Thursday 2 May 2013

Morning Bells (3 May 13)

Good Morning Friends.

Thought of the Day - With faith, you can move mountains, while with doubts you can create them.

So finally everyone come into market like a free lottery ticket on distribution, a surprised rally was on D-Street y’day, I was expecting it around 5970-6000 to cool down there but it attempted to breach 6000. As told y’day people are guessing RBI will do more than 25 bps, some says 50 bps is there and some are saying 100 is also possible. Lets see what happens because FII are more powerful and they get news more frequently then us, and if they have bought on huge volume then there could be something,.

As I discussed last week – traditionally May isn’t good for the health of stock market and I had put my view that may be FII can try to put you wrong this time in first half. So it may be that kind of thing also, and also its not bad if big investors pull up the market and then go for profit booking at higher level, becoz when they come for sell you wont even get time to exit your position even on cost to cost, within seconds they put stock 5-10% down, and they have tested it earlier.

Well, market rallied to a new three-month high on hopes of a rate cut at Friday’s Reserve Bank of monetary policy meet.

The hope of a rate cut was spurred further by lower HSBC Purchasing Managers' Index (PMI). Growth contracted to 50.4 in April from 51.6 in March.

Dealers say the market is pricing a 50 bps repo and 25 bps CRR rate cut. The repo rate is the rate at which banks park money with the central bank while the cash reserve ratio is the mandatory funds that banks have to park with the central bank.

The market ignored weak Chinese manufacturing data and stalling of the reform process in Parliament due to disruption by Opposition parties.

Now its day of RBI, so no comment about market, just talk about RBI only.

RBI cuts FY14 inflation forecast to 6.5% from 7% -

The Reserve Bank of India released the Macroeconomic and Monetary Developments in 2012-13. The document serves as a backdrop to the Monetary Policy Statement 2013-14 to be announced on May 3, 2013.

Overall Outlook - Macro-financial risks require cautious monetary policy stance ahead

Global Economic Conditions - Global growth likely to stay sluggish, commodity price inflation soft

Indian Economy – Output - Slowdown persists in the economy with services sector witnessing moderation

Aggregate Demand - Investment cycle downturn continues, consumption moderates

NOW WHAT I TOLD YOU ALL ABOUT RBI DECISION Y’DAY IS HEADLINE TODAY -

1. The Reserve Bank of India on Thursday warned of "very limited" space for further easing of monetary policy, striking a hawkish tone a day before it is widely expected to cut interest rates by 25 basis points for the third time this year.

2. The Reserve Bank of India’s Macroeconomic Survey has cautioned that inflation was likely to remain rangebound around current levels in the current fiscal (FY14), but above RBI’s comfort levels. The central bank sees inflation rising again during the second half of this fiscal due to increase in diesel, power and coal prices. This will limit the elbow room for cutting interest rates going forward, the Survey said.

3. The Reserve Bank of India’s macro economic report released Thursday said that for economic growth to revive, the government needed to do much more in terms of removing infrastructure bottlenecks and improving governance.

It made it clear there was limited room for cutting interest rates in FY14 because of multiple global and domestic risks, notably inflation.

The RBI report has forecast a slow paced economic recovery this fiscal, with the RBI's survey of professional forecasters lowering its growth forecast for FY14 to 6.0 percent from 6.5 percent.

4. Reserve Bank of India’s annual policy scheduled on Friday is unlikely to astonish market participants as they have already factored in 25 bps repo rate cut; however the central bank’s commentary, especially its tone-hawkish or dovish is more likely to decide street’s mood going forward, experts believed.

(Source – MoneyControl.com)

Gainers –

Reliance Industries, Tata Consultancy Services, Infosys, Wipro, NTPC, Sun Pharmaceuticals, Maruti Suzuki, Tata Steel, HDFC Bank, ICICI Bank, ONGC were among the top gainers.

Losers -

BHEL, Tata Power, Bajaj Auto, Dr Reddy’s Laboratories, Tata Motors, Hero MotoCorp, Hindustan Unilever, Coal India were among major losers.

Sectoral –

The consumer durables index was the top gainer, up 2.5%, followed by realty, power and IT up 1.6%, 1.1% and up 1.5% each. The metal index ended a tad weaker, down 0.9%.

