Nifty Down after 2-day rally

The benchmark Nifty was flat with a positive bias in opening trade amid a choppy trade. The index was consolidating at around previous closing value after a rally seen in previous two days.

Equities are likely to be the best performing asset in the coming decade, says Ridham Desai of Morgan Stanley. "We expect the Sensex to deliver annual returns of 15.3% over the next 10 years. Our view is that the risk-reward ratio for Indian equities will make it the most attractive asset class in the coming decade. We believe that Indian equity returns are likely to be less volatile in the coming decade than in the previous 10 years," he explained.

Among frontliners, ACC, Ambuja Cements, Tata Motors, Bajaj Auto, GAIL, Tata Steel (ahead of numbers), L&T and BHEL were on buyers' radar.

However, Reliance Communications, M&M, HDFC, Jaiprakash Associates, Dr Reddy's Labs, ONGC, Infosys, TCS, Bharti Airtel and Reliance Communications were witnessing selling pressure.

At 9:17 hours IST, the 30-share BSE Sensex was trading at 18,266, up 65 points and the 50-share NSE Nifty rose 14 points to 5,470.

The CNX Midcap went up 11 points to 7,727 and the Nifty Junior gained 24 points at 10,823. About 638 shares advanced as against 253 shares declined on National Stock Exchange.

Midcap & Smallcap space:

Results reaction: Amtek Auto was up 3% while Ispat, Jubilant Life, Deccan Chronicle and Unitech lost 2-4%.

Escorts rose 3% and TVS Motors was up 0.8%. IOB gained 5%.

Reliance Broadcast and Videocon Industries were up 2.5% each.

However, Sun TV lost 3%. HDIL, Reliance Capital and Ashok Leyland fell 0.5%.

Share Market Tips

What is Nifty and how trading ?

1. Nifty (S&P CNX Nifty) Sensex on BSE (Bombay Stock Exchange) and NSE (National Stock Exchange), the Indian stock market index
2. Trading is done on Nifty contract which is also called as Nifty future derivative. Nifty derivative movement is based on Nifty index.
3. Nifty Lot Size - Nifty derivative consist of a lot of 50 quantities of Nifty. So if you want to buy Nifty contract then you have to buy at least one lot. The trading in Nifty contract is done in lots. Small traders can even buy Mini lot of Nifty contract which consist of 20 quantities of Nifty.
4. Nifty Expiry - The Nifty derivative expires every last Thursday of the month. In India we have three month future derivatives for trading. For example - In the month of October, we have October, November and December month Nifty derivative for trading. Current month derivative will have more liquidity (more volumes) as compared to other two months derivatives. A new contract is introduced on the trading day following the expiry of the current month contract. If the last Thursday is a holiday then contracts expire on the previous trading day.
5. Based on your trading position your account will get adjusted on daily basis as per the closing price of Nifty derivative contract. For Example - If you buy one lot of Nifty at 4950 and Nifty closes at 4500 then Rs 50 as profit (total profit will become 50 qty x Rs 50 = Rs 2500) will get credited in your account. On the other hand if Nifty went down Rs 50 then Rs 2500 will be debited from your account. If you do not have balance in your trading account then very next day your position will be squared off by your broker. Some brokers provides some extra days to transfer money in your trading account.
6. If you buy and sell on a same day then the profit and loss will be adjusted in your trading account accordingly.
7. Trader has to square off the positions before or on expiry. If you does not square off then the contract expires on the expiry date and the money gets adjusted in your account.
8. You can buy and sell Nifty derivative contract in your trading account/terminal. Separate account is not required.

Advantages of trading in Nifty

•  Trader get margin to trade on Nifty.
•  Small traders can even buy Mini lot of Nifty contract which consist of 20 quantities of  Nifty. To buy one lot of Nifty mini lot, you need approximately Rs 13,000.
• You can do day trading (Intraday trading) as well as carry forward (hold your nifty positions) till the expiry period of your contract (minimum one month expiry and maximum three month expiry)
• You can trade both sides of the Nifty means if you feel market is going up then you can buy Nifty contract and if you feel market is going to fall then you can short sell Nifty and later buy it to cover up your positions.
• Very Low brokerage rates. Low brokerage rates increases your profit percentage. We are offering 0.03% for buying and 0.03% for selling.
• High liquidity - Very high volumes are traded in Nifty future contract which will make the trader to square off at any time and at any price.

Risk Involved in Nifty trading

Trading in Nifty future is a risky, heavy loss can occur. Basically trading involves big risk either you trade in Nifty future or in any other future contract or in stocks. Trading requires lot of experience and market knowledge. Investing and trading are two different factors in share market. Investing is not as risky as trading.

