Morning Bells (16 Sept 13)

Good Morning Friends.

Circumstances can change at any time, don’t devalue or hurt anyone in this life. You may be powerful today but time is more powerful than you.

News is not coming in the favour of market. IIP and CPI which came unexpected, most of experts argues that its misleading and that was the reason market doesn’t cheer it.

In another news, stage is setting for Fed outcome scheduled on 17&18 Sept and months of anticipation will come to an end on these dates.  Feb’s move has flooded financial markets with some USD 2.75 trillion over the past five years. So finally central bank doesn't surprise with the size of its move or shock in some other way.

The only saviour could be that the Fed has telegraphed its intentions to pare back its monthly purchases of USD 85 billion in bonds at its two-day meeting that ends next Wednesday. The scale of the tapering and what Fed Chairman Ben Bernanke might say at his press conference are key here, but the steady messaging in the last few months means next week probably won't see carnage in the markets.

Investors have already done a lot of work in absorbing the Fed's message. Benchmark bond yields are now hovering near two-year high.

The Fed has said it would wind down its program if it is confident that the economy is improving, particularly that the jobless rate is heading lower. If it delays any action, it could raise concerns that it fears economic growth is going to be too anemic without the Fed's help.

Well on Friday – It was a choppy day of trade with global cues mostly lower. The action seemed to be more outside the market with attention on the announcement of Narendra Modi as BJP’s prime ministerial candidate expected later in the day.

Petrol Price hike –

IOC has hiked petrol prices by Rs 1.63 per litre effective midnight. The price hike is exclusive of the value added tax (VAT). IOC has quoted reasons of a steep fall seen in the Indian rupee in the recent days as well as a surge in global crude prices.

It added that the company is facing a revenue loss of Rs 14.50 per litre on the sale of diesel and the FY14 revenue loss on subsidised fuel is seen at Rs 82,000 crore.

Currency –

The rupee gained marginally and ended at 63.49/50 to the dollar versus 63.50/51 last close.

DOMESTIC FRONT –

In important political development, Narendra Modi is set to be named as Bharatiya Janata Party's Prime Ministerial candidate. According to reports, LK Advani informed Sushma Swaraj and Rajnath Singh that he will not be interested in working for the party if Modi is projected as the party's prime ministerial candidate for the 2014 Lok Sabha elections.

MARKET OUTLOOK –

A big event is slated this week and that’s investors have been taking steps to reduce risks ahead of such an important announcement and buying PUTs to reduce the risk.

Market to go in consolidation phase here say between 5750-6000. Here you need to remember that upside for Nifty seems 5950-6000 so fresh buying will come once Nifty will close above 6010 while downside comes to 5750-5600. So upside is limited and downside is much from here so better either sit on cash or trade intraday only.

If Fed announce tapering on its bond buying program then we may see sharp reaction and all global market will be part of it, even currency too.

I see some longs building up ahead of both events and then pressure build up around the event day.

MG’s Nifty range for trading –

R - 5880 - 5930 - 5950 - 5990 – 6020

S - 5830 - 5780 - 5740 – 5720

EVENTS –

Raghuram Rajan's maiden RBI monetary policy on September 20 will be closely watched by investors.

Fed policy meeting next week (17&18 Sept) is also another important event to be watched out for next week as the US Federal Reserve is set to make public its further plans on US$85bn monthly bond-buying programme.

STOCK OUTLOOK -

(Stock that can see some good moves either side)

Media Sector –

Broadcast regulator TRAI is considering initiating a dialogue on issues related to the present mechanism of pricing TV channels after broadcasters raised their concerns about "flaws" in the system.

Step could be positive for media sectors, keep watching movement in this regard.

Power Grid –

State-run Power Grid Corp of India said on Friday that the ministry of power has sought the federal cabinet's approval for a secondary share sale, which will include the government divesting 4 percent of its stake.

The company will also issue 601.9 million new shares, or 13 percent of its existing paid-up capital, as part of the follow-on share sale, Power Grid said in a statement to the Bombay Stock Exchange. The government's divestment of a 4 percent stake in the company is part of New Delhi's plan to raise Rs 40000 crore through sale of its shares in state companies in the current fiscal year ending March 2014.

Real Estate –

Factors like tighter monetary policies by RBI, depressed domestic economic conditions, exodus of private equity funds, outflow of money from the property market for impending elections are converging after a decade setting a stage for a deep correction in Indian real estate.

DLF –

Leighton Welspun Contractors, part of the Leighton Asia, India and Offshore Group, has been awarded the main contract to build the super luxury residential development ‘The Camellias’ for India’s leading developer, DLF at DLF5, Gurgaon, India, valued at Rs14.5 Billion (US $250 Million).

CALL LOG –

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