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Technical & Derivatives Oscillation on cards: CMP 5735

Nifty witnessed high volatility in the month of September13 in which after hitting a yearly low of 5118 in the last week of August13 the index bounced back sharply to test 6150 levels. However, post steep rise and RBI monetary policy announcement the index closed the month at 5735 ending with a gain of nearly 5% MOM. We are of a view that the Nifty is likely to trade in a range of 5650 6180 for the month of October. We may see stock specific actions in the month as the result season is starting. For the first half of the month we expect nifty to trade with positive bias and during the second half we expect volatility to rise in the mentioned range.

Technical Top Pick for the month

Looking at present setup and overall picture, we believe that the momentum in Metal stocks is likely to continue along with a pickup in OIL & GAS sector. We reiterate our view on IT stocks and profit booking is recommended in HCL Tech and TCS as it is majorly dependent on USDINR movement. In addition we also advise investors to book profits in select Pharma and Healthcare counters. Banking is likely to remain subdued in the month and it is advisable to go stock specific in this sector.

Flows Snapshots
India FII Flows Equity & Derivatives
Despite Sluggish micro-economic condition, FIIs inflows were seen in September month. FIIs remain net buyer in this month and bought 112.35 Bn INR in equity side , But it might be due to some ease in Rupee volatility and QE tapering. We believe that FIIs again will be net buyer in next month oct13. But, again we can say that govt. policy and as well as fed policy will be the key factor for FIIs flow return in the Indian market.

Domestic Institutions Equity & Derivatives

Domestic investors were the net seller in equity market. Insurance companies as well as mutual fund also have remained net seller. Profit booking or redemption might be the reason for selling pressure. Data suggest, domestic mutual funds sold worth 28..01 Bn. INR whereas others DIIs sold 88.78 Bn. INR.

Nifty PCR:
PCR OI increased to 1.28 as Nifty has given decent return 4.8% in sep13 month. While we believe that PCR will be continue in the range of 0.92 to 1.25. Some extent of caution will prevail in the market at current levels but the larger scenario is indicating that Nifty is likely to in the range of 5800 with standard deviation of 2.5%. Overall we believe, strict range of PCR OI will remain for some time and OTM strike call and put selling is deliver profit for time being.

Nifty IVs:
India VIX is indicating that volatility is likely to continue in oct13 and caution will prevail. It also indicates that further upside in the Nifty is not a surprise. But, overall market participants should expect some kind of dramatic movement either side on account of economic conditions. Based on data readings and behavior, we expect IV to reach 25-30 level.