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Bears in cruise control - Minor breather in the offing
Sensex (16142) / Nifty (4846)
We had stated in our previous Weekly report that a "Horizontal
Trend Line" and a gap area around 17300 / 5180 level may
act as resistance in coming trading sessions. Also, we had
mentioned that a violation of 16430 / 4945 level along with
the ADX line rising above 20 -21 level may attract immense
selling pressure, which can drag indices to lower levels of
16000 / 4800. During the week, our markets opened on a
quite note but financial uncertainty across global indices
continued to spread negativity in our markets which dragged
Nifty well below 5000 mark. The Sensex ended once again
with an enormous loss of 4.14%, whereas the Nifty lost
4.51% vis-à-vis the previous week.
Pattern Formation
The ADX (14) line for Sensex / Nifty continues to move up
from the last week's level of 21.07 / 20.75 to the current week's
level of 23.15 / 22.85 along with - DI (Negative Directional
Index) moving upwards.
The Daily chart depicts a candlestick pattern which
resembles a "Bullish Hammer". This pattern needs a
confirmation.
Future Outlook
Our benchmark indices tumbled from a high of 17036 / 5132
during the week and Nifty closed well below the psychological
level of 5000. As expected and mentioned in our previous
reports, markets fell down to test lower level of 16000 / 4800
on Friday's session. The ADX (14) indicator continues to move
up with the rising - DI (Negative Directional Index) which
indicates strength in the negative trend in coming weeks. On
the other hand, we are witnessing a candlestick pattern which
resembles a "Bullish Hammer" coupled with oversold condition
Bullish Hammer
of momentum oscillators indicate a possibility of minor bounce
back in coming sessions if indices manage to trade above the
Friday's high 16288 / 4894. In this case, indices may test
16450 - 16750 / 4950 - 5050 levels. The said pattern will be
negated if indices break low of the candle. This possible upside
rally can only be construed as a bounce back of the fall which
can be used as exit opportunity for the traders. Also, due to
Derivative expiry, the coming week is likely to trade with
extreme volatility. On the downside, a violation of Friday's
low of 15987 / 4796 can take indices to lower levels of
15650 - 15330 / 4675 - 4540.
4800 is a support but losing strength
Nifty spot closed at 4846 this week, against a close of 5073 last week. The Put-Call Ratio decreased from 1.03 to 0.94 points and the
annualized Cost of Carry is positive 6.53%. The Open Interest of Nifty Futures increased by 0.85%.
Put-Call Ratio Analysis Historical Volatility Analysis
Over a week, significant unwinding was witnessed from the
5000 to 5200 Put options and build up was observed in the
lower strike price of 4500 to 4700 Puts. The Nifty PCR open
interest decreased from 1.03 to 0.94 points. On the Call front,
the 4800 to 5000 strike added considerable open interest and
some unwinding was observed in the 5300 to 5500 calls. The
4800 levels which is a support for the market, unwinding in the
4800 put suggests the level is losing its strength.
Historical volatility (HV) has increased from 22.80% to 25.35%.
IV of at the money options is at the same level of 28.50%.
Counters where HV has increased substantially are KSOILS,
IVRCLINFRA, VOLTAS, COREPROTEC and PIRHEALTH. Stocks
where HV has decreased are NTPC, INDIAINFO, BAJAJ-AUTO,
VIDEOIND and M&M.
The Nifty Aug Futures closed at a premium of 5.20 points, it
closed at a premium of 6.90 points, last week. The Sep futures
closed at a premium of 11.40 points. Few liquid stocks where
cost of carry turned from negative to positive are POLARIS,
SUZLON, BANKBARODA, LICHSGFIN and M&M. Stocks where
cost of carry turned form positive to negative are MTNL, BRFL,
TCS, NCC and DLF.
