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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