Saturday, May 31, 2014

Weekly Review - 02.06.2014

Dear All,

GDP Vs MODI Vs RAJAN = ?!?!?!?!?

India's economic growth picked up marginally from a decade low in the fiscal year ended March, but pro-business Narendra Modi's thumping victory in the recent general election has stoked optimism of an investment-led turnaround in the coming quarters.

India's gross domestic product grew 4.7% in FY14, a notch higher than 4.5% in the year before, on account of the poor performance of manufacturing, mining and construction, an indication of weak investment activity. The last quarter of FY14 registered 4.6% growth, the same as in the third quarter, according to data released by the Central Statistics Office on Friday.

Against this, Finance Minister Arun Jaitley, entrusted with the job of reviving the economy by Modi, has to contend with a possibly weak monsoon and the central bank maintaining its focus on fighting inflation.The Reserve Bank of India will make its next monetary policy announcement on June 3. The manufacturing sector contracted by 0.7% in FY14, and is negative for the first time since 1991-92 when it shrank 2.4%, the year reforms were kicked off by former Prime Minister Manmohan Singh,who was finance minister at the time.

Rao of YES Bank, said, "We continue to expect that the economy bottomed out in FY14, with GDP growth likely to improve towards 5.4% in FY15. The strong election outcome has engendered expectations regarding reforms by the new government." Agriculture clocked an 11-quarter high growth of 6.3% growth in Q4 of 2013-14. "Growth has been supported by the farm sector and the good harvests in both the seasons...The question is whether we can sustain this high growth in FY15 on this base and the possibility of El Nino," said Madan Sabnavis, chief economist, CARE Ratings.

Rajan, who calls high inflation a "dangerous disease", won plaudits after he took office in September for arresting a rupee freefall and helping restore investor confidence that had all but evaporated under a lame-duck government led by the Congress party.

This month's decisive election win by the pro-growth Bharatiya Janata Party (BJP) shifts the power dynamics. Now, investors and voters are looking to Prime Minister Narendra Modi to stir India's economy from its prolonged torpor, putting Rajan and Modi on a collision course if inflation stays high.

"The Modi-Rajan equation reminds us of that between Volcker and Reagan, where it was a combination of the central banker's inflation-fighting cred and the latter's charismatic image," said Philippe Jauer, chief investment officer at fund manager Amundi Singapore. Paul Volcker was head of the U.S. Federal Reserve when Ronald Reagan was president in the 1980s.

For now, the RBI is expected to leave interest rates on hold at its policy review on Tuesday, but investors will be scouring Rajan's accompanying statement for clues to whether the new government's strong electoral mandate has changed his rate outlook.

Investors expect the next policy move will be a rate cut, but perhaps not before early next year.

Rajan and the new finance minister, Arun Jaitley, 62, a prominent corporate lawyer, held a meeting in New Delhi on Tuesday, but have not previously worked together.

Jaitley is not seen to be as hawkish as Rajan on inflation - a dynamic that is typical between central bankers and governments around the world and often leads to tension.

One senior finance ministry official who worked with Rajan and was part of the team that made a presentation this week to Jaitley said Rajan's initiative to set an inflation target based on CPI could create conflict if, as many expect, CPI rises in coming months.

"Rajan is ... making things difficult for the government by publicly speaking about RBI's stance on the CPI inflation. He would not find it easy to backtrack even if he wants to adjust with the new government," the official said.

However, he was uncharacteristically blunt on the subject of RBI independence in other recent remarks.

"I am happy to talk to the government, I am happy to listen to the government, but ultimately the interest rate that is set is set by me," he said at an event in St. Gallen, Switzerland.

"The government can fire me, but the government does not set monetary policy."

"The government and the central bank have both stressed the need to emphasise the need to bring down inflation, while respecting the fact that growth is very weak. You need to ensure through a variety of means we sustain the growth process," he said.

>>> Rupee Vs Dollar - Exclusive Chart <<<

>>> Click the chart to see on full screen <<<

Yes - This rupee Chart suggest - a clear upmove in Progress - Provided if there is a break out from the wedge as shown on chart - So if this analysis (count) is right - then expect a huge change in equity market as well.

So get ready for a big change every where. IT / Pharma and Other Export Oriented Stocks to zoom. Lets Wait and See.

