Morning Bells (7 Jan 13)

Good Morning Friends.

Help is very expensive GIFT, so don’t expect it from everyone… and very few people are RICH by heart.

The New Year has brought good tidings for equity markets world over and India is no exception. Week managed to clock gains of 1.7%.

Well, domestic equity market is expected to remain volatile this week because corporate earnings will kick off this week with IT major Infy which seems again lacklustre. Earnings week will begin when IT major Infosys declares its results on January 11.

Industrial production numbers may also have some impact on the trading sentiment this week. Industrial output data is due on Friday, a key indicator ahead of the RBI's policy review on January 29.

Markets would also await the inflation numbers. If there is a reduction in inflation, then expectations of a rate cut will be strengthened.

It was indeed high drama and a last minute scramble in US as Obama and team got into action to avoid the ‘fiscal cliff’ crisis. A likely recession scenario was averted after the House of Representatives approved a Senate bill that raised tax for the rich and delayed spending cuts, triggering a rally across global indices. 

For growth in India market, one should not ignore Inflation, and secondly, about NBFC, in current scenario its more about to fuel money into Indian market but fundamentally I personally avoid this step when it comes to growth fundamentally, giving bank licence to corporate house is not the solution for growth ignoring fundamental needs & fiscal cliff.

Interestingly still there are many nervous investors, sitting on the sidelines all this while, have started to dip their toes into the equity pound, hoping not to dive into a January trap.

Forex - A good way to judge market momentum is to look at the currency market. The dollar index currently is at the crucial 80-mark. The Asian sales desks have already started advising caution, citing the dollar index rise as an indication and some experts expecting a 10% correction.

MARKET OUTLOOK –

Next trigger for market will be RBI monetary policy outcome. I also feel one should be cautious in the previous week of RBI announcement.

Well, there are early signs of overheating in the Indian equity markets. Indian ADRs, particularly banks who are trading at a premium, are looking over bought. A lot of FIIs have already tired to participate in the Indian market, also, a lot of underperformers are moving now, which is usually considered as the last leg or last phase of a market rally. 

So here onward I am expecting a range bound & cautious move till important data & RBI policy and market will react on corporate No.s, Govt. data announcement and finally on RBI policy announcement.

The INDIA VIX on NSE was down 0.74% and ended at 13.37 against 13.47 and FNO PCR is 0.91.

Indian rupee dropped further and was trading at 55.07 than its previous close of 54.49.

S&P 500 (US) was trading at 1466.47 up 7.10 at the time of writing M Bells.

NIFTY OUTLOOK –

Nifty is likely to witness further buying above 6,025 level and may trade within 6,080-5,950 range. Since Nifty is consolidating nicely at current levels which leading to attract many retail investors to get in. No surprise if we see 6100-6150 levels in coming days. But don’t expect any big move from here, trend is up but not on fundamental basis. Remember as told one need to lighten portfolio before RBI policy and then collect some cash before budget in March.

Though Nifty will remain highly volatile ahead of corporate earnings results, IIP and Inflation Nos.

Due to decent rally and then fear of outflow in January putting investors cautious and people are looking for profit booking in sectors which run decent in current rally and feeling it could be a trap.

Nifty is in range of 5835-5885-5990-6040-6090 for current & next week.

Resistance comes to 6030 – 6046 – 6069 - 6090 and supports at 5991 – 5967 – 5952.

Opening seems slightly positive.

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.)

Jet Airways –

News appearing in a leading financial daily titled "Etihad may buy 24% stake in Jet for up to Rs. 18bn. in 10 days" Jet Airways (India) Ltd has clarified that while Jet (“the Company”) and Etihad are in a discussion regarding a potential investment by the latter in the former, these discussions have commenced recently pursuant to the liberalized FDI Policy which permitted foreign investment in the shares of an Indian airline. An appropriate announcement shall be made upon finalization of the terms of the investment with Ethiad as per legal and regulatory requirements.

Power Grid Corporation –

Power Grid Corporation of India Ltd has announced that the Board of Directors of the Company at its meeting held on January 03, 2013, have accorded Investment approval for 'Common Transmission Scheme associated with ISGS Projects in Nagapattinam / Cuddalore area of Tamil Nadu - Part-A1 (a)' at an estimated cost of Rs. 1.82bn, with commissioning schedule of 21 months from the date of investment approval.

IT Sector –

Slower growth in discretionary spending and delays in decision making of clients may continue to hurt Indian IT companies' revenue growth in the December quarter.

Traditionally, the October-December quarter is a weak quarter for IT companies as the number of working days is lesser compared to other quarters due to the holiday season at the client locations.

Worldwide IT spending is projected to reach USD 3.73 trillion in 2013, a 4.2 per cent increase from USD 3.58 trillion in 2012, research firm Gartner said y’day.

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

Dishman - @118 for TG 130+ SL 107 (CMP 116)

Rel Capital – @498 TG 520+ SL 490 (Booked profit on 4 Dec 13 @507, profit 9K)

Rel Infra – @546 TG 565+ SL 537 (Booked profit on 4 Dec 13 @555, profit 4.5K)

ICICI Jan 1200CE – @27 TG 40+ SL 21 (2 lot)

============ 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 – 341 (Gain +2%)

Satyam Computer – @103 TG 130+ (Active from 15 Dec 12) CMP – 108 (Gain +4%)

LakshmiVilas Bank – @105 TG 125+ SL 97 (Active from 27 Dec 12) CMP – 113 (Gain +5%)

On Mobile – @44 TG 60+ SL 41 Qty 2K (Active from 01 Jan 13) CMP – 48.45 (Gain +10%)

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

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

Keep eye on Wipro, Axis & Uco Bank. Will update call during market hours.

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

MG Blog = +5250 (Old) + 13.5K (on 4 Dec 13) = 18,750/-

Rel Capital – @498 TG 520+ SL 490 (Booked profit on 4 Dec 13 @507, profit 9K)

Rel Infra – @546 TG 565+ SL 537 (Booked profit on 4 Dec 13 @555, profit 4.5K)

Billionaire Club = +17,000 (Old) + 13.5K (On 4 Dec 13) = 30,500/-

Today’s MG Mantra –

Enjoy & Ride the rally either side.

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.