Monday 24 September 2012

Morning Bells (24 Sept 12)

Good Morning Friends,

Attitudes are like wrist watches… every watch show different time than others… and everyone thinks his watch is showing right time.

Sorry, Y'day around 9.45 night my MTNL net went down and was waiting till late night. Since all of my online resources got stuck and that's MB remained incomplete. I will try give you some clue shortly, till then please have patience and whatever I have, posting here.
Well, I hope last was good for most of you as bulls run has given good profit as well as chance to exit from long stuck positions.

So on Friday Nifty finished at its highest closing level in over fourteen-and-a-half months, it was a clear reaction to the reform measures announced by the Govt. As I was telling you since past 2 months that market is driving only on liquidity, my thought will remain same for few more time as the rally right now is more about liquidity and less about fundamentals. You will be surprised that in just three trading sessions i.e. Sept. 14-18, FII pumped in Rs 6262 Crore into Indian stock market.

Well to my sense after such a smart rally market (14 months high) market will take a back look sooner or later because it was an overreaction to reform announcement as fundamentals are still weak, IIP has been slowing down, inflation is not yet under control, oil prices are continue with rise, and corporate earnings will show effect of such fundamentals soon. So if time being trends persist, the market would be back to some extend in next couple of weeks.

I have one more strong reason for this back foot – As told many times, Govt. has announced FDI but reality is, it will take some time for the FDI policies in retail and aviation to bring in the much needed foreign capital. And the news of fuel hike on which market has reacted sharply i.e. hike in diesel prices and the cap on the number of cooking gas cylinders is not enough to meaningfully reduce the fuel subsidy bill.


MARKET OUTLOOK
Nifty reached in overbought zone, and that’s suggesting slightly cautious approach till expiry. But as said its bulls rally so don’t try to short on wild level else it will give you deep pain. Trend remains buy on dips on select stock basis. Now people are reshuffling their portfolio and that’s we have seen some stocks are not participating in market instead of big rally.

NIFTY
Nifty reached in overbought zone, and that’s suggesting slightly cautious approach till expiry. As I had informed you few days back that bull cementing the 5600 mark,  now it will act as strong support for bulls and strong resistance for bears.

PCR rose to 1.25 and India Vix 18.93. Resistance has come to Resistance 5748- 5806 – 5893 and Supports has come 5604 – 5517 - 5459. So close below 5459 will favour bears.

Trend remain buy on dips till 5459 is not broken on closing basis, it will be a trend changer signal.

Opening seems sedate with mildly negative outlook ahead of expiry, today market may remain under pressure and bull will try some positive move but still would suggest to go for cautious approach.

Today’s MG Mantra
So, as long as liquidity continues to pour in, fundamentals will have to take a backseat. So enjoy the ride with proper safety belts is the MG Mantra for next few sessions.



Have a Profitable day – MG


Disclaimer – I have shared my view as per my limited knowledge; please use your own skills before making a wise decision. 

44 comments:

  1. GM MG ji. Aaj ke liye koi options trade hai kya?

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  2. GM MG sir! Shud I book loss in Titan or keep holding. Was short @238. Thanks sir

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    Replies
    1. Hi, mkt in under pressure, wait and once it reached to ur buy level just keep strict SL of 2-3 rs.

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  3. GOOD MORNING MG SIR,
    Anything u can recommend today. Also would like ur views on whether its a good time to enter TM, Axis Bank, HDFC.
    Thanks

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    Replies
    1. As you all know I dont get impatience, rather than to make single run everytime sometime we need four or six too. Bank is good bat specially PSU.

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  4. Dear MG Sir,
    May i know your opinion on TM. I have 280 Put option. Actually i am waiting for 265 level. But no movement on either side. Need your help please.

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    Replies
    1. TM keep SL 282-284 range. mkt can go down few points so just waiting for right time.

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  5. GM Sir....good analogy.....waise last week ki tarah four aur sixer agar aa jaaye taab to singles run lena utna tempting bhi nhi hoti hai....:P:P:P

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  6. Analysts are betting a lot on Power Financing Companies!!!Your Views MG?

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    Replies
    1. I am not entering at the moment ahead of expiry... so for any outlook is not clear right now. Wait may be good.

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  7. Various Rating Agencies has cut India GDP to 5.5 from 6.5 including S&P, CRISIL, HSBC... S&P has also downgraded India outlook to Negative from Stable. So lets see how mkt reacts on it.

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    Replies
    1. it was in morning that market reacted on it after news came 5min after market opening,it fall sudden so dont know whether there will be any further impact of this news or no

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    2. NIFFTY will definitely go down by minimum 100 Points till expiry

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  8. Sir if the market falls what would be a good entry point for HDFC and mahindra.

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    Replies
    1. Mahindra not tracking at the moment, in fact out from Auto time being. Keep eye on NIfty levels suggested, that would be only good idea.

