Nifty end at near 8-month low

The BSE Sensex continued its losing streak for the sixth straight session on Tuesday, falling further by 41.84 points, on sustained selling by funds and retail investors coupled with weakening global markets. NSE Nifty fell for the seventh consecutive session today as the selling pressure continued but it defended 8000-mark. Healthcare, technology, capital goods and select oil stocks dragged while banks and metals stocks supported. The index declined 21.75 points to 8022.40, the lowest closing level since October 27, 2014. The 30-share BSE Sensex slipped 41.84 points to 26481.25. Even as the market continued to reel under pressure, there's no dearth of optimism. 

About 1058 shares advanced against 1580 shares declined on the Bombay Stock Exchange. Global cues were weak today. In Asia, Nikkei, Hang Seng and Shanghai lost 0.4-1.8 percent. European markets, too, were trading in the red.

Brokers said sustained selling by participants on prevailing drought fears and a weak trend in global markets amid concerns of an early interest rate hike by the US Fed after Friday's strong jobs report mainly dampened mood. 

Banks stocks gained after the RBI issued new strategic debt restructuring norms. ICICI Bank, Axis Bank and SBI gained 0.9-1.4 percent. Housing finance company HDFC also rose 0.9 percent. Commercial vehicle maker Tata Motors gained 1 percent. Diesel & Motor Engineering Plc (DIMO) together with Tata Motors today launched its two new cars, Zest and Bolt, for the Sri Lankan market. 

However, Cipla topped the selling list on Sensex, down 3 percent. Brokerage Bank of America Merrill Lynch feels the launch of asthma drug by Mylan in the UK is negative for Cipla because earlier the drug maker was expected to be the first company to launch this drug.Cairn India shares slid 4.46 per cent and Vedanta scrip gained around 3 per cent after the news that the oil and gas major is set to be merged with the metals giant. On the other hand, realty major Unitech declined 7.70 per cent after the national consumer court NCDRC ordered it to pay compensation for delayed delivery of flats to buyers.

Nestle India gained 7.5 percent after its Maggi noodles manufactured in India met Singapore's food safety standards. Shares of ITC, Sun Pharma, Dr Reddy’s Labs, ONGC and Wipro were other prominent losers, down 1-2 percent.

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HDFC board approves raising Rs 5000 cr via NCD

HDFC Board has approved raising Rs 5000 crore via non convertible debentures (NCD) along with warrants resulting in a 2.2 percent equity dilution. According to the sources, the approval to raise money is not for any immediate requirement but for any need that may arise in the coming two-three years.
Housing Development Finance Corp (HDFC) – the largest mortgage lender of the country today said its board has approved funding rising worth Rs 5,000 crore simultaneously by secured redeemable non-convertible debentures along with warrants.
The lender will seek shareholder’s approval in its annual general meeting (AGM) scheduled 28 July. The warrant holder will be entitled to exchange the warrants with the equity shares of HDFC at a premium and in line with present norms, the financier said in a notification to the exchanges. 

The maximum dilution that could take place in future, if all the warrants are exchanged into equity shares of the corporation, would be 2.2% of the expanded equity share capital,” HDFC said. The NCDs together with the warrants will be issued to qualified institutional buys, it further added.
According to sources familiar with the development, the funds will be used for making provision for deferred tax liability, financing business growth and also could be used to increase or retain current stake in HDFC Bank. HDFC’s stake in HDFC Bank – the second largest private sector bank -- has fallen to 21.7% from 22.5% after the latter’s qualified institutional placement.
HDFC will also have to entire provision for deferred tax liability over the next three years, -- 25% in the first two years and 50% in the third year.Proceeds would also be used to meet the regulatory requirement for providing for deferred tax liability, which has been eating into its profits. According to analyst there was a 7 percent impact because of this deferred tax liability provision

HDFC has three-year window to make provision of about Rs 2200 crore, which it plans to do in tranches. Another reason why it needs to raise money to make provisions is to maintain its capital adequacy ratio. Currently, HDFC’s Tier I capital stands at 12.3 percent which is expected to get eroded once it makes these provisions. Therefore, some of the proceeds from this NCD will also be used to bridge that gap too.

The outstanding loan book f HDFC grew by 16% in 2014-15 which stood at Rs 2.28 lakh crore compared with Rs 1.97 lakh core as on March of 2014, after taking into account the loans sold during the year.

In the upcoming AGM HDFC will get shareholder approval to raise the money in one-two year timeframe.

