Technical Picks | April 13, 2012

Infosys disappoints, Bulls hope for policy action

Sensex (17095) / Nifty (5207)
The week began on a pessimistic note, in-line with other global indices. As expected, indices drifted towards the support level of 17105 / 5203 and traded marginally below it twice during the week. Broadly speaking, indices maintained their narrow trading range of 17408 to 17027 / 5288 to 5190. On Friday, 5190 strong selling pressure in banks and IT major Infosys, dragged indices significantly lower from day's high to close marginally above 5200 mark. On the sectoral front, IT, Capital Goods and Metal counters corrected heavily during the week, whereas defensive sectors like FMCG, Health Care and Autos ended in the positive territory. The Sensex ended with a loss of 2.24%; whereas Nifty lost 2.17% 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 5300, 17100 / 5150 and 17400 / 5300 respectively. The '20-Week EMA' is placed at 17200 / 5200 level. We are witnessing a 'Downward Sloping Trend Line' resistance around 17400 / 5300 level.
Source: Falcon

the next support levels of 16828 - 16600 / 5076 - 5000 5000.

Future Outlook
On account of significant selling pressure in Friday's session, markets tumbled down from the day's high and closed almost at the lowest point of the week. Indices are now approaching a strong support zone comprising of the '20-week EMA' and '200day SMA'. This support zone is at 17200 - 17100 / 5200 5150 levels. Therefore, going forward, ONLY if indices sustain below recent swing low of 16920 / 5135 we may witness 5135, intense selling pressure and markets are likely to drift towards

Conversely, 17400 / 5300 level is now a crucial resistance for the indices. Only a sustainable move, with strong volumes, above the weekly high 17408 / 5307 will indicate resumption of a strong uptrend. Indices then may rally towards 17664 18041 / 5379 - 5500 levels. Considering, Friday's sharp correction during the second half, Considering, Friday's half, we advise traders to stay light on positions and trade with strict stop losses.

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Technical Picks | April 13, 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 17,557 5,355 10,846 1,388 178 1,254 1,718 338 281 721 365 325 353 212 1,797 397 525 698 550 2,188 136 446 922 142 3,021 251 540 89 618 1,359 724 1,400 174 280 949 117 543 93 782 614 123 99 2,389 201 843 115 615 26 307 109 484 1,233 463 R1 17,326 5,281 10,576 1,323 171 1,208 1,679 331 270 699 353 319 346 205 1,766 377 502 689 539 2,122 130 436 894 137 2,712 244 519 83 600 1,321 708 1,362 170 271 926 114 522 89 767 580 119 96 2,301 194 817 111 600 25 298 106 467 1,150 441 PIVO PIVOT 17,176 5,233 10,318 1,272 164 1,171 1,648 326 260 672 346 311 337 201 1,727 350 488 677 528 2,033 126 418 872 134 2,550 233 500 79 565 1,293 695 1,311 166 264 908 111 498 85 747 561 117 94 2,195 185 791 106 577 24 286 103 455 1,106 427 S1 16,945 5,160 10,049 1,208 157 1,125 1,609 318 249 651 334 306 330 194 1,696 330 465 668 518 1,968 121 407 843 129 2,241 226 479 73 547 1,255 678 1,272 162 254 885 109 476 81 731 527 112 91 2,107 178 765 102 563 23 277 100 438 1,024 405 S2 16,796 5,112 9,791 1,156 151 1,088 1,578 313 239 624 326 297 321 189 1,658 304 452 655 506 1,879 117 389 822 126 2,080 216 459 70 513 1,227 665 1,222 158 248 867 106 452 78 711 507 110 89 2,002 169 739 97 540 23 265 97 426 979 391

Technical Research Team

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Derivatives Review | April 13, 2012

Negative view continues as of now

Nifty spot closed at 5207.45 this week, against a close of 5322.90 last week. The Put-Call Ratio decreased from 1.21 to 1.09 levels and the annualized Cost of Carry is positive 7.36 The Open Interest of Nifty Futures increased by 1.75 7.36%. 1.75%.

Put-Call Ratio Analysis

PCR-OI has decreased from 1.21 to 1.09 levels. The decline in the ratio was due to unwinding in some of the put option especially in 4800 and 5300 strike price, while simultaneously good amount of buildup was visible in 5200-5400 call option in the week gone by. Interestingly 4900 put option have started getting active and in Fridays trading session there was significant amount of buildup visible in this strike price.

Implied Volatility Analysis

Implied Volatility (IV) for NIFTY has increased from 18.62% to 21.57%. Historical volatility (HV) is at 24.58% and that for BANKNIFTY is trading at 34.77%. Liquid counters having very high HV are IGL, LITL, HDIL, UNITECH and PUNJJLYOD. Stocks where HV are on lower side are COREEDUTECH, ULTRACHEM, ITC, GRASIM and HINDUNILVR.

Open Interest Analysis

Total open interest of market has increased from `96,720/crores to `1,12,372/- crores. Stock futures open interest has increased from `26,126/- crores to `27,361/- crores. Some of the large caps which added open interest are INFY, RELINFRA, KOTAKBANK, SAIL and TCS. Open interest was shed in big names like BHEL, RELIANCE, LICHSGFIN, PANTALOONR and RENUKA.

Cost-of-Carry Analysis
Nifty futures closed at a premium of 13.65 points against the premium of 21.65 points to its spot. Next month future is trading with premium of 47.35 points. Liquid counters where CoC is high are ABGSHIP COREEDUTEC, JSWISPAT, JPASSOCIAT and , PANTALOONR. Stocks with negative CoC are SUZLON, PUNJLLYOD, IDEA, CAIRN and KOTAKBANK.

Derivative Strategy
Scrip : HDFC View: Mildly Bearish Buy/Sell SELL BUY
BEP: BEP: `672 Max. Risk: `4000/If HDFC continues to trade above `680.

CMP : `680.70

Lot Size : 500

Exercise Date (F & O) : 26th. April 2012 Expected Payoff

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

Strategy: Call Hedge Scrip HDFC HDFC Strike Price 680 Series APR APR Option Buy/Sell Rate Type (`) FUT CE 681.00 9.00

Qty 500 500

640 650 660

`32.00 `22.00 `12.00 `2.00 (`8.00) (`8.00)

Profit: Max. Profit: Unlimited

If HDFC closes below BEP on expiry

670 680

NOTE TE: NOTE : Profit can be booked before expiry if HDFC moves in the favorable direction.

690

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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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