Total Open interest of the market has increased from `138,837
crores to `146,657 crores. Stock futures open interest has
decreased from `30,313 crores to `29,777 crores. Few liquid
counters where open interest has increased significantly are
HEROMOTOCO, DHANBANK, AXISBANK, ABGSHIP and
RANBAXY. Stocks where open interest has decreased significantly
TATACHEM, SUZLON, ABAN, ALOKTEXT and BATAINDI
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bears in cruise control - Minor breather in the offing
Sensex (16142) / Nifty (4846)
We had stated in our previous Weekly report that a "Horizontal
Trend Line" and a gap area around 17300 / 5180 level may
act as resistance in coming trading sessions. Also, we had
mentioned that a violation of 16430 / 4945 level along with
the ADX line rising above 20 -21 level may attract immense
selling pressure, which can drag indices to lower levels of
16000 / 4800. During the week, our markets opened on a
quite note but financial uncertainty across global indices
continued to spread negativity in our markets which dragged
Nifty well below 5000 mark. The Sensex ended once again
with an enormous loss of 4.14%, whereas the Nifty lost
4.51% vis-à-vis the previous week.
Pattern Formation
The ADX (14) line for Sensex / Nifty continues to move up
from the last week's level of 21.07 / 20.75 to the current week's
level of 23.15 / 22.85 along with - DI (Negative Directional
Index) moving upwards.
The Daily chart depicts a candlestick pattern which
resembles a "Bullish Hammer". This pattern needs a
confirmation.
Future Outlook
Our benchmark indices tumbled from a high of 17036 / 5132
during the week and Nifty closed well below the psychological
level of 5000. As expected and mentioned in our previous
reports, markets fell down to test lower level of 16000 / 4800
on Friday's session. The ADX (14) indicator continues to move
up with the rising - DI (Negative Directional Index) which
indicates strength in the negative trend in coming weeks. On
the other hand, we are witnessing a candlestick pattern which
resembles a "Bullish Hammer" coupled with oversold condition
Bullish Hammer
of momentum oscillators indicate a possibility of minor bounce
back in coming sessions if indices manage to trade above the
Friday's high 16288 / 4894. In this case, indices may test
16450 - 16750 / 4950 - 5050 levels. The said pattern will be
negated if indices break low of the candle. This possible upside
rally can only be construed as a bounce back of the fall which
can be used as exit opportunity for the traders. Also, due to
Derivative expiry, the coming week is likely to trade with
extreme volatility. On the downside, a violation of Friday's
low of 15987 / 4796 can take indices to lower levels of
15650 - 15330 / 4675 - 4540.
4800 is a support but losing strength
Nifty spot closed at 4846 this week, against a close of 5073 last week. The Put-Call Ratio decreased from 1.03 to 0.94 points and the
annualized Cost of Carry is positive 6.53%. The Open Interest of Nifty Futures increased by 0.85%.
Put-Call Ratio Analysis Historical Volatility Analysis
Over a week, significant unwinding was witnessed from the
5000 to 5200 Put options and build up was observed in the
lower strike price of 4500 to 4700 Puts. The Nifty PCR open
interest decreased from 1.03 to 0.94 points. On the Call front,
the 4800 to 5000 strike added considerable open interest and
some unwinding was observed in the 5300 to 5500 calls. The
4800 levels which is a support for the market, unwinding in the
4800 put suggests the level is losing its strength.
Historical volatility (HV) has increased from 22.80% to 25.35%.
IV of at the money options is at the same level of 28.50%.
Counters where HV has increased substantially are KSOILS,
IVRCLINFRA, VOLTAS, COREPROTEC and PIRHEALTH. Stocks
where HV has decreased are NTPC, INDIAINFO, BAJAJ-AUTO,
VIDEOIND and M&M.
The Nifty Aug Futures closed at a premium of 5.20 points, it
closed at a premium of 6.90 points, last week. The Sep futures
closed at a premium of 11.40 points. Few liquid stocks where
cost of carry turned from negative to positive are POLARIS,
SUZLON, BANKBARODA, LICHSGFIN and M&M. Stocks where
cost of carry turned form positive to negative are MTNL, BRFL,
TCS, NCC and DLF.
Total Open interest of the market has increased from `138,837
crores to `146,657 crores. Stock futures open interest has
decreased from `30,313 crores to `29,777 crores. Few liquid
counters where open interest has increased significantly are
HEROMOTOCO, DHANBANK, AXISBANK, ABGSHIP and
RANBAXY. Stocks where open interest has decreased significantly
TATACHEM, SUZLON, ABAN, ALOKTEXT and BATAINDI
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