Technical Picks | Sepember 14, 2013

The ambiguity begins

Sensex (19733) / Nifty (5851)
After an extended week, the opening session of the week started off on a cheerful note on the back of strong global cues. The optimistic opening was fueled by substantial appreciation in Indian Rupee (INR), which resulted in mammoth single day gain of nearly four percent. As stated in previous report, the move beyond 5750 attracted strong buying interest among market participants. In the process, the index went on to test our mentioned level of 5890 and extended further towards 5925 5925. The bulls then seemed quite exhausted and hence, the choppy movement was seen during the rest of the week. This week the rally was dominated by the Capital Goods, Realty, Auto and FMCG counters; whereas for the second consecutive week, the IT sector remained under pressure. The Sensex and the Nifty advanced with sizable gain of 2.40% and 3.00%, respectively, over the previous week's closing.
Source: Falcon

Exhibit 1: Nifty weekly chart

Exhibit 2: Nifty Daily chart

Pattern formation:

The '89-day EMA' and the '89-week EMA' are placed at 19189 / 5729 and 18648/ 5620 levels, respectively. The '20-day EMA' and the '20-week EMA' are placed at 19094 / 5638 and 19243 / 5748 levels, respectively. The negative crossover in monthly 'RSI-Smoothened' oscillator is still intact; whereas the weekly momentum oscillators are contradictory and poised positively. The 'Stochastic' momentum oscillator on the weekly chart is now extremely oversold.
Source: Falcon

we would like to give more weightage to the weekly 'Lower Top Lower Bottom' formation. However, considering the strong momentum, we would not rule out the possibility of an extended rally (if any) towards 5970 - 6000 6000, if the Nifty sustains above 5932. We reiterate that traders should start booking profits as 5932 the market move higher and remain light on positions. On the downside, if the Nifty sustains below 5832 (low of the Hanging Man pattern formed on September 11, 2013), then we are likely to witness some consolidation or correction towards the 5730 The bulls are likely immediate support levels of 5750 - 5730. to lose control once the Nifty slips below this week's low of 5738 5738. In this scenario, the negative direction may get resumed and then we may expect lower levels of 5650 - 5600 5600. In the coming week, the volatility is likely to increase on account of two key events in the market. The US Fed will declare its stance with regards to the bond buying program and the RBI will declare its monetary policy. Hence, traders are advised to remain cautious and avoid taking undue risks.

The 78.6% Fibonacci retracement level of the fall from 6094 (high on July 23, 2013) to 5118 (low on August 28, 2013) is placed at 5890 5890.

The 'Lower Top - Lower Bottom' formation in weekly chart is still intact.

Future outlook
The bulls made a grand come back last week and continued their stand during this week also. As expected, the up move in Nifty got extended towards the 78.6% (5890) Fibonacci retracement level of the fall from 6094 (high on July 23, 2013) to 5118 (low on August 28, 2013). The current price development and market sentiments precisely replicate the scenario in April 2011. Hence, relating to the historical evidence,

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Technical Picks | Sepember 14, 2013

Weekly Pivot Levels For Nifty 50 Stocks

SCRIPS
SENSEX NIFTY BANKNIFTY ACC AMBUJACEM ASIANPAINT AXISBANK BAJAJ-AUTO BANKBARODA BHARTIARTL BHEL BPCL CAIRN CIPLA COALINDIA DLF DRREDDY GAIL GRASIM HCLTECH HDFC HDFCBANK HEROMOTOCO HINDALCO HINDUNILVR ICICIBANK IDFC INDUSINDBK INFY ITC JINDALSTEL JPASSOCIAT KOTAKBANK LT LUPIN M&M MARUTI NMDC NTPC ONGC PNB POWERGRID RANBAXY RELIANCE RELINFRA SBIN SESAGOA SUNPHARMA TATAMOTORS TATAPOWER TATASTEEL TCS ULTRACEMCO R2 20,372 6,034 10,611 1,121 197 463 1,084 2,062 566 364 151 327 343 456 307 165 2,351 322 2,682 1,126 854 666 2,220 119 673 1,000 106 452 3,251 351 254 47 738 868 905 874 1,425 132 144 307 544 106 486 916 396 1,762 201 595 369 84 330 2,049 1,954 R1 20,077 5,942 10,385 1,074 189 451 1,052 2,020 543 346 143 316 331 447 296 157 2,299 316 2,594 1,100 834 650 2,115 115 649 975 101 425 3,159 344 246 43 719 841 886 844 1,373 128 142 293 519 102 471 896 385 1,710 192 576 351 80 317 2,009 1,857 PIV OT PIVO 19,761 5,840 10,183 1,022 180 439 1,011 1,969 508 334 139 305 324 438 288 149 2,255 307 2,488 1,056 805 634 2,025 111 636 958 94 408 3,095 331 239 40 702 806 856 805 1,337 123 138 285 485 100 457 881 376 1,656 183 552 336 76 305 1,977 1,730 S1 19,466 5,749 9,956 975 172 427 979 1,927 485 316 130 293 312 429 277 141 2,202 300 2,399 1,030 785 618 1,920 107 613 934 89 380 3,003 324 231 36 683 779 836 774 1,284 119 136 271 460 97 442 861 364 1,605 174 533 318 72 291 1,936 1,632 S2 19,150 5,647 9,754 923 164 416 938 1,876 449 304 126 283 305 420 269 132 2,158 292 2,293 985 756 603 1,830 103 600 916 82 364 2,939 312 224 34 666 744 807 736 1,248 114 133 264 427 95 427 846 355 1,551 165 509 302 68 280 1,905 1,506