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  9. TM wont participate in bears move... so better keep strict SL for short or exit.

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    Replies
    1. any reason for this y its moving up

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    2. The main reason is portfolio reshuffling, second mkt not going down as per expectations so short cover taking place.

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    3. Why your name is not appearing here... its was 2-3 days back.

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    4. some gmail seting issue wil have check

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    5. Yes, Are you able to see ur name here or is it any prob with my end

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    6. Oh yes, now its showing Jai, thanks

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  10. One more interesting fact for all - I had bought 5600 PE (as was thinking to give a call on that but first I test it myself) at 12 when Nifty was +4 pts, now Nifty down 20 pts now anyone can check value CMP of 5600PE and think why is it so.

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    Replies
    1. Sir,is this because there is more number of call writers than put buyers????

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    2. I had bought at around 12.20 before EU as I was expecting EU in RED.

      Arka, - ye aane wale tufan ki chetawani he... bulls defending positive, a day before u were asking about premium crunch... same thing

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    3. while same time NIfty 57PE was around40 and now its 47.

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    4. hmmm..yes thats what actually I want to express.....that probably nifty is going down due to more number of call writers,who wants to eat the premium of 5600 call....so downside more likely till expiry,ryt Sir??

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    5. More chances it wont go down below 5600

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    6. Sir, now m confused....agaar toofan aanewala hai....and 5700 pe price is increasing then on what side toofan is coming??is it for upside or for downside???I mean I want to know your view(analysis)

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    7. Probably Nifty can stuck in the range say 5630-5730... will have a look in the eve. ad will express view in MB. Becoz both premium are on good discount 56PE & 58CE. Well it would be good for us.

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  11. One small question to clear my ignorance.When the Nifty is at 5600 odd levels and looks like its going down,why is the premiume rate for 5700 PE call is higher?And how is 5700 PE call relevant when Nifty is already below 5700?

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    Replies
    1. Prasadji,

      Actually all FNO has standard formula to calculate premium, so it all depends on how many days left for expiry and how much Nifty can run in this period (except sharp rally either side), that's if wud have noticed our 57CE made run of 8 times in a single day while today its down. Secondly premium difference is managed by big operators and according to balance for both same level PE & CE.

      When Nifty was at 5600 sentiment was not good and 5700 was seen as difficult, but as said in only 3 days FII pumped 6200 Cr. and that lifted the sentiment as well as index future value. Now it can shine if 2 days passes below 5700 mark. Like now ppl are selling 54 & 55 calls as now its almost clear that Nifty wont go down that much.

      Hope this will solve the purpose, else please come back again.

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    2. MY query was since Nifty is in 5600 range,5700 CE call should command a higher premium logically but there is no meaning of 5700 put call increasing in premium as Nifty is below 5700.Do these people expect Nifty to Cross 5700 and then go down?

      Secondly if Nifty stays below 5700 mat expiry,as per my understanding(Please correct me if I am wrong),all the premium is taken by the underwriters,so what do people gain by purchasing 5700 Put call when nifty is already below that value.

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    3. Dear Guru Prasadji,
      It took long to to guess what u exactly wanted to ask, Yes on logical part you are right, but as told many times most of things depend on sentiment and specially on how call writer are writing calls, if wud take a look on both 57PE & CE OI, PE OI decreased and volume also down, while CE OI reduced but volume increased which to my knowledge operators creating virtual strength.

      So probably to my view we we can have 2 options -
      1. Nifty can move to 57 mark or above, this way PE value will be reduced and then on expiry day it can fall to below 57
      OR
      2.we can have same session (todays) and can keep Nifty range bound i.e. around or below 57 mark, this way all nearby premium will be reduced aprx 40-50% and then last day it can make a move.

      All game is eat the premium and then make good profit through last day premium. Normally big call writer pay brokerage in penny, so it doesn't affect their earnings so normally also try to 1 or 2 Rs. premium too (beoz for them it counts in lacs)

      Well will get more clear view after finishing my MB late night.

      Most of times Expiry remains very tricky and it took too much time to make a good strategy to earn through it. Lets see what hapns.

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    4. Thanks mudraji for that patient reply!!!

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    5. See, mkt is just reacting as per our second option.

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  12. Dear Mudraji,
    Can you please suggest your view on Pantaloon?

    Also from above conversation, looking to buy couple of Nifty 4700PE tomorrow. Hope it is fine

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    Replies
    1. Hi Giri, lets mkt to finish its move either side, 57PE wont be good idea as per current situation. Pantaloon will have some move if mkt will support else wait is good. So just wait for MB tomorrow as today I didnt get reasonable time and half minded view can sometimes put us into trouble.

      Try to make single directional view, dont both 57PE and but on pantaloon.

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    2. This comment has been removed by the author.

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  13. Sure Mudraji,

    Then will wait for your Morning bells, and thanks a lot for your patience.

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