GOOD MORNING!!!
KEY BENCHMARK INDICES CUT LOSSES AFTER THE FINANCE MINISTRY'S ECONOMIC SURVEY FOR 2009-2010 TABLED IN THE PARLIAMENT YESTERDAY, PREDICTED THAT INDIA WOULD BOUNCE BACK TO A HIGH 9% GROWTH IN 2011-12 AND IS ON ITS WAY TO BECOMING THE WORLD'S FASTEST GROWING ECONOMY IN FOUR YEARS. MEANWHILE, THE LATEST DATA SHOWED A STRONG GROWTH IN THE INFRASTRUCTURE SECTOR IN THE MONTH OF JANUARY 2010. BUT WEAK GLOBAL STOCKS AND LOWER US INDEX FUTURES CAPPED THE RECOVERY. AUTO STOCKS WERE MIXED. CAPITAL GOODS AND REALTY STOCKS ROSE. BUT, INDEX HEAVYWEIGHT RELIANCE INDUSTRIES EDGED LOWER. THE ECONOMIC SURVEY SAID, THE BROAD BASED NATURE OF THE RECOVERY CREATES SCOPE FOR A GRADUAL ROLL BACK, IN DUE COURSE, OF SOME OF THE MEASURES UNDERTAKEN OVER THE LAST 15 TO 18 MONTHS TO PUT THE ECONOMY BACK ON THE GROWTH PATH. THE INFRASTRUCTURE SECTOR OUTPUT GREW 9.4% IN JANUARY 2010 FROM A YEAR EARLIER, HIGHER THAN AN UPWARDLY REVISED ANNUAL GROWTH OF 6.4% IN DECEMBER 2009, GOVERNMENT DATA SHOWED ON THURSDAY. DURING APRIL-JANUARY, THE FIRST 10 MONTHS OF THE 2009/10 FISCAL YEAR, OUTPUT ROSE 5.4% FROM 3% A YEAR AGO. THE INFRASTRUCTURE SECTOR ACCOUNTS FOR 26.7% OF INDIA'S INDUSTRIAL OUTPUT. THE MARKET BREADTH, INDICATING THE OVERALL HEALTH OF THE MARKET WAS NEGATIVE
BUDGET EXPECTATIONS:
AS FAR THE UNION BUDGET 2010-2011 IS CONCERNED, THE GOVERNMENT MAY ANNOUNCE INCREASE IN EXCISE DUTIES AS A FIRST STEP TOWARDS A GRADUAL WINDING DOWN OF FISCAL STIMULUS MEASURES. IT MAY ALSO RAISE THE SERVICE TAX RATE TO 12% FROM 10%. IT MAY BE RECALLED THAT THE GOVERNMENT HAD SLASHED THE CENTRAL VALUE ADDED TAX (CENVAT) RATE FOR EXCISE DUTY FROM 14% TO 8% IN TWO ROUNDS STARTING IN DECEMBER 2008. IT HAD ALSO CUT SERVICE TAX BY 2 PERCENTAGE POINTS. THESE REDUCTIONS WERE EFFECTED IN ORDER TO PROVIDE A STIMULUS TO DOMESTIC INDUSTRY. SINCE THE OVERALL PROSPECTS FOR GROWTH ARE MUCH BRIGHTER TODAY, THE FINANCE MINISTER MAY WITHDRAW A PART OF THE STIMULUS IN ORDER TO BOOST TAX REVENUE.
ANALYSTS AND ECONOMISTS EXPECT THE FINANCE MINISTER TO PROVIDE A ROAD MAP FOR THE INTRODUCTION OF THE KEY DIRECT AND INDIRECT TAX REFORMS VIZ. THE DIRECT TAX CODE (DTC) AND THE GOODS & SERVICES TAX (GST) IN THE BUDGET.
