Morning Bells (22 Jan 13)

Good Morning Friends.

Always try to prove that you are right but… never try to prove that others are wrong.

Market continue with its uptrend on the back of gains from Reliance Industries. Oil & gas, capital goods, FMCG and power stocks were the major gainers. hares of Reliance Industries Ltd hit a 52-week high after the company posted 24% rise in net profit for Q3.The stock ended at Rs920, up Rs21.05. The stock hit a high of Rs954 and a low of Rs918.

While the undertone remains bullish but most of indices appear to be consolidating. The broader market too was lackluster. Corporate results bringing some cheer but the movement seems restricted to select counters only.

2013 started on a high note and FIIs have kept the tap flowing with over ~Rs110bn in this calendar year. The peak out of the interest rate cycle is another big trigger.

New Banking Bills -

The government appears to be making the right noises in pursuing fiscal consolidation. Should this continue, the current momentum is likely to be sustained. The coming week again has a number of  index-heavyweights announcing their numbers. Ride the rally and look at adding some positions in case of a healthy correction.

The Finance Ministry has expressed the view that the Reserve Bank should allow real estate companies and broking firms to set up banks as adequate safeguards will be there to prevent exposure of promoters to related entities.

In its comments to RBI on the giving out new bank licences, the ministry has said that such entities can be allowed, but there should be complete ban on taking exposure in the group companies or entities related to promoters, sources said.

Even the vendor and large customers of such promoters can't get loan from the new bank, sources said, adding that this move will minimise accumulation of risk.

So, the firewall has been proposed to avoid undue influence of bank CEO to lend to the group companies, they added.

Gainers – RIL, Wipro, Infosys, Tata Power, Hero MotoCorp, HUL, Bharti Airtel, ICICI Bank, ONGC, Dr Reddys Lab were among gainers in Sensex and Nifty.

Losers - TCS, Coal India, Tata Steel, Bajaj Auto, Tata Motors, NTPC, HDFC Bank, M&M, Sun Pharma were among losers in Sensex and Nifty.

Sectoral - Capital Goods, Oil and Gas, FMCG, Power, Consumer Durables were the gainers while Bankex, IT, Healthcare, Realty, Metal, PSU indices losers.

On Domestic Front -

Majority of corporate India feels that asset prices are likely to shoot up in the coming financial year 2013-14, according to a survey based study undertaken by the PHD Research Bureau of PHD Chamber of Commerce & Industry.

Finance Minister P. Chidambaram has reportedly said India can now see the “first green shoots of revival” of economy and expressed confidence that it will again achieve 8% growth.

Chidambaram was quoted as saying, “There are indications that investments are picking up. There are indications that foreign fund flows in India will continue to be abundant."

“Today we are the authentic voice and representative of the vast majority of the people of India,” Chidambaram reportedly said.

Infrastructure -

CII In its pre-budget memorandum to the Ministry of Finance, the Confederation of Indian Industry (CII) has identified the development of adequate infrastructure as the most critical prerequisite for reviving the growth momentum of the economy. Given that the 12^th plan envisages an investment of US$970bn in infrastructure over the next five years and nearly half of which is to come from the private sector, urgent measures are required to make the sector viable and capable of attracting capital, stated the CII in its Pre Budget Memorandum to the Government.

On Global front –

Retaining India's credit rating at the existing level, global agency Moody's has cautioned that a high fiscal deficit could pull the growth down in the coming years. On the positive side, the global rating agency reaffirmed sovereign credit rating of India at Baa3, which indicates investment grade, with a stable outlook.

Barack Obama was officially sworn in as the 44^th President of the United States of America in a brief ceremony on Sunday for a second term. Obama was administered an oath of office on the family bible by Chief Justice John Roberts, in a quiet ceremony in the presence of his wife Michelle Obama and his two daughters-Sasha and Malia, in the White House East Room.

Bill Gates, leading a group of US investors is planning to invest $1 bn for a stake in construction and fertiliser company OCI NV, according to reports.

=====================  MARKET OUTLOOK  =====================

Right now market is undergoing a trend of consolidation and one need to take a cautious stance for fresh longs. Nifty is inching higher but most of indicators are showing overbought, so now it need to consolidate or a correction before making fresh high.

After a blockbuster week, once again market is set to react on industry heavyweight this week, which care HUL (Tue, 22 Jan), L&T (Thu 24 Jan), Marutu Suzuki and Cairn India.