Stock update:IDEA (Idea Cellular) (Positional call)

About Idea Cellular:



Idea Cellular is an Aditya Birla Group Company, India's first truly multinational corporation. Idea is a pan-India integrated GSM operator offering 2G and 3G services, and has its own NLD and ILD operations, and ISP license. With revenue in excess of $4 billion; revenue market share of nearly 15%; and subscriber base of over 121 million in FY 2013, Idea is India’s 3rd largest mobile operator. Idea ranks among the Top 10 country operators in the world with a traffic of over 1.5 billion minutes a day.

 Idea’s robust pan-India coverage is built on a network of over 100,000 2G and 3G cell sites, spread across over 55,000 towns in India.

Using the latest in technology, Idea provides world-class service delivery through the most extensive network of customer touch points, comprising of nearly 4,500 exclusive Idea outlets, and over 7,000 call center seats. Idea’s customer service delivery platform is ISO 9001:2008 certified, making it the only operator in the country to have this standard certification for all 22 service areas and the corporate office. 

Idea has consistently stayed ahead of the industry in VLR reporting. Idea’s thought leadership on Mobile Number Portability (MNP) has enabled it to stay as the top gainer with highest net gain. Every 4th mobile user who exercises choice through MNP, prefers Idea.
It is listed on the BSE with a BSE Code of 532822 and the NSE with an NSE Code of IDEA.
Idea Cellular is an Aditya Birla Group Company, India's first truly multinational corporation. Idea is a pan-India integrated GSM operator offering 2G and 3G services, and has its own NLD and ILD operations, and ISP license. With revenue in excess of $4 billion; revenue market share of nearly 15%; and subscriber base of over 121 million in FY 2013, Idea is India’s 3rd largest mobile operator. Idea ranks among the Top 10 country operators in the world with a traffic of over 1.5 billion minutes a day.


BSE code for idea is 532822 and the NSE Code for idea is IDEA.

Latest announcement:


Idea Cellular gained 2.5 percent intraday Friday as the company has hiked 3G and 2G data tariffs rates in Delhi and NCR. The pre-paid customers in Delhi and NCR will now have to cough out more for using data as the company has increased rates by over 18 percent with effect from June 3. The company has made changes in most of the recharges and vouchers for 2G and 3G services. According to industry sources, the company also planned to increase the data tariffs in five-six more circles in the coming days. Idea Cellular is at a good support considering there is change in polarity at the strand line on the weekly charts.  
 

Idea Cellular pre-paid customers in Delhi and NCR will now have to cough out more for using data as the company has increased rates by over 18 per cent with effect from June 3. The company has made changes in most of the recharges and vouchers for 2G and 3G services. According to industry sources, the company also plans to increase the data tariffs in five-six more circles in the coming days. When asked to comment on the matter, the company did not reply. According to information taken from customer care of Idea Cellular, the company has increased 3G data tariffs by over 18 percent and 2G tariffs by 11 percent. A customer care executive said the 1 GB pack of 3G with a validity of 28 days will now come for Rs 295 compared with Rs 249 earlier, while a 1 GB, 2G data pack for will now come for Rs 195 with 28 days validity as against Rs 175 earlier. The company has also reduced validity of various packs. For instance, customers will now get a validity of 7 days with a recharge of Rs 247 for 1 GB, while earlier it used to cost Rs 249 with 28 days validity. Idea is the first telecom operator, which has increased data tariffs after the March spectrum auctions.

Read more at: http://www.moneycontrol.com/news/business/idea-hikes-prepaid-data-tariffs-by-18delhi_1399757.html?utm_source=ref_article

 Idea Cellular pre-paid customers in Delhi and NCR will now have to cough out more for using data as the company has increased rates by over 18 per cent with effect from June 3. The company has made changes in most of the recharges and vouchers for 2G and 3G services. According to industry sources, the company also plans to increase the data tariffs in five-six more circles in the coming days. When asked to comment on the matter, the company did not reply. 
According to information taken from customer care of Idea Cellular, the company has increased 3G data tariffs by over 18 percent and 2G tariffs by 11 percent. A customer care executive said the 1 GB pack of 3G with a validity of 28 days will now come for Rs 295 compared with Rs 249 earlier, while a 1 GB, 2G data pack for will now come for Rs 195 with 28 days validity as against Rs 175 earlier. The company has also reduced validity of various packs. For instance, customers will now get a validity of 7 days with a recharge of Rs 247 for 1 GB, while earlier it used to cost Rs 249 with 28 days validity. Idea is the first telecom operator, which has increased data tariffs after the March spectrum auctions.

