Technical Picks | November 10, 2012

Uncertainty remains aloof

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Sensex (18684) / Nifty (5686)

We had a flat opening on Monday in-line with other Asian bourses. Post the announcement of US presidential election on Wednesday, the Sensex/Nifty finally managed to conquer the stiff resistance of 18886 / 5729 to close well above it. However, President Obama's win opened up fresh fears of 'Fiscal Cliff' and dampened sentiments across global markets. As a result, we have witnessed nearly 4% correction in all the major global indices over the past three trading sessions. This was coupled with the poor second quarter numbers from the banking giant State Bank of India (SBI) and led to a minor correction in our market towards the latter part of the week. Nonetheless, it's really commendable that despite pessimism across the globe, our markets have managed to buck the trend. Undoubtedly, the Realty and FMCG sectors have outperformed the markets; whereas the Oil & Gas, Capital goods and Metal counters kept the markets under pressure. The Sensex ended the week with a nominal loss of 0.38%, and the Nifty lost 0.20% over the previous week's closing.
Source: Falcon

Exhibit 1: Nifty weekly chart

Exhibit 2: Nifty Daily chart

Pattern Formation
The '20-day EMA' and the '20-week EMA' are placed at 18693 / 5683 and 18119/ 5498 levels, respectively. The monthly 'RSI' oscillator is moving higher from the 50 mark and the positive in the ADX (9) indicator is intact. The daily momentum oscillators viz, the 'RSI' and the 'Stochastic' are now signaling a negative crossover.
Source: Falcon

crossover in the 'RSI' and the 'Stochastic' oscillators. This increases the possibility of a near term corrective move if our benchmark indices manage to sustain below 18656 / 5677 levels. In this scenario, our markets may slide towards 18589 - 18393 / 5650 - 5583 levels. A breach of 18393 / 5583 may reinforce the negative momentum and as a result, we may witness further correction towards 18194 / 5515, which is the 50% Fibonacci Retracement level 5515 of the rise from 17250 to 19138 / 5216 to 5815 5815. On the flipside, 19138 / 5816 level would act a strong resistance for our market. Only a sustainable move beyond this level would augment the buying interest and indices may resume to their higher degree trend, i.e. bullish. In this scenario, the up move may get extended towards 19542 - 19812 / 5850 - 5945 levels. In the broader sense, the near term trading range has widened to 19138 - 18393 / 5816 - 5583 levels.

Future Outlook
Previously, indices slipped marginally below the support level of 18530 / 5630 and bounced back sharply after making a low of 18393 / 5583 We are now observing a mirror image 5583. of the breakdown, in the form of a breakout beyond the 18886 / 5729 mark. Indices managed to traverse the 18886 / 5729 level and started correcting immediately after a minor up move. This shows that the market participants are skeptical and hence, the market is struggling to find a clear direction. At this juncture, the daily chart depicts a negative

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Technical Picks | November 10, 2012

Weekly Pivot Levels For Nifty 50 Stocks

SCRIPS
SENSEX NIFTY BANKNIFTY ACC AMBUJACEM ASIANPAINT AXISBANK BAJAJ-AUTO BANKBARODA BHARTIARTL BHEL BPCL CAIRN CIPLA COALINDIA DLF DRREDDY GAIL GRASIM HCLTECH HDFC HDFCBANK HEROMOTOCO HINDALCO HINDUNILVR ICICIBANK IDFC INFOSYSTCH ITC JINDALSTEL JPASSOCIAT KOTAKBANK LT LUPIN M&M MARUTI NTPC ONGC PNB POWERGRID RANBAXY RELIANCE RELINFRA SBIN SESAGOA SIEMENS SUNPHARMA TATAMOTORS TATAPOWER TATASTEEL TCS ULTRACEMCO WIPRO R2 19,088 5,813 11,850 1,533 227 4,384 1,263 1,926 805 288 245 348 336 414 360 226 1,835 373 3,472 628 830 653 1,996 120 542 1,116 173 2,438 296 402 98 644 1,721 601 938 1,510 173 275 805 123 572 818 505 2,325 181 724 723 297 110 418 1,355 2,086 431 R1 18,886 5,750 11,663 1,493 221 4,249 1,239 1,889 781 282 238 343 333 404 353 219 1,802 364 3,417 621 812 646 1,952 117 536 1,088 166 2,393 292 393 95 632 1,671 593 924 1,487 170 266 787 121 557 803 488 2,240 177 705 709 289 105 404 1,340 2,054 401 PIVO PIVOT 18,771 5,714 11,532 1,448 213 4,065 1,220 1,861 761 275 233 339 330 391 349 210 1,780 359 3,360 614 788 638 1,922 114 531 1,071 162 2,369 287 386 91 622 1,640 584 914 1,465 168 261 768 119 545 794 479 2,184 175 694 699 277 103 395 1,328 2,024 348 S1 18,569 5,650 11,345 1,408 206 3,930 1,196 1,824 736 269 227 335 327 380 343 203 1,746 350 3,305 607 769 632 1,878 111 524 1,043 155 2,324 284 376 87 611 1,590 575 899 1,442 165 252 750 117 531 779 462 2,099 171 676 685 269 98 381 1,313 1,992 318 S2 18,454 5,614 11,214 1,362 199 3,746 1,177 1,795 716 262 222 331 323 367 339 194 1,724 344 3,247 600 745 624 1,849 108 519 1,026 151 2,300 279 370 83 601 1,559 566 889 1,420 163 247 730 115 518 770 452 2,043 169 665 676 257 96 372 1,302 1,961 265

