Morning Bells (15 Oct 12)

Good Morning Friends.

Every sunrise come up with opportunity while every sunset asks what we did with opportunities.

So friends, how was weekend. Market ended almost near day’s low on Friday, snapped a previous winning streak on profit booking. Also sentiment dampened on disappointing operating margins posted by IT bellwether Infosys with muted full-year constant currency guidance. And finally we had hope with Global cues but global markets were also not very supportive.

Well let start with fresh week, this week is full of thrill, as today Market is set to announce Inflation figure around 11AM, so market will face some volatility till no. announce, secondly two major player also set to announce their quarterly earnings which are Reliance Industries and Axix Bank.

Market Leader RIL is set to announce Q2 results, probably after market hours. Most of analysts on an average expect the profit after tax to fall by 6 percent Y-o-Y to Rs 5,365 crore in the second quarter. But the same is likely to grow by 20% QoQ. Net sales are seen going up by 2.9 percent QoQ and 20.3 percent YoY to Rs 94,500 crore in the Jul-Sept quarter of 2012.

The combined market valuation of top seven Sensex companies fell by Rs 39,787 crore last week, The market value of RIL decreased Rs 12,457 crore to Rs 2,64,957 crore, ONGC took the second biggest hit as its m-cap slipped Rs 8,470 crore to Rs 2,37,243 crore, Infosys, which declared its second quarter results on Friday, saw its market value plummeting Rs 7,595 crore to Rs 1,37,565 crore in the week. (Reports MoneyControl.com)

Beside all fears of profit booking and negativity in global market good news for Indian market is that since beginning of this month FII has pumped Rs 10,000 crore in the stock market so far enthused by reforms initiatives taken by the govt to boost economic growth and investor sentiment. During October 1-12, overseas investors were gross buyers of shares worth Rs 30,605 crore, while they sold equities amounting to Rs 20,223 crore - translating into net inflow of Rs 10,382 crore, as per data available with Sebi. And it is also believe and expect that the inflows to continue in the coming months.

The Govt. has also cleared a bulk of the 52 Oil and gas blocks that were stuck for defence and environmental clearances. Since 1999, NELP awarded 254 blocks to domestic and overseas explorers and 52 blocks were stuck for clearances, hurting the nation's plan to expedite exploration of oil and gas to cut its ballooning import bill.

"We have been clearing blocks and I believe only 11-12 blocks are pending for clearances now," Oil Secretary G C Chaturvedi said on Friday. India's crude oil import bill jumped 48% to Rs 672,220 crore in 2011-12.

The Foreign Investment Promotion Board (FIPB) is scheduled to be held on October 19, 2012 FIPB to consider 50 FDI proposals this week. While India allows FDI in most of the segments through automatic route, the FIPB clears those proposals which are related to sensitive sectors like defence and telecom. (Rreports MoneyControl.com)

On Global front Earnings season is heating up Central bank fuelled gains took markets within reach of five-year highs in September, but now US stock market participants are shifting their focus back to corporate outlooks, and the picture is not pretty.

IMF Managing Director Christine Lagarde, she said in IMF-World Bank Annual Meetings in Tokyo, “Global economic growth is being weighed down by uncertainty about whether policymakers will deliver on their policy commitments”, “We need action to lift the veil of uncertainty. Many of us have debated what actions are needed, many of us understand what needs to be done, but it actually needs to happen,” she added.

She just expressed the concern on what I am drawing your attention repeatedly since past 3 months.

MARKET OUTLOOK –

Reliance Industries will post earnings on Monday, while ITC and Tata Consultancy Services will announce results on Friday. Nifty managed to close above earlier breakout levels of 5630 levels and now this level remains key pivot point for current uptrend and a close below the same could lead to unwinding pressure.

Be careful around 11PM ahead of Inflation figure as market always reacts sharply and remain volatile for few minutes just hit your SLs.

