Morning Bells (21 Feb 13)

Good Morning Friends.

PERSONALITY is : Who we are and what we do when everybody is watching. CHARACTER is : who we are and what we do when Nobody is watching.

As expected market again turned choppy and pared its gain, open with a smart gap but finally it gave up all the gains and closed just 3 points up.

After rallying for the past two sessions, the Indian equity market took a breather on Wednesday as traders and investors preferred to take some profits home.

The market opened with a positive gap but was unable to build on to its gains as benchmark indices saw selling in the Consumer Durables, Metals, Capital Goods and the FMCG stocks. Even the Mid-Cap index ended with losses. Bucking the trend was the BSE Oil & Gas, Realty and IT index, even the Small-Cap index declined by 0.2%.

Gainers – RIL, Infosys, Wipro, TCS, Tata Power, Coal India, Sun Pharma, Hero MotoCorp, Dr Reddys Lab and HDFC Bank were among gainers in Sensex and Nifty.

Losers - Bharti Airtel, ICICI Bank, Tata Steel, SBI, BHEL, ONGC, L&T, Maruti Suzuki, Tata Motors, Bajaj Auto, Cipla, Jindal Steel, NTPC and Mahindra & Mahindra were the major losers in Sensex and Nifty.

Sectoral - The BSE Realty index was the top gainer, up 2%, followed by BSE IT index up 1.7%, BSE Healthcare index added 1.4% and BSE Power index gained 1.1%.

BUDGET –

According to various experts - Indian equities have taken a breather since mid January 2013 as market participants ponder over the outcome of the Union Budget. We take it as a foregone conclusion that the Finance Minister will deliver a reform-centric Budget addressing the fiscal and current account deficits in the wake of the sustained country downgrade scare. In our opinion, the FM cannot even afford a Budget which is termed as a non-event, leave alone a bad one.

Attempts to revive the industry cycle, infrastructure and deepening the corporate bond market are other market-friendly measures likely to be taken up. The Finance Minister would obviously want to serve customary populist carrots to appease the critical vote bank ahead of the forthcoming elections but, his Budget, by and large, is likely to be balanced, certainly devoid of any ambiguous provisions to help maintain investor confidence as also to attract foreign capital. We believe the Budget will deliver a good vibe and provide fresh legs to the market to scale new highs.

BUDGET IMPACT ON VARIOUS SECTORS, A PREVIEW -

Automobile - No significant action expected, given the significant deterioration in demand conditions for the sector, coupled with the government's fiscal deficit constraints and recent increases in fuel prices. Probability – Medium, Impact - Neutral.

Banks/Financial Institutes - Details of capital infusion for banks. Positive for banks which are due to receive capital. Possible boost to savings instruments such as insurance/mutual funds, to diversify funds away from gold. Probability – High, Impact – Positive

Capital Goods - One of the measures to support power equipment industry likely: (1) exemption of import duty on CRGO (key raw material used in transformers), (2) anti-dumping duty on imported equipment or (3) exemption of power equipment from excise duty, assuming them as deemed exports. Probability – High, Impact – Positive.

Infra - Exemption of infrastructure companies from the payment of Minimum Alternative Tax (MAT) which the industry has been lobbying for. Probability – Medium, Impact – Positive.

FMCG - 10%-12% increase in excise duty on cigarettes. While a hike of 8%-10% could be recovered by companies, a greater increase may negatively impact volumes. Probability – High, Impact – Negative.

MG’s view on Budget -

Most of experts are hoping for their gains i.e. market friendly budget but my sense is that this budget would be more for common man & basically will be focussed on pending reforms, yes as general election is there in 2014 and this would be last budget where Govt. can announce reliefs for common people.

Surprisingly Mid-Caps have fallen 10-40% in last two weeks. (Blue chips are drifting lower but second line shares went down much sharper.) Street has been expecting a lot from the Budget both in terms of policies and reforms and probably India the Budget is overhyped. So as per personal view – it would be a neutral event and market may go down after budget, unless & until there’s no any magical surprise.

On Domestic Front –

No big event yet.

On Global front –

No big event yet.

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

Market broke out from the trading range on account of lack of selling which triggered short covering in the indices. The current up move is likely to intensify further after Nifty takes out the intermediate high of 5969.

The INDIA VIX on NSE was down 1.2% and ended at 15.60 against previous close of 15.81.

FNO PCR is 0.94 against previous close 0.82.

Indian Rupee – gained its most in two weeks on Wednesday and was trading at 54.07/08 against its previous close of 54.19.

S&P 500 (US) was trading at 1530.94 up 11.15 then its previous close at the time of writing M Bells.

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

Nifty is in range of 5780 – 5820 (100 DMA) - 5840 - 5900-5950-6040-6150-6190 for current series.

Resistance – 5996 – 5983 – 5963 and Support – 5930 – 5917 - 5896

Opening – As told y’day, it could be range bound session, today again seems range bound session at least morning session. Bears will fight tough, interesting to see whether they defend Nifty 5970 or not. So start could be flat and then in opening session market may see selling pressure.

========================  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.)

Reliance -

Reliance Industries gained by 3.2% after British Petroleum Plc, Europe's, and Reliance Industries agreed to invest $5 billion in developing untapped gas reserves in the KG-D6 block to boost gas production. Reliance Industries is currently trading at Rs.860 up by 11.45 over the previous close in the early morning session trade on BSE.

Lanco Infratech -

Lanco Infratech gained by 1.2% after reports came out that the engineering procurement and construction company yesterday reached out to its Malaysian partner, Genting, to sell stakes in three of the coal fired power plants generating a total of 3240MW, said the reports. The company is planning to sell stakes in its three coal-fired power plants to Genting Bhd which are operating a total 3,240 MW, according to reports. Genting has a 35% stake in Lanco's gas-fired Kondapalli power plant, says report.

JP Power –

Shares of Jaiprakash Power slumped by 6%. The company announced the opening of qualified institutional placement to raise up to Rs 35bn. The issue opened for bidding on Tuesday. The floor price for the QIP is set at Rs 31.93 per share. If one assumes that the QIP is priced at the floor price of Rs 31.93 per share, the fresh issue of shares will result in equity dilution of a staggering 41.76%. 

DB Realty -

Vipul Bansal, group CEO, DB Realty , talking to CNBC-TV18, says the company, which has an inventory above Rs 30,000 crore, plans to launch three key projects in the next 3-4 months.  He attributes the jump in sales this quarter as compared to the previous one to the company getting complete clarity from the government on the new Development Control (DC) regulations, allowing it to market and sell products aggressively. The company has about Rs 300 crore of liquid transfer development rights (TDR) in its books, at about Rs 2500-2600 per square foot. Even in the prevailing scenario of high interest rates, he feels that with the current exposure of Rs 300 crore, debt is not a matter of concern for the company.

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

Jain Irrigation 65CE – @2 TG 3.5+ SL 2 Lot-1(Active from 19 Feb 13)

RCom 75CE – @1.45 TG 2.5+ SL 1.45 Lot-1 (Active from 19 Feb 13)

(Booked profit @2.4, Total gain +3800)

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

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

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

MG Blog (Jan+25,900) + Feb Ser. = +6500 + 3800 (Rcom) = +10,300

Billionaire Club (Jan +51,000) + Feb Ser. = +13,500 + 3800 (Rcom) + 3100 (NTPC Future) = +20,400

Today’s MG Mantra –

Excitement can be harmful, its time to be cautious.

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.