on NSE slipped again 2% and ended at 13.39 against previous close of 13.69.

FNO PCR is 0.92 against previous close 0.82.

Indian Rupee – Rupee wa down 0.06 paisa and was trading at 54.92 against its previous close of 54.84.

S&P 500 (US) was trading at 1541.07 up 15.87 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. Here 5835-40 is the level where Nifty face strong resistance, so this level should be watch closely as short covering can take place here if Nifty try to break this level decisively while 5650-55 can give small support to Nifty, if broken then next support comes around 5565.

Intraday Resistance – 5876 – 5833 – 5808 and Support – 5741 – 5697 – 5673

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

Opening – Seems a bit positive and then market can go for a small range bound session till EU cues.

========================  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.)

New Banking Licence –

The issuance of new banking licences in India is likely to be highly selective given the challenges that new entrants face and the cautious approach of the Reserve Bank of India, Fitch Ratings says.

We expect the RBI to exercise stringent measures of selection. Applications are likely to vary considerably in both quantum and type. The risks could be very different this time, with corporate houses expressing interest in a bank licence.

The new entrants have to address financial inclusion, comply with priority-sector lending targets, and position 25% of their branches in rural areas. Such restrictions could limit profitability for new banks, and restrict applicants to those with deep pockets but also to those with a strong commitment and successful track record.

Issuing licenses to conglomerates could increase corporate governance risks, despite RBI's attempt to regulate these issues. The new guidelines announced on 22 February are tough, requiring a successful track record of at least 10 years, greater minimum capital, and viable business plans that meet prudential requirements. The central bank's strong focus on good corporate governance, and its ability to supervise a consolidated banking entity under the recently passed banking reforms, could help in enforcing checks and balances to monitor additional risks.

Sugar Decontrol-

Government is planning to consider relaxing controls on the sugar industry, according to reports.

The sugar decontrol is being delayed after reports of first such decision came last month after an expert panel headed by Prime Minister’s Economic Advisory Council Chariman C. Rangarajan in October last year suggested scrapping two major regulations of supply release mechanism and levying sugar obligation and other regulations subsequently.

Economic survey-2013 too suggested to decontrol the over regulated sugar industry in a phased manner in a similar way recommended by Rangarajan panel.  

Godrej Properties-

Shares of Godrej Properties gained by 2.7% today after the company announced the launch of its landmark commercial development, Godrej BKC. At 1.3 million square feet, this is one of the largest real estate development projects launched in the city. The construction of Godrej BKC has commenced and the project is expected to be complete in 2015.

RIL –

Defence Ministry has cleared “No-Go” zones imposed on its producing Reliance Industries KG-D6 gas block and discovery block of NEC-25 in Bay of Bengal and permitted oil and gas activities with certain conditions, according to reports.

Reports said that Ministry of Defence (MoD) had in all declared 7 blocks, including RIL’s Krishna Godavari basin KG-D6 block and gas discovery area of NEC-25 in the North East Coast (NEC) region.

While MoD has relented on RIL blocks, five other areas of state-owned Oil and Natural Gas Corp (ONGC), BG Group of UK and Cairn India will continue to be under “No-Go” areas, says report.

Essar Oil –

We have discussed new of block clearance, y’day stock gained 21%.

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

Tata Steel 360CE – bought @5.5 (2 Lot) SL 3.5 TG 9+ (Active from 5 Mar 13)

=============== 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 + 6250 (Y’day gain)

(Profit in M&M Futuere 4250, Yes Bank future 2000)

Today’s MG Mantra –

Watch 5840 level closely, market may remain range bound for next 1 or 2 days.

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.