Technical Picks |
February 7, 2015
8650 - A crucial support for the bulls
Sensex (28718) / Nifty (8661)
Trading for the week on Monday began on a flat note
Exhibit 1: Nifty Weekly chart
considering quiet global cues. Subsequently, the banking
conglomerates continued their weakness during the first half
and hence, we witnessed a gentle slide in the market. However,
the index managed to recover sharply from the lows and
eventually trimmed major part of the losses. On Tuesday, our
benchmark index opened slightly higher and then attempted
to break the 8850 mark. But, post the RBI monetary policy; we
witnessed a sharp cut on the back of sharp sell-off seen in few
banking heavyweights. The similar price action continued
throughout the remaining part of the week and as a result, the
Source: Falcon
index gradually corrected to end the session almost at the lowest
Exhibit 2: Nifty Daily chart
point of the week. Undoubtedly, the Banking space led the
previous week's correction along with the Capital Goods,
Consumer Durables, Auto and Power sectors; whereas the
defensive sectors like, the IT and FMCG stood firm throughout
the week. The Nifty ended the week with a cut of 1.68% over
the previous week's closing.
Pattern formation:
The '89-day EMA' and the '89-week EMA' are placed at
27671 / 8325 and 24140 / 7232 levels, respectively.
Source: Falcon
The '20-day EMA' and the '20-week EMA' are placed at
the Nifty as it coincides with the daily '20 EMA' as well as the
28682 / 8657 and 27724 / 8329 levels, respectively.
38.2% Fibonacci retracement level of the recent up move from
Future outlook
8065.45 (low on January 07, 2015) to 8996.60 (high on
We witnessed a range bound activity within 200 points
January 30, 2015). Hence, in the coming week, 8650 level
throughout the week. However, the bias was clearly on the
would act as a crucial support for the Nifty. Considering the
negative side as all trading sessions during the week managed
ongoing pessimism in the banking conglomerates and the
to close with losses. In our previous report, we had clearly
weakness seen in some of the non - banking stocks in the latter
mentioned about the stiff resistance level of 8850. This level
half, if the index manages to give a close below the 8650 mark
proved its importance as several attempts of crossing this hurdle
then we may witness further correction towards 8500 - 8450
got sold into. The banking conglomerates continued their
levels, which are 50% and 61.8% retracement levels of the recent
underperformance on the back of poor quarterly numbers.
up move. However, if the bulls manage to defend this support
However, in last couple of sessions, we observed some weakness
convincingly then the index may bounce back towards
in the non-banking counters as well, which could be the
8780 - 8850 levels. Considering current price activity in the
worrisome factor in the coming week. The index has precisely
market, we would advise traders to trade with appropriate stop
met with our mentioned target of 8650 and has now closed
losses and avoid taking undue risks.
tad above it. This level can be seen as an important support for
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Technical Picks |
February 7, 2015
Weekly Pivot Levels For Nifty 50 Stocks
SCRIPS
S2
S1
PIVOT
R1
R2
SENSEX
28,250
28,484
28,881
29,115
29,512
NIFTY
8,521
8,591
8,716
8,786
8,911
BANKNIFTY
17,922
18,354
19,173
19,605
20,424
ACC
1,431
1,469
1,520
1,558
1,609
AMBUJACEM
238
243
248
253
258
ASIANPAINT
750
774
813
836
875
AXISBANK
498
531
578
611
658
BAJAJ-AUTO
1,821
2,022
2,222
2,423
2,622
BANKBARODA
156
166
179
189
202
BHEL
239
252
276
288
313
BPCL
683
707
740
764
797
BHARTIARTL
347
357
367
378
388
CAIRN
224
239
249
264
273
CIPLA
608
632
669
692
730
COALINDIA
338
351
363
376
388
DLF
148
156
168
175
187
DRREDDY
2,932
2,988
3,086
3,142
3,240
GAIL
389
404
423
439
458
GRASIM
3,687
3,746
