Technical Picks | October 18, 2014 7700 - A sheet anchor for the bulls Sensex (26109) / Nifty (7780) Trading on Monday began with a downside gap over the previous week's closing at the backdrop of negative cues from the global bourses. As a result, the Nifty breached the 7800 mark on the lower side in initial trades. However, a strong buying interest at the day's lows immediately pulled the index higher and it then went on to close well inside the positive territory. This was followed by a gap up opening in the market on Tuesday, although the gains were short lived. The bourses were shut on Wednesday on account of state elections in Maharashtra. On Thursday, we witnessed a massive sell off in the final hour of trade, which dragged the Nifty a tad below the 7750 mark. However, on Friday, the Nifty managed to recover some part of the losses, but eventually closed below the 7800 mark. On the sectoral front, the Realty, IT, Oil & Gas and Consumer Durables counters witnessed a sharp correction; whereas the Banking sector stood firm throughout the week and became the only sector to close in the positive territory on a weekly basis. The Nifty ended the week with a cut of 1.02% 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 25827 / 7718 and 22431 / 6710 levels, respectively. The '20-day EMA' and the '20-week EMA' are placed at 26742 / 7911 and 25757 / 7697 levels, respectively. Future outlook The concluded week's movement can be perfectly described as a tug of war between the bulls and the bears. In our previous reports, we have been continuously mentioning about the near term weakness in the market and the possibility of the Nifty testing 7750 - 7700 levels. The Nifty met our expected levels with it posting a low of 7723 7723.85 on Friday. But honestly speaking, the way the index fell on Thursday was quite unexpected for us as it suddenly tumbled more than 100 points during the concluding hour of the day's trade. We are now observing a cluster of supports around the 7700 mark. Firstly, the daily '89 EMA' is placed around it, which generally provides For Private Circulation Only | Source: Falcon a strong support. In addition, the daily chart exhibits a 'Falling Wedge' pattern and the lower end of this pattern is seen around 7720 7720. We maintain our stance that traders with a longer term perspective should start accumulating stocks with a value buying proposition. As long as the Nifty remains above the 7700 mark on a closing basis, there is no reason for the bulls to panic from a near term perspective. This view will be negated once the index decisively sustains below this level and then the pessimism in the market may get aggravated. In this scenario, the possibility of the Nifty testing 7560 - 7540 cannot be ruled out. On the flipside, the 'Falling Wedge' pattern would get confirmed once the index manages to give a daily close above the 7900 mark and as a result, we may see the Nifty going back towards 7980 - 8050 levels. AngelBrokingLtd:BSESebiRegnNo:INB010996539/CDSLRegnNo:IN-DP-CDSL-234-2004/PMSRegnCode:PM/INP000001546AngelSecuritiesLtd:BSE:INB010994639/INF010994639NSE:INB230994635/INF230994635Membershipnumbers:BSE028/NSE:09946 1 Technical Picks | October 18, 2014 Weekly Pivot Levels For Nifty 50 Stocks SCRIPS S2 S1 PIV OT PIVO R1 R2 SENSEX 25,550 25,829 26,190 26,469 26,830 NIFTY 7,606 7,693 7,811 7,897 8,015 15,063 15,496 15,735 16,168 16,407 1,445 BANKNIFTY 1,351 1,379 1,398 1,426 AMBUJACEM 199 203 208 212 217 ASIANPAINT 599 620 642 663 686 ACC AXISBANK BAJAJ-AUTO 361 381 393 413 425 2,271 2,322 2,381 2,433 2,492 BANKBARODA 834 853 869 888 905 BHEL 210 218 224 232 238 BPCL 639 653 667 681 696 BHARTIARTL 370 383 393 405 415 CAIRN 261 268 280 288 300 CIPLA 558 577 589 608 620 COALINDIA 322 336 346 360 369 69 90 121 142 172 2,799 2,859 2,927 2,987 3,055 427 437 448 459 470 GRASIM 3,085 3,182 3,315 3,412 3,545 HCLTECH 1,861 DLF DRREDDY GAIL 1,319 1,412 1,590 1,683 HDFCBANK 843 864 876 897 909 HDFC 948 973 999 1,024 1,051 3,021 2,653 2,763 2,837 2,947 HINDALCO 127 133 144 150 161 HINDUNILVR 697 712 729 743 760 1,559 HEROMOTOCO 1,410 1,458 1,484 