Morning Bells (25 Jan 13)

Good Morning Friends.

Agar hame SAFAFLATA chahiye ho to fir BAHANE bhool jaiye… aur agar hamare pas BAHANE bahut he to fir SAFALATA bhool jaiye.

Today’s fall was whistle blower for which I was warning you and we were discussing since past two weeks. Even if the Nifty stayed above the 6000 mark, looking at the way midcaps behaved there cannot be any doubt that sentiment has taken a severe knock. In y’day's trade alone, midcap index lost over 2.8 percent. Midcap realty, infrastructure and IT companies were battered out of shape.

We were discussing since long to lighten your portfolio as well as now concentrate on blue chips. We can say today’s fall in mid-cap just ring the alarm for coming days sentiment.

The movement of the main indices may mask the carnage that took place in the broader market. While the Nifty managed to remain above the 6000 mark, it has now declined ~100 points or 1.5% in the last three trading sessions after hitting a high of 6101.

The Infrastructure companies were in the limelight for perhaps the wrong reasons as they came crumbling down the Street. Mid-cap stocks were completely hammered out of shape, especially the counters where promoters had pledged shares.

Bucking the negative trend were the IT stocks which showed signs of resilience against the sell-off. Stocks like TCS and Wipro were up ~1% each.

Gainers – L&T, Hindustan Unilever, ITC, TCS, Kotak Bank, ONGC, Lupin and HDFC Bank. were among gainers in Sensex and Nifty.

Losers - Tata Motors, JP Associates, GAIL, Cipla, Hindalco, Sesa Goa, Ranbaxy, Reliance Infra, Bank of Baroda and Tata Power were the major losers in Sensex and Nifty.

Sectoral – Realty, PSU, Consumer Durables, Auto and the Metals were the major gainers in Sensex and Nifty.

On Domestic Front -

Doug McMillon, CEO Walmart International met Union Commerce Industry and Textiles Minster Anand Sharma at Davos today and conveyed that Walmart is ‘excited about India’ and they are studying the conditions before making the final announcement. 

Sharma said that India’s Policy on FDI in Multi Brand retail has finality and they need not be unduly concerned about any policy reversal.  

Sharma also asked them to send request for clarification, if any, in the written form to his Ministry. All necessary clarity will be provided, assured Sharma. (IIFL.com)

On Global front –

Most equity markets in Asia ended lower on Thursday amid disappointing earnings reports from Apple Inc. and Hyundai Motor Co.

The number of Americans filing new claims for unemployment benefits unexpectedly fell to its lowest since the early days of the 2007-09 recession, a hopeful sign for the sluggish labor market.

Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 330,000, the lowest level since January 2008, the Labor Department said on Thursday.

=====================  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 needs to consolidate or a correction before making fresh high.

After L&T, today Maruti Suzuki will announce its Q3 Nos. and results seems as per experts poll (read stock outlook for details).

The INDIA VIX on NSE was up 5% and ended at 14.46 against previous close of 13.67.

FNO PCR is 0.98 against previous close 1.05.

Indian Rupee closed almost flat against USD and was trading at 53.68/69 against its previous close 53.67.

S&P 500 (US) was trading higher at 1498.92 up 4.11 then its previous close at the time of writing M Bells.

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

The outlook for the near term remains a bit cautious. If The Nifty cracks below the 6000 psychological mark and stays there for a considerable period of time it is likely to see a bearish movement. 

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 – 6053 – 6088 – 6112 and Support – 5996 – 5973 -5938

After a smart correction in mid-caps, Opening seems flat to a bit positive ahead of hopes of RBI rate cut.

========================  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.)

Mid-Cap & Infr Battered, what to expect next –

Midcap realty, infrastructure and IT companies were battered out of shape. Check out some of the midcap names that melted a good 6 percent to 21.6 percent.

HDIL - Down 21.6 percent. Investors began offloading shares of HDIL after its promoter sold 1 percent in the stock this week. The company's efforts to pacify investors via conference call had no impact.

IVRCL - Down 19.8 percent. There are reports doing rounds that an expert engineer working on NHAI project has been found dead in Coimbatore. IVRCL is in charge of executing the 1000 crore NHAI project

Hexaware - Down 9.84 percent, This mid-sized software services exporter had downgraded its revenue outlook for December quarter. The share touched its 52-week low of Rs 75.15.today.

