Technical Picks | October 29, 2011

SAMVAT 2068 begins in favour of bulls

Sensex (17805) / Nifty (5361)
Benchmark indices opened on a quiet note on Monday's session and faced resistance at 17260/5198 in the initial part of the week. As stated in our previous report, markets needed some strong positive trigger on the global or domestic front to cross this resistance level. The decisions taken during the European summit were perceived as positive developments and acted as positive triggers. Also, as expected, the effect of the positive crossover of "RSI - Smoothened" oscillator was seen when indices crossed 17260 / 5198 level. As a result, indices opened nearly 3% higher on Friday's session and closed almost near the highest point of the week. On the sector front, Auto, Metal and Oil & Gas contributed heavily in this rally. Despite being a truncated week, the Sensex ended with a mammoth gain of 6.07%, whereas the Nifty gained 6.15%, vis--vis the previous week.
Source: Falcon

Exhibit 1: Sensex weekly chart

Exhibit 2: Sensex daily chart

Pattern Formation
On the Weekly chart, the "Downward Sloping Trend Line" is placed around the 18150 / 5475 level. We are observing a positive crossover in the Weekly ADX (9) indicator. The Daily "200 SMA" is placed at the 18020 / 5410 level. The "Higher - Top Higher - Bottom" formation is confirmed on the Daily chart after nearly six months. We are witnessing a downside gap area of 17671 to 17350 / 5322 to 5219 created on October 28, 2011.
Source: Falcon

18150 / 5475. Thus, indices may face supply pressure near 5475 18020 - 18150 / 5410 - 5475 levels. However, we are also observing a positive crossover in the "ADX (9)" indicator, which suggests possibility of a strong momentum if indices manage to cross and sustain above the 18175 / 5475 level. The effect of positive crossover may push indices higher to test 18300 18440 / 5500 - 5550 levels. At this juncture, the "Narrow range" body formation on the Daily chart indicates possibility of a consolidation or a minor pull back if indices trade below the 17671 / 5322 level. In this case, indices may fill the gap of 17671 to 17350 / 5322 to 5219 created on October 28, 2011. We advise traders to adopt stock specific approach and avoid taking undue risks.

Future Outlook
Finally, after several attempts, the bulls have managed to cross a firm resistance level of 17260 / 5198 and closed convincingly above it. As a result, a "Higher - Top Higher - Bottom" formation on the Daily chart was confirmed after nearly six months. Going forward, it is likely that indices are now heading initially towards the Daily "200 SMA" placed at the 18020 / 5410 level and then towards the "Downward Sloping Trend Line" placed around

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Technical Picks | October 29, 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 18,547 5,597 10,334 1,307 168 1,236 1,913 425 339 681 326 308 268 1,778 461 479 740 525 2,340 158 378 989 142 3,087 224 648 86 553 1,523 921 1,218 190 310 1,051 112 539 87 405 944 529 102 124 2,071 219 911 153 655 40 225 110 527 1,186 409 R1 18,176 5,479 10,125 1,266 164 1,193 1,835 408 333 659 315 303 258 1,724 445 465 714 504 2,249 150 365 961 137 2,973 220 613 82 532 1,470 896 1,172 185 297 1,007 109 527 84 389 922 497 98 120 1,990 212 882 143 582 39 216 106 505 1,154 391 PIVO PIVOT 17,537 5,282 9,724 1,196 157 1,152 1,745 393 323 647 302 295 241 1,632 433 442 674 476 2,140 136 346 907 129 2,857 212 568 76 498 1,369 852 1,139 177 282 964 104 514 78 359 882 449 92 113 1,909 206 848 126 530 38 199 102 470 1,107 373 S1 17,166 5,164 9,516 1,154 153 1,109 1,667 376 317 625 291 290 232 1,578 417 428 648 455 2,049 128 333 879 124 2,743 208 534 73 477 1,316 827 1,093 171 270 920 101 502 74 343 860 417 88 109 1,828 199 818 116 457 37 190 98 448 1,074 356 S2 16,528 4,967 9,115 1,085 146 1,068 1,578 361 307 613 278 282 215 1,486 404 405 607 428 1,941 115 314 825 117 2,627 200 489 66 443 1,215 783 1,060 164 255 877 96 488 68 314 820 370 82 101 1,747 193 784 100 405 35 174 94 413 1,027 337

Technical Research Team

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Derivatives Review | October 29, 2011

Lot of shorts still uncovered; 5500 looks achievable

Nifty spot closed at 5360.70 this week, against a close of 5049.95 last week. The Put-Call Ratio increased from 1.40 to 1.41 levels .40 and the annualized Cost of Carry is positive 6.25 The Open Interest of Nifty Futures increased by 6.99 6.25%. 6.99%.

Put-Call Ratio Analysis

PCR - OI has being stable from around 1.40 levels it increased a bit to 1.41 level and reason for the same is increase in open interest of both call options and put options simultaneously in Nov. series. On call options front we have seen some buildup in 5500-5700 strike price, while in put options 5200-5400 strike price have seen the maximum buildup. We believe it's more of buying of options as implied volatility is very low.

Implied Volatility Analysis

Implied Volatility (IV) has being decreased from 22.67% to 19.05%. HV for BANKNIFTY is trading at 38.59%. Liquid counters having very high Historical Volatility are IVRCLINFRA, KFA, OPTOCIRCUI, JUBLFOOD and ABAN. Stocks where HV are on lower side are INDHOTEL, PIRHEALTH, CIPLA, IOC and VIDEOIND.

Open Interest Analysis

Total open interest of market has decreased from `1,38,302.40 crores to `1,09,626.90 crores. Stock futures open interest has decreased from `32,215/- crores to `31,415/- crores. Frontline counters which added considerable open interest are GAIL, M&M, ICICIBANK, ITC and CIPLA. Open interest was shed in some liquid counters like IDEA, EDUCOMP IDBI, , LICHSGFIN and ABAN.

Cost-of-Carry Analysis
Nifty futures closed at a Premium of 24.80 points against the Premium of 24.10 points to its spot. Next month future is trading with premium of 47.80 points. Counters where CoC is high are GVKPIL, LITL, BHARATFORG, VIDEOIND and TTML. Stocks with negative CoC are ROLTA, FORTIS, TATASTEEL, ASHOKLEY and TATAMOTORS.

Derivative Strategy
Scrip : NIFTY View: Mildly Bullish Buy/Sell Buy
BEP: BEP: 5490 Max. Risk: `4500/If NIFTY closes on or below the strike price.

CMP : 5360.70

Lot Size : 50

Exercise Date (F & O) : 24th Nov, 2011 Expected Payoff

Strategy: Long Call Scrip NIFTY Strike Price 5400 Series NOV Option Type Call Buy Rate (`) 90.00

Qty 50

Price Closing Price

Expected rofit/Loss Profit/Loss

5700 5600 5500

`210.00 `110.00 `10.00 (`90.00) (`90.00) (`90.00)

Profit: Max. Profit: Unlimited

If NIFTY continues to move above BEP .

5400 5300 5200

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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