Morning Bells (28 Jan 13)

Good Morning Friends.

Kamal ka haunsala diyaa oopar wale ne hum insano ko… waqif ham agale pal se nahi hote aur wade hum zindagi bhar ke kar lete he.

After a choppy week, Indian markets could witness some more volatility and uncertainty as participants brace for the outcome of the much-hyped RBI’s policy meeting. F&O expiry and corporate earnings will have a definite bearing on the sentiment.

Nifty has been moving in a tight band of 100 points. Now Nifty is looking for RBI outcome for further direction but F&O expiry can also play a big role in movement this week. Most of experts are expecting RBI to cut the repo rate by 25bps in the upcoming policy. Persistent moderation in headline inflation and government's displayed commitment towards containing fiscal deficit makes the case for the central bank to cut policy rate.

FII inflows have been encouraging so far, keep a watch on whether it persists or start to taper off. Although some of the results announced have been impressive, any disappointment from results could affect specific counters. The main indices are showing resilience but the undertone remains extremely cautious. 

Also major view on RBI policy is - There is better clarity on macroeconomic environment since October 2012 Quarterly review. RBI had set certain benchmarks for shift into rate reversal cycle. There should be definitive signs of reversal in headline inflation; real interest rates should remain attractive to boost domestic savings; moderation in twin-deficits should lead (and pave way for) shift into moderate monetary policy; resolution to supply side bottlenecks to ease pressure on CPI inflation and dilution in strong headwinds from external sector on growth-inflation dynamics. RBI also considered low real interest rates as not major risk to growth. RBI is seen firm in its stance that loose fiscal and monetary policies cannot co-exist and derives comfort from tight monetary policy when fiscal policy is loose!

Retail investors, who lost a whopping Rs 61,000 crore in blocked funds due to suspension of trading in 1,450 firms during 1992-2009, could get back Rs 12,145 crore on re-listing of some these firms, says a report by CNI Research.

Between November 2009 and November 2012, as many as 250 companies (out of the 1,450 firms which were suspended) got relisted, as a result of which investors could recover their blocked funds, said CNI Research Chairman and Managing Director Kishor P Ostwal in the report.

Gainers – Larsen & Toubro (up 4.8%), ITC (up 4.3%), Maruti Suzuki (up 3.4%), Bharti Airtel (up 3.3%) and Wipro (up 2.6%) were among gainers in Sensex and Nifty.

Losers - Tata Motors (down 8.4%), Ranbaxy Labs (down 5.5%), Hindalco (down 5.2%), NTPC (down 3.1%) and Cipla (down 2.9%) were the major losers in Sensex and Nifty.

Sectoral – Healthcare (-0.8%), Auto (-2%), Oil & Gas (-0.4%), Realty (-5%), Metal (-1.5%) were the losers while Telecom sector (+3.3%) was major gainers in Sensex and Nifty.

On Domestic Front -

As per experts - The recent developments from the Finance Ministry are very encouraging, and have helped to remove the fear factor (and downside risks on the economy) from much talked about issues of policy paralysis, twin-deficits and growth. The Finance Minister has indeed taken the bull by its horns in the absence of RBI support. He had the worry that Government had to walk alone, which has now turned into a sprint to cut lag time. The efforts towards addressing top priority items are commendable. The immediate focus is on attracting long term off-shore investments while keeping the FII interest in tact; drastic reduction in fiscal deficit and squeeze the current account deficit gap; all these will help to contain inflationary pressures and prepare RBI for aggressive growth-supportive monetary stance.

On Global front –

Union Finance Minister of India P Chidambaram will launch a new promotion campaign here from Monday to woo European investors to India as the government struggles to reverse an economic slowdown, rein in fiscal deficit and avert a possible downgrade by the rating agencies.

Chidambaram will attend a roadshow on investment opportunities in India hosted by Deutsche Bank and Barclays Bank in Germany's financial centre and will hold discussions with leading representatives of European companiesand institutional investors.

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

Definitely RBI policy is a major event this week which will decide investors mood, beside RBI policy, F&O expiry will also play big role in market direction which will be supported by leading companies Q3 no.s

After blockbuster Q3 last week, now this week some biggies are on move. JSW Steel will declare its Q3 results on Monday, Sterlite Industries on Tuesday, ICICI Bank, Lupin and Punjab National Bank on Thursday and BHEL on Friday.

Auto and cement stocks will also remain in focus as companies from these two sector will unveil monthly sales data for January on Friday.

The INDIA VIX on NSE was up 2.14% and ended at 14.77 against previous close of 14.46.

FNO PCR is 0.99 against previous close 0.98.

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

S&P 500 (US) was trading higher at 1502.96 up 8.14 then its previous close at the time of writing M Bells.

(MG’s Note – Closely watch S&P as to my personal view S&P above 1500 a bit risky for global market.)

=======================  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 – 6099 – 6122 – 6164 and Support – 6032 – 5990 -5966

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.)

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%).

Tata Global –

Tata Starbucks Limited, the 50/50 joint venture between Starbucks Coffee Company (Nasdaq: SBUX) and Tata Global Beverages Limited, announced the opening of its first stores at Terminal 3 of New Delhi Indira Gandhi International Airport (IGI).

Starbucks entered the market in October 2012 with the launch of three stores in Mumbai and its plans are on track to open in Delhi in early February 2013.

Suzlon Energy –

Shares of Suzlon Energy surged 17% after company announced the formal approval of its proposal for the restructuring of its domestic debt by the Empowered Group of Corporate Debt Restructuring (CDR) Cell.

The stock closed at Rs21, up Rs3.05. The stock has hit a high of Rs18 and a low of Rs18.45.

Reliance Communications –

The telecom arm of Reliance Industries, owned by Mukesh Ambani, may acquire a stake in Reliance Infratel in a complex deal that also includes leasing as many as 50,000 towers, according to reports.

Reports stated that the stake sale may be valued at $3.5-4 bn ( Rs 187.89-214.71bn) for the company.

There are reports that the deal may be inked next month.

Maruti Suzuki –

Maruti Suzuki India Ltd has posted a net profit of Rs. 5012.90 mn for the quarter ended December 31, 2012 as compared to Rs. 2056.20 mn for the quarter ended December 31, 2011.

Total Income has increased from Rs. 79062.10 mn for the quarter ended December 31, 2011 to Rs. 113889.60 mn for the quarter ended December 31, 2012.

The growth in Net Profit was primarily due to higher sales and good response to new models like Ertiga and Swift DZire. The Company’s continued cost reduction efforts helped to drive profit in the quarter.
 

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

Booked profit @17, Total Gain – 3K

Reliance Jan Futu – @913 TG 20+ SL 1902 (Active from 25 Jan 12)

=============== 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 + 3,000 Gain ICICI Call = 19,000

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.