Technical Research Team

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Derivatives Review | Sepember 14, 2013

Market may appear overbought, but its not

Nifty spot closed at 5850.60 this week, against a close of 5680.40 last week. The Put-Call Ratio has increased from 1.28 to 1.33 levels and the annualized Cost of Carry is positive 12.14% 12.14%. The Open Interest of Nifty Futures increased by 7.87% 7.87%.

Put-Call Ratio Analysis

PCR-OI has increased from 1.28 to 1.33 levels. This ratio has mainly increased due to significant amount of buildup in the range of 5600- 5900 put strikes, followed by decent unwinding in 4900-5400 strikes. In call options we have witness good amount of buildup in the range of 6000-6300 strikes last week and decent unwinding was observed in 5400-5800 strikes. Highest buildup is seen in 6000 call & 5300 put options.

Implied Volatility Analysis

Implied Volatility (IV) for NIFTY has increased from 25.93%.to 27.04%. Historical volatility (HV) is at 36.24% and that for BANKNIFTY is trading at 57.95%. Liquid counters having very high HV are FINANTECH, JPPOWER, YESBANK, HDIL and OPTOCIRCUI. Stocks where HV are on lower side are OFSS, DRREDDY, JUBLFOOD, DIVISLAB and WIPRO.

Open Interest Analysis

Total open interest of market has increased from `1,33,913/- cr. to `1,49,492/- cr. Stock futures open interest has increased from `29,441/- cr. to `30,265/- cr. Some of the large cap which added open interest are SIEMENS, TATAPOWER, LT, BHEL and TATAMOTORS. Open interest was shed in large cap names like AXISBANK, SESAGOA, IDFC, PNB and ACC.

Cost-of-Carry Analysis
Nifty futures closed at a premium of 25.30 points against the premium of 17.40 points to its spot. Next month future is trading with premium of 68.90 points. Liquid counters where CoC is high are ASHOKLEY, JISLJALEQS, CHAMBLFERT, ADANIPOWER and OPTOCIRCUI. Stocks with negative CoC are NMDC, FINANTECH, HDIL, BHEL and AXISBANK.

Derivative Strategy
Scrip : NIFTY View: Mildly Bullish Buy/Sell BUY SELL
BEP - `6030/-

CMP : 5875.90/-

Lot Size : 50

Exercise Date (F & O) : 26th. Sept 2013 Expected Payoff

Closing P rice Price (`) Expected oss rofit/Loss Profit/L

Strategy: Bull Call Spread Scrip NIFTY NIFTY Strike Price 6000 6100 Series SEPT SEPT Option Type CE CE Buy/Sell Rate (`) 60 30

Qty 50 50

5925 5975 6025

(`30.00) (`30.00) (`5.00) `45.00 `70.00 `70.00

Max. Risk: `1500/If NIFTY closes on or below 6000 on expiry.

Max. P rofit: `3500/Profit: If NIFTY closes on or above 6100 on expiry.

6075 6125 6175

NO TE : Profit can be booked before expiry if NIFTY moves in favorable direction. NOTE TE:

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Ratings (Returns) :

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

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