AS REGARDS UNION BUDGET 2010-2011, THE FINANCE MINISTER MAY GIVE INFRASTRUCTURE STATUS TO THE OIL & GAS SECTOR TO PROMOTE INVESTMENTS. THERE MAY BE TAX BENEFITS FOR CITY GAS DISTRIBUTION AND EXTENSION IN TAX HOLIDAY FOR NEW REFINERIES. HE MAY ALSO ANNOUNCE DECLARED GOODS STATUS TO THE NATURAL GAS. THE FINANCE MINISTER MAY ABOLISH SERVICE TAX ON EXPLORATION AND PRODUCTION ACTIVITIES.
THE GOVERNMENT IS WIDELY EXPECTED TO RAISE EXCISE DUTIES ON AUTOMOBILES IN UNION BUDGET 2010-2011 THIS WEEK. A HIKE IN EXCISE DUTY IN THE BUDGET WILL RAISE THE COST OF OWNING NEW VEHICLES. COUPLED WITH THE RECENT PRICE HIKES ACROSS SEGMENTS, AND THE PRICE INCREASES LIKELY IN APRIL 2010 ON ACCOUNT OF THE CHANGE IN EMISSION NORMS, THESE POTENTIAL PRICE INCREASES ON EXCISE DUTY INCREASE MAY DAMPEN DEMAND.
THE GOVERNMENT MAY LEVY CUSTOMS DUTY ON IMPORT OF EQUIPMENT FOR POWER PROJECTS IN THE UNION BUDGET 2010-11, WHICH MAY GIVE A FILLIP TO DOMESTIC MANUFACTURERS OF BOILERS, TURBINES AND GENERATORS. THE LEVY OF IMPORT DUTY ON EQUIPMENT FOR POWER PROJECTS WILL BENEFIT COMPANIES SUCH AS BHEL AND L&T.
INDUSTRY WATCHERS EXPECT THAT IN THE COMING BUDGET FINANCE MINISTER MAY INCREASE PRIORITY SECTOR HOUSING LOANS TO RS 30 LAKH FROM EXISTING RS 20 LAKH. THERE MAY BE A GREATER THRUST ON PUBLIC PRIVATE PARTNERSHIP (PPP) PROJECTS IN HOUSING. THERE MAY BE AN INCREASE IN ALLOTMENT TO THE RAJIV GANDHI AWAS YOJANA (SLUM REHABILITATION PROGRAMME). INCREASE IN TAX BREAKS PROVIDED TO HOUSING FINANCE AND INFRASTRUCTURE LENDING COMPANIES IS ALSO EXPECTED. THERE MAY BE A RE-INTRODUCTION OF TAX HOLIDAY FOR HOUSING PROJECTS UNDER SEC 80 IB (10). THE INCREASE IN INCOME TAX DEDUCTION UNDER SEC 80 C ON HOME LOAN PRINCIPAL RE-PAYMENT FROM RS 1 LAKH TO RS 2- 3 LAKH IS ALSO EXPECTED. UNITECH AND DLF WOULD BE THE CHIEF BENEFICIARIES IF THE GOVERNMENT PROVIDERS THRUST TO AFFORDABLE HOUSING PROJECTS IN THE UNION BUDGET 2010-11 NEXT WEEK.
TODAY MARKETS MAY OPEN FLAT AND WOULD BE HIGHLY VOLATILE DURING BUDGET SESSION AND FROM HERE ON WE MAY SEE A FRESH TREND INITIATING IN THE MARKET. GENERALLY THERE IS AROUND 8% MOVEMENT IN THE INDICES DURING BUDGET SESSION, WE EXPECT A VERY HIGH VOLATILITY TODAY. ONE SHOULD BE VERY SPECIFIC TOWARDS CHOOSING OF SECTORS FOR TRADING, SECTORS LOOKING GOOD FOR TRADING PERSPECTIVE FOR TODAY ARE INFRASTRUCTURE, EDUCATION, PHARMA MAY SEE GOOD MOVEMENT AND AUTOMOBILES LOOKING WEAK. IF NIFTY TRADES ABOVE 4870 THEN WE MAY LIKELY TO SEE NIFTY TO GO TO 4910 AND BREAK ABOVE THIS LEVEL WOULD TAKE NIFTY TO 4944 AND ANY CLOSE ABOVE 4944 IS CONSIDERED TO BE VERY BULLISH AND ON THE NEGATIVE SIDE IF NIFTY TRADES BELOW 4840 THEN LIKELY TO DIP TO 4800 AND BREAK BELOW THIS LEVEL WOULD TAKE NIFTY TO 4759 AND TRADE BELOW THIS LEVEL WOULD DRAG NIFTY TO 4700 SO ONE IS ADVISED TO TAKE SHORT POSITIONS IF IT TRADES BELOW 4760 ON POSITIONAL BASIS. STAY VERY CAUTIOUS AS MARKETS WOULD BE HIGHLY VOLATILE.
