Morning Bells (05 Oct 12)

Good Morning Friends.

Never ignore somebody who cares for you… one day you may realize that you have lost a diamonds because you were busy in collecting stones.

Finally they did it! Match winner six! Y’day I had informed you that my guess is to Govt. is in mood to approve all reforms comes true.

Well, Finally the Govt. has rolled out reforms and all 21 big ticket items getting cleared by the cabinet Y’day. Here’s take a look to major decisions –

Cabinet cleared 49% FDI in insurance and cleared as much as 26 per cent FDI in pension (Need Parliamentary approval)

Long waited amendment in company bill (will be taken up in winter session)

Cabinet has also approved the declaration of five airports as international airports in cities Lucknow, Varanasi, Trichurpurli, Mangalore and Coimbatore.

I would like to clear you here that to push these bills, Govt. needs simple majority in both houses from those members who are present and voting in the house. So don’t get excited too much. Its cheers time but not a formal sign of victory.

Well, on other side in a circus act – Opposition told to protest the reforms and will bring “vote of confidence” in parliament. What a great drama, SP, BSP and BJD are also opposed to it while TMC and the Left are saying they will defeat the bills in Parliament. How much of you will agree on SP & BSP’s stand?

Now only pending is GAAR which will be on discussion later this month. Again my view is to Govt. is in the mood to accept it, otherwise why appointed this committee? So if recommendations get incorporated then that will be hugely positive for market.

Currency is getting strengthening and experts expecting it to reach 49 sometimes later this year of fresh start of next year. It would be good sign because inflation as well as the deficit, there is room for improvement because the currency has strengthened and approx 70-80% of the import bill is oil.

On Global front the eurozone debt crisis continues to act as a major overhang for the global economy. The US economy too seems to be losing some steam while China too is grappling with a deeper-than-anticipated slowdown

Spain is another worry on global front, Spanish Prime Minister Mariano Rajoy is desperately hoping that solution will emerge and save him from a Catch-22 situation - the pressures of the regional elections in his birthplace of Galicia on October 21 and accepting the bailout package from the ECB at the EU summit in Brussels on October 18. (Report MoneyControl.com)

This week Auto and Cement stocks will remain in focus as companies from these two sectors will announce their monthly sales volume data for September.

So once again, October series is full of promises and various actions globally. This is also month of corporate earnings so market will remain full of thrill. On global front any move from China to support its economy will be an added positive, particularly for commodities.

So next stimulus could be from China, Markets are now focusing on whether China will inject more stimuli by way of more infrastructure spending or a rate cut.

MARKET OUTLOOK –

Nothing much to say, don’t expect any big gap-up like we had seen on approval of FDI in retail. It would be normal gap-up and then market will watch out for further political development.

Market could remain in 50-70 pts range because of following reason, first it has major resistance at 5850, secondly its Friday so short traders will go for profit booking, also seeing 18 month high many big investors can opt cautious approach ahead of big events and corporate earning nos. next week. Be cautious on 5840-5850 mark. Also its Friday too.

Market trend remain buy on dips, so small correction could be used to make fresh entry at lower levels till 5672 is not broken out.

Had informed you earlier that breakout of 5740 will lead Nifty towards 5830-5850-5900 else market can take back from this range to test 5650-5600 mark.

NIFTY –

Vix is 16.44 and Nifty PCR 0.94.

Resistance 5812 – 5838 - 5868 and Supports 5775 – 5750 – 5672

Opening seems positive say around/above our first resistance level.

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 can decide stock move either side.)

My top pick for next 3 months are – Cement, Infra & Banks – yes not blindly to any stock, in select good stocks only.

Brent crude - can clipped to 105$ and could remain in the range 105-111 for Oct. series.

Banks – Govt. has decided to give interest subsidy of 2% a year to all state owned banks for farm loans upto Rs 3 lakh in 2012-13. Finance Minister proposed to continue the interest subvention scheme for providing short term loans to farmers at 7% p.a in FY13. Public sector banks (PSBs) generally charge 9% rate of interest on farm loans. Lenders can now claim for 2% back from the government of India while disbursing such loans at 7%.

Keep eye on Dhanalaxmi Bank and YES bank for short to midterm bet.

IT – Investors are entering to mid-cap IT industries on expectation that it will outperform in near future while large cap seen some pressure y’day while IT heavyweight seems under pressure.

Infy - Shares of Infosys Ltd. fell on Wednesday after CLSA's sales team said that the stock could drop as much as 40% from the current levels and announced a price target of Rs. 1566. Y’day it remained balance.

Insurance and Pharma – FII now eying on further reforms in sectors like insurance and pharma, so next big earnings can come into both sector.

CLOSED CALLS –

Nifty 5900CE - @31 for TG 55+ SL 15 (TG Achieved, booked 1 lot, today book second lot and close call)

PFC - @187 for TG 198+ SL 176 (TG Achieved, booked at 198+, call closed now)

Titan - @260 for TG 265++ SL 247 (TG Achieved and call closed at 267-268)

OPEN CALLS –

TM 300CE - @3.75 for TG 4.5-5+ SL 2.25

DhanBank - @55 for TG 70 SL 45

Jindal Photo - @145 for TG 160+ SL 130

Today’s MG Mantra –

Since all are talking for correction and big crocos can take advantage so it would be wise to keep strict SL for all your longs. Be cautious on 5840-5850 mark. Also its Friday too.

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.