Morning Bells (19 Dec 12)

Good Morning Friends.

A real truth of life – When any relation is new, people find excuses to meet you… but as it becomes  old, people find excuses to avoid you.

Oops!! First of all sorry friends as my prediction was bang on Nifty since past 8-10 days, even I had informed you all that there wont be any rate cut repeatedly. But today one prediction about reaction of market after RBI outcome went wrong. I was expecting a sharp fall if RBI disappoint and it was but all of sudden parliament proceeding take place and banking amendment bill was put on the table same time. Yes, timing match and then market recover very smartly from decline to positive.

The Reserve bank of India (RBI) in its mid-quarter review of monetary policy kept policy rates unchanged on Tuesday. RBI has been decided to keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.25% of their net demand and time liabilities; and keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent.

Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per cent, and the marginal standing facility (MSF) and the Bank Rate at 9.0 per cent.

Well, a highly volatile trading session ended with smart gains on Tuesday with the NSE Nifty just closing below the 5900 mark.

Today’s rally was seen on the back of optimism that the Banking Amendment Bill, which was tabled in the Parliament with hope that it will clear.

Markets did see a sharp sell off in the first half after the RBI disappointed with its verdict on interest rates. In addition, positive cues from the International equity markets also acted as a sentiment booster for market participants.

nfosys, Wipro, TCS, SBI, ICICI Bank, Tata Steel, Hero MotoCorp,  Tata Motors, Hindalco, Wipro, NTPC, Bharti Airtel, Sun Pharma, BHEL, HDFC were among gainers while RIL, Maruti Suzuki, ONGC, Bajaj Auto, HDFC Bank were among losers in Sensex and Nifty.

But now its clear that hopes for a rate cut in January 2013 and it will give sustainability to market and specially to rate sensitive stocks, yes that will drive the debt and the equity market.. On going forward stocks which were in the list for new banking licence will rally.

Shriram Group, L&T Finance, M&M Financial Services, Bajaj Finserve, Aditya Birla Nuvo and Tata Capital among the top contenders for banking licence and surprisingly Reliance Capital, IDFC are not in top list of experts.

MARKET OUTLOOK –

Now its time to see whether market move forward from here onward on the hopes of new banking amendment bill or choose to book profit as US fiscal cliff matter is still uncertain and no visible sign for a settlement between Democratic & Republican seen till date.

The INDIA VIX on NSE was down 3.2% and ended at 14.44 against 14.92 and FNO PCR is 0.91.

The rupee declined further and ended at 54.85/86, weaker than its previous close of 54.84/86.

S&P 500 (US) ended lower at 1440 up 10.29 points at the time of writing Morning Bells.

FII DERIVATIVES STATISTICS FOR 18 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	44184	1308.84	44682	1323.15	433781	12711.43	-14.31
INDEX OPTIONS	787042	23255.23	797109	23558.60	1601323	47281.79	-303.37
STOCK FUTURES	100153	2995.25	104763	3096.43	1194745	34895.30	-101.18
STOCK OPTIONS	93107	2659.80	94926	2718.01	76483	2145.20	-58.21

FII sold 498 contracts worth Rs. 14.31 Cr. and OI increased by 18,570 contracts signalling that FII have created fresh longs in Nifty & Bank Nifty.

NIFTY OUTLOOK –

In short y’day was the day to hit SLs & TGs as within few seconds Nifty fell down 40 points and then recover and went up 30+ points.

Today would be interesting to see whether market move up on the approval of banking amendment bill or not.

So remember – upside seems capped (except RBI surprise) and there’s more room for downside. As discussed earlier Nifty will face resistance in the range of 5950-5980 (more accurately around 5965) and downside it will have strong support around 5835 & 5785. So it would be better to keep 5785 as SL for longs in Cash and 5835 for FNO. Mid term trend is still buy on dips.

Resistance comes to 5927 - 5957 – 56010 and Supports comes to 5844 – 5792 – 5762.

Opening seems flat to positive.

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.)

Banks –

On approval of banking amendment bill now rate sensitive stocks will show good move in near terms i.e. till next RBI policy outcome which is scheduled on 29 Jan. 12.

Keep eye on – Axis Bank, SBI, Yes Bank, ICICI & HDFC seems good bet.

Realty, Infra & Power –

Realty – Will show some strength on hope of rate cut.

Infra – Will show some strength as after parliament session Govt. may go for some concrete announcement. Keep eye on Rel Infra and IDFC.

Metals –

Metals shine y’day and gave strength to market. Out suggested stocks moved up.

Metal will shine in near term, recommended metal stocks to watch closely are Tata Steel, Hindalco Industries  and Steel Authority of India  (SAIL).

============ 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.

Dishman - @118 for TG 130+ SL 107

DB Corp – @219 TG 240+ SL 201 (1-4 Week)

============ 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 MG Mantra –

Trend will clear after first half hour trade. So just wait for clear indication and then decide your trade.

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.

======== DLF HAD GIVEN EXCELLENT BREAKOUT =========
(Wanted to post y'day but due to RBI announcement I dropped that idea as, as per my expectation RBI had to disappoint)