NIFTY –

Disappointing Infy’s muted full-year constant currency guidance Nifty fell down 32 points and closed to 5756. On daily chart Nifty also seem to form HNS pattern, if it confirm in next 2-3 sessions then Nifty may go below 5600 level.

Well, FII bought 2292Cr in CM and sold 2091Cr net inflow 201Cr while DII bought 1172Cr. and sold 984 net inflows 188Cr.  as per data released by NSE.

Now on long side 5800CE & 5900CE have highest OI of 90Lac each with fresh addition of more than 7 lac in each while short side 5600PE & 5500PE has highest OI of 69 Lacs & 64 Lac respectively. 6000CE saw huge unwinding of 2.69 lac on Friday.

Vix remain unchanged to 16.49 and Nifty PCR is 0.93.

Resistance comes to 5715 – 5752 – 5779 - 5815 and Supports comes to 5648 – 5620 - 5582.

So once again it’s giving sense for choppy market as Inflation figure may remain high due increased fuel prices. Opening seems slightly on negative mark and market seems under pressure & volatile ahead of inflation figure as well as RIL results which also seems below expectation. So better to stay away today from trade till you do not get clear indication for market direction.

STOCK OUTLOOK -

(Stock outlook needs to watch stock movement carefully and then one can bet after having a look, I tried to put related info which can decide stock move either side.)

My top pick for next 3 months are – Cement, Infra & Banks – yes not blindly to any stock, in select good stocks only. (Yes need to wait for Nifty settlement)

Cement Sector –

Brokerage CLSA has upgraded the cement sector to overweight.

Realty Sector -

DLF - Hearing a public interest litigation (PIL) on the Robert Vadra matter, the Allahabad High Court has asked the Centre to respond to charges levelled against Vadra

Aviation Sector -

KFA – No buyer was there for long time or say since start of Oct. series, y’day rose as much as 4.8 percent, after data showed a series of block deals on Thursday.

Steel Sector –

India is the 4th largest steel producer in the world and will soon be the second largest, said Union Steel Minister, Beni Prasad Verma on addressing the 46th Annual Conference of World Steel Association here y’day. The capacity is all set to increase further as Steel plants in both public and private sectors have taken up expansion and modernization programs, added Mr. Verma.

Steel makers are likely to face margin pressure in the near-term even as raw material have eased, believes that the near-term margin outlook for Indian steel companies remains weak, notwithstanding some moderation in raw material prices recently, As a result of the downward journey of steel prices, the imports of steel surged in current year exerting significant pressure on domestic steel prices, which may continue to remain under check in the near-term.

Tata Steel – Has achieved best ever quarterly saleable steel production at 1.87 million tonnes (MT) in the July-September period, in Q2 of the last fiscal, it had achieved 1.71 MT of the saleable steel output, official said in a report on Tuesday last week.

Power Sector –

Another sign of reform has given by PM Mr. Singh in his inaugural address at the International Seminar on Energy Access in New Delhi y’dday, Mr. Singh said Govt has to provide 24x7 Electricity to all in 5 years.

Banks Sector –

Banking sector will remain on focus as y’da FinMin PC said that now its turn for RBI to support Govt. initiative.

IT Sector –

Investors are entering to mid-cap IT industries on expectation that it will outperform in near future while large cap seen some pressure y’day while IT heavyweight seems under pressure.

Auto Sector – Auto makers, including Maruti Suzuki and Mahindra & Mahindra , will also unveil new models.

Insurance and Pharma – FII now eying on further reforms in sectors like insurance and pharma, so next big earnings can come into both sector.

OPEN CALLS –

(Be with strict SL and don’t hesitate to book profit if Nifty shows strength)

DhanBank - @55 for TG 70 SL 45

Jindal Photo - @145 for TG 160+ SL 130

Today’s MG Mantra –

Choppy, volatility etc are the few names to describe market today. Three major results will put extra pressure on market, better sit on cash.

Have a Profitable day – MG

Disclaimer – I have shared my view as per my limited knowledge; please use your own skills to make a wise decision before execution of trade.