Morning Bells (24 Sept 12)

Good Morning Friends,

Attitudes are like wrist watches… every watch show different time than others… and everyone thinks his watch is showing right time.

Sorry, Y'day around 9.45 night my MTNL net went down and was waiting till late night. Since all of my online resources got stuck and that's MB remained incomplete. I will try give you some clue shortly, till then please have patience and whatever I have, posting here.

Well, I hope last was good for most of you as bulls run has given good profit as well as chance to exit from long stuck positions.

So on Friday Nifty finished at its highest closing level in over fourteen-and-a-half months, it was a clear reaction to the reform measures announced by the Govt. As I was telling you since past 2 months that market is driving only on liquidity, my thought will remain same for few more time as the rally right now is more about liquidity and less about fundamentals. You will be surprised that in just three trading sessions i.e. Sept. 14-18, FII pumped in Rs 6262 Crore into Indian stock market.

Well to my sense after such a smart rally market (14 months high) market will take a back look sooner or later because it was an overreaction to reform announcement as fundamentals are still weak, IIP has been slowing down, inflation is not yet under control, oil prices are continue with rise, and corporate earnings will show effect of such fundamentals soon. So if time being trends persist, the market would be back to some extend in next couple of weeks.

I have one more strong reason for this back foot – As told many times, Govt. has announced FDI but reality is, it will take some time for the FDI policies in retail and aviation to bring in the much needed foreign capital. And the news of fuel hike on which market has reacted sharply i.e. hike in diesel prices and the cap on the number of cooking gas cylinders is not enough to meaningfully reduce the fuel subsidy bill.

MARKET OUTLOOK –

Nifty reached in overbought zone, and that’s suggesting slightly cautious approach till expiry. But as said its bulls rally so don’t try to short on wild level else it will give you deep pain. Trend remains buy on dips on select stock basis. Now people are reshuffling their portfolio and that’s we have seen some stocks are not participating in market instead of big rally.

NIFTY –

Nifty reached in overbought zone, and that’s suggesting slightly cautious approach till expiry. As I had informed you few days back that bull cementing the 5600 mark,  now it will act as strong support for bulls and strong resistance for bears.

PCR rose to 1.25 and India Vix 18.93. Resistance has come to Resistance 5748- 5806 – 5893 and Supports has come 5604 – 5517 - 5459. So close below 5459 will favour bears.

Trend remain buy on dips till 5459 is not broken on closing basis, it will be a trend changer signal.

Opening seems sedate with mildly negative outlook ahead of expiry, today market may remain under pressure and bull will try some positive move but still would suggest to go for cautious approach.

Today’s MG Mantra –

So, as long as liquidity continues to pour in, fundamentals will have to take a backseat. So enjoy the ride with proper safety belts is the MG Mantra for next few sessions.

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.