Derivatives Strategist 18 November 2011

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Data Feeler: Nifty future witnessed heavy selling pressure after breaching 5000 psychological levels and unwinding of 1.3 million shares of 5000 PUTs created more panic in the market to close near 4930 levels. Nifty witnessed heavy built of Short positions indicating Bears getting aggressive over Bulls. Nifty for the day sustaining above 4930 levels only may give throwback towards 4980-5020 levels whereas on downside sustaining below 4880 levels would led to unwinding in 4900 PUTs and selling pressure may get intensified towards 4850-4820 levels. PCR OI sustaining near psychological one level, breaching this level may put more pressure in the market, whereas if it holds then a good bounce back could not be ruled out from lower levels.

The PCR OI of Nifty moved down from 1.13 to 1.02 levels. HV of Nifty moved up from 25.37 to 26.74 levels and IV moved up from 24.70 to 26.03 levels.

Nifty future saw increase in open interest with fall in prices by 2.22%. Market witnessed selling pressure across the board especially in Oil & Gas, Power, Metal, Realty, Capital Goods, PSU, Auto, Consumer Durables and FMCG sector stocks. Nifty November future closed at discount of 2 points as compared to previous trading day's premium of 14 points.

The F&O segment of the market saw decrease in turnover as compared to previous trading day. The market turnover decreased by 1.56% in terms of number of contracts traded vis-à-vis previous trading day and in terms of rupees decreased by 2.18%.

Derivative Calls:

TATACHEM: Counter has taken strong support around 320 area and looks good for upside rally from current levels. Stock had also seen short covering rally yesterday with -10.43% OI. One can initiate buy in the given range with stop loss below 319 levels and for the target of 340 levels in coming days.

RANBAXY:

Counter has broken major support line and selling is seen at every rise. Stock has also seen built up of Short Position with 7% OI. One can initiate sell in the given range with stop loss above 462 levels and for the target of 432 levels in coming days.

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First Morning Technical Call_18/11/2011

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Market Outlook:

Nifty View- S&P CNX Nifty will have very strong resistance around 5010 today as Nifty continues to make lower high and lower lows. Nifty after breaching 4980 was very fast to correct and made a low of 4919 now Nifty has a strong support around 4860 & 4820 if these levels hold some relief rally is possible otherwise correction would be strong as we head towards weekend. Week has seen 4.5% downside and with Global market negative and Greece, Italy and now Spain the list of Euro zone trouble has started to have contagion impact. Retail stock saw rally on hopes of hike in FDI limits and opening up of the sector. India needs very strong reforms which has been lacking in last 5years otherwise Indian earnings downgrade could be very high. Quality Mid-cap can be slowly accumulated by long term investor with 2-3years as investment horizon SINTEX, PTC, CROMPTON, BEML, ENGINEERSINDIA, DREGDING CORP.

 

Sensex- Sensex is making lower high and lower low, and in has corrected from high of 17908 to 16408 in 12trading session and still no signs of bottom seen in the charts. Sensex has strong resistance around 16630-16750 levels and failing to cross that 16255 and Gap-up levels 16044-16148 would be levels to watched if in case 16040 is breached then correction could take Sensex below 15k very fast.

 

 

Technical Calls:

GMDC-Rs.179, Stock is relative outperformer and till Rs.168 is held on lower side stock has all possibility a rally till Rs.190-195. Stock is holding above 100DMA Rs.169 and 200DMA Rs.151, Nifty is down 7% in this month while stock is up 1%.

 

APIL-Rs.451, Stock has broken multiple support of Rs.490 which caused a Break-out after which stock is down -8.79% and stock looks very weak to Target Rs.358 on downside if weakness continues. Stock trades below all major averages with 20DMA Rs.519, 100DMA Rs.535 and 200DMA Rs.551.

 

 Technical View: NTPC-Rs.165, Stock has been moving down on falling channel and below Rs.162 on closing basis stock can target levels below Rs.140. Stock held above all major averages for few days after recovering from low levels of Rs.160 and failed to hold higher levels. Now 20DMA Rs.173, 100DMA Rs.174 and 200DMA Rs.176 all levels are breached and stock is firm bear grip and can correct faster as Bulls are trapped @ higher levels.

 

 

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Derivatives Strategist 17 November 2011

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Data Feeler: Nifty future had a volatile session with selling seen towards 5000 psychological levels and then bounced back from those support area. Nifty witnessed heavy built up on Short side indicating Bears are getting aggressive over Bulls. Nifty for the day sustaining above 5060 levels only may give throwback towards 5100-5140 levels whereas on downside sustaining below 5000 levels would led to unwinding in PUTs and selling pressure may get intensified towards 4950-4920 levels. On option front maximum PUT OI is still intact at 5000 strike price followed by 4800 whereas maximum CALL OI lies at 5400 strike price. PCR OI sustaining below one level may create panic in the market due to unwinding in PUT writers positions.

