March 01, 2012

Morning Be!!.....Sensex sheds over 200 points in early moning trade

Indian Market
The main Indian equity benchmarks have lost ground in early morning trade, as investors continue to react to dismal GDP report for the October-December quarter. Also weighing on the sentiment is weak global cues.

The BSE Sensex shed over 150 points on Thursday as investors shift their focus to a government share sale in Oil and Natural Gas Corp aiming to raise at least USD 2.5 billion.The offer, through a one-day auction, is expected see heavy bidding, including by foreign funds.

Global Market
On the global front, while the ECB’s second LTRO auction has seen robust demand, its counterpart across the Atlantic is not keen on additional stimulus. Federal Reserve Chairman Ben Bernanke has refused to play ball when it comes to QE3. He has not given any indication of further monetary support for the US economy.

The ECB allotted a larger-than-expected 529.5bn (US$713.4bn) in cheap loans to 800 euro area banks in its second-ever three-year long-term refinancing operation (LTRO). Economists had largely expected banks to take up a figure close to the 489bn allotted in the ECB's first three-year LTRO in December.

Banks receive three-year loans in return for collateral at a rate fixed to the ECB's refinance rate of 1%.

Asian markets have not received any boost from better-than-expected data on China's manufacturing PMI. Markets in China is trading mostly flat after two rival manufacturing PMI surveys sent conflicting signals on the health of the world's second-largest economy.

The GDP report was disappointing and it is high time the ‘powers that be’ in New Delhi came up with substantial dose of tonic for the Indian economy. Though external environment and RBI’s tightening have played a role in growth deceleration, policy inertia is as much to blame.

Technical Outlook
A close above 5300 for February has led to the confirmation of a breakout on Monthly candlestick chart. This has reinforced a bullish momentum in the Indian markets. Hence, 5300 is likely to emerge as a good support as it coincides with the trough of 'bullish harami' pattern. Some resistance is expected between 5500 and 5600 levels.

Today's Outlook
The Indian Markets could open flat to marginally in the negative territory and later on during the day the markets could remain range bound with a negative bias. Immediate resistances for the Nifty are at 5450-5500. Downside supports are at 5300-5268. Among the sectoral indices Oil & Gas, Metals and realty could witness correction.

Sources-IIFL, Moneycontrol

February 29, 2012

Morning Be!!........Sensex rises over 200 points in early trade

The frontline equity benchmarks have surged in early morning trade, with the BSE Sensex closing in on 18,000 milestone and the NSE Nifty surpassing 5450, on the back of all-round buying frenzy. This is the second straight day of strong gains for the Indian markets after falling for four successive sessions from 22nd Feb. to 27th Feb. The upbeat mood is a wee bit puzzling as macroeconomic situation remains precarious and the global backdrop too is not all that confidence inspiring.

After falling sharply on Monday, Indian markets witnessed a smart recovery on Tuesday. Broader markets outperformed the benchmarks led by a sharp spike in infrastructure and PSU banks.

While the BSE Sensex finally closed 285.37pts or 1.64% higher at 17,731.12, the Nifty gained 97.65pts or 1.85% to close at 5,378.85. Broad market indices too ended higher as the BSE Midcap and BSE Small Cap indices gained 3.40% and 2.78% respectively.

The Rupee helped by large gains in local stocks, robust capital inflows and easing demand for dollars from oil importers. Forex dealers said weak dollar overseas also aided the rupee sentiment.

The Indian Markets could open on a firm note, following positive global cues and consolidate at higher levels throughout the session. Immediate resistances for the Nifty are at 5450-5500. Downside supports are at 5300-5268. Among the sectoral indices, Realty, Capital Goods & Banks continue to look good and could outperform


February 28, 2012

Morning Be!!......frontline Indian equity benchmarks have opened with a gap, regaining some of the lost momentum after four straight days of losses

Indian Markets
As anticipated, the frontline Indian equity benchmarks have opened with a gap, regaining some of the lost momentum after four straight days of losses. So, the BSE Sensex is back above 17,500 and the NSE Nifty has reclaimed 5,300. The buying appears to be secular at the moment, with most index constituents and most sectoral indices on the BSE trading with a positive bias. The market breadth too is favourable for the bulls so far.

Markets began the week on a negative note as it witnessed the biggest one-day fall on Monday since September 2011 led by huge shorts build up and unwinding of long positions. UP election results expected on March 6 and spike in crude oil prices to 10-month high may also have deteriorated investors' sentiment.

