NIFTY OUTLOOK FOR 27th & REVIEW

CLOSING SESSION CRUCIAL

Nifty experienced one of the huge volatile sessions and closed nearly flat amid huge selling at higher levels and short covering at lower levels. Stop loss for Nifty may be maintained at  7250 (on close basis). While Global cues, Quarterly results   and  Funds flow  are expected to broadly guide the market movement, based on the present market position , market can be expected to  encounter selling at higher levels . Monday’s  trading range (being very wide), may be kept as reference for the rest of the week.

Nifty                               7359  -8

Review for Monday :: Roller Coaster Ride …Huge Selling at Higher Levels… !!!

Market gained smartly in the forenoon session and encountered huge selling in the Second half (between 2.15pm and 2.45pm) but recovered to close nearly flat for the day. However, huge selling has shattered the confidence of the traders / investors with bullish bent of mind. 32 of Nifty stocks ended in the red and broader market too was weak with Advance Decline ratio at about 1:1.8. IT and Auto indices were the lone gainers and Realty, PSU Bank, Energy, Media, Infra indices closed weak for the day. M&M, L&T, Tata Motors, contributed more than 20 points to Nifty’s gain while  Reliance, Sbi and HDFC    dragged down by about 15 points.

M&M, SSLT, HCL Tech, Wipro   remained major gainers  among Nifty stocks while DLF, BHEL, IDFC, Bank of Baroda   remained   losers.

 M&M, SAIL, Wipro, HCL Tech, SSLT     remained major  gainers  among F&O stocks while HDIL, M&M Finance, JP Power, Adani Power, IB Realestate  declined among F&O stocks.

RPOFIT MARGIN FALLS ASS DEMAND DECLINES

'Poor demand shaves off top cos' profit;margin by 37% in FY14' Mumbai, May 23 (PTI) India Inc witnessed a massive 37.4 per cent drop in profit growth and narrowing of margins in FY'14 due to muted investments and lower demand, says a report by Care Ratings. Net profit of 880 companies, excluding SBI (which reported its numbers earlier in the day), was up by 8.2 per cent in the recently concluded FY14, down 37.4 per cent, as against the 13.1 per cent achieved in the previous fiscal, it said in a note today. Net profit margins narrowed moderately to 9.5 per cent, as against 9.8 per cent in the previous fiscal. Net sales increased 12 per cent as against 15.3 per cent in the year-ago period, it said. "The deterioration in the overall performance has been the outcome of muted investment and lower market demand... corporate performance during the year was affected by the muted pace of economic growth." the agency said. The government expects the economy to grow below 5 per cent mark in FY14, up from the revised number of 4.5 per cent in FY13. A slew of reasons, including an alleged inaction of the then government on policy front, slowdown in the global markets and high interest rates have been blamed for the slowdown in the economic growth to under 5 per cent. On the expenses side, it said the total expenditure by 880 companies was up 11.4 per cent in 2013-14 as against 14.5 per cent in the previous fiscal. The softening in rates got reflected in the interest expenses as well, it said, adding growth on this front dipped to 17 per cent from the 27.3 per cent in FY'13. With worries over asset quality due to gloomy economic environment dominating the discourse in banking sector, the Care Ratings note said there was a 37 per cent rise in provisions and contingencies by lenders.

VEGGIE PRICES DEFFERENCE 49%

Difference between wholesale and retail prices of essential vegetables, like onion and potato, went up beyond 49 per cent during 2013-14, a study said.
The difference underscores the widening gaps between the prices at which procurement is done from farmers and the price level for consumers, the Assocham study said.
Majority of Indian retailers, it said are selling vegetables at prices which are significantly higher than the wholesale price index (WPI).
"Normally, the difference between wholesale price (WSP) and retail prices on an average stays around 30 per cent and it has been much more as seen in the findings of paper," the chamber said.
It further said that WSP benefited multiple times middlemen and traders, particularly for sale of essential commodities and worst hit in the process remained farmer and consumer as farmers margins squeezed badly with consumers paying unreasonably higher prices.
"Due to difference in both prices of wholesale and retail prices, the extra amount which end consumers are paying for vegetables is utterly disproportionate," it added.
The study, Assocham said considered 33 market centers in India including Abohar, Bhubaneshwar, Chandigarh, Chennai, Delhi, Guwahati, Jammu and Trivendrum.
Out of 33 centers, nearly 18 centers are charging more than all India average retail prices and wholesale prices, the study said.
The essential vegetables incorporated in the study include bitter gourd, brinjal, cabbage, garlic, onion, peas and potato.