Were

Domestic Front –

Global Front –

ECB Monetary Policy -

The European Central Bank has cut interest rates for the first time in 10 months on Thursday. Sharply falling inflation and rising unemployment has forced the apex bank's governing council to lower its main interest rate by a quarter percentage point (25 bps) to a new record low of 0.5%.

The rate determines the cost of more than 850 billion euro in outstanding ECB loans.

The move was on expected lines as ECB President Mario Draghi said the bank was ready to act last month. Economists also expected the ECB to act as inflation in April fell to 1.2%, way below its target of about 2%.

The big question is whether this symbolic move can lift morale in the Eurozone and if it is enough to jolt the continent out of its longest recession in its history.

Fed bond buying –

Overnight, the Federal Reserve promised to continue with its bond buying program. The apex body said it could either increase or decrease its bond buying from the current pace, depending on the changes in the labor market and inflation.

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

No outlook today, lets see how market reacts, as today is big even and its Friday too.

The INDIA VIX on NSE was up 7.81% and ended at 16.28 against previous close of 15.10.

FNO PCR was 0.96 against previous close 1.07.

Indian Rupee – Rupee gain 15 paisa and was trading at 54.23 against its previous close of 54.38.

S&P 500 (US) was trading at 1598.48 up 15.78 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 ========================

No outlook.

Opening – Seems a bit positive or flat, then will be holding its breath till 11.00 AM, a high voltage drama i.e. volatility could be there.

======================== 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.)

Rate sensitive stocks may see high volatility. Realty, Auto and Banking sectors are on radar today, better stay away till RBI outcome.

==================== 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+ Updated SL 15 (Qty 2 Lots)

(Booked profit @42)

=============== 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 Fronm Jan 13 to April 13 (Total 56,050)

May 2013 - +3000 (profit in Infy calls, 2 lots)

Billionaire Club from Jan 13 to April 13 (Total 1,10,950)

May 2013 - +6000 (profit in Infy calls, 4 lots)

Today’s MG Mantra –

Stay away till RBI outcome or go with call straddle.

============ Join MG on FaceBook ============

Join MG on FB for live update – www.facebook.com/mudraguru.india

Please make sure you need to send a message on FaceBook – “I am blog reader” as currently I am not accepting FB request from unknown person.

Have a Profitable day – MG

Wednesday 1 May 2013

Morning Bells (2 May 13)

Good Morning Friends,

busy with having look for fresh trades, I hope there's nothing new till RBI policy, so may be I will not post MB today. Lets see if I get time then will post it.

This will help for todays trade strategy -

RBI Rate Cut, will RBI cut the rates ? Answer is here -

In anticipation, the business press has already started beating the drums for a rate cut, and Business Standard even talks of a buzz about the RBI delivering a pleasant surprise with a 50 basis points cut (100 basis points is 1 percent).

However, the case against any rate cut continues to remain strong, till the evidence that inflation is coming under control gets stronger.

Right now, inflation is falling on the wholesale side, but not the consumer side. While the Wholesale Prices Index (WPI) is down to 5.9 percent (it may still be corrected upwards to above 6 percent later), the Consumer Price Index for March is still in double-digits at 10.4 percent.

What this means is that the slowdown has reduced business’ pricing power, but consumption demand is holding prices up. The more immediate cause of the drop in WPI is declining global commodity prices and the chances are that this decline could continue. But the domestic impact of this will be muted as long as the current diesel policy of raising prices steadily every month holds. Even today, the diesel price subsidy (or losses sustained by the oil companies) is Rs 6.42 a litre. It could take a year to neutralise this at the rate of 50 paise a month. In short, the fuel price uptick will continue all through till the next general elections in 2014.

The primary problem Subbarao faces is one of credibility. He fell flat on his face, not once but twice, by opting for easy money when it was unwarranted.

In 2010, he failed to raise interest rates on the presumption that growth needed a leg up rather than inflation a press down. At that time, the government’s post-Lehman stimulus packages were already beginning to create an inflationary spiral, boosting growth prematurely.

In 2012, based purely on Pranab Mukherjee 's promise that the fiscal deficit would be contained, Subbarao cut the repo rate (the rate at which banks borrow short-term funds from the RBI) by 50 basis points, when inflation was nowhere near trending down and fuel price increases were still to be passed on. (The current repo rate is 7.5 percent, and it has already been cut twice this year. Most analysts expect another 50-75 basis points cut in calender 2013.)

