Morning Bells (30 Aug 13)

Morning Bells (30 Aug 13)

Good Morning Friends.

Quote of the day – Great minds have purposes, others have wishes.

So it was handsome recovery on D-street y’day and we bang on expiry target, my target was around 5300 if only short covering takes place and if there’s some other steps to recover currency then it was between 5350-5400.

Well now we are into fresh series, its difficult to express precise view but as per my previous view now Nifty need to close above 5450 some relief rallies, these relief rallies can take Nifty to 5650 kind of levels while down side range now shifted to 4900 which was my earlier target after breaking 5200 mark. So most probably now participant will try to move Nifty higher to settle vix & oversold zone status.

Well come to market commentary - The Indian equity market ended with strong gains on Thursday amid F&O expiry. Overnight gains in the US and the Asian markets propped up the benchmark indices to open with a positive gap. From there on the benchmark indices just continued rallying on account of short covering across the markets.

Sector-wise, major short covering was witnessed in the realty and infra stocks as the Congress was now eyeing for the contentious Land Acquisition, Rehabilitation and Resettlement Bill. Parliament is likely to take the Land Bill for discussion. The Land Acquisition Bill seeks to provide a fair compensation and rehabilitation to land owners in both rural and urban areas for land that is acquired for developmental projects.

On the currency front, the slide in the rupee came to a halt after the RBI decided to open a foreign exchange swap window to meet the daily dollar requirements of the three public sector oil marketing companies which guzzle US$8-8.5bn every month, for the import of an average of 7.5 mn tonnes of crude oil.

S&P Rating agency outlook –

Standard and Poor's has warned that large deficit economies, including India, could face more economic problems in the near term, says report.

Report said that India's CAD rose to an all time high of $88.2 bn or 4.8 per cent of the GDP in 2012-13.

"The road may be rocky in the near term, particularly for the largest deficit countries - India and Indonesia," said S&P's report.

High CAD is also impacting the value of rupee which slipped to an all-time low of 68.75 to a dollar in intra-day trade on Wednesday.

Next Triggers -

New RBI Governor and monetary policy in September will be the next trigger. Market is also expecting big hike in Diesel prices which would definitely give market a boost.

MARKET OUTLOOK –

Now some situations are changed and are favourable for market in short term. First Syria tension seems eased which lead to cooling off of global crude prices. Secondly direct swapping window for dollar demand of state run OMCs. Third market is very near from where FIIs had started entering Indian market aggressively i.e. first they entered around 4900 level and then around 5200 level, so when Nifty touched 5100 mark some inflows are seen in equity market as investors bought equities at lower valuation.

So if my above belief is true and this continue for few sessions then Rupee is going to recover sharply and we may again see Rupee around 62 levels in this series itself.

Here remember (I am sorry but many of you don’t read MB carefully and then asked me on FB for smaller things, I don’t irritate by your asking but I lose my enthusiasm for preparing MB, it give me thought that my efforts are going waste. This doesn’t mean you stop asking me, I just want to say if ask some intellectual things then I enjoy it and if you ask something which I have already mentioned I get disappointed, well so no worry, keep asking) so remember, if currency recovers sharply then rate sensitive stocks to rally as they are already below their 52week low. Keep eye on stock like JPA, JI.

Above story doesn’t tell we are bottom out, Nifty need to cross many hurdles or say exams, first one is 5450 (for short term) then 5510 (short term) then 5650 (mid term) and finally 5710 (mid-long run).

So what could be strategy is to sell on rise with SL 5450 / 5510 for a target of somewhere 5100 and if broken and close below it then 4900. And above 5510 take some longs for TG 5650 with SL 5450.

My sense say after such a free fall initially we may see some relief rally if Nifty closes above 5450.

So just wait and see how this series starts.

KEY DATA-

Market participants will look forward to the GDP data which is scheduled to be released on 30th August.

For medium term or next series, outlook is still negative till Nifty doesn’t close above 5504. 20DMA is 5646 and 40DMA is 5710.

The INDIA VIX was down 9% at 29.41. It hit a day’s high of 32.44 and low of 28.83.

STOCK OUTLOOK (Stock that will see good volume this week) –

Reliance -

Reliance Industries and its partner BP Plc won approval to invest $3.18 bn in R-Series gas field in KG-D6 block, says media reports.

Report said that RIL-BP plan to bring satellite fields in KG-D6 block to production.

REC –

Rural Electrification Corp is planning to raise Rs50bn through issue of taxfree bonds. The issue opens on August 30 and closes on September 23, says report. REC will use the capital raised through this bonds for lending purposes.

Report said that the lead managers to the issue are ICICI Securities, A K Capital Services, Axis Capital and Edelweiss Financial Services, says report.

Idea –

The DoT may soon issue new telecom licences to Idea Cellular which had earlier refused to accept guidelines related to 3G roaming pacts in the unified license, sources said. The new licence agreement between DoT and Idea may also incorporate certain clauses proposed by Idea, they added.

The Department had said that it was illegal for telecom operators to sell 3G services in areas where they do not have spectrum. Telecom companies Airtel , Vodafone and Idea Cellular had contested the DoT's point and the matter is now sub-judice.

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