Expected movement for this Month:

 BUY:

Idea Cellular was last traded at Rs 178.25, up 2.5%.It is good telecom stock to invest our money.Last Friday Open was 174.90 ,high was 179.15 and Friday close was 178.25.we can buy Idea at current market price (178.25). We can buy this stock when IDEA Equity crosses 175 level. Strong support is there for this stock. so my first target is 180.20 and second target is 181.32 (You can exit at this level). Finally my exit target for this month Buy is 183. So please buy 1 lot of idea future at current level and exit at 183.

 For small investor please buy IDEA 180 call option at 4.Target is 6.

Lot size of idea future is 2000.

SELL:

According to last month high and low, we can short this stock when it crosses 171.60.
 So my first target is 306.93, second target is 167.03 and exit target for short is 164.88.we can short the IDEA stock future at 171.60 level. Please find the below table.

 

The Reserve Bank of India (RBI) Policy Announcement

The Reserve Bank of India (RBI) cut interest rates for a third time this year on Tuesday, taking advantage of subdued inflation to give more support to an economy that many economists doubt is doing as well as latest impressive growth numbers suggest.

The RBI's quarter point reduction in the repo rate to 7.25 per cent was predicted by 35 of 48 analysts polled by Reuters. Previous cuts, in January and March, had also been by 25 basis points.

Home, auto and corporate loans are likely to cost less after RBI on Tuesday cut interest rate by 0.25 per cent for the third time this year to spur investment and growth but hinted there may not be any more cuts in the near-term sending stock markets into a tizzy.

The governor asked banks to follow suit and pass on the rate cuts -- 0.75 per cent since January to individual and corporate borrowers.

Most bankers felt that with today's rate cut RBI has provided space for lowering lending and deposit rates. Public sector Allahabad Bank became the first to reduce the lending rate by 0.3 per cent.

RBI cut the repo rate (short-term lending rate) from 7.5 per cent to 7.25, but left all other policy tools like cash reserve requirement unchanged at 4 per cent and Statutory Liquidity Ratio (SLR) at 21.5 per cent.

Rajan lowered projections of the economic growth as measured by GVA (gross value added) to 7.6 per cent from 7.8 per cent estimated in April due to global factors and likely impact of below normal monsoon.

At the same time, inflation still remains a worry for the central bank as it expects price rise to remain subdued till August before rising to 6 per cent by January 2016.

The other concern for the RBI is raising crude oil prices. Since the last policy in April, the crude oil prices have witnessed an increase of 9 per cent. Soon after the policy announcement, the BSE Sensex plunged by over 400 points. The markets, however, later recovered slightly.

The reduction showed policymakers recognized the need to put the economy on a sounder footing, regardless of data released on Friday that showed India outpaced China by growing 7.5 per cent in the March quarter.

Many economists, inside and outside the government, suspect a new way used to calculate gross domestic product has overstated how fast India is rising.

With low domestic capacity utilization, still mixed indicators of recovery, and subdued investment and credit growth, there is a case for a cut in the policy rate today the RBI said in a statement.

Still, the RBI did not take any new steps to free up cash-strapped commercial banks liquidity, which bankers had said were needed for them to lower lending rates further and pass on the benefits of monetary easing to the broader economy. Instead, the central bank urged lenders to lower their lending rates.

The RBI also warned it would closely track inflationary trends, citing risks posed to food prices if monsoon rains are weaker than expected, or global crude prices recover, or the rupee weakens due to volatility in global markets.

And RBI said that a more appropriate stance is to front-load a rate cut today and then wait for data that clarify uncertainty. Meanwhile banks should pass through the sequence of rate cuts into lending rates.

RBI Governor Raghuram Rajan said that monetary policy would continue to be data contingent, warning that a below normal monsoon, global crude prices and external sector risks pose a threat to inflation. The central bank projects inflation at around 6 percent by January 2016.

Today's decision by the Reserve Bank of India (RBI) to cut the repo rate for the third time this year is unlikely to be the last in the current loosening cycle.

Rajan reiterated that the government should avoid putting the burden on the central bank to revive the economy, which he believes is in a "slow recovery".

Gross domestic product (GDP) data out last week showed India's economy expanding 7.5 percent in the January-March period from the year-ago period.

However, nagging concerns remain over the government's new way of calculating its growth data and how the robust growth figures belie broad economic weaknesses.

The 3rd bi-monthly policy statement will be announced on August 4, 2015.