While the BSE Sensex finally closed 477.82pts or 2.67% lower at 17,445.75, the Nifty lost 148.1pts or 2.73% to close at 5,281.2. Broad market indices too ended lower as the BSE Midcap and BSE Small Cap indices shed 3.02% and 3.26% respectively.

US Dollar appreciated by 0.6% vis-a-vis the Indian Rupee on Monday. The Rupee fell against the Dollar on the back of weak domestic equities that reached a three-and-a-half week low as concerns that rising oil prices may drag worldwide growth.

After a sharp slide yesterday, we expect the Indian Markets to open in the green. However, it is likely to face resistance at higher levels later during the day. Immediate support for Nifty is at 5230, while resistance is at 5370 levels. Among the sectoral indices, Realty & Metals look weak, while FMCG & Healthcare look good and could outperform.


February 27, 2012

If you have been left out!

The past few days when the stellar rally reached peaking levels, am sure there was a large section of people who has been feeling left out to make a quick 20% on their money and make a killing. The ideal utopian scenario or for someone who could see tomorrow, it could have been easy – enter equities in December and move out in February 2012; thus making a cool 20% and walking away, to put money in FD’s. If it were that simple, then we would have been out of business before I could have finished typing this.

But for those who have always felt that their timing skills are pathetic and that they end up losing almost each time they invest in equities, I guess is that over the next few weeks, their chance to enter and make money would be high. The only problem – which is as old as man himself is with an emotion called ‘Greed’ – he/she wants to almost always catch the peak and trough and proclaim that he is Buffet’s granddad.

But for this emotion, I think for that bunch of people who missed the bus in December 2011, chances are that he could have a chance to invest around those levels could come true. So fortune favors the brave, and one must remember that the bus timing are limited and you just cannot push your luck by skipping busses for the choicest of seats, just hop on to enjoy the ride.

Today’s session was akin to a mini sell off and now is on the back of EU nations still trying very hard to do everything possible to find a solution to the imbroglio. There are consequences for oneself and other on actions when each one of us is standing closely on a ramp and similarly whatever happens to EU in terms of QE3 and monetary easing would definitely impact us asset markets. As has been in the past, the driving force of our markets has been and would be (till the near future) foreign funds flows. The effect of huge fiscal stimulus would definitely impact our / global asset markets.

So while today’s session looks like we are going back to stone age, actually this might the umpteenth time that we are getting a fresh bus to board, but if we “assume” that this will keep happening forever, then we are just making an ‘ass’ of ‘u’ and ‘me’

So time not to fret, take a deep breath, close your eyes and take the plunge.

Morning Be!!.....Sensex has lost ~100 points while the NSE Nifty has dropped below 5400 in the early morning trade

Indian Markets
The main Indian stock indices have kicked off the new trading day and new week on a weak note, extending losses from the last week when the two frontline indices snapped a seven-session winning streak. The BSE Sensex has lost ~100 points while the NSE Nifty has dropped below 5400 in the early morning trade. The Sensex has fallen below the 18,000 mark on Friday.

NSE Nifty was quoting 5,410, down 18 points over the previous close. It has earlier touched a day’s high of 5,449 and a day’s low of 5,406. It opened at 5,448.

The BSE Mid-Cap index was trading down 0.33%, while BSE Small-Cap index was trading flat.

FMCG and Oil and Gas indices are the gainers.

HC, Metal, PSU, Consumer Durables, IT, Power,Auto, Bankex, Realty indices are the losers.

TCS, HDFC Bank, Coal India, ONGC, Sterlite Inds, ITC, Sun Pharma, HUL were among the notable leaders in the Sensex and the Nifty.

Infosys, Wipro, Reliance Infra, RPower, RCOM, DLF, ICICI Bank, M&M, Tata Motors, BHEL,L&T,Hero MotoCorp,Tata Steel,ICICI Bank,Hindalco Inds,SBI were among the notable losers in the Sensex and the Nifty.

The market breadth is weak as the Mid-Cap shares are under-performing the Large-Cap indices. Realty and Capital Goods indices are the biggest laggards so far (down 2-2.5%) followed by Consumer Durables, Banking, Power, Auto and Metals (down 1-2%).

FMCG and Oil & Gas indices are the leaders so far while Pharma, IT, Teck and PSU indices are marginally lower.

The Rupee ended below 49-mark at 48.93/94 - its three-week high level against the Dollar on sustained dollar selling by exporters and some banks.

Key events to watch for today
India IIP (Y-o-Y)

Today’s Outlook
Today, we expect the Indian Markets to open marginally lower and remain volatile in a range throughout the session. Immediate support for Nifty is at 5400, while resistance is at 5535 levels. Among the sectoral indices, Capital Goods & Realty look weak, while Metals & IT look good and could outperform.