1,532 IDFC 132 136 139 143 146 INDUSINDBK 608 634 651 677 693 4,039 ICICIBANK 3,743 3,798 3,891 3,945 ITC 336 345 352 361 369 JINDALSTEL 135 141 152 159 170 INFY 960 980 1,000 1,021 1,041 LT 1,402 1,428 1,445 1,470 1,488 LUPIN 1,281 1,314 1,340 1,373 1,399 M&M 1,153 1,203 1,261 1,311 1,369 MARUTI 2,855 2,898 2,945 2,989 3,036 NMDC 146 153 157 164 168 NTPC 135 138 140 143 145 KOTAKBANK ONGC 382 390 400 407 417 POWERGRID 130 132 134 136 139 PNB 868 894 914 940 960 RELIANCE 894 916 947 970 1,001 SSLT 200 216 235 252 271 SBIN 2,379 2,450 2,503 2,574 2,626 770 784 806 820 842 2,215 2,328 2,543 2,657 2,872 449 462 482 495 515 79 82 85 88 91 419 433 450 465 482 TECHM 2,052 2,162 2,277 2,387 2,502 ULTRACEMCO 2,170 2,244 2,371 2,445 2,573 WIPRO 540 553 573 586 606 ZEEL 297 310 321 333 344 SUNPHARMA TCS TATAMOTORS TATAPOWER TATASTEEL Technical Research Team For Private Circulation Only | AngelBrokingLtd:BSESebiRegnNo:INB010996539/CDSLRegnNo:IN-DP-CDSL-234-2004/PMSRegnCode:PM/INP000001546AngelSecuritiesLtd:BSE:INB010994639/INF010994639NSE:INB230994635/INF230994635Membershipnumbers:BSE028/NSE:09946 2 Derivatives Review | October 18, 2014 Don't expect linear move on either side Nifty spot closed at 7779.70 this week against a close of 7859.95 last week. The Put-Call Ratio has decreased from 0.88 to 0.84 levels and the annualized Cost of Carry is positive at 13.34% 13.34%. The Open Interest of Nifty Futures increased by 3.87% 3.87%. Put-Call Ratio Analysis Implied Volatility Analysis PCR-OI has decreased from 0.88 to 0.84 mainly due to Implied Volatility (IV) for NIFTY has increased from 13.61%.to reasonable amount of open interest addition in call options, 15.22%. Historical volatility (HV) of NIFTY is at 16.68% and 7800-8100 call options added significant buildup which is that for BANKNIFTY is trading at 28.47%. Liquid counters mostly long positions which got formed in last two trading having very high HV are DLF, JPASSOCIAT, UNITECH, sessions. On the other hand in put options we saw open interest GMRINFRA and JPPOWER. Stocks where HV are on lower addition in the range of 7300-7600 strike price last week. side are HINDUNILVR, POWERGRID, DABUR, MARUTI and Maximum buildup in current series has shifted from 8200 to KOTAKBANK. 8000 call options & of put options is at 7800 strike price. Open Interest Analysis Cost-of-Carry Analysis Total open interest of market has increased from Nifty current month futures closed at a premium of 37.35 `1,94,997/- cr. to `2,14,628/- cr. Stock futures open interest points against the premium of 26.85 points to its spot. Next has increased from `53,015/- cr. to `54,189/- cr. Large cap month future is trading with premium of 78.30 points. Liquid names which added significant positions last week are TCS, counters where CoC is high are JPPOWER, JPASSOCIAT, HCLTECH, M&M, HDFC and DLF. On the other hand unwinding NHPC, HDFCBANK and GMRINFRA. Stocks with negative CoC was visible in counters like KOTAKBANK, INFY, AXISBANK, are SAIL, SRTRANSFIN, PETRONET, JUBLFOOD and IDFC. COALINDIA and PNB. Derivative Strategy Scrip : RELIANCE CMP : ` 943.00 View: Mildly Bearish Lot Size : 250 Strategy: Ratio Put Spread Buy/Sell Qty Scrip BUY 250 RELIANCE 940 SELL 500 RELIANCE 920 Strike Price Series Option Ty p e Buy/Sell Rate (`) OCT PE 13.00 OCT PE 6.00 LBEP - `901/901/UBEP - `939/939/Max. Risk: Unlimited If RELIANCE continues to move below LBEP. Max. Profit: `4,750/If RELIANCE closes at Rs. 920 on expiry. NOTE: Profit can be booked before expiry if RELIANCE moves in favorable direction and time value decays. For Private Circulation Only | Exercise Date (F & O) : 30th. Oct 2014 Expected Payoff Closing PPrice rice ((` `) Expected oss rofit/Loss Profit/L 895 (`6.00) 905 `4.00 915 `14.00 925 `14.00 935 `4.00 945 (`1.00) AngelBrokingLtd:BSESebiRegnNo:INB010996539/CDSLRegnNo:IN-DP-CDSL-234-2004/PMSRegnCode:PM/INP000001546AngelSecuritiesLtd:BSE:INB010994639/INF010994639NSE:INB230994635/INF230994635Membershipnumbers:BSE028/NSE:09946 3 Weekly Disclaimer This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Pvt. 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