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Bulls pray for a bounce amidst a strong downtrend
Sensex (15849) / Nifty (4749)
We had stated in our previous Weekly report that the ADX (14)
line continues to move up with rising - DI (Directional Index)
which indicates strength in the negative trend. Also, we had
mentioned that on the daily chart a "Bullish Hammer" suggests
a possibility of a minor bounce back. The week opened on a
quite note and we witnessed a minor a bounce in the initial
part of the week but markets lost ground on Friday's session
and slipped below recent lows of 15987 / 4796. The Sensex
ended once again with a loss of 1.81%, whereas the Nifty lost
2.02% vis-à-vis the previous week.
Pattern Formation
We are still observing that the ADX (14) line for
Sensex / Nifty continues to rise from the last week's level of
23.15 / 22.85 to the current week's level of 25.23 / 24,97
along with - DI (Negative Directional Index) moving upwards.
The momentum oscillator viz. the "RSI - Smoothened" on
the Daily chart is placed well in the oversold territory.
Future Outlook
In the last week, we witnessed a sluggish movement
till Thursday's session but indices failed to hold recent low of
15987 / 4796 on Friday's session due to immense selling
pressure and registered a weekly close below 16000 / 4800
mark. The strength in the ADX (14) indicator continues to
increase and we reiterate our view that a rising ADX on the
weekly chart is a negative sign for the markets. However, on
the Daily chart, RSI - Smoothened oscillator has entered an
extreme oversold territory. This can be construed as markets
are due for a minor bounce or consolidation in coming sessions.
However, it is extremely difficult to predict from what level this
bounce is likely to occur as the primary downtrend is gaining
strength. Therefore, we advise traders to avoid creating fresh
short positions as a logical risk reward ratio is highly unfavorable
at this juncture. In case of a bounce, if indices sustain above
16256 / 4888 level then are likely to test 16550 - 16750 /
4966 - 5050. Going forward, indices may test 4675 - 4540 if
they breach Friday's low of 16765 / 4720.
Risk reward ratio is not in favour of forming fresh short
Nifty spot closed at 4748 this week, against a close of 4846 last week. The Put-Call Ratio increased from 0.94 to 1.27 points and the
annualized Cost of Carry is positive 0.20%. The Open Interest of Nifty Futures decreased by 8.24%.
Put-Call Ratio Analysis Historical Volatility Analysis
The Nifty PCR open interest increased from 0.94 to 1.27 points.
In the new series, many call and put options are active and
added substantial open interest. Data is scattered but the 4600
put has highest open interest. On the Call front, the 5000 level
is showing resistance for the market and the level contain highest
open interest. Selling pressure from FIIs is still continues.
Historical volatility (HV) has decreased from 25.35% to 25.21%.
IV of at the money options is 27.20% and it is still high. Counters
where HV has increased substantially are DCHL, BRFL,
GMDCLTD, GMRINFRA and IDBI. Stocks where HV has
decreased are ADANIENT, M&M, JSWENERGY, GUJFLUORO
and GTL.
The Nifty September Futures closed at a premium of 0.90 points;
it closed at a premium of 11.40 points last week. The October
futures closed at a premium of 10.05 points. Few liquid stocks
where cost of carry is positive are TRIVENI, MLL, HINDZINC,
HCLTECH and GVKPIL. Stocks where is negative are IDBI, ABAN,
HINDPETRO, BHUSANSTL and SCI.
Total Open interest of the market has decreased from
`146,657crores to `103,004 crores. Stock futures open interest
has decreased from `29,777crores to `24,816crores. In the
September series, the market wide rollover was less, while the
Index futures were showing rollover of short positions. Few liquid
counters where open interest has increased significantly are
COALINDIA, PFC, SUNPHARMA, AXISBANK and POWERGRID.