FURTHER UPSIDE IN INDIAN MARKETS

After staging impressive rallies in the run-up to elections, Indian stocks and the rupee have scope for further upside, said a report by Goldman Sachs. "The general elections in India resulted in an unequivocal verdict in favour of the opposition BJP, and there is substantial momentum behind the prospects for economic reform. "Expectations of a market-friendly outcome have seen Indian equities, the INR and INR swaps rally - and the key question now is whether these moves can extend. Our general answer to that question is a qualified 'yes'...." Goldman Sachs said in a research note. Indian equities, rupee and rupee-swaps have all seen rallies of varying intensity in anticipation of a reformist government and post elections these moves are likely to extend further, it said.
Though the large Parliamentary majority will allow the new government to undertake previously stalled reforms, transplanting the model of effective administration from Gujarat to the national level, where there are many more disparate constituencies and vested interests, is likely to take some time, the report said.
Year-to-date, India has been one of the best-performing emerging equity markets. The 50-share index NSE Nifty is up almost 15 per cent in the local currency, with about half of that return coming in the last couple of weeks as optimism around the election results built. After staging impressive rallies in the run-up to election, the BSE benchmark Sensex briefly breached the crucial 25,000-mark on May 16, the day votes were counted. The index in its last trade had recorded its historic closing high of 24,693.35. On rupee, the report said, it is likely to remain "steady" as positive policy dynamics and capital inflows push the currency stronger, but the RBI is likely to resist too much spot appreciation. The local currency had strengthened to its 11-month high of 58-level last week. Goldman Sachs Asian Equity Strategists have maintained their overweight stance on India within the Asia-Pacific (ex- Japan) region and have raised their 12-month Nifty target to 8,300, implying about 15 per cent upside from current levels.
According to Goldman Sachs, the rupee is likely to be around 58.5/USD in the next three months, 61/USD in next six months and 63 in next 12 months time. The report further noted a clear mandate for the BJP has rekindled hope for structural reforms and better investment climate and the country's growth is likely to accelerate to 6.5 per cent in FY16. 

FOREIGN INVESTORS TO POUR 60 BILLION DOLLARS IN INDIA EQUITIES

Foreign investment inflows are estimated to more than double to USD 60 billion level this fiscal as overseas investors repose confidence in Narendra Modi-led government that is expected to unleash big-bang reforms to reboot the economy, says an Assocham study. "Riding on huge expectations from the incoming Modi government, global investors are gung ho on the Indian economy which is expected to witness over 100 per cent increase in foreign investment inflows - both FDI and FIIs - to above USD 60 billion in the current financial year as against USD 29 billion during 2013-14," the study projected. The net foreign investment inflows, led by aggressive foreign institutional investors (FIIs) in the Indian equity and debt markets in 2014-15, are expected to even overtake the figure of USD 46.17 billion during fiscal 2012-13, one of the best years for overseas investment inflows, it estimated.
"The unfolding scenario also points to easing of prices and lowering of interest rates, the two major challenges that the Indian economy had been facing for some years now," Assocham President Rana Kapoor said.
However, the emerging situation will pose a new challenge to the Reserve Bank to deal as it will have to balance the rupee rate and inflation from the increased liquidity into the system.
The new Finance Minister and the RBI, thus, will have to be on the same page in dealing with this scenario which will see strengthening of Rupee and a further improvement on the current account balance, Assocham said.
In the current fiscal, the FII investment would remain more than the FDI inflows, Assocham said. The expectations are that FII investment in both debt and equity could exceed USD 35 billion while the FDI money could be above USD 25 billion. "If the Modi government is able to take some reforms- friendly measures along with taming inflation and earning goodwill of the people, the FDI will do a fast catch-up with the FIIs. The euphoria must be taken advantage of and things will move on from there," Kapoor said. Significantly, India will continue to outpace all other emerging economies in terms of FII inflows which would not be affected much by the tapering of the Quantitative Easing by the US Federal Reserve, the study found. Besides, as the new government goes about removing obstacles in investment, FDI is likely to pick up again in the key infrastructure areas of ports, airports, roads and energy, the study said. 

