MARKETS FOR 2-5-14

Nifty (6696) we said ‘next logical TGT and strong support zone is 6650’ the market unfolded as expected and saw the low at near our support of 6650 and closed in the red…technically the market is still weak but has seen at a crucial support and saw a technical bounce is not ruled out…

The support for Nifty is it 6650-6600 and the resistance to the up move at 6800- 6900-7000

HUNG VERDICT IN INDIAN ELECTIONS WOULD BE A DISASTER

A fragmented government of smaller parties will be the “biggest threat” to the country’s credit quality, according to international rating agency Moody’s.

“History has often revealed election outcomes to be quite different from poll data, and parliamentary arithmetic has resulted in coalition governments for about the last two decades,” the agency said in a note, adding that the Modi-led BJP is tipped to come to power according to many opinion polls.

“The biggest electoral threat to credit quality would be if a fragmented coalition of smaller parties without a common economic reform goals comes to power,” it added.

The emergence of such a fragmented government can provoke further capital flight, push borrowing costs, weaken the rupee, delay economic recovery and make fiscal consolidation more difficult, Moody’s said.

The markets have been joyously welcoming emergence of opinion polls showing a BJP victory over the past few months and rising in the expectation of a Modi government, even though the BJP has been opposing reform measures like FDI in organised retail.

“The BJP’s economic platform has emphasised increasing infrastructure investment and the share of manufacturing in GDP, and its candidate for Prime Minister Narendra Modi has a record of investment-friendly policies in the state he governed,” the Moody’s note said.

Meanwhile, in some positive news for the country, the rating agency today said the country’s vulnerability to a reduction in capital flows is limited due to low proportion of debt in foreign currencies and is also long term.

“While the country’s debt is far larger than Indonesia?s in GDP terms, the long maturity, which averages nine years, and the very low proportion denominated in foreign currency limits the country’s vulnerability to a reduction in capital inflows,” Moody’s said.

It also acknowledged the measures taken by the country to fight the rapid depreciation in the rupee in the aftermath of the US Fed’s announcement to taper its liquidity infusing asset buying programme.

THOUGHT FOR THE DAY

EASIER SAID THAN DONE

3 STAGES OF LIFE

HURDLE TO SUN PHARMA RANBAXY MERGER

The merger of Ranbaxy Laboratories with Sun Pharmaceuticals Industries has received a setback with the Andhra Pradesh high court asking both the BSE and the NSE to withhold their approval for the proposal as it hears a petition alleging insider trading in the Ranbaxy scrip.

The high court has issued orders to the stock exchanges to maintain interim status quo on the matter. It has also issued notices to the Securities and Exchange Board of India, the BSE, the NSE, Sun Pharma, Ranbaxy, Daiichi Sankyo and Silver Street Developers — a limited liability partnership firm having two Sun Pharma subsidiaries as partners.

“There shall be interim status quo, as prayed for,” Justice P. Naveen Rao said in his order.

This followed a writ petition filed by some individual investors alleging heavy trading in the Ranbaxy stock before the merger with Sun Pharma was announced on April 6.

The petitioners had requested the court to direct market regulator Sebi to investigate the insider trading of Ranbaxy shares and take appropriate action against Sun Pharma and Silver Street.

“We have not received any such communication. At Sun Pharma, we hold ourselves to the highest standards of corporate governance and business ethics. Our code of conduct serves as a compass that guide the actions of our employees and directors ensuring consistent and uncompromising integrity as we build trusted relationships around the world,” a spokesperson for Sun Pharma said.

“The matter related to the purchase of shares of Ranbaxy Laboratories does not violate insider trading rules. With regards to the petition filed, the matter is sub-judice and hence we cannot make specific comments but we would be taking appropriate action as advised by our legal counsel,” the spokesperson added.

The petitioners also requested the court to “restrain” the BSE and NSE from giving any clearance to the scheme of amalgamation or merger of the two drug makers.

“However, the extensive and sudden rise in the share price of Respondent 5 (Ranbaxy) prior to announcement of merger clearly demonstrates that certain persons had prior information about the said merger. Consequently the trading on the said shares amounts to violation of Sebi’s Insider Trading Regulations,” the petitioners alleged.

Sun Pharma had earlier denied insider trading charges against Silver Street Developers LLP — its wholly owned arm — in the $4-billion deal to acquire Ranbaxy.

Silverstreet Developers had bought Ranbaxy shares amounting to a 1.41 per cent stake by the end of December 2013. As on March 31, 2014, its holding stood at 1.64 per cent.

Mumbai-based Sun Pharma had on April 6 announced that it would fully acquire Ranbaxy in an all-stock transaction with a total equity value of $3.2 billion, along with debt of $800 million, taking the overall deal value to $4 billion.

MARKETS FOR 30-4-14

   Market Review for 30th April 2014     

Nifty (6715) we said ‘technically the market is still weak but a technical bounce back is not ruled out’ the market unfolded weak as expected…next logical TGT and strong support zone is 6650

The support for Nifty is it 6650 and the resistance to the up move at 6800- 6900-7000

VERY TRUE