Technical Picks | February 6, 2016
Hold on to longs; strong support at 7350
Sensex (24617) / Nifty (7489)
Trading for the week gone by began with the Nifty opening
Exhibit 1: Nifty Weekly chart
slightly higher on Monday owing to firmness in the US
markets on the previous weekend. However, the lead was
short lived as we witnessed a correction from the day’s high,
although minor, leading the index to end the day with a
negligible loss. On Tuesday, the Nifty remained muted in the
first half of the session ahead of the RBI monetary policy. But
it failed to sustain itself and took a nosedive to close the day
with a cut of over a percent. The downward momentum got
carried over to Wednesday as it proved to be yet another
weak session. The following trading sessions of the week
saw the bulls put in an attempt to take control over the
proceedings, thereby leading the Nifty to post a modest
Source: Company, Angel Research
recovery. The Nifty closed the week a tad below the 7500
mark, i.e. with a marginal cut of 0.98% over the previous
Exhibit 2: Nifty Daily chart
week’s closing.
Pattern formation:
The ’89-day EMA’ and the ’89-week EMA’ for the
Sensex/Nifty are placed at
25600
/
7768 and
25825 / 7809 levels, respectively.
The ’20-day EMA’ and the ‘20-week EMA’ for the
Sensex/Nifty are placed at
24675
/
7497 and
25605 / 7789 levels, respectively.
Future outlook
Source: Company, Angel Research
The concluded week’s price action can be described as a
roller coaster ride as the Nifty swayed on both sides. In our
The movement in the Nifty that followed validated our view,
last weekly report, we had expressed our anticipation of the
given Friday’s closing. In the forthcoming week, we expect
Nifty extending the previous week’s up move. However, the
the Nifty to extend this move first towards 7600.45 and then
index did not move in line with our expectation as we
to test the 7700 mark. Going by this hypothesis, we may
witnessed a sharp decline during the first half of the week.
expect Wednesday’s low of 7350.30 to form a probable
Despite this, we maintained our stance of avoiding shorting
‘Higher Bottom’ on the daily chart. Thus, it should act as an
and suggested investors towards not getting carried away by
immediate as well as important support for the index. A
the pessimism. This view was mainly based on our few key
sustainable move below this support may nullify our above
observations. Firstly, there was a confirmation of a
mentioned hypothesis. Traders are advised to focus on
‘Dragonfly Doji’ pattern on the weekly chart. Secondly, we
stock-specific long ideas, following a proper exit strategy.
saw 7360 and 7320 as strong support levels, which are the
61.8% and 78.6% retracement of the recent up move from
7241.50 to 7600.45, respectively.
For Private Circulation Only
1
Technical Picks | February 6, 2016
Weekly Pivot Levels For Nifty 50 Stocks
SCRIPS
S2
S1
PIVOT
R1
R2
SENSEX
23,787
24,202
24,602
25,017
25,417
NIFTY
7,230
7,359
7,480
7,610
7,730
NIFTY BANK
14,359
14,760
15,163
15,565
15,967
ACC
1,220
1,246
1,266
1,292
1,312
ADANIPORTS
198
205
214
221
230
AMBUJACEM
185
190
196
201
207
ASIANPAINT
843
871
887
915
932
AXISBANK
357
378
394
415
431
BAJAJ-AUTO
2,252
2,309
2,352
2,409
2,452
BANKBARODA
112
119
124
131
136
BHEL
117
125
135
143
153
BPCL
793
818
849
874
906
BHARTIARTL
285
296
302
313
320
BOSCH
14,704
15,396
16,593
17,285
18,482
CAIRN
108
117
123
133
138
CIPLA
506
538
572
604
638
COALINDIA
299
313
325
338
351
DRREDDY
2,904
3,007
3,072
3,175
3,240
GAIL
317
330
351
364
386
GRASIM
3,313
3,388
3,479
3,554
3,645
HCLTECH
828
849
869
890
911
HDFC
1,030
1,043
1,055
1,068
1,080
HDFCBANK
1,143
1,163
1,178
1,198
1,214
HEROMOTOCO
2,430
2,508
2,548
2,626
2,666
HINDALCO
64
68
70
74
76
HINDUNILVR
772
808
832
868
892
ICICIBANK
186
197
212
224
239
IDEA
95
98
102
106
110
INDUSINDBK
866
889
914
937
963
INFY
1,132
1,153
1,174
1,196
1,216
ITC
310
317
322
328
333
KOTAKBANK
648
670
684
706
719
LT
1,064
1,102
1,130
1,168
1,197
LUPIN
1,527
1,665
1,741
1,879
1,955
M&M
1,164
1,192
1,217
1,244
1,269
MARUTI
3,420
3,571
3,845
3,997
4,271
NTPC
111
118
130
137
149
ONGC
202
211
219
228
237
POWERGRID
137
141
145
149
154
PNB
84
89
92
98
101
RELIANCE
911
941
991
1,021
1,072
SBIN
148
158
170
180
192
SUNPHARMA
785
821
855
891
925
TCS
2,326
2,374
2,407
2,455
2,488
TATAMOTORS
305
321
333
349
361
TATAPOWER
55
58
59
62
64
TATASTEEL
196
215
235
254
274
TECHM
433
454
486
507
540
ULTRACEMCO
2,707
2,775
2,818
2,885
2,928
VEDL
56
65
70
79
84
WIPRO
542
550
562
570
582
YESBANK
726
751
770
796
815
ZEEL
378
394
408
424
438
Technical Research Team
For Private Circulation Only
2
Derivatives Review | February 6, 2016
Refrain from shorting as of now
Nifty spot closed at 7489.10 this week, against a close of 7563.55 last week. The Put-Call Ratio has decreased from 0.89 to 0.83
levels and the annualized Cost of Carry is positive at 7.33%. The Open Interest of Nifty Futures decreased by 1.62%.
