Technical Picks | October 22, 2011

All Eyes on the Euro Zone

Sensex (16786) / Nifty (5050)
Markets opened with a neutral bias on Monday's session and traded in a range throughout the week. As stated in our earlier report, markets faced strong resistance near the multiple resistance zone of 17260 - 17200 / 5198 - 5177 Hence, 5177. every attempt of scaling this level failed during the week and a selling pressure dragged indices lower to register a weekly close around the daily "20 EMA". This average is currently placed at 16714 / 5038 level. As expected, 16510 / 5034 acted as a 6714 decent support level for the week. On the sector front, the correction was mainly led by IT, Realty and Oil & Gas counters. The Sensex ended with a nominal loss of 1.74%, whereas the Nifty lost 1.60%, vis--vis the previous week.
Source: Falcon

Exhibit 1: Sensex weekly chart

Exhibit 2: Sensex daily chart

Pattern Formation
We are observing a positive crossover in Weekly "RSI - Smoothened" momentum oscillator. On the Weekly chart, there is a "Horizontal Line" resistance at 17256 / 5198 level. The "20 EMA" on the Weekly chart is now placed at 17215 / 5172 level. On the Daily chart, the "20 EMA" is placed at 16714 / 5025 level.
(Note: All technical evidences mentioned last week are almost unchanged; therefore, we continue to mention them along with a single addition of Daily "20 EMA") Source: Falcon

gap area of 17358 - 17665 / 5230 - 5323 created on August 5, 2011. On the other hand, indices have a decent support of Daily "20 EMA", which is now placed around 16714 - 16669 / 5025 - 5011 levels. Indices are likely to test 16460 - 16300 / 4944 - 4890 levels if indices manage to sustain below 16669 / 5011 level. Broadly speaking, indices have a trading range of 17256 to 16669 / 5198 to 5011 A violation of this 5011. range on either side would lead to a clear direction of the trend. Moreover, traders should take a note that the markets may react to various global and domestic events in the coming week. The decision of the European Union on the EFSF and monetary policy coupled with derivative expiry on Tuesday would lead to increased volatility in the markets. Therefore, we advise traders to stay light on positions and trade with strict stop losses.

Future Outlook
Yet another week ended with a failure of crossing the strong resistance zone of 17260 / 5198 We reiterate that the bulls 5198. are facing a major hurdle of this Weekly "Horizontal Line" and "20 EMA" near 17256 / 5198 levels. Therefore, we are of the opinion that unless we get some strong positive trigger on the global or domestic front, our markets may not cross this stiff resistance zone. On an optimistic note, a positive crossover in Weekly "RSI - smoothened" oscillator is still intact, which may come into action if indices manage to cross and sustain above 17256 / 5198 level. In this case, indices may rally towards the

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Technical Picks | October 22, 2011

