Morning Bells (21 Jan 13)

Good Morning Friends.

From Guru Grantha Saheeb – Taqdeer ke likhe par kabhi shiqwa na kar, tu abhi itna samajhadar nahi hua ki Rab ke iraade samajh sake.

First of all congratulations to all blog members, visitors and well wishers, today we are going to hit 1Lack blog visitor. In just 4 months and we have achieved this achievement while for most of starter its really hard to achieve. It was not possible without your love, I will be always thankful for this love.

Why these lines are there – because Friday gave a pain which I can’t forgive shortly. We were bullish on OMCs and were holding 340CE which we had bought at 5.5, on Friday and don’t know why but it got squared off at same price and just after squared off it went to 45K profit, oops we just missed wonderful profit. So I just reminded these lines from Grantah Sahib and now trying to settle.

The partial decontrol in diesel prices triggered a rally of sorts in OMCs sending the main indices higher for the day. The Sensex ended above the psychological 20,000 mark led by to touch a two-year high.

The rally was co-supported by RIL which gained over 1% and hit a fresh 19-month high on the hopes that it will post better Q3 Nos.

New Banking Bills -

The government appears to be making the right noises in pursuing fiscal consolidation. Should this continue, the current momentum is likely to be sustained. The coming week again has a number of  index-heavyweights announcing their numbers. Ride the rally and look at adding some positions in case of a healthy correction.

The Finance Ministry has expressed the view that the Reserve Bank should allow real estate companies and broking firms to set up banks as adequate safeguards will be there to prevent exposure of promoters to related entities.

In its comments to RBI on the giving out new bank licences, the ministry has said that such entities can be allowed, but there should be complete ban on taking exposure in the group companies or entities related to promoters, sources said.

Even the vendor and large customers of such promoters can't get loan from the new bank, sources said, adding that this move will minimise accumulation of risk.

So, the firewall has been proposed to avoid undue influence of bank CEO to lend to the group companies, they added.

In a big move for Insurance sector –

The Parliamentary Standing Committee on Finance has rejected the proposal to increase foreign direct investment to 49%. The Standing Committee headed by senior BJP leader Yashwant Sinha—who had scrutinised the Bill— said that the Amendment to the Insurance Bill is stuck on only one concern on FDI. Also, the government's unwillingness to reach out to opposition is holding back the amendment.

FII inflows continue unabated (FIIs have already pumped in ~Rs90bn this calendar year into Indian equities) amid hopes that government will continue with further reforms and deliver a credible plan on fiscal consolidation. 

My View – Since govt. don’t want to be blamed and to face strong oppose by citizen its passes the control to OMCs, and still OMCs will still seek signals from government for any price hike. It shows political incapability to take any tough decision. So don’t get too excited by decision right now, reason is simple one - When petrol was deregulated, OMCs had no courage to increase the price and always looked at Govt. to give signals for an increase. But yes its well planned and well decided roadmap for next inning i.e. next Govt. will take benefit from these announcements/decisions.

Gainers – ONGC, RIL, SBI, ICICI Bank, Maruti Suzuki, BHEL, HDFC, Bajaj Auto, L&T, Tata Power, NTPC and Hindalco Inds were among gainers in Sensex and Nifty.

Losers - Dr Reddys Lab, M&M and HUL were among losers in Sensex and Nifty.

Sectoral - Oil and Gas, PSU, Power, Realty, Capital Goods indices were the gainers while IT, Auto, Metal, Consumer Durables, Bankex packs were the losers. The BSE Small-Cap index and BSE Mid- Cap index were trading down by 0.41% and 0.14% respectively.

Importantly - Stocks which hit 52-week high during the week were HPCL, Essar Oil, ONGC, RIL and  Satyam Comp while Hero MotoCorp , Maharashtra Seam, NIIT  and Rama Petro hit 52-week low during the week.

On Global front –

Retaining India's credit rating at the existing level, global agency Moody's has cautioned that a high fiscal deficit could pull down the growth in the coming years.

=======================  MARKET OUTLOOK  =======================

After a blockbuster week, once again market is set to react on industry heavyweight this week, which care HDFC (Mon, 21 Jan), NTPC (Mon, 21 Jan), HUL (Tue, 22 Jan), L&T (Thu 24 Jan), Marutu Suzuki and Cairn India.

The INDIA VIX on NSE remained flat and ended at 14.01 against previous close of 13.99.

FNO PCR is 0.92 against previous close 0.93.

This week come good with Indian Rupee, Rs. gained smartly around 68 Paisa against USD on Friday and was trading at 53.71/72 against its previous close 54.39, highest level in more than a month. But it can not be considered good in terms of FII investment.

S&P 500 (US) was trading higher at 1485.98 up 5.04 then its previous close at the time of writing M Bells.

