Morning Bells (12 Dec 12)

Good Morning Friends.

God solves our problems when we have faith in his abilities, when he does not solve our problems that mean he has faith in your abilities.

So finally once again our prediction proves right, as expected Nifty will face strong resistance in the range of 5950-5980 & Nifty remain choppy ahead of profit booking proved right. Nifty back from 5965 and closed  below 5900 mark.

Market participants were jittery as the BJP, Left and few other parties marched outside the parliament after the Govt. rejected opposition’s demand to refer an amendment bill to the standing committee even as it was passed by the Lok Sabha on Monday. Except FMCG index all the sectoral indices on the BSE ended with losses. Realty index was the top loser, down 2% followed by BSE Oil & Gas, BSE PSU and BSE Power index all declined by 1% each. Even the BSE Mid-Cap and BSE Small-Cap index fell by 1.1% each. ICICI Bank, L&T, Sun Pharma, HDFC, ITC, Bajaj Auto, Hero MotoCorp, Jindal Steel were among gainers in Sensex and Nifty. 

IPO of credit rating agency, Credit Analysis and Research Limited (CARE) has been oversubscribed 27.62 times, according to reports. 

Gross direct tax collections during April-November of the Financial Year 2012-13 was up by 7.14% at Rs. 3256.96bn as against Rs. 3040.02bn in the same period last year.

As told many times Opposition don’t have any issue and that’s whenever it find anything to object they just try to grab the opportunity and also they don’t want Govt. to proceed ahead of election in many states and LS election in 2014. The Opposition on Tuesday continued to derail both the Houses of Parliament over retail giant Walmart lobbying report. The Opposition is demanding an investigation by the Joint parliamentary Committee (JPC) in to the issue. Following the pressure from the opposition parties over the issue, the government also conceded that they would order an investigation into the issue after Parliament was disrupted for two continuous days.

Well, on domestic front many experts expect market will remain positive on the market because they see the macro data improving from here onwards.

Banking law amendment bill will be presented in the current session of parliament, and there are likely chances for it to be passed. The passage of bill will pave the way for RBI to issue much awaited new bank licenses. RBI has been very selective in issuing new banking licenses, evident from the fact that it issued 12 new bank licenses in the last two decades. The guidelines do not specify the number of licenses but given the past record and the RBI's cautious approach, experts believe a maximum of three or four licenses would be granted. (MoneyControl.com)

Shriram Group, L&T Finance, M&M Financial Services, Bajaj Finserve, Aditya Birla Nuvo and Tata Capital among the top contenders for banking licence and surprisingly Reliance Capital, IDFC are not in top list of experts.

On Global front experts are expecting that there are chances that the Greek authorities will achieve the target of 30 billion euros of debt buyback set by themselves and hopefully they may get next tranche of bailout from the EU Council.

Reserve Bank Governor D Subbarao last week said he is expecting inflation to trend down starting the fourth quarter (of the fiscal year ending March 31, 2013).

So now need to be cautious at this point as investors typically sell stocks to cut their losses at year end.

Industrial Production No. on – 12 Dec 12

Wholesale Price Inflation on -  14 Dec 12

MARKET OUTLOOK –

Well if we talk about sentiment then it seems that we have reached some kind of a resistance point, and market may face few more choppy sessions if IIP & Inflation disappoint and then trading range seems 5800-6000.

The key data point to look out will be the inflation, and chances for that is to remain high, and if it remain high then that will wash out hopes of rate cut, though I have already expressed my view that rate cut is unlikely but yes there could be CRR cut.

So in short – we all need to close our longs on the day of inflation if it remain high to previous month and if it remain below last month then one can hold longs with SL 5785 on Nifty.

Now IIP & Inflation data will give direction to Nifty, so keep close eye on both, though IIP wont have much effect as we all know it will remain low on YoY basis but Inflation data will definitely affect the market as it will give the sense for upcoming RBI monetary policy review result.

Now keep a close watch on strong resistance levels of 5,950-5,980, if broken then 6040 would be next strong resistance zone, so any big rally from current levels is unlikely at the moment.

So we need to be cautious this week as it could be a disappointing or choppy week.

Market uptrend is intact (at least for few more sessions) and participant eagerly waiting for breakout of 6000, but it may not be that much easy. Market participant will also keep close eye on courage from Govt. to go ahead quicker, maybe during the session or post session, with a lot of things, which are still incomplete, to revive the economy back into action

In the last two decades, the last month of the year has generated returns between 0.7% and 15.7%, which has given birth to the December phenomenon theory. Only four times in the last 20 years -1994, 2000, 2001 and 2011 - December has generated negative returns, states a recent Morgan Stanley report.

The INDIA VIX on NSE was up 1% and ended at 14.67 and FNO PCR is up at 0.87.

The rupee gained 0.42% and was trading at 54.46 against previous close 54.69 as per NSE data.

S&P 500 (US) were trading at 1432 up 13.53 points at the time of writing Morning Bells.