WEEKLY ASTRO GUIDE FOR NIFTY

CAUTION @ HIGHER LEVELS

(General outlook for the week 26.05.2014 to 30.05.2014)

 Planetary Position ::  During the current week Moon would be transiting  from Aswini in Aries to   Mrigasira in Gemini. .  Sun transits in Rohini  in  Taurus. .  Mercury transits  in Mrigasira in  Gemini.  Mars  transits in  Hastha  constellation in Virgo .  Saturn  in  Retrograde motion from  2^nd March till 20^th July and presently in  Visakha  constellation in  Taurus navamsa .  Jupiter transits in Punarvasu in Gemini and  in  Taurus Navamsa. Sun square Neptune and Mars after being Direct, in hard aspect to outer planets is another factor to consider for correction in markets. But in view of the upbeat sentiment in Indian markets, it is to be seen, how far this will occur.  Nifty’s monthly astro range is  the range between 21^st May and 23^rd May, 2014 and the high and Low during the above period was 7381 and 7207 and Nifty would be bullish above 7381 and bearish below 7207 and first upper side target is 7560. Caution at higher levels is advised.

Stock Specific Approach – Need of the hour

NIFTY::7367(+164)  

Nifty gained for the Third week and gained about 2% during the week. PSU Bank stocks were the major gainers during the week . Mid cap stocks too gained smartly and the midcap index rose nearly 15% during May. These developments show the expectations from this Government. Sectors which lagged behind during the last few years due to Government’s policies might  to do better (as Government is expected to address these issues and remove the bottlenecks. Going by Modi’s record in Gujarat, reform oriented, market friendly policies can be expected from this Government which would boost investment, employment etc., and create a congenial environment for business and Industry and as usual, Stock market started already discounting these factors  for the last Eight months. Once the Government is place, reform measures could be rolled out.

While Nifty had gained more than 2%, it could not go past the euphoric top of May 16^th. Market can be expected to consolidate after the steep rise of the past Three weeks. Hence, there is a possibility of side ways movement / minor correction after the 26^th, ie., Swearing in ceremony. Hence, traders need to be cautious at higher levels. However, investors need to buy in staggered manner in view of the promise that the market holds for future. Stock specific approach needs to be followed by investors.

\Cyclicals , rate sensitive and financials (which have been underdogs) could be preferred to exported oriented sectors such as IT, Pharma etc.,

Market is Bullish in all time frames i.e., Long term, Medium term and Short term. Key support levels for the above time frames are 6300, 6650 and 7200 respectively. In case Nifty closes below 7200 in first half of the week and below 7300 in Second half of the week, short term reversal would be in place.

Sectoral rotation has become order of the day and different sectors should be tracked to discern individual stock trends.   Investors need to accumulate quality stocks while traders need to be ever vigilant. However, any sharp fall for any reason would be an opportunity to Buy for Medium / Long term.

Nifty continues to be above 200 DMA and 50 DMA too is above 200 DMA suggesting that the long term bullish trend is intact.  Even with the recent  rise, Nifty is quoting at a PE of above 20 , which is about 12% above the long term PE multiple.  Hence, further upside (upto 8000 to 8500) is possible  in view of the  stable and performing Government  at the centre as earnings go up over the time in an inflation ridden economy and further upbeat sentiment can fuel the indices as market are usually irrational and emotional. As a very stable and proactive Government is being formed, market can be expected to go up further over medium / long term.

