Morning Bells (29 Apr 13)

Good Morning Friends.

Thought of the Day - An emotional investment is a sure way to make loss in the Stock Market.

The Indian equity market ended in the negative terrain for the first time in seven trading sessions amid profit booking in the scrips across the sectors. The decline was seen despite better than expected corporate earnings from the Indian corporate Inc.

Gainers –

Maruti, Bharti Airtel, Bajaj Auto, Gail India, HDFC, L&T, Hindalco Inds, Tata Motors, Coal India, Tata Power and Dr Reddy’s Lab were among the major gainers in Sensex and Nifty. 

Losers –

RIL, TCS, ICICI Bank, Infosys, Wipro, ONGC, Tata Steel, Sun Pharma, SBI, NTPC, HDFC Bank, Jindal Steel and HUL were among the major losers in Sensex and Nifty.

Sectoral –

Barring the BSE Auto and BSE Capital Goods index all the other major sectoral indices ended in the red. The BSE Realty, IT, Oil & Gas, Metals and the Banking stocks were among the top laggards. The Mid-Cap and Small-Cap indices too declined by half a percent each.

52 Week High –

Stocks which hit a 52-week high during the week were Dabur India, Dr Reddy’s Lab, Global Offshore, Rollatainers and Grandma Trading.

Domestic Front –

Monsoon –

Southern states likely to get less than normal rain: Food minister

Monsoon is expected to be quite satisfactory in India excluding the southern tip—Kerala, Karnataka and Tamil Nadu, Food Minister KV Thomas said today.

Speaking to reporters on the sidelines of an event organised by the Bureau of Indian Standards in New Delhi, Mr Thomas said that monsoon rains in these southern states are likely to be delayed or could be less than the normal level.

India Meteorological Department is expected to announce its long range monsoon forecast for the year ahead later today.

Indian Economy -

Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister released the document ‘Review of the Economy 2012-13’ at a Press Conference in New Delhi today. According to report - Economy to grow at 6.4% in 2013-14.

Global Front –

ECB Monetary Policy -

With signs of a slower economy mounting, the near-term outlook for US stocks isn't rosy, but investors may find comfort next week from the world's major central banks.

The Federal Reserve will meet on Tuesday and Wednesday, with the report of weaker-than-expected, first-quarter growth could reinforce expectations the Fed will keep purchasing bonds at a pace of USD 85 billion a month.

Low interest rates and ample liquidity provided by the Fed and other central banks have buoyed global equity markets because low borrowing costs for businesses and consumers lead to richer corporate profits. Major US stock indexes hit record highs earlier this month.

The ECB is constrained essentially in terms of monetary policy they will keep interest rates low, monetary policy will continue to be loose, according to experts.

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

A Reuters poll shows 37 of 42 economists expect the central bank to cut the repo rate by 25 basis points on May 3. The Reserve Bank of India's (RBI) guidance on future policy stance will be key for direction in the near-term post the policy outcome.

According to a CNBC-TV18 poll, the central bank is likely to cut rates by 25 basis points (bps). Around 20 percent of the respondents see a cash reserve ratio (CRR) cut and nearly 80 percent expect banks to pass on the cut this time.

To my personal view - We have had a very strong rally, so people are looking for any trigger for profit-taking, so don’t take longs around RBI.

The INDIA VIX on NSE was down 2% and ended at 13.88 against previous close of 14.20.

FNO PCR was 1.05 against previous close 1.17.

Indian Rupee – Rupee lost 16 paisa and was trading at 54.38 against its previous close of 54.22.

S&P 500 (US) was trading at 1582.24 down 2.92 then its previous close at the time of writing M Bells.

RESULT CALENDER –

29 April – HUL, Exide Industries, Sterlite Industries,

30 April - Infrastructure output data for March due around noon, Fiscal deficit data for March

Result – Dabur India, Petronet LNG, TVS Motors,

1 May – Market closed for Maharashtra Day, Result IDFC

2 May – RBI to release macro-economic review at 17.00 IST

Result - Bharti Airtel, Canra Bank, Kotak Bank

3 May- RBI Monetary Policy Review decision at 11.00 IST

4 May – JP Associate

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

5760 is a good support level at the moment, Nifty may attempt 6000 level ahead of RBI policy but as told you earlier 5965 is still a hurdle.

