Technical Picks | March 24, 2012

The fight for dominance continues...

Sensex (17362) / Nifty (5278)
The week began on a flat note in-line with other global bourses. We had stated in our earlier report that the Daily momentum oscillators and "3 & 8 EMA" were negatively poised. The impact of these technical tools was seen after breaching last week's low of 17426 / 5305 Subsequently, indices drifted towards 5305. expected support levels of 17239 - 17008 / 5244 - 5171 5171. Weak economic data from China and Germany coupled with increased uncertainty on domestic policy reforms resulted in extreme volatility and mixed sentiments throughout the week. On the sectoral front, defensives such as FMCG and Health Care counters were among the major gainers, whereas Metal and Oil & Gas sectors ended on a losing side. The Sensex ended with nominal loss of 0.60%, whereas Nifty lost 0.75% vis--vis the previous week.
Source: Falcon

Exhibit 1: Sensex weekly chart

Exhibit 2: Sensex daily chart

Pattern Formation
The 200-day SMA (Simple Moving Average) and 20-day EMA (Exponential Moving Average) have now shifted to 5350, 17164 / 5163 and 17607 / 5350 respectively. The "20-Week EMA" is placed at 17150 / 5188 level.
Source: Falcon

Future Outlook
Broadly speaking, Indices are trading in the range of 17687 to 5171. 17008 / 5386 to 5171 Clarity of trend will emerge only if we witness a breakout on either side from the said range. On the upside, the positive trend will resume once markets trade and close beyond 17687 / 5386 In this scenario, indices are likely 5386. to surge towards the next resistance levels of 5610. 18041 - 18524 / 5500 - 5610 Conversely, the 17008 / 5171

level is a key support for the market. A sustainable move below this level may reinforce selling pressure, which may drag indices lower to test the support zone of 16828 - 16600 / 5076 5000. 5000 Extreme volatility is likely to continue in the coming week on account of the derivative expiry. We advise traders to adopt stock specific approach and trade with strict stop loss.

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Technical Picks | March 24, 2012

Weekly Pivot Levels For Nifty 50 Stocks

SCRIPS
SENSEX NIFTY BANKNIFTY ACC AMBUJACEM AXISBANK BAJAJ-AUTO BHARTIARTL BHEL BPCL CAIRN CIPLA COALINDIA 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 RELIANCE RELINFRA RPOWER SAIL SBIN SESAGOA SIEMENS STER SUNPHARMA SUZLON TATAMOTORS TATAPOWER TATASTEEL TCS WIPRO R2 17,946 5,470 10,793 1,447 182 1,283 1,798 352 285 727 381 314 354 212 1,706 384 519 684 539 2,157 149 419 961 150 2,956 233 617 87 563 1,401 720 1,416 180 280 1,019 112 443 98 804 668 139 102 2,312 213 842 121 612 30 305 110 489 1,243 441 R1 17,654 5,374 10,544 1,410 177 1,231 1,754 344 276 704 367 308 344 204 1,686 377 502 672 527 2,087 140 411 936 142 2,914 228 576 83 544 1,351 704 1,362 176 274 985 110 430 94 774 631 130 98 2,239 206 810 117 596 29 289 105 469 1,214 433 PIVO PIVOT 17,395 5,290 10,335 1,367 172 1,192 1,700 332 266 680 352 302 335 198 1,666 368 486 660 510 1,989 135 399 914 138 2,859 222 551 79 528 1,314 689 1,324 173 270 954 107 412 90 753 601 125 96 2,183 200 782 114 569 28 276 101 456 1,163 426 S1 17,103 5,194 10,086 1,330 168 1,140 1,656 324 257 656 339 296 325 189 1,646 360 469 649 497 1,919 126 392 889 131 2,817 216 511 75 510 1,264 673 1,269 168 263 921 106 399 86 723 565 116 92 2,111 193 750 109 554 27 260 96 436 1,134 418 S2 16,845 5,110 9,877 1,288 162 1,101 1,602 313 247 632 323 291 316 183 1,626 351 453 637 480 1,821 120 380 868 126 2,762 210 486 71 494 1,228 659 1,231 165 259 890 103 381 83 702 534 110 89 2,055 187 722 106 527 26 248 93 423 1,083 411

Technical Research Team

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Derivatives Review | March 24, 2012

Support of 5200 may be breached but don't expect a crash

Nifty spot closed at 5278.20 this week, against a close of 5317.90 last week. The Put-Call Ratio increased from 1.08 to 1.09 levels and the annualized Cost of Carry is positive 8.24%. The Open Interest of Nifty Futures decreased by 2.07%.

Put-Call Ratio Analysis

Despite of high volatility observed in the week gone by, PCR OI has hardly changed from 1.08 to 1.09 levels. On call options front we have seen some buildup in 5200-5400 strike price while 5900 strike price have seen maximum unwinding. However in put option 5000 strike price have seen maximum buildup in open interest and 5300-5500 put option have observed some unwinding.

Implied Volatility Analysis

Implied Volatility (IV) for NIFTY has decreased a bit from 22.80% to 22.75%. Historical volatility (HV) is at 26.20% and that for BANKNIFTY is trading at 40.99%. Liquid counters having very high HV are LITL, HDIL, UNITECH, VIPIND and PUNJLLOYD. Stocks where HV are on lower side are DRREDDY, COREEDUTECH, DIVISLAB, HINDUNILVR and INFY.

Open Interest Analysis

Total open interest of market has increased from ` 1,41,846/ - crores to ` 1,47,613/- crores. Stock futures open interest has decreased from ` 32,922/- crores to ` 32,671/- crores. Some of the large cap names which added open interest are HEROMOTOCO, ACC, MARUTI, DLF and HINDALCO. Open interest was shed in some big names like GAIL, ONGC, M&M, INFY and BHARTIARTL.

Cost-of-Carry Analysis
Nifty futures closed at a premium of 7.15 points against the premium of 24.80 points to its spot. Next month future is trading with premium of 48.20 points. Liquid counters where CoC is high are TTML, VIDEOIND, BHARATFORG, VIPIND and SINTEX. Stocks with negative CoC are TECHM, ABAN, HEXAWARE, HEROMOTOCO and ULTRACEMCO.

Derivative Strategy
Scrip : TATAMOTORS TA AMOT View: Mildly Bearish Buy/Sell BUY SELL
BEP: BEP: `250.00

CMP : ` 273.20

Lot Size : 2000

Exercise Date (F & O) : 29th March, 2012 Expected Payoff

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

Strategy: Ratio Put Spread Scrip TATAMOTORS TATAMOTORS Strike Price 270 260 Series MAR MAR Option Buy/Sell Rate Type (`) PE PE 5.00 2.50

Qty 2000 4000

275 270 265

0 0 `5.00 `10.00 `5.00 0

Max. Risk: Unlimited

If TATAMOTORS continues to move below BEP .

Profit: Max. Profit: `20,000/If TATAMOTORS closes at ` 260 on expiry

260 255 250

NOTE TE: NOTE : Profit can be booked before expiry if TATAMOTORS moves in the favorable direction and time value decays.

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Weekly

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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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