February 24, 2012

Tax breaks for education loan & tuition fee!

Beyond the obvious benefits of good education, it also helps that the funds one deploys for education could actually help avail tax breaks. This not a much used avenue for saving taxes, primarily because of lack of awareness. Here is a brief on how one could use the education loan and tuition fee to reduce tax liability…

Education Loan – qualifies under section 80E
Apart from the home loan, this is another loan liability that provides tax breaks. However, do note that unlike the home loan where the entire EMI including both interest and principal would qualify for tax benefit, incase of the education loan, only the interest part would qualify as tax benefit. There is no maximum limit on the interest that one can claim.

The interest rate on educational loans would typically be slightly higher than that of the home loan and marginally lower than that of personal loan. The onus of repayment would lie on the student, and normally repayment will have to start within 6 months of placement or 1 year after completion of the course, whichever is earlier. One can claim the tax deduction for a period of 8 years’ from the year from which the loan repayment is initiated.

The scope of the deduction includes loan taken for the individual, spouse or children (assessee being legal guardian). From assessment year 2010-11, the Government has extended the benefit in Section 80E to all streams of studies including regular courses as well as vocational courses, pursued after passing the Senior Secondary Examination from a recognized Board. The course has to be a full

Morning Bell........NSE Nifty is back above the 5,500 mark after closing below it in the previous session.

Indian Market
The frontline Indian stock indices have posted decent gains in early morning trade, reversing two days of losses. The NSE Nifty is back above the 5,500 mark after closing below it in the previous session.

The market breadth is positive as the broader indices have resumed their upswing following a two-day pause. Most sectoral indices on the BSE are in the positive territory, led by Consumer Durables, Realty, Metals and Power indices. Teck, Capital Goods, Auto and PSU indices too are up smartly.

Citigroup is believed to have sold 145mn shares at ~Rs 670 per share.The block sale of HDFC shares is likely to fetch Citigroup ~US$2bn, according to reports. The stake sale in HDFC is part of the US bank's efforts to shore up its capital base to meet new global banking rules.

Global Market
Most Asian markets are trading higher, although not by a great deal, as investors cheered economic reports out of the US and Germany.

US stock indices managed moderate gains on Thursday, with the S&P 500 index ending near a 10-month high, as investors welcomed a couple of encouraging economic statistics.

European stock indices closed mixed as a downbeat growth outlook by the European Commission offset an upbeat reading on German business confidence.

coming back to India, the seven-week winning streak is under some threat after two relatively weak sessions. The main indices could close the week in red for the first time this year. It is not necessarily a bad thing. A pause is always healthy after such a rise. For those who missed the rally, such corrections could be a blessing in disguise.

The Indian market could consolidate in a sideways fashion in the near term. Most participants won’t want to take a chance in the run up to important domestic events next month. At the same time, uncertainties over the European debt crisis and geopolitical tensions persist.

Technical Outlook
A ‘doji’ like formation in Thursday's trading session indicates indecisiveness after a bearish engulfing pattern on Wednesday. Any upmove beyond 5570 has the potential to negate the bearish structure and reinforce bullish momentum. One should wait for a breakout above 5570 to initiate fresh long positions.

The Indian Rupee strengthened for a second day vis-a-vis the US Dollar as exchange data showed foreign investors stepped up purchases of the nation's bonds. Dollar inflows also supported the Indian currency, although traders said this was balanced by dollar demand from oil importers through much of the day.

Today’s Outlook
Today, the Indian Markets could open flat to marginally in the positive and remain volatile in a narrow range. We expect the market to witness resistance at higher levels and correct during the latter half of the session. On the downside, Nifty has a strong support at 5450, while the resistance is at 5535. Among the sectoral indices, Realty & Metals continue to look weak, while FMCG, Oil & Gas & Power could outperform.

Sources-IIFL, hdfcsec

February 23, 2012

Morning Bell.....Nifty opening below the 5500 level amid volatility

Indian Market

The Nifty was subdued in an early trade, opening below the 5500 level amid volatility. Consistent inflow of foreign money has been supporting the market whereas on other side, concerns like rising oil prices, disappointing economic data from major continents like US & Europe still weighed on the market.

The main Indian equity benchmarks have turned virtually flat after a positive opening, tracking weakness in most Asian markets. Markets in the US and Europe also ended in the red on Wednesday amid concern that the long-running debt crisis in the eurozone was having an adverse impact on the global economy.

Wednesday’s drop was only the second such fall this year. That goes to show the groove that the market is in, thanks largely to the liquidity deluge unleashed by global central banks. Wednesday’s provisional FII figure should provide some succor on the F&O expiry day.