So keep eye on 5965-6000 range, if one sees the calls of May series, the maximum build-up that one can be seeing is a 5900 Call option. It is quite possible that market may go a bit higher than 5900, and change the consensus that it is losing the steam. We might probably touch 6,000 figure also and from there the correction may happen and if closed above then 6160 is possible.

So in short as I have been saying for the past few days, we are heading or near the top and moving beyond this requires a big trigger, regarding RBI, market has already discounted a 25 basis point (cut), so now it need bigger rate cut than 25 bps. Next trigger is Monsoon which quite far away. So from these levels I am expecting some amount of correction. Also historically May isn’t good for health of stock market.

Intraday Resistance – 5945 – 5926 – 5898 and Support – 5852 – 5833 – 5805 (Pivot 5879)

Opening – Seems flat and will wait for further cues, it may be corporate earnings or will remain cautious for Infra output due on Tuesday.

========================  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.)

TM –

My View – As suggested earlier TM may continue its onward journey and now TM is next price band which is 291-305, one can hold TM with SL 286.

Bharti & Reliance –

Bharti, Reliance Jio ink int'l data connectivity pact

Bharti Airtel Limited, a leading global telecom services provider with operations in 20 countries across Asia and Africa, and Reliance Jio Infocomm Limited announced that they have signed an Indefeasible Right to Use (IRU) Agreement, under which Bharti will provide Reliance Jio data capacity on its i2i submarine cable.

i2i connects India to Singapore and is wholly owned by Bharti. The state of the art cable consists of eight fiber pairs using DWDM, capable of supporting multiple terabits of capacity per fiber pair. Its landing points are at Chennai in India and Tuas in Singapore. Reliance Jio will utilize a dedicated fiber pair on i2i. The high speed link will enable Reliance Jio to extend its network and service reach to customers across Asia Pacific region. It will connect Reliance Jio directly to the world’s major business hubs and ISPs, thereby, helping the operator to meet the bandwidth demand and provide ultra-fast data experience to its customers.

ICICI Bank -

On the earnings front, ICICI Bank announced its Q4 FY13 results which beat expectations. The Bank’s operational numbers were stronger than expected. NIM expansion by 20-25bps qoq was a positive surprise; it stood at multi-year high of 3.3%. In the domestic business, benign wholesale funding cost and stable lending yields are likely to have been the key drivers of margin improvement. NII growth was at a robust 23% yoy. Asset quality remained resilient as Gross NPA ratio improved marginally to 3.2%. Slippages are likely to have been within Rs10bn as expected. Credit cost was in-line with PCR sustained near 77%.

LIC Housing Finance -

LIC Housing Finance was the star performer of the day; the stock skyrocketed by over 8% to close at Rs250 after the NBFC posted a net profit of Rs3161.5mn for the quarter ended March 31, 2013 as compared to Rs2536mn for the quarter ended March 31, 2012. Total Income has increased from Rs16890.2mn for the quarter ended March 31, 2012 to Rs20747.4mn for the quarter ended March 31, 2013.

Maruti Suzuki -

Maruti results were a positive surprise. Operating margins were higher at 10.4% mainly on account of currency benefits and better product mix in the domestic market. In a weak market, the stock surged by 5% to close at Rs1674.

Idea Cellular -

Idea Cellular Ltd surged 5.75% after it reported a better-than-expected 30% rise in quarterly profit. The stock closed at Rs. 123.15 up by Rs. 6.70 or 5.75% on the NSE. The stock touched high of Rs. 128 and a low of Rs. 121.30. Total traded volumes on the counter stood at 1.48 crore.

DLF –

DLF is planning to raise Rs 20bn through the institutional placement programme (IPP) route, says media reports.

Reports stated that the company will launch the IPP in a week or two to sell 80 million shares to qualified institutional buyers.

This may further help the company to bring down its debt level.

