Financial Focus_Issue 5 | Volume 1

Financial focus Weekly Newsletter InFINeeti ISSUE 5

VOLU ME 1

20 13

 TOP STORIES….…........1  MARKET ACTIVTY  ECONOMICS

….....2

....... …... 3

 TERM OF THE WEEK  TRADING CALLS

….4

..…….5

Financial focus

A one stop guide to know about all the recent happenings in the finance world

TOP STORIES : INDIA 

MEGA DEAL:HOLCIM TO RAISE STAKE IN AMBUJA TO 61% Swiss cement giant, Holcim has decided to simplify structure of its Indian subsidiaries by increasing stake in Ambuja Cements from 50% to 61.39% and Ambuja, in turn will buy Holcim's stake in ACC. Post the deal Ambuja Cements will own 50.01% stake in ACC. In a statement, Holcim said it intends to streamline the ownership structure of its operations in order to strengthen the existing platform and create value for all stakeholders. The management stated both ACC & Ambuja Cements will remain separate entities post the deal.

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WHY WARREN BUFFETT, POSCO ARE GIVING UP ON INDIA? Warren Buffett, Wal-Mart Stores, ArcelorMittal and Posco are pulling back on investments in India that they had announced with great fanfare. What's scaring foreigners away? A rampant political dysfunction that has stopped India's progress cold. The problem is an Indian government that won’t get out of its own way. The long debate over foreign-investment limits says it all. In September 2012, Prime Minister Manmohan Singh’s government passed a law allowing big retailers to open stores directly in India, yet no one has

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RBI IMPOSES MORE CURBS ON GOLD IMPORTS On Monday, RBI released revised scheme for import of gold. More curbs on gold imports are likely to be announced in the coming days. RBI said at least 20% of the imported gold should be used for export only and should be kept in custom bonded warehouses. 80% of it must be used for entities in the jewellery business. The Apex Bank also said that the new gold import norms will not be applicable for SEZ units, trading houses. All auctions to be held under uniform price method. The new scheme rationalizes import of gold in any form or purity.

Financial focus Weekly Newsletter InFINeeti

TOP STORIES : WORLD 

JAPAN STARTING TO WIN FIGHT AGAINST DEFLATION, DATA SHOW According to statistics, the Bank of Japan is starting to make progress in its effort to end 20 years of deflation. Consumer prices rose in June at the fastest yearly pace since November 2008. A year-on-year gain in the consumer price index, which doesn't count highly volatile prices for food, was 0.4%. It was the first time consumer prices rose in 14 months. The Tokyo core CPI, seen as a good indicator of what will happen to prices across the country, rose 0.3 percent in July after a 0.2 percent increase in June, in line with market expectations

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ARGENTINA CHANGES APPROACH ON FOREIGN OIL INVESTMENT Rejecting its previously protectionist stance, Argentina is opening the Vaca Muerta shale oil and gas field to foreign companies to halt a decline of energy production.

Argentina has relaxed regulations to clear the way for a production contract worth $1.24 billion with U.S.-based Chevron. After years of nationalist rhetoric and protectionist policies, Argentina is seeking to lure foreign investment to its Vaca Muerta shale oil and gas field in an bid to jumpstart the country's energy sector and reverse a decline in output.

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CHINA MANUFACTURING ESTIMATE REVEALS SHARP DECLINE A gauge of China's manufacturing activity fell for the third consecutive month in July, reaching an 11-month low. HSBC said its flash China Manufacturing Purchasing Managers' Index "deteriorated at the fastest rate for almost a year in July, signaling one of the steepest downturns seen since the 2008-2009 financial crisis," including the sharpest drop in the employment sector in more than four years.

MARKET ACTIVITY 

ASIAN-PACIFIC MARKETS CLOSE MIXED, WITH JAPAN SLIDING Asian-Pacific markets ended the week mixed as a rising yen sent Japan's Nikkei 225 tumbling 3% on Friday. Hong Kong's Hang Seng Index rose 0.3%. Australia's S&P/ASX 200 edged up 0.1%. China's Shanghai Composite lost 0.5%. South Korea's Kospi rose 0.1%. India's Sensex was down 0.4%.

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SENSEX SNAPS 4-WEEK WINNING STREAK; PSU BANKS DRAG Sensex fell 56.57 pts. to end at 19748.19, Nifty at 5886.20, as PNB, SBI & BoI fell ahead of RBI policy. Disappointing earnings continued to hurt the market sentiment with the asset quality concerns impacting public sector lenders and reduction in discretionary spending pinching FMCG companies. (Friday— 26th July)

Financial focus Weekly Newsletter InFINeeti 

FOREX RESERVES TOUCH LOWEST LEVEL IN 3 YEARS TO REACH BELOW $280 BILLON Country’s forex reserves fell by almost $1 billion to reach the lowest level in last 3 years. Total forex reserves $279.2 billion for the week ended July 19, Reserve Bank of India (RBI) data showed on July 26th 2013. Last time forex reserves were at $278.2 billion in the week ended July 2, 2010. Rupee meanwhile ended at a bit stronger on friday to end at Rs 59.04 against the dollar compared to Thursday’s close of 59.11.

ECONOMICS 

U.S. AGENCY: WORLD SET TO USE 56% MORE ENERGY BY 2040 Driven largely by demand from China, India and other Asian countries, the world's consumption of energy will jump 56% by 2040, the U.S. Energy Information Administration said. "Rising prosperity in China and India is a major factor in the outlook for global energy demand," said EIA Administrator Adam Sieminski. "This will have a profound effect on the development of world energy markets."

