Morning Bells (12 Sept 2012)

Good Morning Friends,

As already informed on Monday that fuel hike seems off the table comes true y’day, the CCPA outcome says a hike in the prices of diesel, LPG and kerosene was put off apparently following strong reservations within the Congress even though Oil Minister S Jaipal Reddy said the increase was unavoidable. As per oil minister stated that oil companies is bearing losses of Rs 1.88 lakh crore due to rise in crude oil prices and fall in the rupee. Now this matter will take up in the forthcoming meeting of CCPA which is likely to held on September 18 to have a fresh look on the issue.

The cheer for market was - RBI on Tuesday raised the limit of external commercial borrowings by any individual company or group. As per the new regulation, a company can borrow offshore funds to the tune of 75% of the average foreign exchange earnings in the immediate past three years or 50% of the highest foreign exchange earnings realized in any of those three years, whichever is higher.

The effect of this policy is - Currently, a company is allowed to raise 50% of the average annual export earnings during the same time mentioned above. This measure is likely to serve the twin benefits, it will bring some stability in rupee’s movement against the U.S. dollar, and the high rate of inflation too can be controlled on account of lower input costs. Importers are benefitted as rupee becomes strong from steady. No doubt, it will prompt a positive sentiment in the market.  (Source MoneyControl.com)

Also Govt’s statement boosted the market sentiment - the Govt. on Tuesday said it will take fiscal measures to control inflation so that the RBI can look at growth oriented monetary policy. This once again raises the hopes for banking sector.

Germany’s Federal Constitutional Court is due to rule on Wednesday on the country’s participation in the European Stability Mechanism (ESM), as I flashed news during the day that German parliament won’t oppose to ESM. So that was the only reason market recovered later.

Today all eyes will be on domestic front - markets will react to the latest industrial production data which is expected at 11AM, so cautious approach is suggested, better to book profit in first half and then to wait for EU cues. If I see reports on various Industrial output is slowing down but main point is how our big experts (FIIs & DIIs) consider the output, only their view will decide the action of later part.

Once again, the week is full of thrill and volatility on both domestic as well as on global front. So enjoy the ride till it long last.

MARKET OUTLOOK -

Market has taken some breathing space but Market will remain highly volatile and people may lose who will be without SL in the market. As today it has 2 shocking wave (IIP & German verdict), sorry friends it was confusion about IIP in mind y’day when I was writing text and I thought y’day was 12 and that’s mentioned IIP no.s in y’day M Bells though I mentioned date correctly. Well today is that day and keep eye on it.

Opening seems sedate ahead of important decisions i.e. positive one.

NIFTY –

Finally Nifty has crossed 5385 and now on the door of 5400. Since OI increased in NF indicating fresh longs were created in Nifty & Bank Nifty. As I had mentioned that till 5335 is safe on closing basis trend remain buy on dips and Y’day Nifty got support there.

I believe as per current data that now Nifty is in the range of 5300-5500, so at the moment we are in the middle. 5335 will still act as trend changer. Now supports comes to 5365 & 5350 while Nifty face resistance at 5400 (if not opened above 5400 mark) and then 5415 & 5435. So data shows Nifty will remain in narrow range till result of any one event.

Trend remains buy on dips till 5335 is safe on closing basis.

STOCK OUTLOOK -

Banks – Banks remain in news and can show strength if IIP & German verdict go smooth. Bank lovers can keep eye on SBI & ICICI.

TM- Finally it made breached 250 marks but again went back to seat. As suggested TM will face resistance to its favourite band 252 then 254 and then 257, so as suggested 254 seems best level to book profit. While 241 will act as ultimate SL for longs. If everything goes smooth with market we will see TM around 254, how long it will stay there can’t say. We have also build some position in TM 260 (@3.5) & 270 (1.5) calls.

OPEN CALLS –

(Now we need to close our open positions slowly-slowly. Liquidity lover can also close their positions)

Infy - Y’day we made good profit in Infy 2550 call, initiated @30 and booked part profit at 42. Chances are still bright with Infy may be a gap up opening. 2550 is the level where one should need to take precaution.

Apollo Tyre – (bought @94 and @92) hold stock for updated TG 98+ with SL 86.

Cox&Kings - (TG 148, SL 121) its below its good support 129, will wait for mkt and then will think to average our buying levels.

FDC - (Bought at 88) hold for TG 94+, SL 78

Bank of India - (bought 358) TG 375+ SL 352

Today’s MG Mantra –

Don’t make fresh position till IIP Nos. If you are going long then make only Intraday positions.

Have a Profitable day – MG

Disclaimer – I have shared my view as per my limited knowledge; please use your own skills before making a wise decision.