The PCR OI of Nifty moved down from 1.21 to 1.16 levels. HV of Nifty stood at 25.97 levels and IV moved down from 24.62 to 24.06 levels.

Nifty future saw increase in open interest with fall in prices by 1.5%. Market witnessed marginal buying interest Consumer Durables, FMCG, Metal and Realty sector stocks whereas selling pressure was seen in Capital Goods, Power, Oil & Gas, IT, Health Care and PSU sector stocks. Nifty November future closed at premium of 14 points as compared to previous trading day's premium of 8 points.

The F&O segment of the market saw increase in turnover as compared to previous trading day. The market turnover increased by 35.86% in terms of number of contracts traded vis-à-vis previous trading day and in terms of rupees increased by 34%.

Derivative Calls:

ONGC: Counter has taken strong support around 255-260 area and looks good for pullback rally from current levels. Stock had also seen short covering rally yesterday with -3.2% OI. One can initiate buy in the given range with stop loss below 254 levels and for the target of 270 levels in coming days.

HCLTECH: Counter has broken major support line and selling is seen at every rise. Stock has also seen Liquidation of Long position indicating profit booking is seen. One can initiate sell in the given range with stop loss above 419 levels and for the target of 395 levels in coming days.

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First Morning Technical Call_17/11/2011

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Market Outlook:

Nifty View- S&P CNX Nifty will have very strong resistance around 5080 today as Nifty continues to make lower high and lower lows. If Nifty holds 4970 then there can be rally till 5080 or slightly higher levels. Nifty has broken 50% retracement levels for rise from 4728 to 5399 now 61.8% comes around 4984 and if Nifty closes below 4980 for 2-3days then 4700 would be soon breached. MSCI has added BHARTIARTL-IDEA-PFC and weightage has been hiked in SBIN can see some positive while ICICIBANK-HCLTECH-HEROMOTORCO can be negative due to adjustment in Index while SAIL-IBREALST-HDIL can correct due to deletion from the list, based on which ETF flows. U.S. stocks fell hard Wednesday after Fitch Ratings said that the credit outlook for U.S. banks can worsen if the euro-zone debt crisis is not resolved in a timely manner. India's Debt at 70% of GDP Is 'Constraint' to Higher Rating, Moody's Says.

 

Sensex- Sensex is making lower high and lower low, so till Sensex is unable to cross 17170 weakness would continue for the day. Sensex up-move from low of 15745 to high of 17908 is below 50%-16826 and now 61.8%-16571 would important level breaching which then 16255 becomes very crucial level on downside. Sensex already trades below major averages 20DMA-17223, 100DMA-17342 and 200DMA-17920 clearly indicating weakness where failure to cross 17275 would be considered weakness in coming weeks.

 

Technical Calls:

IDEA-Rs.98, Stock is near 41months high of Rs.103.7 Breaking which Rs.115 can be possible target in the stock. Stock after long consolidation gave a price-volume break-out after news of stock being included in MSCI India Index hit the street. Stock trades above all major averages 20DMA Rs.94, 100DMA Rs.91 and 200DMA Rs.78.

 

PFC-Rs.168, Stock is holding well in a weak market and break-out above Rs.172 which is sloping trendline resistance then Rs.190-195 can become possible. Stock has been included in MSCI India index which will be positive for next few weeks if market sustains.

 

 

 Technical View: SAIL-HDIL-IBREALST-Selling pressure after deletion from MSCI Index-SAIL-Rs.93 has been deleted from MSCI India Index along with HDIL & IBREALST all 3stock saw selling pressure. SAIL has made 32month low and looks weak. HDIL-74 is near all time low of Rs.62 which looks to be breached on downside. IBREALST-Rs.66 is making all time low and looks weak in very short term.

 

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First Morning Technical Call_15/11/2011

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Market Outlook:

Nifty View- S&P CNX Nifty opened very positive with Gap-up but selling pressure closed both the Gap-up and gap-down formed. Nifty is facing stiff resistance of 100DMA 5217 and below 5130 selling pressure could be very high in markets with 5064 & 4984 being next support levels on the downside. Heavy selling was witnessed in many mid & small cap stocks this could soon pressure frontline stock with weakness in SBIN-TATASTEEL-TATAPOWER-M&M-SAIL-ICICIBANK-LT-MARUTI seen which can likely break 52week low and 8-10Downside can be possible in these stocks. While on positive side CAIRN-ACC-HINDUINLEVER-AMBUJACEM-SUNPHARMA-DRREDDY looks good for smart gains. India makes case for ratings upgrade with Moody's but many await the outcome of rating. Result season- 2857corporates results sales growth 20.9% while net profit is down 34.7% compared with YOY basis, results have disappointed in big way.