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GM REPLACES TOYOTA AS WORLD'S TOP AUTOMAKER For the first time in six quarters, General Motors has outsold Toyota Motor.

GM sold 2.49 million vehicles in the second quarter, compared with Toyota's 2.48 million. GM also has reported Q2 earnings that top analysts' estimates.

Toyota’s decline in Japan car sales shows a rare weak spot for a company that’s forecasting its biggest profit in six years and whose stock has gained 54 percent this year

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ECB LIKELY IS FINISHED LOWERING RATES, ECONOMISTS SAY A poll of 70 economists indicates that the European Central Bank likely won't reduce interest rates further, but it could take other steps to bolster the economy. "Further ECB measures should concentrate on improving credit conditions in the peripheral *Eurozone+ countries," said Kristian Toedtmann, an economist at DekaBank. "These measures could be targeted at the *assetbacked securities+ market. But it is difficult to say what exactly the ECB could or will do." However, the survey was conducted before another one was released suggesting growth in the Eurozone private sector

DID YOU KNOW? Reliance Industries Ltd., one of India’s biggest conglomerates earned close to INR 8000 Crores only through its treasury operations in the last fiscal (How many companies will ever reach that turnover?).

It has cash reserves amounting to a whopping INR 83,000 Crores. The company’s treasury income accounted for 38% of its annual net profit in Financial Year - 2013

Financial focus Weekly Newsletter InFINeeti

Source : FLIP

Financial focus Weekly Newsletter InFINeeti

Avneet’s Call

Jubilant Foodworks Period

CMP

1 week

1150

Call Sell

Target 1076

Stop Loss 1200

SKS Microfinance Period

CMP

1 week

104

Call Buy

Target

Stop Loss

112

53.50

DrReddy’s Lab Period

CMP

1 week

2290

Call Buy

Target 2400

Stop Loss -

Last week FMCG stocks dragged the NIFTY lower by posting in line expected results. The stock last week touched 1200 despite the bearish mood in the market and lost the momentum by Friday. The stock is already on downtrend with RSI close to 55 and reversal in (12, 26) MACD is showing signs of weakness in the stock. Also the stock broke the first Fibonacci support of 1160. With Q1 results coming on Friday, we expect a short on the stock.

The stock closed above the 10 day moving average last Friday. By closing above the 10 day moving average the stock has broke the resistance level and 12 day MACD is showing signs of reversal by almost crossing 9 day MACD. With huge volumes last week and strong Q1 numbers, the stock is expected to touch 112-115 this week.

The stock is making new life time highs for the past month. They have launched the Alzheimer‟s Drug in US market on Saturday which would boost its revenue and results expected on Tuesday to be better than the last quarter. The US market is also expecting a good earnings season this week. We expect the stock to hit new highs. “The call is high risk & follows no technical indicator”.

Financial focus Weekly Newsletter InFINeeti

Bhushan’s Call

Dish TV has posted a net Q1 loss 30.4 cr, though the losses have been trimmed Y-o-Y, the stock can still see some pressure, owing to stressful margins. An engulfing Bearish pattern has been formed on the daily candlestick chart, and the downward momentum can take it to its strong support level of 47-48, and if it breaks this support, it may slide down further. Going forward it is a very good buy for long term when it starts realising the revenues earned from digitization, and it starts recovering its invest-

Dish TV Period

CMP

Call

1 week

52.50

Sell

Target 48.50

Stop Loss 54

HUL Period

CMP

1 week

660

Call

Target

Sell

620

Stop Loss 680

HUL has posted a sluggish growth in sales , with volume growth slowing at 4% from 6% Q-o-Q, and 9% Y-o-Y. The inclusion of stock in FTSE triggered it to go towards 725 levels, but with consumer demand slowing, the correction in FMCG space can be foreseen. The stock has formed a „Three Black Soldiers; Bearish pattern and it can recede back to its support level at 580. Also in F&O space there has been strong building in OI on short side, and the volumes are also higher on the decline . The downward trend will strengthen after it closes below its 20 DMA at 637.

Yes Bank Period

CMP

1 week

367.50

Call

Target

Buy

380

Stop Loss 350

Stock Name

Call

Target Price

Bajaj Auto

Buy

2050

BHEL

Sell

168

Maruti Suzuki

Sell

1390

Vijaya Bank

Sell

41

(Technical Call) The downward rally in Yes Bank seem to be exhausted as all the negative news regarding the recent RBI policies has been discounted. The results have been quite excellent with 38% in Net Profit, owing to higher interest income, robust loan growth and improved margins. It has formed a Hanging Man pattern on daily candlestick chart, and also RSI and Williams %R confirming the oversold levels. With market already forming an opinion of RBI not decreasing of rates on its policy announcement on 31 July, the downside is limited on this stock

TARGET HIT

Last Week’s Stock Calls that hit their target levels

Avneet Bhulania and Bhushan Kanathe are 2nd year students of IIFT (Kolkata campus) Disclaimer : InFINeeti and IIFT do not take any responsibility regarding the authenticity of above calls. Please consult your financial advisor before taking any investment decisions

InFINeeti Team Aakanksha Hajela Bhushan Kanathe Kunal Maheshwari Vaibhav Garg Md. Umair Ansari