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Technical Picks | November 1, 2014
Stay with the flow - 8500 in sight
Sensex (27866) / Nifty (8322)
After the long weekend of the previous week on account of
the Diwali festival, our market opened higher on Monday.
However, the Nifty corrected a bit during the second half of
the session and eventually closed marginally in the negative
territory. The next two trading sessions too opened higher and
maintained their positive bias just ahead of the October month
derivative expiry session. However, the overall movement was
quite range bound. The remaining sessions of the week too
traded with strong upward momentum, but the price activity
was much bigger than in the previous sessions. As a result, the
Nifty eventually managed to close the week at its highest point
ever. All the defined sectors closed in the green for the week
among which the Capital Goods, Banking, Auto and Oil &
Gas sectors were the major gainers. The Nifty ended the week
with a sizable gain of 3.84% over the previous week's closing.
Exhibit 1: Nifty Weekly chart
Source: Falcon
Exhibit 2: Nifty Daily chart
Pattern formation:

The '89-day EMA' and the '89-week EMA' are placed at
25996 / 7780 and 22637 / 6774 levels, respectively.

The '20-day EMA' and the '20-week EMA' are placed at
26707 / 8010 and 26003 / 7784 levels, respectively.
Future outlook
Source: Falcon
Our market has seen a v-shaped recovery in the concluded
week from the lows witnessed in the sessions preceding to it. A
couple of weeks back; few might have anticipated that the
Nifty would hit a new all time high any time sooner. Honestly
speaking, despite having a continuous positive view from the
level of 7750 on the Nifty, we did not expect an all time high
to be printed so soon. Until the first half of Thursday's session,
we expected 8080 to 8120 levels to act as an immediate
hurdle for the bulls. But the way the Nifty thrashed these levels
post the midsession on Thursday, we expected it to hit a new
high. In-line with our view, the Nifty opened with an upside
gap at 8200 on Friday and continued its northward journey
till the last trade of the session. In the process, the Nifty even
surpassed the 8300 mark on a closing basis. Technically
speaking, the Nifty has now broken out from the 'Horizontal
Line' resistance with a 'Breakaway Gap'. This technical
development indicates strong optimism among the market
participants. Hence, looking at the ongoing momentum across
the broader market, we expect to the market to continue to
trade firm in the coming few trading sessions as well.
The near term targets on the Nifty are now seen around
8450 - 8550 levels, which is the 127% 'Price Extension' of
the previous rally from the recent low of 7723.85
7723.85. Hence,
we advise traders to remain with the flow and avoid initiating
short positions. On the flipside, 8180 - 8040 levels would
now be seen as strong supports for the Nifty.
For Private Circulation Only |
We have been advising traders to accumulate value buying
propositions since the last few weeks and we reinstate our
advice this week as well.
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Technical Picks | November 1, 2014
Weekly Pivot Levels For Nifty 50 Stocks
SCRIPS
S2
S1
PIV
OT
PIVO
R1
R2
SENSEX
26,328
27,097
27,496
28,264
28,663
NIFTY
7,868
8,095
8,213
8,440
8,558
16,269
16,657
16,859
17,247
17,448
1,540
BANKNIFTY
1,438
1,469
1,489
1,519
AMBUJACEM
212
220
225
232
237
ASIANPAINT
635
646
652
664
670
ACC
AXISBANK
BAJAJ-AUTO
413
426
433
446
453
2,412
2,512
2,570
2,669
2,728
BANKBARODA
867
898
916
947
964
BHEL
235
246
252
263
270
BPCL
660
693
711
743
761
BHARTIARTL
383
391
404
412
425
CAIRN
268
277
283
292
298
CIPLA
600
633
653
686
706
COALINDIA
339
355
363
379
388
DLF
102
114
120
132
138
2,918
3,043
3,122
3,248
3,327
449
489
520
560
592
GRASIM
3,273
3,390
3,458
3,576
3,643
HCLTECH
1,426
1,517
1,571
1,662
1,716
877
894
905
922
932
HDFC
1,005
1,056
1,083
1,133
1,160
HEROMOTOCO
3,189
