Morning Bells (10 Dec 12)

Good Morning Friends.

Before burning other things Matchstick first burn itself. Anger people are also like matchstick, they destroy themselves first before harming others.

Finally as expected Govt. has won FDI in retails in RS too. UPA defeated opposition by 14 votes, i.e. 123 to UPA and opposition got 109 votes. We had discussion and informed about FDI in LS & RS that it seems just formalities because when Govt. agreed for voting was a indicator that UPA has exercised its no.s in both houses, thought LS was a bit easy but finally BSP made it simple in RS too.

But Indian market snapped a three-day winning streak on Friday as market participants preferred to take some profit off the table post the win on FDI in retail by the UPA Govt. Except Consumer Durable and the Auto index all the major sector indices ended in the red.

Goldman Sachs has said that India's GDP may exceed all expectations next year as there are signs that policymakers might spring up positive surprises.

Reserve Bank Governor D Subbarao last week said he is expecting inflation to trend down starting the fourth quarter (of the fiscal year ending March 31, 2013).

Well, we are moving towards year end, it was a good year for Indian market and FII have made net investments of USD 21 billion so far in the year 2012. Its the second highest net inflow by in a single calendar year since their entry into Indian capital markets in 1992.

In 2010, overseas investors had made net investments of about USD 29 billion (about Rs 1,33,266 crore) while FII had pulled out USD 358 million (Rs 2,714 crore) in 2011.

So now need to be cautious at this point as investors typically sell stocks to cut their losses at year end.

Industrial Production No. on – 12 Dec 12

Wholesale Price Inflation on -  14 Dec 12

MARKET OUTLOOK –

As discussed in last tow MBells about FDI in retail voting in parliament and had discussion that after confirmation market may take rest.

Nifty is very close to strong resistance levels of 5,950-5,980, if broken then 6040 would be next strong resistance zone, so any big rally from current levels is unlikely at the moment, before continue its winning streak market need some rest through consolidation or a correction.

So we need to be cautious this week as it could be a disappointing or choppy week.

Market seems in uptrend and participant eagerly waiting for breakout of 6000, but it may not be that much easy. The winning streak on FDI will give a lot of courage to Govt. to go ahead quicker, maybe during the session or post session, with a lot of things, which are still incomplete, to revive the economy back into action

So now market again will turn to further new flow i.e. proceeding for pending bill in parliament and will look for global cues.

In the last two decades, the last month of the year has generated returns between 0.7% and 15.7%, which has given birth to the December phenomenon theory. Only four times in the last 20 years -1994, 2000, 2001 and 2011 - December has generated negative returns, states a recent Morgan Stanley report.

The INDIA VIX on NSE was down 1.9% and ended at 14.96 and PCR is up at 0.86.

The rupee declined 0.39% and traded at 54.68 against previous close 54.29 as per NSE data.

FII DERIVATIVES STATISTICS FOR 7 Dec 2012
	BUY		SELL		OPEN INTEREST AT THE END OF THE DAY		Difference
	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores
INDEX FUTURES	41495	1238.69	29092	869.23	395048	11588.46	369.46
INDEX OPTIONS	554116	16461.55	550525	16361.76	1461656	43220.81	99.78
STOCK FUTURES	44338	1285.32	53433	1589.17	1104882	32010.54	-303.85
STOCK OPTIONS	61356	1757.72	61087	1751.20	68167	1903.57	6.52

FII bought 12,403 contracts worth Rs. 369.46 Cr. and OI increased by 9919.

NIFTY OUTLOOK –

Profit booking seen in Index and main indices. Now all is set good for time being and most of it was already priced in though a bit doubt always remain there so this volatility was just part of that. Now I guess traders can go for profit booking and market may see a small correction. May be it can take place this week. Going forward 6050 – 6100 is on card.

Historical data shows that Dec seems a month for 3%-4% gain, but situation are different a bit from past.

Nifty will face resistance at / in the range of 5950 & 5980 while 5785 is the SL for longs for short term trend.

So for short term view Nifty seems in the range of 5785 – 6000.

6000CE has highest OI of 88.12 and seems call writer get activated as profit booking seen and call writing seen.

On short side huge position built up, 5500PE still has highest OI of 71.46 Lacs with addition of 2.35 Lacs while 5800PE has second highest OI of 66.95 lacs with addition of 3.47.