Put-Call Ratio Analysis
Implied Volatility Analysis
PCR-OI has decreased from 0.89 to 0.83 levels due to
Implied Volatility (IV) for NIFTY has increased from 15.10%
open interest addition in call options. In call options, 7400-
to 16.07%. Historical volatility (HV) of NIFTY is at 19.96%
7800 strikes remain active and they also added good
and that for BANKNIFTY is at 26.40%. Liquid counters
amount of OI. We believe these positions in call options are
having very high HV are CROMPGREAV, LUPIN, CIPLA,
longs, expecting market to show strength from current
DISHTV and SAIL. Stocks where HV are on lower side are
levels. While in put options, 7400 and 7500 strike added
TCS, M&M, IDBI, ITC and INDUSINDBANK.
some OI. Maximum build-up in current series is seen in
7600 call options and 7300 put options.
Open Interest Analysis
Cost-of-Carry Analysis
Total open interest of market has increased from
Nifty current month futures closed at a premium of 30.10
`1,77,409/- cr. to `2,08,436/- cr. Stock futures open
points against a premium of 4.50 points to its spot. Next
interest has increased from `58,117/- cr. to `60,685/- cr.
month future is trading with premium of 48.75 points.
Large cap names which added significant positions last
Liquid counters where CoC is high are RELIANCE, NTPC,
week are ACC, NTPC, ICICIBANK, MARUTI and M&M. On
POWERGRID, TATAPOWER and IDFC. Stocks with negative
the other hand unwinding was visible in counters like VEDL,
CoC are NMDC, GAIL, CAIRN, AMBUJACEM and
ASIANPAINT, INFY, ITC and CAIRN.
BHARTIARTL.
Derivative Strategy
Scrip: NIFTY
CMP : 7519.20
Lot Size : 75
Exercise Date (F & O) :
25th Feb 2016
View: Range Bound
Strategy: Short Strangle
Expected Payoff
Buy/Sell
Qty
Scrip
Strike
Series
Option
Buy/Sell Rate
Closing Price
Expected
Price
Type
(`)
(`)
Profit/Loss
SELL
75
NIFTY
7600
FEB
CE
70.00
7125
(`135.00)
SELL
75
NIFTY
7400
FEB
PE
70.00
7275
`15.00
LBEP - 7260
UBEP - 7740
7425
140.00
7575
140.00
Max. Risk: Unlimited
Max. Profit: `10,500
If NIFTY continues to move below LBEP or above
If NIFTY closes between two strike prices on expiry.
UBEP on expiry
7725
`15.00
NOTE: Profit can be booked before expiry if Nifty remains in range and time value decays.
7875
(`135.00)
For Private Circulation Only
3
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and Metropolitan Stock Exchange of India Limited. It is also registered as a Depository Participant with
CDSL and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is
a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates including its relatives/analyst do not hold any financial interest/beneficial
ownership of more than 1% in the company covered by Analyst. Angel or its associates/analyst has not received any compensation /
managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. Angel/analyst
has not served as an officer, director or employee of company covered by Analyst and has not been engaged in market making activity
of the company covered by Analyst.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot
testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.
While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from
or in connection with the use of this information.
Note: Please refer to the important ‘Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates may
have investment positions in the stocks recommended in this report.
For Private Circulation Only
4