Stocks where open interest has decreased significantly
CHAMBLFERT, M&M, MOSERBAER, INDIAINFO and ROLTA.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bulls pray for a bounce amidst a strong downtrend
Sensex (15849) / Nifty (4749)
We had stated in our previous Weekly report that the ADX (14)
line continues to move up with rising - DI (Directional Index)
which indicates strength in the negative trend. Also, we had
mentioned that on the daily chart a "Bullish Hammer" suggests
a possibility of a minor bounce back. The week opened on a
quite note and we witnessed a minor a bounce in the initial
part of the week but markets lost ground on Friday's session
and slipped below recent lows of 15987 / 4796. The Sensex
ended once again with a loss of 1.81%, whereas the Nifty lost
2.02% vis-à-vis the previous week.
Pattern Formation
We are still observing that the ADX (14) line for
Sensex / Nifty continues to rise from the last week's level of
23.15 / 22.85 to the current week's level of 25.23 / 24,97
along with - DI (Negative Directional Index) moving upwards.
The momentum oscillator viz. the "RSI - Smoothened" on
the Daily chart is placed well in the oversold territory.
Future Outlook
In the last week, we witnessed a sluggish movement
till Thursday's session but indices failed to hold recent low of
15987 / 4796 on Friday's session due to immense selling
pressure and registered a weekly close below 16000 / 4800
mark. The strength in the ADX (14) indicator continues to
increase and we reiterate our view that a rising ADX on the
weekly chart is a negative sign for the markets. However, on
the Daily chart, RSI - Smoothened oscillator has entered an
extreme oversold territory. This can be construed as markets
are due for a minor bounce or consolidation in coming sessions.
However, it is extremely difficult to predict from what level this
bounce is likely to occur as the primary downtrend is gaining
strength. Therefore, we advise traders to avoid creating fresh
short positions as a logical risk reward ratio is highly unfavorable
at this juncture. In case of a bounce, if indices sustain above
16256 / 4888 level then are likely to test 16550 - 16750 /
4966 - 5050. Going forward, indices may test 4675 - 4540 if
they breach Friday's low of 16765 / 4720.
Risk reward ratio is not in favour of forming fresh short
Nifty spot closed at 4748 this week, against a close of 4846 last week. The Put-Call Ratio increased from 0.94 to 1.27 points and the
annualized Cost of Carry is positive 0.20%. The Open Interest of Nifty Futures decreased by 8.24%.
Put-Call Ratio Analysis Historical Volatility Analysis
The Nifty PCR open interest increased from 0.94 to 1.27 points.
In the new series, many call and put options are active and
added substantial open interest. Data is scattered but the 4600
put has highest open interest. On the Call front, the 5000 level
is showing resistance for the market and the level contain highest
open interest. Selling pressure from FIIs is still continues.
Historical volatility (HV) has decreased from 25.35% to 25.21%.
IV of at the money options is 27.20% and it is still high. Counters
where HV has increased substantially are DCHL, BRFL,
GMDCLTD, GMRINFRA and IDBI. Stocks where HV has
decreased are ADANIENT, M&M, JSWENERGY, GUJFLUORO
and GTL.
The Nifty September Futures closed at a premium of 0.90 points;
it closed at a premium of 11.40 points last week. The October
futures closed at a premium of 10.05 points. Few liquid stocks
where cost of carry is positive are TRIVENI, MLL, HINDZINC,
HCLTECH and GVKPIL. Stocks where is negative are IDBI, ABAN,
HINDPETRO, BHUSANSTL and SCI.
Total Open interest of the market has decreased from
`146,657crores to `103,004 crores. Stock futures open interest
has decreased from `29,777crores to `24,816crores. In the
September series, the market wide rollover was less, while the
Index futures were showing rollover of short positions. Few liquid
counters where open interest has increased significantly are
COALINDIA, PFC, SUNPHARMA, AXISBANK and POWERGRID.
Stocks where open interest has decreased significantly
CHAMBLFERT, M&M, MOSERBAER, INDIAINFO and ROLTA.
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