 

Further, Nifty had been trading in a range of 4600 to 6300 for more than 4 years and  a  powerful breakout has taken place  for an initial target of about 8000 / 8500. Hence strong long term support would be around 6300 level and Medium term support is 6650 and for short term support is 7200.  

For the coming week, Nifty spot is expected to face resistance at
7455,  7540, 7620 and find support at 7285, 7190, 7110.

Nifty is in short term bullishness with and immediate stop loss is 7200 in first half of the week and 7300 in Second half of the week.

Advice for Traders :: Caution is advised at higher levels. In case Nifty closes below the Weekly open level, long positions may be avoided. Risky traders can consider short positions in case Nifyt closes below 7200 or below weekly open level with the high level till then as strict stop loss. Immediate stop loss for Nifty is 7200.

INDIVIDUAL SPENDING ABROAD MAY BE HIKED

Giving more freedom to individuals travelling abroad, they may soon be allowed to spend USD 2 lakh overseas in a year as against the present ceiling of USD 75,000. "The RBI may eventually reverse all measure taken to contain CAD and currency fluctuation in July-August last year," a Finance Ministry official said. The central bank could raise the limit sometime this year based on its assessment of the external sector, the official said. As part of restrictions imposed in August last year to contain burgeoning current account deficit (CAD), the Reserve Bank had lowered the outward remittance limit to USD 75,000 in a financial year for any permitted current or capital account transaction or a combination of both. The CAD had touched a record high of USD 88.2 billion or 4.8 per cent of GDP in 2012-13. It, however, is estimated to have come down to below USD 32 billion or 1.7 per cent of GDP in 2013-14.
The rupee has strengthened to sub-59 level against dollar from a high of nearly 68.85 in August 2013. This remittance limit was allowed under the condition that the fund should not be used for acquisition of immovable property, directly or indirectly, outside India. Resident individuals were allowed to use this limit for setting up joint ventures (JV) or wholly-owned subsidiaries outside India. Last week, the Reserve Bank of India (RBI) had eased gold import norms by allowing select trading houses, in addition to already permitted banks, to procure the precious metal to boost exports. The central bank had tied imports with exports and prescribed a 20:80 formula. This facility was available to select banks only and other entities were barred from importing the metal.
The RBI in July last year had imposed severe restrictions on gold imports in order to check burgeoning current account deficit and sliding rupee.

NIFTY OUTLOOK FOR 26th & REVIEW

CAUTION @ HIGHER LEVELS

Inputs by

Dr.Bhuvanagiri Amaranatha Sastry

Astro Technical Analyst

Saketha Consultants, Hyderabad

sastry.saaketa@gmail.com

09848014561

http://www.saaketa.com/AstroTechnicals.aspx

Week closed at the highest level and Nifty gained about 1.50% to close above 7350. Stop loss for Nifty may be enhanced to  7250 (on close basis). While Global cues, Quarterly results   and  Funds flow  are expected to broadly guide the market movement, based on the present market position , market can be expected to  be cautiously optimistic ahead of Swearing in ceremony. However, in view of the steep rise, caution is advised at higher levels.

Nifty                               7367  +91

Review for Friday  :: PSU Banks in limelight… !!!

After being positive in the opening hour, all the gains got eroded by noon and picked up thereafter to close at the highest levels with a gain of about 1.50%. PSU Bank stocks were the star performners as SBI rose nearly 10% and PSU Bank index clocked in a gain of more than 8%. 36 of Nifty stocks gained and broader market too was bullish with Advance Decline ratio of 2.25:1. PSU Bank, Infra, Energy, Metal, Realty and Auto indices gained smartly while FMCG and Media indices declined. SBI, Reliance, ONGC, contributed more than 40 points to Nifty’s gain while ITC and HDFC Bank    dragged down by about 15 points.

 

SBI, Tata Power, Jindal Steel, PNB, MAruti   remained major gainers  among Nifty stocks while Hindalco, Kotak Bank, HDFC Bank, Infy and Indusind Bank   remained   losers.

