Derivatives Strategist 29 AUGUST 2011

Market Outlook

 

Nifty future witnessed sustained selling pressure across the board throughout the day and moved down towards 4700 levels. On option front, maximum Put OI is at 4800 strike and Nifty is below 4800 levels. If Nifty remains below 4800 levels, then fresh selling may get intensified in the market towards 4600 levels. Maximum Call OI is intact at 5000 strike, which would be the major hurdle for the market. If Nifty future sustains above 4800 levels then it may go up to 4850-4900 levels. On downside if it fails to hold 4700 levels, then selling pressure may get intensified in the market towards 4600 levels. If Nifty future fails to cross 4700 levels then hedge the position by buying 4600 strike put.

Derivatives Calls : Buy Dabur and M&M

 

 

First Morning Technical Call_29082011

Market Out Look:

S&P CNX Nifty being the first day of the week may see some pullback rally as the week is short due to festival season pullback would be followed by low participation hence for good recovery 4830 levels on closing basis is required for further pullback towards 4950-4980 levels. Whereas on downside if it fails to hold 4730 levels then selling pressure could break 4700 and 4640 can also be possible. Nifty has given the lowest close in last 23 months with selling pressure continued for the fifth consecutive week. Nifty has also closed below 200 Weekly Moving Averages @4830 levels in the last week of August month. Now Nifty above 4980 on sustainable basis is positive for the week while below 4710 on downside could bring more selling pressure towards 4550-4480 levels. SBI has reached our target of 1865 levels now for the time being fresh short should be avoided. Markets are still under bear grip and investors but not traders should start buying value scripts systematically for long term gains.

§ Sensex- Sensex closed below 16K psychological levels with breaking the low made in May/2010 of 15960 and opens the door for 15500-15200 levels in coming days. For the day if it sustains above 16K then only some relief rally may be seen towards 16400 levels.

§ Stock - Cement Secotr stocks are seeing good strength even in the negative market scenario. In any pullback rally this sector may outperform the index with ACC-GRASIM-ULTRATECH-AMBUJA looking strong on charts.

Technical View: BHARAT FORGE 263.30 Stock has made Inverse Pole and Flag formation on weekly charts and closed below the weekly support of 265 levels which is very negative for the counter. Stock can correct by 8-10% from the current levels to 240 levels which is the next major support area being the multiple monthly support levels. Stock has come under strong bear grip trading below all major averages.

Fundamental Weekly Wrap

OUTLOOK

 

The much awaited annual forum in US concludes without any clear signal on what options as the US central bank will use and when. This looks neither negative nor positive, basically its wait and watch policy for everyone.

 

On domestic front the markets closed on Friday below 18 months low and most of the shares are trading at their 52 week low. The political instability still continues. One should select value stocks from them for longer term perspective.

 

Coming to this week it is going to be a short week with only 3 sessions available for trading. We have the important Q1 GDP data coming this week expectations of 7.6% by consensus. Other statistics like the monthly auto sales numbers and cement dispatches numbers will also come this week.

 

The volatility in the market is to continue and we maintain cautious view on markets.