Sintex - Down 8.36 percent. The company reported 35 percent fall in its net profit to Rs 63.4 crore in the third quarter.

IRB - Down 7.58 percent. Probably weak sentiment related to IVRCL has rubbed off on IRB Infra.

Unitech - Down 6.44 percent. Investors have taken an aversion to realty stocks in general. After the HDIL episode, the aversion had sharpened towards certain players.

Sugar Industry –

India Ratings has a Negative Outlook for Indian sugar manufacturing companies for 2013 considering the continued deterioration in their financial profile. Ample domestic sugar as well as a glut in global sugar inventory is expected to weigh down sugar prices in 2013, and thus the operating margins of sugar companies will fall below the 2012 levels (13%).

HDIL & IVRCL–

Shares of HDIL nosedived further after Vice-Chairman and MD Sarang Wadhawan recently sold 5mn shares on the NSE, reducing his stake to 0.99% from 2.19%. The promoter sold shares earlier this week to help fund a land acquisition by the company. The stock today plunged ~23% to close at Rs72.5.

The big losers HDIL and IVRCL issued clarifications. HDIL official stated that the company is not going bankrupt and promoters will not sell any more shares.

IVRCL reportedly fell after reports that an expert consultant with National Highways Authority of India (NHAI) was murdered.

Tata Motors –

Shares of Tata Motors plunged 6.1% to close at ~Rs293 after the company warned in an investor call early on Thursday that the company’s UK subsidiary Jaguar Land Rover would report weaker earnings for the three months ended 31 December as compared with the previous two quarters.

Tata Motors ' warning late on Wednesday that its luxury Jaguar Land Rover unit, which accounts for majority of its profits, would see flat earnings growth in the third quarter and margins will in fact decline due to unfavourable forex shifts and high share of low-margin Evoque SUV sent shock waves in the market.

Investors, so far driven by the JLR story, sensed things were not as rosy after all, and were quick to dump Tata Motors, sending the shares down 10 percent on Thursday morning.

Tata Steel –

Stock of Tata Steel Ltd. closed down 0.8% on Thursday after the company declared plans to raise Rs.10bn ($185.82 mn) through a dual tranche bond sale. The company will issue 6 and 8 year bonds at 9.15%, said the reports.

Tata Steel closed at Rs. 404.45 down by Rs.3.25. The share traded in a range of Rs.402-411. Total traded quantity at the counter stood at 6.52 lakh shares.

Maruti Suzuki –

Maruti Suzuki  will report its third quarter results on Friday, amid continued sluggish demand for passenger vehicles in the domestic market. But the India's largest passenger car maker will be boosted by resumption of normal operations at Manesar plant, higher realisations and improved margins.

The India's largest passenger vehicle maker by sales is expected to report a net profit of Rs 466 crore, more than double year-on-year, while total income from operations is seen at Rs 11,025.4 crore, up 40 percent, according to a CNBC Awaaz poll.

Reliance Communications –

Reliance Communications was down 9% after the company reported a decline in profit for the second straight quarter as its finance costs jumped.

The stock is currently closed at Rs. 80 down by Rs.8. The share touched a high of Rs. 86.75 and a low of Rs. 79.40 in today’s trade. Total traded quantity at the counter stood at 46 lakh.

Suzlon Energy –

Debt-laden Suzlon Energy on Thursday said that the empowered group of Corporate Debt Restructuring (CDR) Cell has given formal approval to its proposal to restructure domestic debt.

A consortium of 19 banks approved the CDR package of Rs 9,500 crore (USD 1.8 billion), the wind turbine maker said in a notice to stock exchanges.

==================== 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.

ICICI 1200CE – @11 TG 20+ Updated SL 5 (Active from 23 Jan 12) CMP – 11 (Gain 0%)

Update your SL with 4Rs on every 4Rs move from here.

=============== 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)

Satyam Computer – @103 TG 130+ SL 112 (Active from 15 Dec 12)

On Mobile – @44 TG 60+ Updated SL 39 Qty 2K (Active from 01 Jan 13)

=============== 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 = +16,000

Billionaire Club

TOTAL = +51,000

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.