Global Market
Doubts over the effectiveness of the second bailout for Greece is also acting as a dampener for the world equity markets following a strong start to the year. Fitch Ratings cut Greece's sovereign credit rating to C from CCC. The eurozone's composite PMI fell in February, raising the specter of recession. Europe and Greece may continue to be in the spotlight in the coming days as well.

Crude is at a nine-month peak while gold is at three-month high. The dollar is at seven-month high vs. the yen. We could see a choppy session with intraday gyrations possibly peaking in the afternoon.

Today’s Outlook
Today, the Indian Markets could open on a flat note and remain volatile in a narrow range. It might make an attempt to inch higher during the day, but is likely to find resistance at higher levels. On the downside, Nifty has a strong support at 5450. The immediate resistance for Nifty is at 5560. Among the sectoral indices, Auto, Realty, Capital Goods & Banks are looking weak and could underperform, while FMCG & Oil & Gas could outperform.
Sources-IIFL, hdfcsec, ET, moneycontrol

February 22, 2012

Morning Bell.......The Nifty has surpassed 5600, while the Sensex is near 18,500. Both the indices have rallied 18% YTD on the back of heavy FII inflows. Last year they lost 25% each.

Indian Market
The key Indian equity benchmarks have gained modestly in early minutes of trade, tracking a recovery in some Asian peers. The market breadth is favorable for the bulls as the broader indices too are up smartly. Most sectoral indices on the BSE are in the positive terrain.

A meaningful correction may have eluded us so far this year but could hit us anytime given that the market has entered the so-called overbought zone. The question troubling many participants is: how long can this liquidity-driven ‘risk on’ rally last? The Nifty has surpassed 5600, while the Sensex is near 18,500. Both the indices have rallied 18% YTD on the back of heavy FII inflows. Last year they lost ~25% each.

The MCX IPO launches today and will be open for three days. The issue is likely to receive very good response from all categories of investors. Whether the MCX IPO will revive the comatose primary market remains to be seen.

Sterlite Industries and Sesa Goa could be in the spotlight amid reports of Vedanta Group Plc mulling a merger of the two companies. Kingfisher Airlines has received a lifeline from SBI and thus could recover. RIL has announced a JV with Russia’s Sibur for butyl rubber.

Gujarat Pipavav and KSB Pumps will declare their results today.

Global Market
European indices fell despite Greece getting another rescue package. US benchmarks finished flat. Back home, retail level inflation is still elevated. Crude prices too remain uncomfortable. Liquidity continues to be tight, stoking speculation of another CRR cut in March. A rate cut may take a while to materialize. The Union Budget is another domestic event to look forward to in the coming days apart from the outcome of UP elections.

Technical Outlook
The earlier resistance of 5550 has now turned into a strong support for the Nifty. The current rally has the potential to stretch till 5700 in the coming days. Hence, we recommend adding long positions on every dip with a stop loss placed at 5550 on a closing basis.

Today’s Outlook
Today, the Indian Markets are likely to open marginally lower following negative Asian cues and than could remain range bound during the day. While the underlying trend is up profit booking during the day cannot be ruled out. The immediate support level to watch is 5550 while the immediate resistance levels to watch are 5660 and 5890. Among the sectoral indices, Realty and Consumer Durables appear strong and Health Care and IT appear weak.
Sources- hdfcsec,IIFL

Greek bailout dance!

Post the earnings for Q3 FY12 which has been decent to say the least; the action has now decisively shifted to Greece and what would happen with default or a bailout. In all likelihood, it looks like the EU prefers a bailout to a default and the flow of funds has morphed into a fountain of life (which flows perennially) in the European Union. The funny thing is that all of the asset managers who matter (read who influence the world markets) just go with the flow; which means that just like the YEN carry trade the same thing now is likely and is happening with the Euro. This Euro carry trade, it is estimated would happen at least over the next 4-6 months.
So when these taps of liquidity flow, they tend to go to the shallowest of corners of the plain; which means places like Asia where the engines are still hot and running.

An interesting piece that I keep following on a periodic basis is in the link above and this summarizes what is happening with the situation across the risk markets today. I found this piece very interesting. In summary, suffice to say that though we are doing excellent at this moment, we are not out of the woods yet. Far from it.

Finally, today’s session, was about higher ground and even more optimism and now actually bordering on “pushing the envelop” which is why getting too much carried away at this moment is a thing one should be very wary about. Though it appears that we are very close to the onset of a nice and steady bull rally, the “stars” are yet to align in a perfect setting for the same.