Weekly Pivot Levels For Nifty 50 Stocks

SCRIPS
SENSEX NIFTY BANKNIFTY ACC AMBUJACEM AXISBANK BAJAJ-AUTO BHARTIARTL BHEL BPCL CAIRN CIPLA DLF DRREDDY GAIL HCLTECH HDFC HDFCBANK HEROHONDA HINDALCO HINDUNILVR ICICIBANK IDFC INFOSYSTCH ITC JINDALSTEL JPASSOCIAT KOTAKBANK LT M&M MARUTI NTPC ONGC PNB POWERGRID RANBAXY RCOM RELCAPITAL RELIANCE RELINFRA RPOWER SAIL SBIN SESAGOA SIEMENS STER SUNPHARMA SUZLON TATAMOTORS TATAPOWER TATASTEEL TCS WIPRO R2 17,401 5,223 10,058 1,153 160 1,178 1,727 401 346 672 312 295 247 1,589 440 465 698 507 2,166 135 339 923 131 2,802 210 569 76 488 1,454 836 1,182 176 275 1,020 102 531 81 368 896 438 90 112 2,047 232 868 125 515 40 196 103 456 1,208 378 R1 17,093 5,136 9,876 1,135 155 1,153 1,684 390 333 658 300 291 236 1,559 429 439 666 497 2,109 128 333 897 126 2,763 207 550 73 477 1,394 819 1,138 173 270 1,001 101 514 78 351 866 419 88 109 1,998 219 846 120 501 38 187 100 444 1,129 366 PIVO PIVOT 16,881 5,074 9,685 1,117 151 1,115 1,620 380 324 644 291 287 229 1,526 418 419 648 485 2,036 125 329 882 123 2,725 205 524 71 469 1,360 803 1,074 170 267 979 99 499 76 336 839 408 86 106 1,918 212 825 117 483 37 182 98 434 1,075 354 S1 16,574 4,987 9,504 1,099 147 1,090 1,577 369 312 630 279 284 218 1,496 407 393 616 474 1,979 118 322 855 118 2,685 202 504 67 458 1,301 786 1,031 167 262 960 97 483 72 319 808 388 83 103 1,868 199 802 112 469 35 173 95 422 996 342 S2 16,362 4,925 9,312 1,081 143 1,052 1,512 360 303 615 271 280 211 1,463 395 373 598 462 1,906 115 319 840 116 2,648 200 479 65 451 1,266 770 967 164 258 937 95 468 70 304 781 377 81 100 1,788 192 781 109 451 34 168 94 412 941 331

Technical Research Team

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Derivatives Review | October 22, 2011

Rollover Long positions and sit tight on it

Nifty spot closed at 5049.95 this week, against a close of 5132.30 last week. The Put-Call Ratio decreased from 1.56 to 1.40 levels and the annualized Cost of Carry is positive 7.32 The Open Interest of Nifty Futures increased by 14.67 7.32%. 14.67%.

Put-Call Ratio Analysis

PCR-OI has decreased from 1.56 levels to 1.40 levels and maximum of that has happened in last three trading sessions. We have witnessed some unwinding in put options but decline in ratio is mainly due to built-up in calls ranging from 5000 to 5200 and especially 5200 call. In same period FII's have also bought index options approximately worth `5000 cr.

Implied Volatility Analysis

Implied Volatility (IV) has being increased from 22.67% to 25.67%. HV for BANKNIFTY is trading at 37.60%. Liquid counters having very high Historical Volatility are JUBLFOOD, KFA, CHAMBLFERT, CROMGREAV and ABAN. Stocks where HV are on lower side are BRFL, BOSCHLTD, NHPC, GLAXO and DIVISLAB.

Open Interest Analysis

Total open interest of market has increased from `1,25,671.70 crores to `1,38,302.40 crores. Stock futures open interest has increased from `30,043/- crores to `32,215/- crores. Frontline counters which added considerable open interest are ITC, HDFC, TCS, LT and HEROMOTOCO. Open interest was shed in big names like LUPIN, RELCAPITAL, PUNJLLOYD, CENTURYTEX and CAIRN.

Cost-of-Carry Analysis
Nifty futures closed at a Premium of 4.05 points against the Premium of 11.05 points to its spot. Next month future is trading with premium of 24.10 points. Counters where CoC is high are OPTOCIRCUI, BOSCHLTD, GMRINFRA, AREVAT&D and TECHM. Stocks with negative CoC are GITANJALI, HINDZINC, ASIANPAINT, TATASTEEL and BANKBARODA.

Derivative Strategy
Scrip : NIFTY View: Mildly Bullish Buy/Sell Buy
BEP: BEP: 5125 Max. Risk: `1250/If NIFTY closes on or below the strike price.

CMP : 5049.95/-

Lot Size : 50

Exercise Date (F & O) : 25th Oct, 2011 Expected Payoff

Strategy: Long Call Scrip NIFTY Strike Price 5100 Series OCT Option Type Call Buy Rate (`) 25.00

Qty 50

Price Closing Price

Expected rofit/Loss Profit/Loss

5275 5200 5125

`150.00 `75.00 0.00 (`25.00) (`25.00) (`25.00)

Profit: Max. Profit: Unlimited

If NIFTY continues to move above BEP .

5050 4975 4900

NOTE TE: NOTE : Profit can be booked before expiry if NIFTY moves in the favorable direction.

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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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