 

Sensex- Sensex Gapped-up failed to sustain the gap and in process closed gapped-down (17331-17279) and closed 12trading days lowest levels indicating weakness. Sensex  up-move from low of 15745 to high of 17908 38.2% retracement comes around 17081 where now support is seen below which 50%-16826 and 61.8%-16571 would be levels to be watched going forward.

 

Technical Calls:

KPIT-Rs.169, Stock has given price-volume Break-out and has closed above 100DMA and 200DMA around Rs.163. Stock has made higher low and gained 7% on a weak day which shows the strength in the stock.

 

ACC-Rs.1217, Stock after steep rise from Rs.917 low made in June2011 has made high of Rs.1237 on 28 October2011 has not made a mini triangle and if 1175 on lower side is held on closing basis higher levels of 1265-1290 would become possible in near term.

 

 

 Technical View: BFUTILITE-Rs,451,Stock has retraced 75% of the gain from Rs.414 to 488 which took 22trading days while 75% retracement took less than 3days. Stock closed below 20DMA Rs.476 and 30months low of Rs.402 can also be breached if weakness continues in the stock.

 

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Raymond - Value Pick ( Revised )

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    Raymond                         CMP    381                            Target   635    

 

Investment Rationale

   

~  Strong portfolio of brands

 

~ Largest retail network

 

~ The turnaround

 

~ Land bank, the trigger

 

~ Industry outlook

 

 

 

 Valuations 

Raymond has shown good performance for the current financial year and with festive season and improved demand the company shows a positive outlook for future though pressure on margins is visible. At CMP the stock trades close to its lowest PE valuations of last 5 years. We have a price target of Rs. 635.

 

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First Morning Technical Call_04/11/2011

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Market Outlook:

Nifty View- S&P CNX Nifty is finding strong support around 5200 levels and if we can hold that level then rally till 5315-5350 can be a possibility and Range for the day can be 5190-5315. Nifty in last 4trading days has been making lower high and lower lows, sustaining 5200 on closing basis is very important as Global crisis very hour news flow changes and with weekend ahead stock specific Mid-cap can give good returns.  ALBANK, INDIANHOTEL, ZYLOG, GSPL, BERGERPAINT, TECHMAH, BEML, REC, PFC and PTC are looking good for short term sharp rally. Petrol price hike would have positive impact on Oil marketing companies like BPCL, HPCL & IOC but already positive is priced in, till Diesel and LPG price hike won't come stock rally is a chance to exit. Indian Services PMI shrinks to lowest in 30 months, slumped to 49.1 in October. Result update QoQ basis sales growth has been +1.74% while Net profit has dropped -5.62% for 1166Companies update available.

 

Sensex- Sensex likely to trade in a range 17200-17750, so till this range holds being stock specific would be better as host of events would put pressure on markets. Normally market Gap up/down and closes so today if the Gap levels is closed then 18250 in Sensex becomes possible in next few weeks.

 

Technical Calls:

GSPL-Rs.102, Stock has taken strong support around 200DMA & 100DMA Rs.99 and has bounced back and stock looks very strong to target Rs.113-116 in short term. Stock is in long term consolidation where stock can even target all time high Rs.128 in next 6-8months so investor can accumulate slowly for good long term gains.

 

INDIANHOTEL-71 Stock after making panic low of Rs.66 has consolidated and good volumes are seen in last 7trading session and now stock has given Price-volume Break-out from a triangle where 8-12% return in next 1-2months can be possible with Rs.67 as strong support.

 

 

 Technical View:  PTC-PFC-REC- Price-Volume Break-out 3stocks which benefit out of reforms to SEB( State electricity Board) PTC-74 Looks very good to target Rs.85-88 around levels, PFC-164 which has given Inv.Head & shoulder Break-out looks good to target Rs.182-187 levels and REC-194 Looks good for Rs.220-229 as Target By End December. Trade with suitable stop loss as Global scenario changes every hour.