Now next trigger is RBI policy on 29 Jan 12. Here please remember I am expecting to cut the repo rate by 25bps in the upcoming monetary policy and no rate cut.

=========================  NIFTY OUTLOOK  ==========================

Nifty just closed below the level 6070, this range was we discussed throughout last week, as still bulls need to close above 6070 to sustain the rally. So today would be interesting to see whether profit booking comes or RIL to pull Nifty above 6100 mark. For longs 5935 is SL and 6085 for bears.

Buying in selective stock will continue.

Nifty is in range of 5835-5885-5990-6040-6090 for current week.

Resistance – 6082 – 6100 – 6117 and Support – 6047 – 6030 -6012

Opening seems flat and some profit booking can be seen at higher levels.

========================  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.)

ITC –

ITC shares closed marginally higher after posting a net profit of Rs. 20.5bn for the quarter ended December 31, 2012 as compared to Rs. 17009.80 mn for the quarter ended December 31, 2011, which is a growth of 21%. The stock closed at Rs. 2867 up Rs.1.90. It hit a high of Rs. 289 and a low of Rs. 284.

Wipro –

Shares of Wipro Ltd were down 8% after Q3 results and a muted guidance of 0.5-3% US dollar revenue growth in the fourth quarter. The company has posted a net profit after taxes, Minority Interest and Share of Profit of Associates of Rs. 17164 mn for the quarter ended December 31, 2012 as compared to Rs. 14564 mn for the quarter ended December 31, 2011. The stock closed at Rs395, down Rs35.30. The stock hit a high of Rs439 and a low of Rs395.

OMC –

Now analyst get enough time to analyze the Govt. decision. Its good in long term but for short term its remain subdued, so profit booking is not ruled out in OMCs

RIL –

Reliance Industries Ltd has posted results for the third quarter ended 31st December, 2012. Its net profit stood at Rs55.02bn as compared to Rs44.40bn in the corresponding quarter, up 24% YoY. Its Q3 sales stood at Rs938.86bn. Total Income is Rs. 956260.00 mn for the quarter ended December 31, 2012 where as the same was at Rs. 868520.00 mn for the quarter ended December 31, 2011. The Scheme of amalgamation of Reliance Jamnagar Infrastructure Limited (RJIL), with the Company from the appointed date of April 01, 2011, has been sanctioned by the Hon’ble High Court of Gujarat at Ahmedabad.

Analysts on an average were expecting expect a 17% year-on-year jump in net profit to Rs 5,200 crore. Revenues may grow around 6% to Rs 90,000 crore

Reliance Industries has bought back shares worth over Rs 3,900 crore from public shareholders through an about year-long share repurchase programme, achieving just about 38 per cent of the target.

RIL Buyback Programme–

The share buyback programme, the largest-ever by an Indian company, concluded yesterday, but the final figure might change as the data has been disclosed on the stock exchanges only for shares bought back till January 16.

Billionaire industrialist Mukesh Ambani-led Reliance Industries (RIL) began the buyback programme on February 7, 2012 with a target to repurchase shares worth about Rs 10,440 crore from the public shareholders. The company had offered to buyback the shares at a price of up to Rs 870 each under the programme.

The company said in a notification that the buyback of equity shares, as approved by its board of directors on January 20 last year, closed on January 19, 2013, but did not disclose the final tally.

TV 18 –

TV18 Broadcast   turned corner during the quarter ended December, reporting a consolidated net profit of Rs. 21.3 crore, driven by strong growth in broadcasting and distribution revenues. Quarterly revenues stood at Rs 512.4 crore, up 72 percent year-on-year and a gain of 59 percent quarter-on-quarter. The company had been reporting net losses at the consolidated level for five successive quarters till September 2012.

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

Wait is the winning key in stock market, don’t get impatience.

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

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

Mahindra Holiday – @334 TG 375+ (Active from 15 Dec 12) CMP – 330 (Gain -1%)

Satyam Computer – @103 TG 130+ (Active from 15 Dec 12) CMP – 115 (Gain +11%)

On Mobile – @44 TG 60+ SL 41 Qty 2K (Active from 01 Jan 13) CMP – 45 (Gain +2.5%)

============ HOT SHOT ============

Keep eye on following stocks, if Nifty shows strength then these stocks can give you reasonable return in very short term –

============ PL Sheet (started from Jan 2013) ============

(If someone find any error in PL, please draw our attention)

MG Blog (Total 25,650) –

Cash = +9,650.00

FNO = +11,500 + 4,500 = 16,000

Billionaire Club

TOTAL = +29,750.00 + 14,750 = 44,500

Today’s MG Mantra –

Still one need to remain cautious on higher levels till 6070 is not taken out on closing basis.

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.