The stock closed at Rs237, down 2%.

HUL -

Hindustan Unilever , the largest fast moving consumer goods company in India, will report fourth quarter earnings  on Monday, amid signs of a slowdown in discretionary spending. So the street will be keenly eyeing its performance, especially, in the personal care and foods segment.

HUL, a unit of Anglo-Dutch Unilever Plc, is expected to report a quarterly revenue growth of 11-13 percent year-on-year, while net profit is likely to grow 11-15 percent, analysts say. Volume growth is likely to remain subdued around 5-6 percent.

Lupin –

Lupin has received final US approval for two oral contraceptive tablets.The two products are the generic version of Janssen Pharmaceuticals Inc’s Ortho-Novum 7/7/7 tablets and Ortho-Novum 1/35 tablets. Lupin would start shipping the products shortly.

Despite being a generic, the two versions of the Ortho-Novum are being branded byLupin due to regulatory reasons. The firm has been aggressively pursuing the contraceptive market in the US.

Lupin is gearing up for a commercial launch of generic version of Bayer's oral.

Suzlon Energy –

REpower Systems SE, the Indian wind turbine maker Suzlon Group's German arm is going to slash upto 750 jobs across the world as part of its plan to achieve cost savings of about 100 million euros (USD130 million) in the current fiscal year.

The Hamburg-headquartered company has 3,300 employees.

The lenders of REPower's Indian parent, the world's fifth-largest wind turbine maker, in January approved a plan to restructure USD 1.8 billion of debt after Suzlon defaulted on a USD 200 million convertible bond redemption last October.

Gold this week -

Ahead of festive season and auspicious events, precious metal will remain in demand.

Precious metals exhibited impressive upside this week, whereby robust physical buying has aided the recovery in gold prices. Spurt in jewellery demand and coin sales have been reported in India, China and US. Rush for the metal has led to supply shortage in Asian markets. In this respect, spot premiums for the gold bar have surged to multimonth highs in India, Singapore and Hong Kong. Meanwhile, US Mint has suspended the sales of American Eagle Gold coins, as it is not able to cope up with the sharp rise in demand. In Indian markets, recent slide in prices have lured retail entities for jewellery purchase ahead of the wedding season. 

Base Metals -

Since long base metals was on sellers radar and now most of stocks are in oversold zone, so buying at lower level and some short covering will help stocks to move up but overall sentiment will remain subdued due to slow down in Chinese micro economy.

The recent PMI survey from China conveys a slowdown in manufacturing activity. More alarmingly, various sub indexes (component of the PMI index) indicate overcapacity in the supply chain and subdued demand. In addition, recent flow of macroeconomic numbers from Europe and US as well has shown signs of deterioration. In light of such dreary landscape, it is difficult to get too optimistic on nonferrous metals. The only glimmer of hope for the bulls is that many metals remain in oversold conditions. Most of the metals may be due for a shortcovering but we infer that such upside will not be sustainable and selling would reemerge at higher levels.

Crude –

Energy prices have registered a healthy upside this week, with WTI Crude oil futures ricocheting from the low of US$87.6/bbl. The upside was also aided by the broad based recovery in the commodity pack. However, expanding US crude oil inventories and weak economic landscape enacts as a headwind for the prices. US oil stockpiles remain at high levels, just close to the record levels witnessed during 1990. Weak economic estimates from IMF and other agencies have also raised concerns regarding the demand prospects for global oil markets. In the short run, the focus remains accentuated on the US Advance GDP data, wherein the markets are estimating a growth of 3.1% during Q1 2013, as compared with a reading of 0.4% during the prior quarter.

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

TV18 – Bought @28.5 TG 34+ SL 25.5 (Qty 1K)

Infy 2300CE – Bought @30 TG 45+ SL 20 (Qty 2 Lots)

It was purely on the base of US GDP and it has disappointed, so will see how it reacts till RBI else will exit with minimal loss.

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

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

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

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

MG Blog Since Jan 13 (Total 56,050)

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Today’s MG Mantra –

New series, just relax and ride on rate sensitive stock till RBI policy.

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