Resistance comes to 5941 – 5976 – 6003 - 6040 and Supports comes to 5880 - 5854 – 5819 - 5785.

Opening seems flat and under pressure as guessed all was priced in and people can go for profit booking, so market remain choppy. People who have already initiated longs need not to worry at the moment and can keep SL 5785.

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.)

Realty, Infra & Power –

Now, with the hopes of the Central Electricity Regulatory Commission (CERC) hearing resuming from December 11.

JPA –

The management has confirmed that their stake sale in the cement division, which is situated in Gujarat for about 4.8 million tonne, is likely to happen in the next three weeks.

Power Grid –

Power Grid Corporation of India Ltd has announced that the Board of Directors of the Company at its meeting held on December 06, 2012 have accorded approval for (a) formation of a Joint Venture Company With Odisha Power Transmission Corporation Ltd for taking up Intra State Transmission projects in the state of Odisha; and (b) formation of a Joint Venture Company with Bihar State Power (Holding) Co. Ltd. for taking up Intra State Transmission projects in the State of Bihar.

The scope of Intra State works is yet to be finalized.

REC –

REC has come out with a tax free bond issue offering 7.72% and 7.88% to the retail investors for a tenure of 10 years and 15 years, respectively. Interest received on the bond is fully exempt from income tax.

Telecom –

FDI in telecom sector is shrinking, inflows plunging to USD 43 million in the April-September period of the current fiscal, had attracted USD 1.9 billion in April-September 2011, according to the latest data of the Department of Industrial Policy and Promotion (DIPP).

According to market experts the sector is facing a lot of problems domestically. Industry is shrinking in terms of margins and profitability and that could be the main reason foreign investors are not participating.

Overall, FDI in India declined by about 33 per cent to USD 12.84 billion in the first half of this fiscal, from USD 19.13 billion in the year-ago period. (MoneyControl.com)

MG’s Note – Bharati Airtel could be an exceptional for this sector and telecom sector can back on track once Govt. will finalized spectrum auction policy.

Life Style Segment –

There’s news of good salary hikes and signal of increasing life style expenses. One can keep eye on Mahindra Holidays & Thomas Cook.

Coal & Minings –

NMDC -

The government is likely to sell its 10 per cent equity this week in iron ore miner NMDC , which could fetch the exchequer nearly Rs 6,300 crore at the current market price. The stake sell could happen either on Thursday or Friday, according to sources.

MG’s Note – It could be on sell counter.

KFA –

Looks attractive post Eithad talks and seems Eithad looks serious player and taking things serious to enter Indian market. If it comes to brand recall then KFA has good brand recall value among its competitors.

United Spirit –

Is giving good moves, intraday traders can watch 2-3 days its movement and then can earn good chunk of amount in intraday to one week swing trading.

Auto Sector –

Post FDI approval now its turn for beaten sectors to outperform.

Tata Motors -

TM will among those stocks who can get benefit of it. It may move to 287-289 level in coming days and then to 302. Keep SL 262.5 and then 254.

============ 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 profit if Nifty doesn’t shows strength.

DB Realty - @128 for TG 145+ SL 107 (plz book profit above 140)

Dishman - @118 for TG 130+ SL 107 (Has given buy signal and may see some move in this series)

Jindal Photo - @145 for TG 160+ Updated SL 126 (126 on closing basis)

DB Corp – @219 TG 140+ SL 201 (1-4 Week)

SBI call spread – 2100PE @11 SL 4, 2400CE @23 SL 10 (hold till next instruction)

Hero MotoCorp – @1820 SL 1800 TG 1875+ (Positional)

Rel Infra – @501 Updated SL 512 Updated TG 520+ (Made high 518.4, Booked profit at 512)

============ INVESTMENT BASKET ============

(Stock in this section is with view of 3 months to 1 year)

Mahindra Holiday – @334 TG 375+

Satyam Computer – @103 TG 130+

============ TODAY’S PICK ============

(Intraday to 1-2 sessions) –

For more update – stay on blog during market hours.

Today’s MG Mantra –

Though Nifty is in uptrend but need to be cautious as Nifty need some rest here and after such good move throughout the year investors can go for some profit booking.

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.