Technical Picks | July 30, 2016
Avoid aggressive trades; 8572 a crucial support
Sensex (28052) / Nifty (8639)
Exhibit 1: Nifty Weekly chart
The Nifty started the proceedings for the week on a cheerful
note as we witnessed a decent rally on Monday, leading to a
convincingly close above the 8600 mark. The index had last
closed above the mentioned level more than a year back,
i.e. on July 22, 2015. This was followed by a couple of
subdued sessions as the Nifty oscillated within a small
range. On Thursday, despite the July series derivatives expiry
falling on the day, the index did not find itself subjected to
any significant volatility and it edged past the July 2015 high
of 8654.75 on a closing basis in the course of trading.
However, the Friday’s session saw the index surrender some
gains and it closed a tad below the 8650 mark; on a weekly
basis the index added 1.14%.
Source: Company, Angel Research
Key Moving Averages:
The ’89-day EMA’ and the ’89-week EMA’ for the
Exhibit 2: Nifty Daily chart
Sensex/Nifty are placed at
26556
/
8133 and
25885 / 7866 levels, respectively.
The ’20-day EMA’ and the ‘20-week EMA’ for the
Sensex/Nifty are placed at
27694
/
8502 and
26506 / 8120 levels, respectively.
Future outlook
The Nifty continued with its uptrend in the week gone by and
tested the 8655 mark, which was on our expected lines.
However, it struggled a bit on multiple occasions at the
higher levels, indicating profit booking by cautious traders.
Still, the broader trend continues to remain positive as there
Source: Company, Angel Research
are no signs of reversal on the chart. If we observe the daily
chart meticulously, the last three weeks’ up move in the
In the near term, the immediate support for the Nifty is
index has led to a formation of a ‘Rising Wedge’ pattern.
placed around 8572 and only its breach could possibly
Such a pattern is usually formed at the end of an uptrend
result in a loss in the upward momentum. In the last three
and a breakdown of the same generally leads to a reversal
trading sessions, the bulls have vehemently tried to surpass
in the trend. However, on this occasion, even in case of a
the 8675 mark on the Nifty. We see a higher probability of
confirmation of this pattern, we still do not expect any trend
the index surpassing the mark and reaching its next
reversal. On the contrary, we would rather look at it as just a
resistance zone of 8750 - 8800. For momentum traders,
loss of momentum in the ongoing optimism. Traders
there will likely be more stock-specific opportunities in the
however should not pre-empt any reversal as other technical
near term which could be capitalized upon but with a proper
indicators have not shown any divergence from the broader
risk management strategy in place. Given the scenario, it
uptrend. Thus, going by the Dow Theory tenet - “Trend is
would be advisable to trade with caution in the coming week
your friend”, positional traders should continue to trade with
and avoid initiating aggressive positions on either side.
a positive bias until there is a pronounced confirmation of
the trend reversal supported by a wider number of
indicators.
For Private Circulation Only
1
Technical Picks | July 30, 2016
Weekly Pivot Levels For Nifty Constituents
SCRIPS
S2
S1
PIVOT
R1
R2
SENSEX
27,506
27,779
28,010
28,283
28,513
NIFTY
8,453
8,546
8,610
8,703
8,768
NIFTY BANK
18,329
18,641
18,884
19,196
19,439
ACC
1,627
1,658
1,688
1,719
1,749
ADANIPORTS
218
225
229
237
241
AMBUJACEM
257
264
271
278
285
ASIANPAINT
998
1,056
1,105
1,163
1,212
AUROPHARMA
759
775
791
807
822
AXISBANK
501
523
541
564
582
BAJAJ-AUTO
2,559
2,630
2,692
2,763
2,825
BANKBARODA
143
147
153
157
163
BHEL
135
141
146
151
157
BPCL
563
578
590
605
617
BHARTIARTL
347
354
368
376
389
INFRATEL
337
366
390
419
443
BOSCH
23,382
24,179
24,660
25,458
25,939
CIPLA
503
515
525
538
548
COALINDIA
318
323
329
334
339
DRREDDY
2,492
2,714
3,147
3,368
3,801
EICHERMOT