Buy Mahindra & Mahindra

Buy Mahindra & Mahindra Ltd CMP: Rs. 665 Target Price: Rs. 775

Mahindra & Mahindra Ltd is the flagship company of the Mahindra Group, present in diverse business areas. It is the leader in UVs (56%) and tractors (41%), and is growing significantly in financial services, tourism, infrastructure development, trade and logistics through its various subsidiaries and associate company. Besides thriving in UV and tractor businesses, the company has a sizeable market share in the LCV market (~30%), three wheelers (7%) and two wheelers (~5%). To venture into the MHCV space, M&M would be launching trucks ranging between 16MT and 49MT, in collaboration with Navistar International USA Inc.

Mahindra & Mahindra dominates the domestic tractors market, commanding 41% market share. Three key structural factors—higher farm product prices, firmer labour wages (notably NREGA), and greater commercial usage of tractors—have significantly increased rural incomes and brought smaller farmers (owning <4 hectares of land) into the "tractor purchasing" ambit. These factors are likely to drive long-term tractor demand, which Mahindra & Mahindra (M&M) is well-positioned to capitalize on.

Sensex at 18K

Indian equity continued their upside for the second consecutive day - the Nifty was inching up towards the 5400 level at 10:43 hours as global markets were on uptrend on stablility in Egypt after President Muhammad Hosni Sayyid Mubarak resigned on Friday. He handed over control of the country to the military after headed country for 30-years as a president.

About 10 shares gained as compared to one share declined on NSE Nifty 50. Financial, metal, capital goods, auto and power companies' shares were leading the markets higher. However, heavyweight Reliance Industries on sellers' radar today with nearly one percent fall as there were reports that the company may have to pay fine for insider trading.

Rakesh Arora of Macquarie Capital Securities is bullish on Indian markets. He said that the Sensex is likely to touch 22,000 by the year-end.

Arora explained that there is a renewed interest as the Indian growth story looks largely unparallel in the world. “Talking to the investors, it does appear that they are looking for buy ideas. I would say that we had a short and sharp correction and maybe the investors will come back at these levels, he added.

The 30-share BSE Sensex was trading at 18,001, up 282 points and the 50-share NSE Nifty surged 88 points to 5,397. The broader indices were outperforming the benchmarks - the BSE Midcap and Smallcap indices rallied 2.5-3%.

You Should Know Before The Opening Bell

In the US markets, stocks ended mixed with the Dow ending its winning streak, closing fractionally lower after rising for eight straight sessions as hopes for a possible resolution to the political unrest in Egypt lifted equities off their intraday lows. For the most part, risk-sensitive asset markets held up.

In economic data

10 things you should know before the opening bell

* New claims for jobless benefits fell to their lowest level in 2.5 years down 36,000 to settle  at a seasonally adjusted 383,000.
* Wholesale inventories climbed 1% to their highest level in almost two years while sales rose much less than expected.
* Business inventories rose to USD 430.5 billion, the highest since January 2009.
* Foreclosures continued their upward climb in January surging 12%.
* The US treasury monthly budget report showed a January deficit of USD 49.8 billion versus $80.0 billion last month.

And in the day's economic data to watch out for:

* The US international trade gap in January is expected to rise to USD 40.5 b from USD 38.3
* The University of Michigan’s consumer sentiment index is expected to rise to 75.0 versus 74.2

European shares fell on Thursday, hit by some disppointing results from index heavyweights like Credit Suisse and by renewed sovereign debt concerns after Portugal's government bond spreads widened.

The US dollar fell to a 3-day low against the euro on Wednesday, after a strong treasury debt sale accelerated bearish sentiment in the wake of comments by Federal Reserve chairman Ben Bernanke that its bond buying program would continue.

Oil rose after Egyptian president Mubarak defied calls for his resignation, agreeing only to delegate some authority to his deputy, prompting concern supplies may be disrupted amid further unrest.

Gold fell to USD 1,363 an ounce as the precious metal remained under pressure from the firmer dollar and sharper risk appetite.

And back home, markets closed the session lower for the third consecutive day amid an extremely choppy trade yesterday led by banking and telecom heavyweights. The Nifty touched the 5200-mark during the day for the first time in eight months to end at 5,226 after trading in a tight range of 5210-5250 all day.

An important cue for the markets today will be the IIP data—CNBC-TV18 poll throws up a weak 1.69% versus the 2.7% in November and hugely down from the double digit growth until October.

The Cairn India top management in an analyst call last evening made it very clear that its board is not in a position to accept any of the pre-conditions laid down by the oil ministry for approving the deal with Vedanta.

Even Vedanta had earlier communicated to the oil ministry that it could not accept these pre-conditions as it would be against the interests of Cairn India shareholders, especially minority shareholders. Cairn India’s top boss Rahul Dhir in this concall clarified that though the company has nothing in writing from the government on these conditions. The board cannot concede to ONGC's claim that royalty at the Barmer oil fields is cost recoverable.

The follow on offer for SAIL, which was scheduled for February has now been pushed to March. CNBC-TV18 learns that this delay could be due to some issue with the bankers.