Morning Bells (9 Apr 13)

Good Morning Friends.

A subject called LIFE is a difficult critical exam. Many fail in it trying to copy from others not realizing that each one has different question paper.

The markets continued its losing streak. The Nifty traded in a frustratingly narrow range of 32 points. In the last three trading session, the Nifty has shaved of about 200 points.

Weakness was seen in capital goods and IT stocks. Disappointing numbers from Bharat Heavy Electronics weighed on sentiment. The company saw its profits plummet close to 8% yoy.

Gainers –

Reliance Industries, Tata Power, Dr Reddy’s Laboratories, BHEL, Bharti Airtel, Maruti Suzuki, Gail India, HDFC Bank, Tata Motors, Tata Steel, Hero MotoCorp and NTPC were among the major gainers in Sensex and Nifty. 

Losers –

Infosys, Tata Consultancy Services, Wipro, ICICI Bank, HDFC, Sterlite Industries, Coal India, ONGC, Bajaj Auto, L&T, HDFC, ITC were among the major losers in Sensex and Nifty.

Sectoral – consumer durables, healthcare, oil and gas, FMCG, power, auto led while realty, capital goods, banking, metal, and disappointed.

Domestic Front –

No news at the moment.

Global Front –

US –

Global cues too haven’t been supportive. On Friday, the Dow Jones ended weak on poor non-farm data. The US economy added just 88,000 jobs during March, well below the estimates of 192,000. Spike in weekly jobless claims, lower ADP private payrolls and subdued non-farm payrolls are again casting dark shadows  over  the growth prospects in the US economy.

Asia –

In Asia, the Bank of Japan conducted its first government bond buying operation today. Last week, it had announcement a massive $1.4 trillion stimulus. The move had its intended consequences with the yen tumbling and Japanese stocks soaring.

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

The negative trend to continue, the breadth of the market is favouring declines. This remains an immediate concern. But as long as Nifty adheres to support of its November 2012 lows, a bounce back cannot be ruled out. However, the overall trend remains negative with resistance likely at 5630 -5650.

Another thought is that - option price is suggesting that large buying in at the money puts followed by huge shorting of Index futures by FII investors in the last two trading sessions suggests 5550 is crucial for Nifty. A break from here can see the Nifty move 100 points higher or we may see lower levels in this week i.e. next 2-3 days.

As told few times earlier, in such a critical situation one can buy Sun Pharmaceuticals, Dr Reddy's, Cipla, Aurobindo Pharma, these are main pharma stocks and phrama and FMCG considered to be defensive stock in uncertain condition in which we are right now.

So in short, there could be some more pain. The results for this quarter will reflect some of that pain in the next couple of months as more and more results get declared. The corporate earnings this quarter would not meet investors expectations is our belief. A lot of the midcaps have hit levels which are very low. The market broadly has seen that the consumer and the pharma stocks or defensive stocks have outperformed and stayed up at high valuations and rest of the market has been hit very badly.

The INDIA VIX on NSE was up 0.67% and ended at 16.77 against previous close of 15.16.

(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 seen gained by 25 paisa and was trading at 54.56 against its previous close of 54.81.

S&P 500 (US) was trading at 1558.04 up 4.54 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.

Intraday Resistance – 5594 – 5581 – 5562 and Support – 5530 – 5517 – 5498 (Pivot 5549)

Opening – Seems flat as global market recover overnight. But since Nifty closed below 5550 it may show some range bound movement till EU.

========================  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.)

RCom –

Anil Ambani-owned Reliance Communications may sell an 80% stake in its subsidiary Reliance Globalcom,  to a consortium led by Bahrain Telecommunications Company (Batelco) for around Rs 60bn, says report.

According to reports, the proceeds from these transactions, would be used to pay off RCOM's debt, estimated at Rs 370bn.

RCOM would retain a 20% share in the company for the first year, following which it has the option to sell that portion of the equity as well., says media report.

There were reports that Reliance Group would remain in the company only as an investor

Bharati Airtel -

The Supreme Court has postponed the 2G trial court summon issued for Bharti Airtel Chairman and Managing Director Sunil Mittal's appearance in court to April 1.

The 2G trial court had summoned Mittal to appear in court on April 11, after Central Bureau of Investigation named him as an accused in a corruption case related to allocation of additional spectrum in 2002.

Mittal had challenged the 2G trial court order on April 2, asking the Supreme Court to quash the order. The apex court will now hear the matter on the April 15, which is one day before his scheduled appearance at the 2G trial court.

BHEL –

Experts comments - The earnings are below expectations. We expected some kind of a negative surprise because in the previous quarter also the company had faced problems in execution and to that extent, there was definitely a bias on the downside.

What is crucial for the company is not the profit, but the order intake and the industry scenario.

LIC, a life saviour for Govt. as well as for most of Indian equity, Need to watch its exposure  –

State-owned insurer LIC trimmed exposure in key index mover stocks in the January-March quarter of 2013. LIC sold around 80 lakh shares in Infosys worth Rs 2,200 crore and offloaded 1.3 crore shares in HUL amounting to Rs 650 crore.

During the period, the insurer got rid of 40 lakh shares in HDFC Bank worth Rs 260 crore, 1.3 crore shares (Rs 260 crore) in BHEL and 20 lakh shares (Rs 140 crore) in Bank of Baroda . However, it bought 1 .8 crore shares in Cairn worth Rs 540 crore in the same period.

Earlier in March, LIC rescued government's share sale of steel major SAIL , by acquiring 70.57 per cent of the total offer. This amounts to about Rs 1,069 crore, of the total Rs 1,517 crore which the government raised by divesting 24.04 crore shares or 5.82 percent of its stake in Steel Authority of India through the offer for sale route.

With the big buy, LIC helped the government inch closer to its revised target of raising Rs 24,000 crore through disinvestment in FY 13.

In FY12, LIC had pumped in close to Rs 12,000 crore during the concluding minutes of government's Rs 12,750 crore equity sale in ONGC . It had also acquired shares worth over Rs 2,000 crore during the stake sale in NMDC , NTPC , Hindustan Copper , Rashtriya Chemicals and Fertilisers , Nalco and Oil India in FY13.

==================== 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

(Profit of Mahidra Satyam is not included here because it was in investment basket and call was active since Dec. 12, once can also compensate its profit with loss in On Mobile)

Billionaire Club Since Jan 13 (Total 1,09,350) + Apr= -5700

(This is first time since Jan 13 when BC PL went in RED)

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. 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.