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Finally the awaited bounce has come - Sustainability in Jeopardy
Sensex (16821) / Nifty (5040)
We had mentioned in our previous Weekly report that the
momentum oscillator viz., the "RSI - Smoothened" is placed well
in the oversold territory. Therefore, we had advised to avoid
fresh short positions as the bounce was expected due to oversold
condition of the oscillator. Also, we had stated that indices may
test 16550 - 16750 / 4966 - 5050 levels if they manage to
sustain above 16256 / 4888 level. The week opened on an
optimistic note in - line with global cues and traded with positive
bias throughout the week to give a close well above 5000 mark.
The Sensex ended with a mammoth gain of 6.14%, whereas
the Nifty gained 6.15% vis-à-vis the previous week.
Pattern Formation
The Weekly chart depicts a positive crossover in "RSI"
momentum oscillator.
The "20 EMA" on the Daily chart is placed at 16825 / 5052
level.
Future Outlook
Our benchmark indices opened with a decent upside gap on
Monday's session and continued to surge higher to give a close
well above 5000 mark. As expected, the "RSI - Smoothened"
turned upwards from its oversold territory and gave a positive
crossover on Monday's session which led indices to give
enormous bounce of 6% in spite of truncated week. We are
now observing that indices have closed marginally below
"20 EMA" on Friday's session which is placed at 16825 / 5052
level. Generally, the "20 EMA" is considered as a decent
support / resistance. Therefore, going forward, indices may
face some resistance near 16825 / 5052 level on a closing
basis. On the positive front, the "RSI" momentum oscillator on
the Weekly chart has given a positive crossover which indicates
a possibility of a further bounce if indices manage to sustain
above Friday's high of 16990 / 5114. In this case, they are
likely to rally towards17100 - 17250 / 5150 - 5200 levels. On
the downside, if indices breaks 16688 / 4993 then they are
likely to drift towards 16250 - 16550 / 4950 - 4870 levels.
Therefore, we advise our traders to stick to a stock centric
approach and avoid heavy trading on a positional basis.
5050-5100 is a resistance zone; avoid fresh longs
Nifty spot closed at 5040 this week, against a close of 4748 last week. The Put-Call Ratio increased from 1.27 to 1.35 levels and the
annualized Cost of Carry is negative 1.58%. The Open Interest of Nifty Futures increased by 2.34%.
Put-Call Ratio Analysis Implied Volatility Analysis
Despite strong bounce back we have seen PCR-OI has not
increased significantly, though it has increased from levels of
1.27 to 1.35 levels. Reasons for this is that there has been no
meaningful call unwinding despite market bouncing 300 odd
points from the lows. We did see some unwinding in 4800 call
but that was it. Put buying has been seen in strikes of 4900 to
4700, maximum being in 4700.
Implied volatility (IV) has decreased considerably from 29.90%
to 24.93%. It made a low of 23.90% in last week. IV for
BANKNIFTY is trading at 27.52%. Liquid counters having very
high implied volatility are KSOILS, GTOFFSHORE, VIPIND,
DCHL and JINDALSWHL. Stocks where IV's are on lower side
are BRFL, BPCL, GRASIM, HINDUNILVR and HDFC.
Nifty futures closed at a discount of 5.91 points against the
premium of 0.90 points to its spot. Next month future is trading
with premium of 6.25 points. Despite bounce back market is
into discount indicating some formation of short positions on
Friday. Counters where CoC is high are GTL, ULTRACEMCO,
TRIVENI, TTML and BAJAJHIND. Stocks where CoC is on the
lower side are HINDPETRO, IOC, BGRENERGY, BHUSANSTEL
and SCI.
Total open interest of market has increased from `97,731/-
crores to `1,13,807/- crores. Stock futures open interest has
increased from `24,816/- crores to `26,970/- crores. Frontline
counters which added considerable open interest in this bounce
back are ONGC, IDEA, NTPC, UNITECH and HEROMOTOCO.
