Morning Bells (17 Sept 13)

Good Morning Friends.

In 3 words I can sum up everything about life – I learned about life: “It goes on”, I learned about Love: “It doesn’t last” and I learned about people: “They change fast”

After a strong start, the Indian equity market ended in the red erasing all its early gains after the WPI inflation rose at the fastest pace for six months in August, driven by an 18% jump in food prices. The inflation surged to 6.1% in August against 5.79% in July.

Markets had opened with a gap up following overnight gains in the US and the Asian markets after Lawrence Summers withdrew from consideration as Federal Reserve chairman, paving the way for Janet Yellen, which would favor a slower reduction of stimulus. However the early upswing was very short lived amid rising inflation.

Currency –

After Rajan’s effect finally rupee coming and stabilizing below 63 levels and currently trading at 62.83.

Fed and RBI: MG’s view –

Now everyone is talking about Feb tapering and feared about it but when look to global market it give me another picture so I think that Fed will have a smooth communication in terms of tapering and that could be a positive sign and global market may continue to rally.

Same case is for RBI meet also where nobody is expecting anything from RBI right now but giving full faith in Rajan that he will deliver something better in forthcoming days. But right now Indian market is facing its domestic challenges so if something positive in global market is not giving that much boost to Nifty but if there’s something wrong then definitely we will get penalty for that.

Also as per global experts Lawrence Summers' pulling out from the race for the next Fed chairman is positive news for the markets and leading contender for the title, Janet Yellen, has a good working experience in Europe and is well-known by the markets.

MARKET OUTLOOK –

After exit news of Lawrence Summers global market gained but Nifty erases all its gain due to higher than expected WPI but finally managed to close around physiological level of 5850.

So I guess WPI effect has gone and now market is ready to move up on positive cues from global market.

Current market range is 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 announces 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)

Ranbaxy –

Ranbaxy Laboratories stock plunged 30% on reports that USFDA has issued an import alert for drugs manufactured at its plant in Mohali.

CALL LOG –

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