>>> NIFTY - DAILY <<<

>> Click the chart to see on full screen <<<

Friday Bulls saved 15dma and managed to closed above it. Over all - Short Term trend looks down and bulls have a strong support at the channel top or 61.8% Golden ration as shown on chart.

>>> Nifty - Hourly <<<

>> Click the chart to see on full screen <<<

Hourly chart - Bear Cross suggest - more fall left. RSI also broken the trend line - Support line may enable bulls to regain strength.

>>> Bank Nifty - Hourly <<<

>> Click the chart to see on full screen <<<

Bank Nifty - As usual - like Nifty - more downside left - Can buy near the channel for a good upmove.

>>> Stock Performance of the Week <<<

>>> Canara Bank <<<

>> Click the chart to see on full screen <<<

Our Sell call on Canara Bank on 26th may - gave us a bumper profit of Rs.36000. So as per above chart - we still believe that more fall likely, as we shorted at 461 on monday and covered, stock continues to fall and closed at 415 on last friday.

>>> Hexaware <<<

>> Click the chart to see on full screen <<<

Hexaware - Our patience paid a profit of Rs.20,000. Hope for a good upmove in coming days also.

>>> INFY <<<

>> Click the chart to see on full screen <<<

We initiated Long and booked some part profit also, But later on friday - stock made a gap down followed by BG Srinivas Resignation who was a front runner for the post of CEO. So we discussed in detail about the stocks - below.

>>> DRREDDY - As Update on 28th May 2014<<<

>>> Click the chart to see on full screen <<<

Wrote to Buy DrReddy for a good Upmove. See what Happened.

>>> Happened <<<

>>> Click the chart to see on full screen <<<

Target achieved and made a good Profit. Cheers!!!

>>> ICICI Bank - As Updated on 27th May 2014 <<<

>>> Click the chart to see on full screen <<<

Told to short ICICI Bank on 27th May - as we expected a good fall. See what happened.

>>> Happened and yet to <<<

>>> Click the chart to see on full screen <<<

Yes we hold still with a part profit of Rs.7500. Now the support broken on friday shows more fall likely. Cheers!!!

>>> Performance <<<

>>> Click the image to see on full screen <<<

>>> INFY - Special Analysis <<<

Infosys president and board member B.G. Srinivas has resigned, the latest in a series of senior management exits at India’s second-largest software services exporter.

Srinivas’s resignation is effective from June 10, the company said in a statement to the exchanges.

Srinivas’s is the tenth top-level exit since Infosys brought back from retirement its founder N.R. Narayana Murthy to help revive the company in June last year.

Srinivas, who was Infosys's highest-paid executive, led key portfolios such as financial services, manufacturing and public services.

Infosys Executive Chairman N R Narayana Murthy on Friday said the departure of 10 senior executives was in the best interests of the city-based information technology company.

“As we embark on a newer and better horizon for our employees and our clients, we will see some transition in leadership,” Murthy said in an email to Infosys employees on Friday. “Please rest assured that the leadership changes take into account the best interests of the company.”

Srinivas is the 10th senior manager to quit Infosys since co-founder Murthy’s return to the company in June 2013. The company has seen the departures of board members Ashok Vemuri and V Balakrishnan, both regarded as CEO contenders. Infosys is also facing attrition at lower levels. The company’s attrition during January-March 2014 was at an all-time high of 18.1 per cent.

Srinivas’ departure has stoked worries among investors of a leadership vacuum at the Infosys. The company’s shares fell around eight per cent on Thursday. On Friday, they traded flat and ended up 0.6 per cent.

“BG’s departure raises Infosys’ risk profile even further,” said Peter Schumacher, founder of Germany-based Value Leadership Group.

Murthy reassured employees the company would continue to deliver on its commitments to its clients and staff. "We will endeavour to earn the respect and retain the goodwill of our clients, employees and investors," he added.

Murthy said the selection of a CEO for Infosys was as planned and an announcement would be made once it concluded. While the search was on, Murthy said, he along with Shibulal and executive vice-chairman S Gopalakrishnan would continue to steer the company.

So let see what the Technical Chart Says,

>>> Click the chart to see on full screen <<<

Infy - I hope If this analysis is right - then short term bounce expected from here onwards. Provided firday low 2895 looks very important.
A Break out above the wedge may trigger short covering and fresh buying also - Price may spike to move upward.
As Rupee chart attached above - may also help IT stocks - also if there is a clear announcement of next CEO - then stock may move up
Decide yourself and Buy. Enjoy. Cheers!!!