  

Ashok Leyland,, Canara Bank, Jain Irrigation, Syndicate Bank,     remained major  gainers  among F&O stocks while IB Realestate, Mc Leod , Sun TV, Shriram Transport, Apollo Tyres  declined among F&O stocks. 

NEW PEAKS 

Equity benchmarks Sensex and Nifty today galloped to new closing peaks, logging their best single-day rise in 10 days, boosted by spurt in shares of SBI after earnings and heavy buying in power sector on hopes of a big push under the incoming Narendra Modi-led government. The indices also logged third straight week of gains. Both Sensex and Nifty have gained 10 per cent in three weeks. The BSE Sensex today spurted by 319 points, or 1.31 per cent, to end at a new historic closing high of 24,693.35 supported by buying in banking, refinery, capital goods and auto counters amid firm global markets. The Sensex surpassed previous record closing of 24,376.88 reached on May 20. The 319-point rise was its best single-day gain since May 13, 2014 when it increased by 320 points. Similarly, wide-based 50-issue CNX Nifty of NSE flared up by 90.70 points, or 1.25 per cent, to end at new closing peak of 7,367.10. It crossed previous peak of 7,276.40 (May 22).

Country's largest bank SBI, was the top gainer from the Sensex pack with a rise of 9.69 per cent despite decline in the Q4 net profit but asset quality showed signs of improvement. "SBI reported healthy performance on the asset quality front while operating performance came ahead of our estimates," said Angel Broking. RIL, ONGC, L&T, HDFC, Maruti Suzuki, ICICI Bank, Sesa Sterlite and M&M were among the 22 Sensex gainers. Investors heavily bought into power stocks, including NTPC and Tata Power, on reports that Modi-led NDA government is likely to harness solar power and give a fillip to development of offshore wind energy. Adani Power, Reliance Power, Power Grid and JP Power also hogged the limelight. Jignesh Chaudhary, Head of Research, Veracity Broking Services said: "Local equities continued to trade strong. It is expected that the new government will form business friendly economic policies which will remove bottlenecks and will eventually help the economy to grow." A clear mandate for the BJP has rekindled hope for structural reforms and better investment climate and the country's growth is likely to accelerate to 6.5 per cent in FY16, a Goldman Sachs report said today. 

 726 stocks log fresh 52-week high

As many as 726 stocks today hit 52- week highs on the BSE as the benchmark index Sensex recorded a new closing peak on hopes of a big reforms push under the incoming Narendra Modi-led BJP government.
Some of the prominent ones were: Ashok Leyland, Bank of India, Canara Bank, GVK Power, HCL Infosystems, IOB, JSW Steel, Maruti Suzuki, MTNL, NHPC, NTPC, PNB, REC, Reliance Power, SBI, Tata Power, Tata Comm and TVS Motor.
The BSE Sensex spurted by 319 points, or 1.31 per cent, to end at a new historic closing high of 24,693.35.
The index surpassed its previous record closing of 24,376.88 reached on May 20.
Jignesh Chaudhary, Head of Research, Veracity Broking Services said: "Local equities continued to trade strong. It is expected that the new government will form business friendly economic policies which will remove bottlenecks and will eventually help the economy to grow."
Among the 30 Sensex stocks, 22 ended the day in green with SBI leading the chart.
Out of the 13 BSE sectoral indices, 11 ended the day in positive territory led by power index.
In all, 2,267 stocks advanced, while 912 declined.
"Amid volatility, the benchmarks were seen registering decent gains on Friday and ended close to the day's high. In absence of any major domestic cue, positive global market and better than expected result from the PSU banking major SBI, kept the sentiments on positive side," said Jayant Manglik, President-retail distribution, Religare Securities. 