DRREDDY
GAIL
HDFCBANK
2,943
3,004
3,066
3,127
HINDALCO
138
151
158
171
177
HINDUNILVR
678
708
737
767
796
1,675
1,544
1,585
1,609
1,651
IDFC
138
147
153
161
167
INDUSINDBK
673
697
709
733
746
4,262
ICICIBANK
3,660
3,856
3,961
4,157
ITC
342
349
354
361
366
JINDALSTEL
140
151
157
168
175
KOTAKBANK
1,045
1,081
1,102
1,139
1,159
LT
1,524
1,590
1,627
1,692
1,729
LUPIN
1,277
1,323
1,366
1,412
1,455
M&M
1,206
1,256
1,290
1,340
1,373
MARUTI
3,020
3,179
3,264
3,423
3,509
NMDC
155
163
168
176
182
NTPC
142
146
149
152
155
INFY
ONGC
382
394
400
412
418
POWERGRID
137
142
144
148
151
PNB
873
902
924
953
975
RELIANCE
899
950
977
1,027
1,054
SSLT
242
249
254
261
266
SBIN
2,536
2,619
2,665
2,748
2,793
769
807
828
867
888
2,383
2,495
2,558
2,670
2,733
489
513
526
549
562
85
89
92
96
99
430
460
477
507
524
TECHM
2,251
2,384
2,454
2,587
2,657
ULTRACEMCO
2,350
2,449
2,505
2,604
2,659
WIPRO
539
552
559
571
579
ZEEL
309
327
340
358
371
SUNPHARMA
TCS
TATAMOTORS
TATAPOWER
TATASTEEL
Technical Research Team
For Private Circulation Only |
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Derivatives Review | November 1, 2014
Significant formation of longs by FIIs
Nifty spot closed at 8322.20 this week against a close of 7995.90 last week. The Put-Call Ratio has increased from 0.87 to 0.93
levels and the annualized Cost of Carry is positive at 4.95%
4.95%. The Open Interest of Nifty Futures increased by 16.87%
16.87%.
Put-Call Ratio Analysis
Implied Volatility Analysis
PCR-OI has increased from 0.87 to 0.93 mainly due to
Implied Volatility (IV) for NIFTY has increased from 11.02%.to
significant amount of buildup in put options. We have been
12.10%. Historical volatility (HV) of NIFTY is at 18.22% and
witnessing good amount of open interest addition from start of
that for BANKNIFTY is trading at 25.74%. Liquid counters
last week in November series. Significant buildup was observed
having very high HV are DLF, JINDALSTEL, UNITECH,
in both call and put options. Buildup is quite scattered, 8300 -
JPASSOCIAT and GMRINFRA. Stocks where HV are on lower
8500 call options and 8100 & 8200 put options has added
side are ITC, COLPAL, POWERGRID, HDFCBANK and NTPC.
more than 5 digit contracts last week. Maximum buildup in
current series has shifted from 8200 to 8500 call options & of
put options is at 8100 strike price.
Open Interest Analysis
Cost-of-Carry Analysis
Total open interest of market has decreased from
Nifty current month futures closed at a premium of 30.50
`2,23,491/- cr. to `1,80,015/- cr. Stock futures open interest
points against the premium of 61.50 points to its spot. Next
has decreased from `58,120/- cr. to `56,143/- cr. Large
month future is trading with premium of 80.90 points. Liquid
cap names which added significant positions last week are
counters where CoC is high are HDFCBANK, PTC, JPPOWER,
GAIL, BHARTIARTL, MARUTI, HEROMOTOCO and GRASIM.
JSWENERGY and IDFC. Stocks with negative CoC are BHEL,
On the other hand unwinding was visible in counters like
NMDC, SAIL, JUBLFOOD and BANKINDIA.
AMBUJACEM, DRREDDY, HCLTECH, NMDC and COALINDIA.
Derivative Strategy
Scrip : NIFTY
CMP : 8322.20
View: Mildly Bullish
Lot Size : 25
Strategy: Long Call
Expected Payoff
Buy/Sell
Qty
Scrip
Strike
Price
Series
Option
Ty p e
Buy/Sell Rate
(`)
BUY
25
NIFTY
8500
NOV
CE
40.00
BEP - 8540/-
Max. Risk: `1,000/If NIFTY closes on or below strike price on expiry.
Max. Profit: Unlimited
If NIFTY continues to move above BEP.
NOTE: Profit can be booked before expiry if NIFTY moves in favorable direction.
For Private Circulation Only |
Exercise Date (F & O) :
27th. Nov 2014
Closing PPrice
rice
((`
`)
Expected
oss
rofit/Loss
Profit/L
8250
(`40.00)
8350
(`40.00)
8450
(`40.00)
8550
`10.00
8650
`110.00
8750
`210.00
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Weekly
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Buy (> 15%)
Reduce (-5% to -15%)
Accumulate (5% to 15%)
Sell (< -15%)
Neutral (-5 to 5%)
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