18,835
20,648
21,584
23,397
24,333
GAIL
369
375
387
394
405
GRASIM
4,780
4,837
4,878
4,935
4,976
HCLTECH
712
732
746
766
780
HDFCBANK
1,217
1,232
1,241
1,256
1,266
HDFC
1,319
1,347
1,378
1,406
1,438
HEROMOTOCO
3,083
3,143
3,213
3,274
3,344
HINDALCO
128
131
134
137
140
HINDUNILVR
884
903
914
933
944
ICICIBANK
252
257
266
271
280
IDEA
101
103
106
108
111
INDUSINDBK
1,108
1,142
1,167
1,201
1,226
INFY
1,044
1,059
1,078
1,093
1,111
ITC
242
247
252
257
262
KOTAKBANK
733
748
761
776
788
LT
1,510
1,534
1,575
1,599
1,640
LUPIN
1,638
1,689
1,720
1,770
1,801
M&M
1,417
1,442
1,461
1,486
1,505
MARUTI
4,265
4,511
4,668
4,914
5,071
NTPC
154
156
158
161
163
ONGC
213
217
223
227
233
POWERGRID
161
168
174
181
186
RELIANCE
992
1,004
1,019
1,031
1,047
SBIN
217
223
229
235
242
SUNPHARMA
766
798
819
851
872
TCS
2,458
2,538
2,587
2,668
2,716
TATAMTRDVR
315
319
327
331
338
TATAMOTORS
491
497
505
511
520
TATAPOWER
69
71
72
73
74
TATASTEEL
336
345
356
366
377
TECHM
472
480
490
498
509
ULTRACEMCO
3,562
3,640
3,690
3,768
3,817
WIPRO
524
534
546
556
567
YESBANK
1,112
1,164
1,200
1,253
1,288
ZEEL
448
473
487
511
525
Technical Research Team
For Private Circulation Only
2
Derivatives Review | July 30, 2016
Rollovers not so encouraging; stay light
Nifty spot closed at 8638.50 this week, against a close of 8541.20 last week. The Put-Call Ratio has decreased from 1.04 to 0.94
levels and the annualized Cost of Carry is positive at 7.53%. The Open Interest of Nifty Futures decreased by 13.24%.
Put-Call Ratio Analysis
Implied Volatility Analysis
PCR-OI has decreased from 1.04 to 0.94 levels. Being start
Implied Volatility (IV) for NIFTY has increased from 13.35%
of new series overall build-up is quite scattered. In call
to 13.75%. Historical volatility (HV) of NIFTY is at 13.52%
options,
8700-9000 strikes added good amount of
and that for BANKNIFTY is at 18.47%. Liquid counters
positions. While, in put options
8400-8700 strikes
having very high HV are EICHERMOT, DRREDDY, DISHTV,
remained active and they also added decent amount of
BAJFINANCE and ASIANPAINT. Stocks where HV are on
open interest. Maximum build-up in August series is placed
lower side are INFY, BIOCON, PETRONET, NTPC and
at 9000 call and 8500 put options.
CENTURYTEX.
Open Interest Analysis
Cost-of-Carry Analysis
Total open interest of market has decreased from
Nifty current month futures closed at a premium of 48.10
`2,77,109/- cr. to `2,06,385/- cr. Stock futures open
points against a premium of 53.00 points to its spot. Next
interest has decreased from `74,002/- cr. to `68,427/- cr.
month future is trading with premium of 96.65 points.
Large cap names which added significant positions last
Liquid counters where CoC is high are WIPRO,
week are DRREDDY, M&M, EICHERMOT, TECHM and
TATAMTRDVR, INFY, BAJAJ-AUTO and ASIANPAINT.
TATAPOWER. On the other hand unwinding was visible in
Stocks with negative CoC are LT, BHARTIARTL, BHEL,
counters like HCLTECH, AXISBANK, KOTAKBANK,
HCLTECH and SBIN.
HEROMOTOCO and BHEL.
Derivative Strategy
Scrip: RELIANCE
CMP : 1030.95
Lot Size : 500
Exercise Date (F & O) :
25th Aug 2016
View: Mildly Bearish
Strategy: Ratio Bear Put Spread
Expected Payoff
Buy/Sell
Qty
Scrip
Strike
Series
Option
Buy/Sell Rate
Closing Price
Expected
Price
Type
(`)
(`)
Profit/Loss
BUY
500
RELIANCE
1020
AUG
PE
20.00
930
(`16.00)
SELL
1000
RELIANCE
980
AUG
PE
7.00
955
(`9.00)
LBEP - `1014/-
UBEP - `946/-
980
`34.00
Max. Risk: Unlimited
Max. Profit: `17,000/-
1005
`9.00
If RELIANCE continues to move below LBEP on expiry.
If RELIANCE closes at `980 levels on expiry
1030
`6.00
Profit can be booked before expiry if Reliance moves in favourable direction and time value decays.
1055
`6.00
For Private Circulation Only
3
Research Team Tel: 022 - 39357800
Website: www.angelbroking.com
For Technical Queries
E-mail: [email protected]
For Derivatives Queries
E-mail: [email protected]
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