The INDIA VIX on NSE was down y’day and ended at 13.66 against previous close of 14.01.

FNO PCR is 1.01 against previous close 0.92.

Indian Rupee fell down against USD y’day and was trading at 53.75/76 against its previous close 53.71, highest level in more than a month. But it can not be considered good in terms of FII investment.

S&P 500 (US) was trading higher at 1485.98 up 5.04 then its previous close at the time of writing M Bells.

Now next trigger is RBI policy on 29 Jan 12. Here please remember I am expecting maximum possibility for a 25bps cut in the repo rate in the upcoming monetary policy.

=======================  NIFTY OUTLOOK  ========================

Market consolidating, now its time to lighten your portfolio and don’t make any fresh longs. Keep 5935 as SL for Longs.

Buying in selective stock will continue.

Nifty is in range of 5935-5990-6040-6090-6150 for current week.

Resistance – 6095 – 6108 – 6125 and Support – 6067 – 6051 -6037

Opening seems flat and some profit booking can be seen at higher levels.

========================  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.)

Spice Jet –

Shares of Spicejet Ltd surged 5% after the company has posted net profit for Q3.The stock closed at Rs46.15, up Rs2.20. The stock has hit a high of Rs47 and a low of Rs44.

HDFC –

Shares of HDFC was down 1% despite the company has posted net profit for Q3.The stock closed at Rs809, down Rs6.70. The stock has hit a high of Rs822 and a low of Rs825.

BHEL –

BHEL gained 2% at Rs231 after it said it has achieved a significant milestone in Africa with the successful commissioning of its first Steam Turbine Generator (STG) Unit in Ethiopia. The stock ends at Rs231, up Rs5.10. The stock has hit a high of Rs233 and a low of Rs226.

NTPC –

Stock of NTPC Ltd. was down 1.7% ahead of its quarterly results which is set to be released on Monday. The stock  closed at Rs161.25, down almost Rs.2.40. The stock hit high of Rs167 and a low of Rs160.Total

Reliance Power –

Reliance Power Ltd has jumped almost 4% after the company sought approval from sector regulator CERC to revise tariff of its 4,000 MW Sasan project in Madhya Pradesh because of a rise in taxes and user charges.

The stock closed at Rs97.40, up almost Rs4. The stock has hit a high of Rs97.45 and a low of Rs 93.60 Total traded quantity on the counter stood at over 23.7 lakh shares

Cairn India –

Its net profit stood at Rs33.50bn, While its Q3 sales was at Rs42.80bn.

Cash flow from operations at Rs26,949 mn (US$ 499 million), up 26 % yoy

Strong balance sheet with net cash of Rs 146,043 mn (US$ 2,667 million) as on 31 December, 2012

RIL Buyback Programme–

The share buyback programme, the largest-ever by an Indian company, concluded yesterday, but the final figure might change as the data has been disclosed on the stock exchanges only for shares bought back till January 16.

Billionaire industrialist Mukesh Ambani-led Reliance Industries (RIL) began the buyback programme on February 7, 2012 with a target to repurchase shares worth about Rs 10,440 crore from the public shareholders. The company had offered to buyback the shares at a price of up to Rs 870 each under the programme.

The company said in a notification that the buyback of equity shares, as approved by its board of directors on January 20 last year, closed on January 19, 2013, but did not disclose the final tally.

================= 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 even small profit if Nifty doesn’t shows strength.

Wait is the winning key in stock market, don’t get impatience.

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

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

Mahindra Holiday – @334 TG 375+ (Active from 15 Dec 12) CMP – 330 (Gain -1%)

Satyam Computer – @103 TG 130+ (Active from 15 Dec 12) CMP – 115 (Gain +11%)

On Mobile – @44 TG 60+ SL 41 Qty 2K (Active from 01 Jan 13) CMP – 45 (Gain +2.5%)

============ HOT SHOT ============

Keep eye on following stocks, if Nifty shows strength then these stocks can give you reasonable return in very short term –

============ PL Sheet (started from Jan 2013) ============

(If someone find any error in PL, please draw our attention)

MG Blog (Total 25,650) –

Cash = +9,650.00

FNO = +11,500 + 4,500 = 16,000

Billionaire Club

TOTAL = +29,750.00 + 14,750 = 44,500

Today’s MG Mantra –

Don’t make fresh longs till RBI policy, one can trade with a view to exit before RBI policy.

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.