GOLD Rs.24000/- BY DEEWALI

Following the Reserve Bank easing the 20:80 gold import norms, India Bullion & Jewellers Association (IBJA) today said gold prices are likely to fall to Rs 23,000-24,000 per 10 grams by Diwali as it also expects the Customs duty reduction in the forthcoming Budget. "RBI's easing of 20:80 gold import norms is positive for the gems and jewellery industry. We expect this will be followed by reduction of the Customs duty to 4-5 per cent from the current 10 per cent in the forthcoming Budget, resulting in declining of gold prices and (price) is likely to be at Rs 23,000-24,000 by Diwali," IBJA President Mohit Khamboj told reporters here. The yellow metal is likely to be on par with the global prices as the premiums will also go down due to the positive steps taken by the government, he said.
"It will also reduce the gold inflow through the grey market," he said. The RBI yesterday eased gold import norms by allowing select trading houses, in addition to some banks, to procure the precious metal to boost exports.
In July last year RBI had imposed severe restrictions on gold imports to check burgeoning current account deficit and depreciating rupee.
Under the 20:80 scheme an importer has to ensure that at least one-fifth, or 20 per cent, of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use.

eBAY ADVISE USERS TO CHANGE PASSWORD

The US e-commerce giant eBay has asked its about 145 million users to change passwords, following a cyberattack that compromised database containing encrypted passwords and other non-financial data. The US-based firm said though it has not found evidence of any compromises, changing passwords is a best practice and will help enhance security for eBay users. The database, which was compromised between late February and early March, included eBay customers' name, encrypted password, e-mail address, physical address, phone number and date of birth. "After conducting extensive tests on its networks, eBay has no evidence of the compromise resulting in an unauthorised activity for eBay users, and no evidence of any unauthorised access to financial or credit card information, which is stored separately in encrypted formats," it said in a statement. However, changing passwords is a best practice and will help enhance security for eBay users, it added. eBay further stated that it has found no evidence of unauthorised access or compromises to personal or financial information for PayPal users. "PayPal data is stored separately on a secure network, and all PayPal financial information is encrypted," it said. eBay users will be notified via email, site communications and other marketing channels to change their password. In addition to asking users to change their eBay password, the company has also urged users, who utilised the same password on other sites, to change those passwords too. Cyberattackers compromised a small number of employee log-in credentials, allowing unauthorised access to eBay's corporate network, the company said. It added that the compromised employee log-in credentials were first detected about two weeks ago. Extensive forensics subsequently identified the compromised eBay database. The company said it is working with law enforcement and leading security experts to aggressively investigate the matter and applying the best forensics tools and practices to protect customers. This is one of the largest data breaches witnessed over the last few years. Last year, software maker Adobe Systems was attacked by hackers resulting in about 152 million user accounts being compromised.

GOLD PRICE CRASHED TO Rs.28,550

Gold prices today plummeted by up to Rs 800, the biggest fall in a day this year, to 10-month low levels in major bullion markets of the country after RBI eased import restrictions on the precious metal.
In Delhi, gold prices plunged by Rs 800 to Rs 28,550 per 10 gram, the lowest level since August last year. In Mumbai, the price fell below the 28,000 mark dropping by Rs 780 to Rs 27,840 per 10 gram.
The precious metal dropped by Rs 800 to Rs 28,310 per 10 gram in Chennai, while it lost Rs 605 to trade at Rs 28,340 per 10 gram in Kolkata.
Traders attributed the sharp fall gold prices to RBI's decision to ease import restriction on the metal which triggered heavy sell-off by stockists. RBI allowed select trading houses, in addition to already permitted banks, to procure the precious metal to boost exports.
There are expectations that RBI's move would increase supplies and reduce prices in the domestic market, they said.
RBI in July last year had imposed severe restrictions on gold imports in order to check burgeoning current account deficit and sliding rupee. The central bank had tied imports with exports and prescribed a 20:80 formula. This facility was available to select banks only and other entities were barred from importing the metal.
A weakening trend in global markets, which normally sets price trend on the domestic front, too weighed on prices here.
The rupee today strengthened by 30 paise to close at over 11-month high of 58.47 against the US dollar. A stronger rupee makes imports cheaper.
Welcoming RBI's decision on easing the 20:80 gold import norms, the World Gold Council said this will help in increasing official supplies.
In futures, the June contract of the metal trading 0.66 per cent lower at Rs 27,190 per 10 grams after hitting a low of Rs 27,151 earlier in the day on the MCX.