Open interest was shed in big names like ITC, RELIANCE,
TATAMOTORS, HCLTECH and JPASSOCIAT
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Finally the awaited bounce has come - Sustainability in Jeopardy
Sensex (16821) / Nifty (5040)
We had mentioned in our previous Weekly report that the
momentum oscillator viz., the "RSI - Smoothened" is placed well
in the oversold territory. Therefore, we had advised to avoid
fresh short positions as the bounce was expected due to oversold
condition of the oscillator. Also, we had stated that indices may
test 16550 - 16750 / 4966 - 5050 levels if they manage to
sustain above 16256 / 4888 level. The week opened on an
optimistic note in - line with global cues and traded with positive
bias throughout the week to give a close well above 5000 mark.
The Sensex ended with a mammoth gain of 6.14%, whereas
the Nifty gained 6.15% vis-à-vis the previous week.
Pattern Formation
The Weekly chart depicts a positive crossover in "RSI"
momentum oscillator.
The "20 EMA" on the Daily chart is placed at 16825 / 5052
level.
Future Outlook
Our benchmark indices opened with a decent upside gap on
Monday's session and continued to surge higher to give a close
well above 5000 mark. As expected, the "RSI - Smoothened"
turned upwards from its oversold territory and gave a positive
crossover on Monday's session which led indices to give
enormous bounce of 6% in spite of truncated week. We are
now observing that indices have closed marginally below
"20 EMA" on Friday's session which is placed at 16825 / 5052
level. Generally, the "20 EMA" is considered as a decent
support / resistance. Therefore, going forward, indices may
face some resistance near 16825 / 5052 level on a closing
basis. On the positive front, the "RSI" momentum oscillator on
the Weekly chart has given a positive crossover which indicates
a possibility of a further bounce if indices manage to sustain
above Friday's high of 16990 / 5114. In this case, they are
likely to rally towards17100 - 17250 / 5150 - 5200 levels. On
the downside, if indices breaks 16688 / 4993 then they are
likely to drift towards 16250 - 16550 / 4950 - 4870 levels.
Therefore, we advise our traders to stick to a stock centric
approach and avoid heavy trading on a positional basis.
5050-5100 is a resistance zone; avoid fresh longs
Nifty spot closed at 5040 this week, against a close of 4748 last week. The Put-Call Ratio increased from 1.27 to 1.35 levels and the
annualized Cost of Carry is negative 1.58%. The Open Interest of Nifty Futures increased by 2.34%.
Put-Call Ratio Analysis Implied Volatility Analysis
Despite strong bounce back we have seen PCR-OI has not
increased significantly, though it has increased from levels of
1.27 to 1.35 levels. Reasons for this is that there has been no
meaningful call unwinding despite market bouncing 300 odd
points from the lows. We did see some unwinding in 4800 call
but that was it. Put buying has been seen in strikes of 4900 to
4700, maximum being in 4700.
Implied volatility (IV) has decreased considerably from 29.90%
to 24.93%. It made a low of 23.90% in last week. IV for
BANKNIFTY is trading at 27.52%. Liquid counters having very
high implied volatility are KSOILS, GTOFFSHORE, VIPIND,
DCHL and JINDALSWHL. Stocks where IV's are on lower side
are BRFL, BPCL, GRASIM, HINDUNILVR and HDFC.
Nifty futures closed at a discount of 5.91 points against the
premium of 0.90 points to its spot. Next month future is trading
with premium of 6.25 points. Despite bounce back market is
into discount indicating some formation of short positions on
Friday. Counters where CoC is high are GTL, ULTRACEMCO,
TRIVENI, TTML and BAJAJHIND. Stocks where CoC is on the
lower side are HINDPETRO, IOC, BGRENERGY, BHUSANSTEL
and SCI.
Total open interest of market has increased from `97,731/-
crores to `1,13,807/- crores. Stock futures open interest has
increased from `24,816/- crores to `26,970/- crores. Frontline
counters which added considerable open interest in this bounce
back are ONGC, IDEA, NTPC, UNITECH and HEROMOTOCO.
Open interest was shed in big names like ITC, RELIANCE,
TATAMOTORS, HCLTECH and JPASSOCIAT
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