 

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Indian Hotels - Value Pick

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   Indian Hotels                         CMP 71                            Target 95                        Time Horizon - 12Months 

 Investment Rationale 

 ~ Reclassifying of various hotel properties under four brands – TAJ, VIVANTA, THE GATEWAY and GINGER

~ Expansion plans – Capacities and Geographical Regions

 

~ Better Financial Performance – Q2 FY12 Results

 

~ The Turnaround

 

~ Better Industry Outlook – Tourist arrivals and growing domestic demand

 

 

 

Valuations 

Improving domestic industry trends are aiding the company, with the major trigger for it being a turnaround in its US operations. With the improving situation, we expect it would clock a 16% rise in revenue in FY12 with the better bottom line reducing its debt burden. On improved performance we see a price target of Rs.95.

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Book Profits PFC Technofunda

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We suggest to book profits at the levels of 166. We had recommended at 151 on 1st Nov 2011. Total returns 10%

 

 

 

     PFC                         CMP   151                                                               SL     143                                                                  Target    169   

Company Description

 

 

PFC is the largest power finance com   pany in India. It enjoys a sovereign rating, strong capital adequacy ratio of 18.9 per cent and negligible non-performing assets.

 

Power Finance Corporation is engaged in power sector financing, and the integrated development of the power and associated sectors. They provide large range of Financial Products and Services like Project Term Loan, Lease Financing, Direct Discounting of Bills, Short Term Loan, and Consultancy Services etc for various Power projects in Generation, Transmission, and Distribution sector as well as for Renovation & Modernization of existing power projects.

 

The company has loan book of over Rs 1, 04,050 crore with 84 per cent of the loans to generation sector. Higher exposure to low-risk power generation business compared to its peers (REC has 40 per cent exposure) places it better, given the concerns surrounding the power sector.

 

 

Technical Comments 

 

 Stock is trading above all short term moving averages (5, 20 & 50 DMA) and is also making an inverse head & shoulder. In last 2 days high volume delivery is seen in the stock. The stock is making higher lows and higher highs which can lead to a target of around Rs. 170 levels with a strict SL of Rs. 143.

 

 

 

 

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BEML - Technofunda

 

 

 

  BEML                     CMP   525                                                                     SL   495                                                         Target   575 

Company Description

 BEML (formerly Bharat Earth Movers) is a public sector undertaking manufacturing BEML Limited operates as a construction equipment company in India and internationally. The company offers a range of mining machinery for opencast and underground mines; and produces machines, such as electric rope shovels, hydraulic excavators, bulldozers, wheel loaders, wheel dozers, dump trucks, motor graders, pipe layers, tire handlers, water sprinklers, and backhoe loaders, as well as mammoth walking draglines for the opencast mines.

BEML's products are exported to more than 56 countries. As part of the company's globalisation strategy, it has expanded global reach by opening a local company in Indonesia and Brazil recently in addition to offices in Malaysia and China.

 

Technical Comments  

 

Stock has made positive Island reversal where 8-12% target in 1-60days can be possible in the stock. Stock Gapped-down(506-501) on 18/10/2011 and today gapped-up(497-498) and if the stock holds Rs.495 on downside then 575 on higher side can be possible. 

 

 

 

 

 

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Tech Mahindra - Technofunda

 Tech Mahindra                     CMP  586                                                                     SL  560                                                        Target  640 

Company Description

Tech Mahindra Limited provides information technology (IT)  services to the telecommunications industry worldwide. Its IT   solutions comprise consulting services, such as strategy   planning, assessment, procurement, and re-engineering   solutions, as well as planning, audits, and practices; system   integration and transformation services; managed services,including application management, infrastructure management,revenue management, and mobile virtual network enabler   services; application development, maintenance, and support   services; B/OSS solutions; and business intelligence and data   management solutions.  

 The company also offers network   solutions and services, including network lifecycle, network   integration and testing, data quality management, managed   network, and network solutions; and infrastructure management   services comprising data centre, managed network, application   support, and end user services. The company was founded in1986 and is based in Pune, India.

 

  

Technical Comments

Stock has Gapped-up(570-571) after making higher low and higher high should target Rs.640 on higher side 100DMA -673 & 200DMA Rs.678 can possibly be target for the stock in short term, while strong  support comes around Rs.560. Traders can hold the stock with Rs.560 as strong stop loss.

.

 

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Daily Fundamental Snippets - 28 October 2011

OUTLOOK

 

Asian stocks rose, poised for their best week in nearly three years, as a long-awaited plan to resolve the European debt crisis encouraged investors to put money back in markets driving up prices of risky assets such as the euro and commodities.The dollar steadied after nursing heavy losses, having suffered its biggest decline in more than two years against a basket of major currencies, after a European debt deal sparked a massive relief rally. The deal in Europe calls for private banks and insurers to take 50 percent losses on their Greek debt as well as agreements on recapitalization of hard-hit European banks and a leveraging of the bloc's rescue fund.