FII DERIVATIVES STATISTICS FOR 11 Dec 2012
	BUY		SELL		OPEN INTEREST AT THE END OF THE DAY		Difference
	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores
INDEX FUTURES	39775	1190.76	23575	703.58	391484	11449.97	487.18
INDEX OPTIONS	653224	19409.34	645976	19154.71	1501637	44340.68	254.63
STOCK FUTURES	46829	1332.50	55922	1681.62	1119788	32382.91	-349.11
STOCK OPTIONS	53947	1524.79	54787	1540.95	72269	1991.51	-16.16

FII bought 16,200 contracts worth Rs. 487.18 Cr. and OI increased by 3886 contracts signalling that FII booked profit on their shorts and went long in Nifty & Bank Nifty.

NIFTY OUTLOOK –

As expected profit booking seen in Index and main indices. Now investors will keep close eye for IIP no.s on 12^th and the Inflation figure on 14^th and then RBI Monetary policy review on 18^th. Parliament session is also there which is ending next week so investor will also eye on some more pending reform bills.

Historical data shows that Dec seems a month for 3%-4% gain, but situation are different a bit from past.

Nifty will face resistance at / in the range of 5950 & 5980 while 5785 is the SL for longs for short term trend.

So for short term view Nifty seems in the range of 5785 – 6000.

Resistance comes to 5954 – 6009 – 6053 and Supports comes to 5854 - 5835 – 5810 - 5785.

Opening seems mildly positive ahead of IIP nos. People who have already initiated longs need not to worry at the moment and can keep SL 5835.

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 will help you in taking positions.)

Banks –

The Banking Laws (Amendment) bill, being pushed by the government in the parliament saw heavy resistance from the opposition which staged a walkout on three new clauses introduced in the bill.

Banks are allowed to trade in shares, bonds and currencies but Section 8 of the Banking Regulation Act prohibits banks to trade in commodities. RBI is not comfortable with this new provision by the government in the absence of a clear risk mitigation mechanism and regulatory responsibility. In the original bill banks were not allowed to invest in futures.

Realty, Infra & Power –

Now, with the hopes of the Central Electricity Regulatory Commission (CERC) hearing resuming from December 11.

Coal & Minings –

NMDC -

The government is likely to sell its 10 per cent equity this week in iron ore miner NMDC , which could fetch the exchequer nearly Rs 6,300 crore at the current market price. The stake sell could happen either on Thursday or Friday, according to sources.

Government of India has announced that the Floor Price of Rs147 per equity share for the Sale in terms of the OFS Circular. The Sale shall take place on a separate window of the Stock Exchanges and shall commence on December 12, 2012 at 9:15 a.m. and shall close on the same day at 3:30 p.m. Indian Standard Time ("Sale Date").

MG’s Note – It could be on sell counter.

Coal India Limited -

From the energy security point of view Government has encouraged acquisition of coal assets abroad. Accordingly, Coal India Limited (CIL) has taken initiatives to acquire coal assets abroad through its Coal Videsh Division.

KFA –

Looks attractive post Eithad talks and seems Eithad looks serious player and taking things serious to enter Indian market. If it comes to brand recall then KFA has good brand recall value among its competitors.

Auto Sector –

Domestic car sales fell by 8.25% to 1,58,257 units in November this year compared to 1,72,493 units in the same month last year, Society of Indian Automobile Manufacturers reported (SIAM).

Tata Motors -

Tata Motors  owned Jaguar Land Rover has signed a letter of intent with National Industrial Clusters Development Programme (NICDP) in Saudi Arabia to explore opportunities for a new plant in the Middle Eastern country.

TM will among those stocks that can get benefit of it. It may move to 287-289 level in coming days and then to 302. Keep SL 262.5 and then 254.

============ OPEN CALLS ============

# Please remember when I make special remark with any position then one should need to take care of that else you can make loss instead of profit.

# Be with strict SL and don’t hesitate to book profit if Nifty doesn’t shows strength.

DB Realty - @128 for TG 145+ SL 107 (plz book profit above 140)

Dishman - @118 for TG 130+ SL 107

Jindal Photo - @145 for TG 160+ Updated SL 126 on closing basis. (Not performing as per expectation and now need to exit above 131)

DB Corp – @219 TG 240+ SL 201 (1-4 Week)

SBI call spread – 2100PE @11 SL 4, 2400CE @23 SL 10 (Exited at cost)

Tata Steel – @402 SL 394 TG 415+ (suggested to hold during the day)

Dhana Bank – @71 SL 68 TG 78+

Hero MotoCorp – @1820 SL 1800 TG 1875+ - Booked profit at 842 (22/- profit)

============ INVESTMENT BASKET ============

(Stock in this section is with view of 3 months to 1 year)

Mahindra Holiday – @334 TG 375+

Satyam Computer – @103 TG 130+

============ TODAY’S PICK ============

(Intraday to 1-2 sessions) –

For more update – stay on blog during market hours.

Today’s MG Mantra –

Though Nifty is in uptrend but need to be cautious as Nifty need some rest here and after such good move throughout the year investors can go for some profit booking.

Have a Profitable day – MG

Disclaimer –

1. I have shared my view as per my limited knowledge; please use your own skills to make a wise decision before execution of trade or consult your financial advisor.

2. Those that don’t have patience and are not willing to book loss also in cases don’t enter this market.