LONG STRADDLE: BUY 4900 CALL AND 4900 PUT IN THE OPENING AND HOLD THEM
BUY ICICI BANK SL 842 TGT 860/868/874
BUY EDUCOMP SL 670 TGT 700/724/746
BUY RANBAXY SL 449 TGT 458/462/465
BUDGET EXPECTATIONS:
AS FAR THE UNION BUDGET 2010-2011 IS CONCERNED, THE GOVERNMENT MAY ANNOUNCE INCREASE IN EXCISE DUTIES AS A FIRST STEP TOWARDS A GRADUAL WINDING DOWN OF FISCAL STIMULUS MEASURES. IT MAY ALSO RAISE THE SERVICE TAX RATE TO 12% FROM 10%. IT MAY BE RECALLED THAT THE GOVERNMENT HAD SLASHED THE CENTRAL VALUE ADDED TAX (CENVAT) RATE FOR EXCISE DUTY FROM 14% TO 8% IN TWO ROUNDS STARTING IN DECEMBER 2008. IT HAD ALSO CUT SERVICE TAX BY 2 PERCENTAGE POINTS. THESE REDUCTIONS WERE EFFECTED IN ORDER TO PROVIDE A STIMULUS TO DOMESTIC INDUSTRY. SINCE THE OVERALL PROSPECTS FOR GROWTH ARE MUCH BRIGHTER TODAY, THE FINANCE MINISTER MAY WITHDRAW A PART OF THE STIMULUS IN ORDER TO BOOST TAX REVENUE.
ANALYSTS AND ECONOMISTS EXPECT THE FINANCE MINISTER TO PROVIDE A ROAD MAP FOR THE INTRODUCTION OF THE KEY DIRECT AND INDIRECT TAX REFORMS VIZ. THE DIRECT TAX CODE (DTC) AND THE GOODS & SERVICES TAX (GST) IN THE BUDGET.
AS REGARDS UNION BUDGET 2010-2011, THE FINANCE MINISTER MAY GIVE INFRASTRUCTURE STATUS TO THE OIL & GAS SECTOR TO PROMOTE INVESTMENTS. THERE MAY BE TAX BENEFITS FOR CITY GAS DISTRIBUTION AND EXTENSION IN TAX HOLIDAY FOR NEW REFINERIES. HE MAY ALSO ANNOUNCE DECLARED GOODS STATUS TO THE NATURAL GAS. THE FINANCE MINISTER MAY ABOLISH SERVICE TAX ON EXPLORATION AND PRODUCTION ACTIVITIES.
THE GOVERNMENT IS WIDELY EXPECTED TO RAISE EXCISE DUTIES ON AUTOMOBILES IN UNION BUDGET 2010-2011 THIS WEEK. A HIKE IN EXCISE DUTY IN THE BUDGET WILL RAISE THE COST OF OWNING NEW VEHICLES. COUPLED WITH THE RECENT PRICE HIKES ACROSS SEGMENTS, AND THE PRICE INCREASES LIKELY IN APRIL 2010 ON ACCOUNT OF THE CHANGE IN EMISSION NORMS, THESE POTENTIAL PRICE INCREASES ON EXCISE DUTY INCREASE MAY DAMPEN DEMAND.