 

On domestic front the RBI, which has raised key interest rates by a cumulative 375 basis points since March last year, has also signalled that chances of another rate increase when it reviews monetary policy again in December are "relatively low". Though data released by the government on Thursday showed food inflation rose to 11.43% year on year for the week to October 15, compared with 10.6% in the preceding week, driven by a 25% jump in vegetable prices even as prices of food articles increased 0.25%. It is now a wait and watch policy.

 

Result season is in full swing with results for the day are BEML, Bharat Electrical, Indian Hotels, NHPC, Tata Global, Tata Elxsi.

 

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Theme - Winter Picks

Theme -Winter Picks - Time Horizon - 0-63 days

 

CMP 184                Motherson Sumi                Target  203

CMP  90                 Chambal Fertiliser              Target  101

CMP  70                   PTC India                           Target  82

CMP  164         KPIT Cummins Info System      Target  180

 

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First Morning Technical Call_28102011

Market Outlook:

Nifty View-

S&P CNX Nifty has breached the supply zone of 5170 and closed above 5200 and with very positive global markets 3-4% in Indian markets in opening trade is possible as Euro Zone has led to global rally in stock and commodities. Today Nifty Gap-up would become positive island reversal and target of 5500-5700 could become possible in near term if today's Gap-up sustain. Nifty Gapped-down (5323-5229) on 5/August/2011 and closing this Gap will lead to heavy short covering and fresh buying. Normally Diwali has been turning point for Indian market in 2010 Diwali day market made all time  high on closing basis while in 2008 Diwali day Market made low of 6years. Nifty 100DMA 5241 & 200DMA 5411 are important levels to be crossed. RBI has hiked policy rate by 25basis points, deregulated saving rate with immediate effect and scaled down growth forecast. 

 

Sensex- Sensex has made a high of 17350 Diwali day and above 17357 Sensex would make high in 55trading days, and target of 18300 become near term target which is trend line resistance made from high of November 2010. Few calculation suggest the correction in 2011 is likely over and fresh major correction would start only after March/April 2012, if no major global events negates the up-move. Outperformance would come from beaten down good mid-cap stocks like SINTEX, VOLTAS, BEML, JINDALSAW, HDIL, CROMPTONGREAVES, IDBI, CUMMINS, and IFCI.

 

 

Technical Calls:

 INDIANHOTEL-Rs.69 Stock has been correcting from high of Rs.118 made in May/2010 made a low of Rs.66 in August/2011 after which in the last 45trading day's stock has consolidated well. Now stock moving above Rs.70.5 is a break-out above falling trend-line resistance, above which Rs.76-78 becomes target. Stock is a beneficiary of weak rupee.

 

JPASSOCIATE-72 Stock has made a triangle formation, if the stock can hold above Rs.70 then Rs.80-83 becomes near term target. Stock has closed above 100DMA Rs.71.9 and trades above 50DMA Rs.68 for long time, once 200DMA Rs.79.9 is breached then stock becomes very bullish. Weekly and monthly charts are suggesting stock can soon target Rs.100 above levels.

 

 Technical View: INDUSINDBANK-277, SAVINGBANK deregulation Impact- RBI in its policy meet has with immediate effect deregulated saving rate which is very positive for Banks with low CASA namely YESBANK, INDUSINDBANK, IDBI and LASKMIVILASBANK, while move can be negative for SBIN, AXISBANK, ICICIBANK and HDFCBANK which has high CASA.  INDUSINDBANK has made high 0f 58trading days and trades near all time high of Rs.309 and chances of 325 in near term looks very possible.

 

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दीपावली की हार्दिक शुभकामनायें ...

ओम् लक्ष्‍म्‍यै नम:!
या देवी सर्वभूतेषु लक्ष्‍मीरूपेण संस्‍थिता, नमस्‍तस्‍यै नमस्‍तस्‍यै नमस्‍तस्‍यै नमोSनम:!

लक्ष्‍मी-गणेश आप सभी के घरों में विराजमान होकर आप सभी पर अपार धनवर्षा करें और आपके परिवार के सदस्‍यों के जीवन में शांति, सुख और समृद्घि लाएं!
दीपोत्सव का यह पावन पर्व आपके जीवन को धन-धान्य-सुख-समृद्धि से परिपूर्ण करे!!!

सभी बंधुजनों को दीपावली की हार्दिक शुभकामनाएं!

Narendra Yadav
Shanghai