It is only now, after the fiscal correction has begun to take place under P Chidambaram, that WPI seems on the right trajectory. But this presents Subbarao with a different problem: is he following the right inflation index to really assume that inflation is headed south in a sustainable basis?

Monday 29 April 2013

Morning Bells (30 Apr 13)

Good Morning Friends.

Thought of the Day - Problem means absence of ideas but not absence of solutions.

Y’day I was expecting a small dip but exactly that time HUL came up with above expectation no. and market moved up.

After pausing on Friday, the indices resumed their upswing today. This time around the rally was led by FMCG major Hindustan Unilever (HUL). The index heavyweight shot up over 6.5% after the company posted a 15% year-on-year increase in its Q4 FY13 net profit at Rs7.87bn versus IIFL's estimates of Rs7.60bn. Sales rose 10.4% to Rs63.67bn in the quarter under review as against estimates of Rs62.5bn.

Gainers –

HUL, Wipro, Hero Motocorp, Sterlite Industries and ITC, up between 2-7 percent.

Losers -

Jindal Steel, Coal India, Sun Pharma, HDFC and Tata Steel, down 1-4 percent.

Sectoral –

The consumer durables index was the top gainer, up 2.5%, followed by realty, power and IT up 1.6%, 1.1% and up 1.5% each. The metal index ended a tad weaker, down 0.9%.

Domestic Front –

Logjam to end on Tuesday –

The Opposition once again raised a ruckus on Monday over Chinese incursion and the Coalgate issue forcing the Parliament to be adjourned. Both the houses were adjourned just minutes after the day began.

The Parliament was first adjourned till noon and later till 2 pm even as opposition created a ruckus with BJP raising slogans: 'pradhan mantri isteefa do' and 'Koyley ki dalali hai puri congress kali hai.' CBI’s affidavit on the alleged coal allocation scam report is being cited as the reason for PM’s resignation.

However, the logjam ended after the Speaker Meira Kumar convened an all party meet in which it was decided that crucial Finance Bill will be tabled in the parliament tomorrow.

As Lok Sabha began the session on Monday, BJP members stormed the well of the house demanding the resignation of Prime Minister.

Petrol Prices to fall by 2.5Rs -

According to reports, OMCs may reduce petrol price by around Rs 2.50 a litre.

While Essar Oil is also planning to reduce diesel at its retail outlets by little over Rs 3 a litre.

The price of petrol has come down by Rs 4.65 a litre, to a little over Rs 66 in Delhi, says media report.

The revenue loss on diesel for OMCs is over Rs 4 a litre, while in case of PDS Kerosene and domestic LPG, under-recoveries for April remain at Rs 30.49 a litre and Rs 434.52 a cylinder, respectively, report said.

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 up 3.24% and ended at 14.33 against previous close of 13.88.

FNO PCR was 1.07 against previous close 1.05.

Indian Rupee – Rupee gain 15 paisa and was trading at 54.23 against its previous close of 54.38.

S&P 500 (US) was trading at 1596.28 up 14.04 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 – 5975 – 5947 – 5925 and Support – 5875 – 5847 – 5825 (Pivot 5897)

Opening – Seems on positive bias as results are coming good and also today participant will await Infra output data.

======================== 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 and book PP in the range of 302-305.

Tata Steel –

Tata Steel slipped in trade today after news emerged that the steel major had warned the British government of plans to shut down two research and development facilities in the country. It plans to shift these jobs overseas to countries like India which will result in 300-400 job cuts in the UK. The stock closed at Rs 302.4, down Rs 2.65 or 0.8%..

Hero MotoCorp -

Hero MotoCorp scrip accelerated on Monday on better-than-expected Q4 FY13 earnings. The scrip ended Monday up 2.7% at Rs 1640.

FT -

Financial Technologies closed higher on news that MCX Stock Exchange will introduce F&O trading on its flagship SX40 from May 15. The stock ended at Rs 842.15, up Rs 22.3 or 2.7%.

Hexaware Technologies -

Hexaware Q1 PAT stood at Rs792mn, up 19% QoQ.

While Q1 forex gains was at Rs22.5mn. Its Q1 sales was at Rs5.08bn.

“The Q-o-Q improvement in volume, utilization, onsite-offshore ratio enabled robust improvement in Gross Margin and Operating Margin. We expect margins to expand further in the coming quarter”, said Atul Nishar, Chairman, Hexaware Technologies Limited.