Technical Research Team

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Derivatives Review | November 10, 2012

Uncertainity continuous
Nifty spot closed at 5686.25 this week, against a close of 5697.70 last week. The Put-Call Ratio has decreased from 1.09 to 1.06 levels and the annualized Cost of Carry is positive 11.02% The Open Interest of Nifty Futures increased by 3.81% 11.02%. 3.81%.

Put-Call Ratio Analysis

PCR OI has decreased from 1.09 to 1.06 levels. After some volatility observed for the first few days since start of this new series, market is again showing consolidation kind of movement and outperforming the global markets. On options front 5800-6000 call option has seen significant amount of buildup in open interest and also maximum buildup in open interest in call option is quite scattered between them however 6000 strike price has maximum open positions as of now, while in put option considerable amount of buildup is seen 5500-5800 strike price and 5600 put option continues to have maximum buildup in open interest for this series.

Implied Volatility Analysis

Implied Volatility (IV) for NIFTY has increased from 12.10% to 12.28%. Historical volatility (HV) is at 14.35% and that for BANKNIFTY is trading at 21.68%. Liquid counters having very high HV are SUZLON, IRB, UNITECH, CESC and PANTALOONR. Stocks where HV are on lower side are TATACHEM, ULTRACEMCO. IOC, HDFCBANK, SUNPHARMA and

Open Interest Analysis

Total open interest of market has increased from Rs.1,32,232/- cr. to Rs.1,47,234/- cr. Stock futures open interest has increased from Rs.32,613/- cr. to Rs.34,115/- cr. Some of the big names which added open interest are RANBAXY, LT, ONGC, TATAMOTORS and TATASTEEL. Open interest was shed in large cap names like CIPLA, LUPIN, STER, HEROMOTOCO and M&M.

Cost-of-Carry Analysis
Nifty futures closed at a premium of 34.35 point against the premium of 41.85 points to its spot. Next month future is trading with premium of 68.00 points. Liquid counters where CoC is high are OFSS, JISLJALEQS, NHPC, ALOKTEXT and ONGC. Stocks with negative CoC are SUZLON, HEXAWARE, RCOM, JPASSOCIAT and SUNTV.

Derivative Strategy
Scrip : DLF View: Mildly Bearish Buy/Sell BUY SELL
BEP - `208

CMP : 211.95

Lot Size : 1000

Exercise Date (F & O) : 29th. Nov. 2012 Expected Payoff

Price Closing Price (` (`) Expected rofit/Loss Profit/Loss

Strategy: Bear Put Spread Scrip DLF DLF Strike Price 210 200 Series NOV NOV Option Buy/Sell Rate Type (`) PE PE 3.50 1.50

Qty 1000 1000

190 195 200

`8.00 `8.00 `8.00 `3.00 (`2.00) (`2.00)

Max. Risk: `2,000/If DLF closes on or above `210 on expiry.

Profit: Max. Profit: `8,000/If DLF closes on or below `200 on expiry.

205 210 215

NOTE TE: NOTE : Profit can be booked before expiry if DLF moves in 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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