Morning Bells (10 Apr 13)

Good Morning Friends.

Though I am junior to most of you in stock market, Please do not prefix or suffix SIR, instead I want live in your hearts.

So finally we have seen the levels for what I was warning repeatedly. Even y’day we have discussed that from 5550 nifty may see a bounce and that bounce can be used to exit longs and to take fresh shorts, we also discussed that 5600-5630 range is crucial and one can book all their longs once Nifty reaches in this range then can go for shorts. The same thing has happened today, market was up around 55+ points and all of sudden i.e. after EU open it fell down 100 points. As told you few times, now FII are on selling counter and DII is in wait and watch mode.

Well, the markets started off flat but crashed into the red on bouts of selling. The Nifty has fallen for five days on a trot. Its fall below 5,500 levels is worrisome as these levels were last seen in September 2012.

Dealers attribute today’s market sell-off to selling by London-based exchange traded funds. Fears of poor Q4 earnings is another reason cited for their exit.

There’s also talk on RBI review policy disappointment which dampened the sentiment. Non-banking finance companies today said the Reserve Bank is likely to keep its key lending rate intact in the forthcoming monetary policy review, but expect a 0.25 per cent reduction in the cash reserve ratio.

The RBI will unveil its annual monetary policy on May 3. Currently, the repo rate is 7.5 per cent, while the CRR is 4 per cent. The demands by the FIDC, which is the apex body of NBFCs, is in tandem with the views of bankers, who also asked for a cut in the CRR for effective monetary transmission.

Rupee –

The rupee weakened marginally on Tuesday as a sharp selloff in domestic shares raised concerns about foreign investor outflows at a time when the country is looking to narrow a record current account deficit.

Dollar demand from oil companies also hurt the rupee, although that was somewhat offset by selling of the greenback by foreign banks.

Foreign investors have now sold a net total of $137 million in Indian shares in the four trading sessions to Monday and a net total of $710.68 million in domestic debt over the same period, according to regulatory data.

Domestic Front –

Reserve Bank of India has rejected the suggestions of auctioning new bank licenses as it may defeat the idea of financial inclusion due to high cost of services.

Subbarao noted that perhaps there was only one country in the world, which had attempted to distribute banking licenses through auctions. The governor informed Members of Parliament that number of new banking licenses to be issued was not yet fixed and the central bank is expecting more than 30 applications. (Moneycontrol.com)

Global Front –

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

FIIs continue to pull out money from India-dedicated funds. Global fund managers have been pulling out funds from emerging market equities and deploying the same in US and Japanese markets.

The markets are now focussing on Wednesday's Federal Reserve policy minutes to look for cues on its intent going forward. India Infoline feels the probability of a cut-back in monetary stimulus has faded, especially after disappointing March non-farm payroll data.

Fresh shorting was seen in Nifty futures today with open interest rising about 10%. Put unwinding is seen in the 5500 strike which shed 1.5% open interest. Among sectors, fresh shorts were seen in banking, infrastructure and oil and gas.

As per the trend of last few days, Indian markets are falling in the second half even if Europe opens okay. That is because the general fear in the market is that some of the Europe-based exchange-traded fund (ETFs) are the ones selling in the market. That is what dealers and traders tell you and that is what the volumes also suggest.

Everyday you are seeing lots of Puts being accumulated. It started with 5,500. It trickled down to 5,300. The 5,200 Put added close to 30 lakh shares in open interest. This clearly is the bear market and there is no other way to describe it and that is what the internals of this market have also been suggesting.

The INDIA VIX on NSE was up 0.29% and ended at 16.82 against previous close of 16.77.

(Not – my personal view is that Vix can move up max 17 to 17.5 which itself meant a small recovery can be there)

FNO PCR is 0.90 against previous close 0.90.

(PCR is also suggesting its in middle)

Indian Rupee – Rupee declined by 2 paisa and was trading at 54.58 against its previous close of 54.86.

S&P 500 (US) was trading at 1572.26 up 9.19 then its previous close at the time of writing M Bells.

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

Technically if you see to charts, Nifty has final support 5545-35 on daily charts, next small stop seems around 5335 and then good stop seems around 5215. Weekly chart also confirm same, while monthly chart confirm 5215 only. It also show reverse of HNS making pattern till 5215. Stay away from market and wait for clear indication, which down now, just hope is 5545, if broken then next support seems around 5200-5250.

Below 5500 there’s gap which comes 5450, Nifty can try to feel the gap in coming days, not exactly today but in April series.

Once again emphasizing here – its corporate earning month and would remain highly volatile, some mild bounces could be there which can be used to book profits on longs and then to create shorts.

Intraday Resistance – 5685 – 5644 – 5569 and Support – 5453 – 5412 – 5337 (Pivot 5528)

Opening – A bounce expected as bears will give a tough fight and can try to bring Nifty once again its physiological level of 5550. Since global market ended flat with positive bias, a small gap up is expected.

========================  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.)

TVS Motors –

TVS Motor Company was the major loser in trade today. It ended down 11.5% at Rs 35.15. Reports suggest the company’s market share slipped over 2.5% to 15.46% since FY08. News that Honda Motorcycle and Scooters India has dislodged TVS from its number three position weighed on sentiment.

BHEL -

Bharat Heavy Electricals ended 2.1% down at Rs 178.5 on lower provisional FY13 earnings.

JSW Steel –

JSW Steel ended 1.4% lower despite its in Q4 crude steel production rose 2% at 2.11mt from 2.07mt. The share closed at Rs 662, down Rs 9.5 or 1.4%.

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

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

(Start exiting from stock if Nifty goes below 5500 mark)

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

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

MG Blog Since Jan 13 (Total 50,300) + Apr 13 = = +3150

Billionaire Club Since Jan 13 (Total 1,09,350) + Apr= -5700 + 13,600 (Profit on 9 Apr) = +7,900

(Booked profit in HPCL future = 11K, 300CE = 2600)

Today’s MG Mantra –

Trend is not clear or say is down, just due to oversold zone and continuous fall it may show some bounce which can be used to book profit on your longs and to create fresh shorts. 5600-5630 is the level.

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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.