Saturday, September 29, 2012

Weekly Review - 30.09.2012

Dear All,

As Expected Fiscal Deficit Alarm was sounded by Kelkar Panel Recommendations on Friday. The Report has warned the Government that fiscal deficit would reach 6.1 per cent of GDP against the Budget estimates of 5.1 per cent. It said the Budget had overestimated tax receipts by Rs 60,000 crore and underestimated subsidies by Rs 70,000 crore.

Following are some "Unbelievable Recommendations by the Committee.

> The panel wanted the government to increase the prices of food items sold through ration shops, every time the minimum support price is revised. Besides, it recommended removing the system of selling the sweetener through the ration shops.

> The Panel suggested immediately increasing the diesel prices by Rs four a litre, kerosene by Rs 2 a litre and LPG by Rs 50 per cylinder. These steps, would reduce under-recoveries of oil marketing companies by Rs 20,000 crore, it said. However, the government’s recent steps would themselves reduce underrecoveries by Rs 20,300 crore, according to estimates of analysts.

> The committee further recommended regular raising of diesel prices until it becomes completely deregulated, and keeping subsidy at affordable level on LPG and kerosene.

> The Kelkar panel fovoured a proposal to increase the MRP of Urea by 10 per cent during the first year with any further increase being limited to any increase in the pooled gas price and in fixed

>The report comes after Prime Minister Manmohan Singh unveiled a series of big-ticket reforms on Sept. 14 seen as key to reviving sluggish economic growth. It provided a sobering reminder of the challenges still facing the government.

> Singh, in a rare televised address last Friday, warned his countrymen that "money does not grow on trees" on the same day that his biggest ally quit the government in protest against the reforms, which included opening up the country's retail sector to foreign supermarkets.

>Failing to tackle the deficit means India could potentially face a worse situation than the balance-of-payments crisis in 1991, when the country was bailed out by the International Monetary Fund (IMF), the report said.

Mean while The government on Friday said the rupee could touch the 50-mark to a dollar in the next four months on the back of strong inflow of foreign currency.

Added more that appreciation of rupee would help cutting down the subsidy bill and cool down inflation, which stood at 7.55 per cent in August.

>>>NIFTY - Weekly Chart<<<
>Click the Chart to see it on full screen<
Nifty Weekly Chart - Seems to be Possible Double Top near 5735-40 level.

>>Nifty - Daily Chart<<
>Click the Chart to see it on full screen<
Nifty Daily Chart - Unable to cross the channel suggest end of sub wave 3 or c.

On Sep,26th IFCI started its fall on the Opening bell when Sebi has approved a proposed hike of the government's stake in IFCI Ltd to 55.57 per cent to make it a state-run company, without triggering an open offer for shares of public investors.

Unluckily I had a Call on IFCI to sell on 25th Sep,2012 below 31.30 (spot) - did not triggered and fell down sharply on the next day opening itself.

Meanwhile, Cabinet last month approved a proposal for conversion of debentures worth Rs 923 crore into shares of IFCI, following which the government’s stake in the financial institution would rise to 55.57 per cent, from a meagre 0.0000011 per cent currently.

So what's Wrong in SEBI's Order:-

IFCI investors are of the view that the conversion of debentures should be made at a price that is determined according to Sebi-mandated formula for preferential issues. This would ensure a fair deal for minority investors in the company. If debentures are converted at par, it erodes the value of small investors substantially
>Click the Chart to see it on full screen<

IFCI - Daily Chart shows a Head and Shoulder - I have earlier suggested last month in my Weekly Review that - Head Shoulder for a Target of 23-24. After hitting the Target, Price bounced back to touch the neck line as shown on chart. Now its time to fall once again.

>>>IGL - Indraprastha Gas Ltd <<<

"Natural gas prices must be determined by market forces," the 12th Five Year (2012-17) Plan document states.

After a tuff fight between PNGRB in SC and Delhi HC - its seems the war may end sooner, and allow IGL to fix its rates on own. As RIL also seeking an increase in Gas Price from Govt of India, it shows IGL may raise its price sooner with out any trouble may favour IGL in coming days to increase its revenue substantially.
>Click the Chart to see it on full screen<

IGL - Hourly Chart shows the Trend Line Break Out with Volume. Upmove Should continue as per Chart.

>Click the Chart to see it on full screen<
Whats the Latest News on Infy :- The Compnay considering giving wage hike to its employees in October this year. The extent of the hike could be in the range of 5-6%, according to sources in the company.

The decision on wage hike would be taken after the closure of the book next month. Infosys will announce its second quarter results for FY13 on 12 October.

In April this year, the company had decided to defer the annual wage hike citing uncertain business environment and slow growth. The company however had said that it would revisit the decision when the situation improves.

Which means the Cost for the company may increase substantially - during the time of poor business environment and may affect its revenue too.

Apart from News lets see what else left in Infy in coming days.

The rupee, Asia’s worst performing currency in the past six months, rose (appreciated) after the government allowed overseas retailers to invest in Asia’s third-largest economy and said foreign airlines can own minority stakes in local carriers. A stronger local currency hurts exporters because it reduces the value of repatriated earnings, Specifically IT Industry and Infosys in Particular.

Even though falling Western Nations and trouble in most of the Euro countries - sp far Infosys Profit not Hurt due to week Indian Rupee. The IT companies have gained a lot from the depreciation of the rupee recently.

But things have changed after latest Reforms form Govt. and Strength in Indian Rupee.

Every 1 percent movement in the Indian rupee against the U.S. dollar has an impact of about 50 basis points on Infosys’s operating margin, the company said in its annual report.

So lets see how Technically Infosys is going to be.

After a fall upto 2101 on 27th July,2012, INFY retraced till 61.8% of its previous high 2994 which I feel its an end of sub wave 2. The retrace was a-b-c as shown on above chart and a possible fall for sub wave 3 has already started. Break below 2520 may bring price upto 2440 which was my first Target.

But the fall may go deeper enough as I feel the Result won't cheers the Market and the guidance going to be too poor due to appreciating Indian Rupee.


Following is the Performance for the month end of September 28, 2012.

Wish You all a Very Happy Weekend. Cheers