Morning Bells (25 Sept 12)

Good Morning Friends,

Never get discouraged, when your first few attempts fails, it’s often the last key in the bunch that opens the lock.

So much awaited profit booking taken place y’day, FMCG, Oil & Gas, PSU and Telecom stocks were among the top laggards but it was almost a dull session.

Market has also reacted on report of S&P Ratings, on Monday it has slashed India's GDP growth forecast to 5.5% from 6.5%, and CRISIL too had slashed its forecast for the country's GDP growth to 5.5% from 6.5% for the current fiscal year. HSBC has also cut its forecast for India's GDP growth in the current fiscal year.

S&P cut its outlook on India's sovereign rating of 'BBB-' to 'negative' from 'stable' in April this year. It had upgraded India to investment grade 'BBB' (Reports IndiaInfoline.com)

Well coming to home ground as informed on Friday that FM PC is set to announce few more policy measures, the day came y’day, TV reports flashed that Govt. has approved a bailout for cash-strapped power distributors, but details of the bailout package were not immediately available.

Power sector was dominated by years – on corruption, mismanagement have driven the power distributors. According to Govt. data power sector had accumulated Rs 92600 crore in losses by the end of the 2010/11 financial year. On the hope of bailout power sector stock gained y’day despite Nifty down.

Well why Govt. is announcing reforms & policy measures in hurry - It was quite necessary for Govt. to announce reform else possible downgrade in rating can increase borrowing cost and also repayment cost which could be another burden on Govt. and that’s UPA know it very well, no one would be able to handle the situation even if current govt. fall. Remember my line for next few year – we are gradually moving towards EU situation, not now but will take time if some export and production and macroeconomic condition is not get better in next few years. Middle class modern life style will be the main cause for that. Ofcourse corruption is no. 1.

Well come to current rally, the reforms announced so far are not enough, but it is a good start to at least gain some confidence in market. But to continue the momentum Govt. need to take some concrete steps on infrastructure and fiscal consolidation. Yes inflation and volatile political set-up are still two major concerns for India under current circumstances.

On Global front sentiment not seems good, Spain could go to the ECB for a bailout, Greece still tethering with the fact that it might exit and last but not least the worries of a slowdown in China.

MARKET OUTLOOK –

Well the current fact is that market forming base for bull cycle and if Nifty gets corrected here will be good sign to move above 6000 mark in next few months (except further political uncertainty). As suggested trend remain buy on dips till 5459 is not broken on closing basis, it will be a trend changer signal.

Regarding expiry I feel that the expiry could be between levels of 5,650 - 5700 - 5,730

NIFTY –

As told y’day Nifty has reached in overbought zone, and that’s had suggesting slightly cautious approach till expiry. Bulls have started rollover their longs for Oct. series. 15 Lacs share were added to 5800 CE and now 5800CE has highest OI, approx 4 Lac share were added to 6000CE which indicating tough time ahead for bears.

PCR 1.23 and India Vix 18.83. Resistance has come to Resistance 5700-5748- 5806 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 as most of global markets were down y’day, market may again remain under pressure and bull will give a try to close it around or above 5700 but still would suggest to go for cautious approach.

STOCK OUTLOOK -

FNO exclude –

From this week, 51 stocks will be excluded from the NSE derivatives segment, some of them - Aban Offshore, Bajaj Hindusthan, BF Utilities, BGR Energy, Core Education, Development Credit Bank, Educomp Solutions, Essar Oil, Hindustan Construction Co, Hindustan Oil Exploration, India Infoline, Indian Oil, Jet Airways, Lanco Infratech, MRPL, MTNL, OnMobile Global, Orchid Chemicals, Polaris Financial, Praj Industries, Rolta India, S. Kumars Nationwide, Shobha Developers, Tata Coffee, TTK Prestige, Videocon and VIP industries.

Brent crude oil –

Fell below USD 110 a barrel on Monday, dragged down by a firm dollar and worries over weak global economic growth after disappointing German data. Brent dropped 4.5 percent last week, while US crude lost 6.2 percent on demand worries and a pledge by Saudi Arabia to supply enough oil to the market to keep prices down.

Power Sector - Shares of Power Finance Corp. and Rural Electrification Corp. surged on Monday amid media reports to consider a bailout plan for the debt-laden power distribution companies.

FDI in Aviation –

Companies looking for FDI need to get clearance from the ministry and FIPB for it. Keep eye on KFA, Jet & Spice.

FDI in Retail -

Stocks will pickup with Nifty upmove.

Infra - Finance Minister P Chidambaram has proposed single window clearance under Prime Minister Manmohan Singh for infrastructure projects. Infra sector will remain in news for next few days.

CoalGate –

Various companies will be on investor’s fire, TV reports said y’day that now CBI to investigate Coal Allotment from 1996. Media reports also reported CBI probe for Jindal Steel & Power. Also keep eye on Coal India.

Banks – I see banks will perform good in near future ahead of CRR cut, drop in interest rate and festive season. One can keep eyes on SBI, Axis Bank & HDFC Bank look attractive, but one need to wait for Nifty settlement.

DiD – Stock will remain in news & on buyers RADAR - Hindustan Copper, Oil India, Nalco, Neyveli Lignite, MMTC and Rail India Technical and Economical Services (RITES) due to IPO planning.

Suzlon Energy - Company is into severe cash crunch, interest cost this company has not good, it paid around Rs 5 crore in the first quarter, operations have been pretty bad and there are no hopes of the operations being revived in the near future. - Rajesh Agarwal, Eastern Financiers, told CNBC TV18

OPEN CALLS –

Cox&Kings – Bought 138, TG 148, SL 121 (R 133 – 139 S 129 - 127)

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. So, don’t try to go short in excitement, first try to watch stock movement.

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.