3,842
3,901
3,997
HCLTECH
1,707
1,831
1,914
2,038
2,121
HDFCBANK
1,023
1,038
1,066
1,081
1,108
HDFC
1,176
1,228
1,260
1,312
1,344
HEROMOTOCO
2,666
2,721
2,805
2,860
2,944
HINDALCO
133
140
147
154
161
HINDUNILVR
875
890
911
926
946
ICICIBANK
306
318
339
351
372
IDFC
156
161
170
175
184
INDUSINDBK
809
827
859
877
908
INFY
2,048
2,139
2,193
2,285
2,339
ITC
354
364
369
379
384
JINDALSTEL
127
135
147
155
168
KOTAKBANK
1,195
1,231
1,299
1,334
1,402
LT
1,612
1,648
1,699
1,735
1,786
LUPIN
1,480
1,524
1,567
1,611
1,654
M&M
1,051
1,100
1,193
1,242
1,335
MARUTI
3,338
3,420
3,573
3,655
3,808
NMDC
132
137
140
144
148
NTPC
135
138
141
143
147
ONGC
331
341
358
367
384
POWERGRID
137
140
145
148
153
PNB
151
161
178
187
204
RELIANCE
878
894
919
935
960
SSLT
187
199
209
221
231
SBIN
270
280
296
306
322
SUNPHARMA
890
909
937
956
984
TCS
2,411
2,494
2,544
2,626
2,677
TATAMOTORS
515
537
575
597
635
TATAPOWER
73
78
85
90
97
TATASTEEL
349
359
377
387
405
TECHM
2,744
2,802
2,899
2,957
3,054
ULTRACEMCO
2,871
2,940
3,064
3,133
3,257
WIPRO
590
617
636
662
681
ZEEL
349
355
366
372
383
Technical Research Team
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Derivatives Review |
Market may be volatile but in range; 8600-8950
Nifty spot closed at 8661.05 this week against a close of 8808.90 last week. The Put-Call Ratio has decreased from 0.90 to 0.87
levels and the annualized Cost of Carry is positive at 10.71%. The Open Interest of Nifty Futures decreased by 1.51%.
Put-Call Ratio Analysis
Implied Volatility Analysis
PCR-OI has decreased from 0.90 to 0.87 levels. We saw huge
Implied Volatility (IV) for NIFTY has decreased from 18.55%.to
open interest addition in 8800-9300 call options which are
18.33%. Historical volatility (HV) of NIFTY is at 17.34% and
long positions formed by FIIs last week. On the other hand in
that for BANKNIFTY is trading at 28.27%. Liquid counters having
put options decent buildup was seen in 8300-8700 strike prices.
very high HV are HDIL, UNITECH, JPASSOCIAT, INDIACEM
Maximum buildup in FEB series is visible in 9000 call &
and GMRINFRA. Stocks where HV are on lower side are
8500 put options. We believe Nifty may trade in wider range of
INDUSINDBK, MARUTI, HEROMOTOCO, COLPAL and
8600-9000 levels, being close to lower range one should buy
POWERGRID.
Nifty on dips.
Open Interest Analysis
Cost-of-Carry Analysis
Total open interest of market has increased from
Nifty current month futures closed at a premium of 50.85 points
`1,88,343/- cr. to `2,17,522/- cr. Stock futures open interest
against the premium of 63.75 points to its spot. Next month
has increased from `68,980/- cr. to `69,644/- cr. Liquid
future is trading with premium of 112.95 points. Liquid counters
counters names which added significant positions last week
where CoC is high are JPPOWER, GMRINFRA, RELIANCE,
are M&M, ICICIBANK, ASIANPAINT, DRREDDY and TECHM.
HINDZINC and APOLLOHOSP. Stocks with negative CoC are
On the other hand unwinding was visible in counters like CAIRN,
SAIL, NMDC, GAIL, RECLTD and PFC.
HCLTECH, SSLT, DLF and HDFCBANK.
Derivative Strategy
Scrip : RELIANCE
CMP : `917.30
Lot Size : 250
Exercise Date (F & O) :
26th. Feb 2015
View: Volatile within range
Strategy: Short strangle
Expected Payoff
Buy/Sell
Qty
Scrip
Strike
Series
Option
Buy/Sell Rate
Closing Price
Expected
Price
Type
(`)
(`)
Profit/Loss
SELL
250
RELIANCE
940
FEB
CE
15.00
860
(`10.00)
SELL
250
RELIANCE
900
FEB
PE
15.00
885
`15.00
LBEP
-
`870/-
UBEP - `970/-
910
`30.00
935
`30.00
Max. Risk: Unlimited
Max. Profit: `7,500/-
If RELIANCE continues to move below LBEP or above UBE
If RELIANCE closes between two strike prices on expiry.
960
`10.00
NOTE: Profit can be booked before expiry if RELIANCE remains in range and time value decays.
985
(`15.00)
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Ratings (Returns) :
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