Morning Bells (12 Oct 12)

Good Morning Friends.

Never explain yourself to anyone… because the person who likes you doesn’t need it, and the person who dislikes you won’t believe it.

So market was like in our fingers y’day, as I had expressed about S&P’s rating and other things, market rattles that warnings, infact we had expected under pressure first half and GREEN second half (50 pts range) was absolutely correct and we made handsome profit in options (almost doubled). So Y’day market just reversed the previous day’s losses completely and markets showed resilience despite weak overseas cues.

Sugar stocks also rose after reports suggested that the Rangarajan Committee, set up by the PMO, is going to submit sugar decontrol report to the Prime Minister today.

Fertiliser shares rose after the Cabinet Committee on Economic Affairs approved modified direct cash subsidy for urea, Govt. hiked the price of the widely used nitrogenous fertiliser Urea by Rs. 50 per ton. Deepak Fertilizers, Chambal Fertilizers and National Fertilizers were the gainers.

Some mixed (bad+good, stock wise) news are also there, India's merchandise exports fell by nearly 11% in September to US$23.7bn while imports in the same month rose by 5.1% to US$41.78bn, Oil imports in September surged by 31% to US$14.09bn while non-oil imports fell by 4.5% to US$27.68bn, the Government said on Thursday. So it could be good for oil companies.

So as used word football since past 3 days, now a day to see whether striker taking the ball forward or passing it. FII have made positions in Cash while shorted the futures, which shows ball will be passed either today or next day.

After S&P, now world banks have come to make pressure. Please join the events in a series and you will get dimmed but looking picture of days ahead.

The World Bank has scaled down its fiscal year GDP growth forecast for India to 6% from 6.9% citing infrastructure constrictions and slow policy reforms. They also highlighted the key reason which are affecting India growth include power shortages, corruption scandals in the mining and telecom sectors, and investor uncertainty due to pending legislative proposals the World Bank said in a report on Wednesday. (Reports IIFL.com)

Well market ended GREEN on Thursday and I hope you would have lightened up your portfolio ahead of major global concerns of slowdown in economy. (had already suggested to sit on cash would be better), lets have a thought on IMF Managing Director Christine Lagarde, she said in IMF-World Bank Annual Meetings in Tokyo, “Global economic growth is being weighed down by uncertainty about whether policymakers will deliver on their policy commitments”, “We need action to lift the veil of uncertainty. Many of us have debated what actions are needed, many of us understand what needs to be done, but it actually needs to happen,” she added.

She just expressed the concern on what I am drawing your attention repeatedly since past 3 months.

One Good news is - After repeated crash scams (specially after Emkay Global case), finally BSE & NSE has decided to inform you about your trade through SMS, I had received this SMS 3 days back (hope you would too), and well this is going to start from today, just to protect unauthorised stock market trades through investor accounts. The investor will have the facility to inform BSE where the details received through SMS does not pertain to the investor.

MARKET OUTLOOK –

Today we have two major results, Infy (before market open) & HDFC (in between), both gained 1% y’day ahead hope of good result (or was a TRAP). Beside corporate earning result sentiment would also partly hinge on IIP data (at 11PM), which is also scheduled to be announced today. Consumer level inflation is also due on Friday while the benchmark WPI inflation report is due on Monday, which will key consideration for RBI monetary policy review.

As per CNBC Awaaz poll, HDFC Bank's QE2 net profit is likely to grow more than 28%. While IT heavyweight Infy’s Q2 PAT seen up approx 3.6% (according to Citigroup analysts). On the hope Infy gained 1.5% y’day and if everything is also goes correct with Infy then it will be a good day for market else we will see a regular Friday i.e. choppy and RED blinking screen. For Infy, all eye will be on Will Infy cut its earnings per share guidance for the full year or not.

So be careful around 11PM as market always reacts sharply and remain volatile for few minutes just hit your SLs. Short term trend remain sell on rise till 5754 is not taken out on closing basis.

NIFTY –

As told y’da bull will try to make 5701, market exactly closed above that mark. Our prediction for 50 pts GREEN after EU flat was also helped us a lot.

Well, FII sold Index Futures while taken position in CM. Oct. series future OI stand on 2.53 i.e. OI reduced by 2+ lac which give sense for profit booking in shorts.

Now 5800CE & 5900CE have highest OI 83 lacs on long side while 5600PE has highest OI of 70 Lacs. As had thought that bulls need to break 5700 mark in this week else situation may go worst, now second challenge for them is to once again breakout of 5815 (Oct. Series High) which turned into strong resistance now, while on down side it need to protect 5585 mark else situation will be worst for rest of expiry as well as for next series as then 5450 & 5215 mark could also be possible (as per forming pattern on daily chart).

Vix has fell down to 16.49 and PCR comes to 0.96.

Resistance comes to 5740 – 5772 - 5815 and Supports comes to 5688 – 5656 - 5604.

So once again it’s giving sense for choppy market. Opening seems muted one and market may remains under pressure before IIP and then one can expect volatility 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 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. (Yes need to wait for Nifty settlement)

DLF - Hearing a public interest litigation (PIL) on the Robert Vadra matter, the Allahabad High Court has asked the Centre to respond to charges levelled against Vadra

KFA – No buyer was there for long time or say since start of Oct. series, y’day rose as much as 4.8 percent, after data showed a series of block deals on Thursday.

Steel - India is the 4th largest steel producer in the world and will soon be the second largest, said Union Steel Minister, Beni Prasad Verma on addressing the 46th Annual Conference of World Steel Association here y’day. The capacity is all set to increase further as Steel plants in both public and private sectors have taken up expansion and modernization programs, added Mr. Verma.

Tata Steel – Has achieved best ever quarterly saleable steel production at 1.87 million tonnes (MT) in the July-September period, in Q2 of the last fiscal, it had achieved 1.71 MT of the saleable steel output, official said in a report on Tuesday.

Power Sector - Another sign of reform has given by PM Mr. Singh in his inaugural address at the International Seminar on Energy Access in New Delhi y’dday, Mr. Singh said Govt has to provide 24x7 Electricity to all in 5 years.

Banks – HDFC Bank's QE2 net profit is likely to grow more than 28% yoy, suggested a poll estimate by CNBC Awaaz.

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 - is expected to post a rise in Q2 PAT and in profit in the quarter ended September 30 to Rs 2,380 crore, according to Thomson Reuter’s data, so mood is a bit upbeat now.

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

OPEN CALLS –

(Be with strict SL and don’t hesitate to book profit if Nifty shows strength)

Infy – Y’day we just doubled the 2600CE in an hour and closed call at 58

TM 300CE - @3.75 for TG 4.5-5+ SL 2.25 (Made high 4.55, hope you would have booked profit)

DhanBank - @55 for TG 70 SL 45

Jindal Photo - @145 for TG 160+ SL 130

Today’s MG Mantra –

Choppy, volatility etc are the few names to describe market today. Its also day of first major quarterly result so will be interesting to see how market reacts. It could be a golden Friday or Black Friday. Sit on cash, nothing harm in booking profit before IIP.

Have a Profitable day – MG

Disclaimer – I have shared my view as per my limited knowledge; please use your own skills to make a wise decision before execution of trade.