THE GOVERNMENT MAY LEVY CUSTOMS DUTY ON IMPORT OF EQUIPMENT FOR POWER PROJECTS IN THE UNION BUDGET 2010-11, WHICH MAY GIVE A FILLIP TO DOMESTIC MANUFACTURERS OF BOILERS, TURBINES AND GENERATORS. THE LEVY OF IMPORT DUTY ON EQUIPMENT FOR POWER PROJECTS WILL BENEFIT COMPANIES SUCH AS BHEL AND L&T.
INDUSTRY WATCHERS EXPECT THAT IN THE COMING BUDGET FINANCE MINISTER MAY INCREASE PRIORITY SECTOR HOUSING LOANS TO RS 30 LAKH FROM EXISTING RS 20 LAKH. THERE MAY BE A GREATER THRUST ON PUBLIC PRIVATE PARTNERSHIP (PPP) PROJECTS IN HOUSING. THERE MAY BE AN INCREASE IN ALLOTMENT TO THE RAJIV GANDHI AWAS YOJANA (SLUM REHABILITATION PROGRAMME). INCREASE IN TAX BREAKS PROVIDED TO HOUSING FINANCE AND INFRASTRUCTURE LENDING COMPANIES IS ALSO EXPECTED. THERE MAY BE A RE-INTRODUCTION OF TAX HOLIDAY FOR HOUSING PROJECTS UNDER SEC 80 IB (10). THE INCREASE IN INCOME TAX DEDUCTION UNDER SEC 80 C ON HOME LOAN PRINCIPAL RE-PAYMENT FROM RS 1 LAKH TO RS 2- 3 LAKH IS ALSO EXPECTED. UNITECH AND DLF WOULD BE THE CHIEF BENEFICIARIES IF THE GOVERNMENT PROVIDERS THRUST TO AFFORDABLE HOUSING PROJECTS IN THE UNION BUDGET 2010-11 NEXT WEEK.
TODAY MARKETS MAY OPEN FLAT AND WOULD BE HIGHLY VOLATILE DURING BUDGET SESSION AND FROM HERE ON WE MAY SEE A FRESH TREND INITIATING IN THE MARKET. GENERALLY THERE IS AROUND 8% MOVEMENT IN THE INDICES DURING BUDGET SESSION, WE EXPECT A VERY HIGH VOLATILITY TODAY. ONE SHOULD BE VERY SPECIFIC TOWARDS CHOOSING OF SECTORS FOR TRADING, SECTORS LOOKING GOOD FOR TRADING PERSPECTIVE FOR TODAY ARE INFRASTRUCTURE, EDUCATION, PHARMA MAY SEE GOOD MOVEMENT AND AUTOMOBILES LOOKING WEAK. IF NIFTY TRADES ABOVE 4870 THEN WE MAY LIKELY TO SEE NIFTY TO GO TO 4910 AND BREAK ABOVE THIS LEVEL WOULD TAKE NIFTY TO 4944 AND ANY CLOSE ABOVE 4944 IS CONSIDERED TO BE VERY BULLISH AND ON THE NEGATIVE SIDE IF NIFTY TRADES BELOW 4840 THEN LIKELY TO DIP TO 4800 AND BREAK BELOW THIS LEVEL WOULD TAKE NIFTY TO 4759 AND TRADE BELOW THIS LEVEL WOULD DRAG NIFTY TO 4700 SO ONE IS ADVISED TO TAKE SHORT POSITIONS IF IT TRADES BELOW 4760 ON POSITIONAL BASIS. STAY VERY CAUTIOUS AS MARKETS WOULD BE HIGHLY VOLATILE.
LONG STRADDLE: BUY 4900 CALL AND 4900 PUT IN THE OPENING AND HOLD THEM
BUY ICICI BANK SL 842 TGT 860/868/874
BUY EDUCOMP SL 670 TGT 700/724/746
BUY RANBAXY SL 449 TGT 458/462/465
