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Seems bears have honed their weapons
Sensex (16867) / Nifty (5059)
As stated in our previous report, indices showed some optimism
due to positive crossover in "RSI" oscillator and moved marginally
above 17100 / 5150 level. Also, we had mentioned that the
"20 EMA" on Daily chart is placed at 16825 / 5052 level. During
the week, indices traded with a positive bias and registered a
high of 17210 / 5169. However, the Friday's sell - off mainly in
Banking, Metal and Oil & Gas counters led indices to give a
close near "20 EMA" on Daily chart which is now placed at
16873 / 5066 level. The Sensex ended on neutral bias with a
marginal gain of 0.27%, whereas the Nifty gained 0.39%
vis-à-vis the previous week.
Pattern Formation
We are observing a "Horizontal Line" resistance at
17300 / 5177 level which was the crucial swing low made in
February 2011
Last Weekly candle resembles a "Spinning Top" formation
near above mentioned resistance of 17300 / 5177. This pattern
needs a confirmation.
The Daily chart depicts a "Rising Wedge" continuation
pattern.
However, On the Weekly chart, the positive crossover in
momentum oscillators viz., the RSI and the Stochastic is still
intact which cannot be ignored.
Future Outlook
Markets moved higher during the initial part of the week but
showed some positive momentum to register a weekly high of
17210 / 5169. However, indices could not sustain near this
level as they were nearing strong "Horizontal Line" resistance
of 17300 / 5177. On Friday's session after reversing from
mentioned resistance level, mainly due to sell - off in Banking,
Metal and Oil & Gas counters, we are now witnessing a "Rising
Wedge" continuous pattern. This pattern has a negative
implication. The breakdown will be confirmed if indices sustain
below Friday's low of 16830 / 5046. Subsequently, indices may
correct to test support level of 16488 / 4942. In addition, we
are observing a candlestick pattern which resembles a "Spinning
Top". The said pattern will be confirmed ONLY if indices break
and sustains below 16488 / 4942 level. In this case,
indices can test recent bottom of 15765 / 4720. This pattern
will get negated once prices break high of the pattern which is
17210 / 5169. However, the positive crossover in Weekly RSI
and Stochastic oscillator is still intact. The impact of this crossover
may be nullified once indices break 16488 / 4942 level.
On the upside, last week high of 17210 / 5169 would act as
strong resistance. A move beyond this level, indices may test
17300 - 17600 / 5200 - 5280 levels.
Put unwinding indicates downward pressure likely for markets
Nifty spot closed at 5059 this week, against a close of 5040 last week. The Put-Call Ratio increased from 1.35 to 1.36 levels and the
annualized Cost of Carry is negative 2.51%. The Open Interest of Nifty Futures increased by 7.73%.
Put-Call Ratio Analysis Implied Volatility Analysis
Though prices and PCR-OI has remained flat on weekly basis
we have seen lot of action within week. In rising market we
didn't see much of long unwinding but fall on Friday saw
meaningful unwinding in puts. 4900 and 5000 put saw
unwinding while significant built up was observed in 5100 call.
PCR-OI which went up to 1.43 levels has now come down to
1.3.6 levels.
Implied volatility (IV) has inched up from 24.93% to 25.66%
but interestingly last week IV has increased with rise in markets.
It has seen highs of 28.07%. Call IV's are at 22.85% and
that of puts is at 28.19%. There has been substantial jump
in IV's of KSOILS, GTL, SKUMARSYNF, UNIONBANK
and ONMOBILE.
Last week even CoC was quite volatile. After ending last week
with discount of 5.90 points, Nifty futures did go into slight
premium of 1.75 points but ended in discount of 6.95 points.
Next month's future is trading at a premium of 5.35 points
only. Stocks like FSL, GVKPIL, PANTALOONR, ASIANPAINT and
RAYMOND have witnessed increase in CoC.
Total open interest of market has increased from `1,13,807/-
crores to `1,26,490/- crores. Stock futures open interest has
increased from `26,970/- crores to `28,072/- crores.
Considerable open interest was added over the week in counters
like ONGC, DELTACORP, EXIDEIND, JUBLFOOD and KSOILS.
Stocks which reduced OI in same period were HCLTECH, GAIL,
APOLLOTYRE, JETAIRWAYS and RELIANCE.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Seems bears have honed their weapons
Sensex (16867) / Nifty (5059)
As stated in our previous report, indices showed some optimism
due to positive crossover in "RSI" oscillator and moved marginally
above 17100 / 5150 level. Also, we had mentioned that the
"20 EMA" on Daily chart is placed at 16825 / 5052 level. During
the week, indices traded with a positive bias and registered a
high of 17210 / 5169. However, the Friday's sell - off mainly in
Banking, Metal and Oil & Gas counters led indices to give a
close near "20 EMA" on Daily chart which is now placed at
16873 / 5066 level. The Sensex ended on neutral bias with a
marginal gain of 0.27%, whereas the Nifty gained 0.39%
vis-à-vis the previous week.
Pattern Formation
We are observing a "Horizontal Line" resistance at
17300 / 5177 level which was the crucial swing low made in
February 2011
Last Weekly candle resembles a "Spinning Top" formation
near above mentioned resistance of 17300 / 5177. This pattern
needs a confirmation.
The Daily chart depicts a "Rising Wedge" continuation
pattern.
However, On the Weekly chart, the positive crossover in
momentum oscillators viz., the RSI and the Stochastic is still
intact which cannot be ignored.
Future Outlook
Markets moved higher during the initial part of the week but
showed some positive momentum to register a weekly high of
17210 / 5169. However, indices could not sustain near this
level as they were nearing strong "Horizontal Line" resistance
of 17300 / 5177. On Friday's session after reversing from
mentioned resistance level, mainly due to sell - off in Banking,
Metal and Oil & Gas counters, we are now witnessing a "Rising
Wedge" continuous pattern. This pattern has a negative
implication. The breakdown will be confirmed if indices sustain
below Friday's low of 16830 / 5046. Subsequently, indices may
correct to test support level of 16488 / 4942. In addition, we
are observing a candlestick pattern which resembles a "Spinning
Top". The said pattern will be confirmed ONLY if indices break
and sustains below 16488 / 4942 level. In this case,
indices can test recent bottom of 15765 / 4720. This pattern
will get negated once prices break high of the pattern which is
17210 / 5169. However, the positive crossover in Weekly RSI
and Stochastic oscillator is still intact. The impact of this crossover
may be nullified once indices break 16488 / 4942 level.
On the upside, last week high of 17210 / 5169 would act as
strong resistance. A move beyond this level, indices may test
17300 - 17600 / 5200 - 5280 levels.
Put unwinding indicates downward pressure likely for markets
Nifty spot closed at 5059 this week, against a close of 5040 last week. The Put-Call Ratio increased from 1.35 to 1.36 levels and the
annualized Cost of Carry is negative 2.51%. The Open Interest of Nifty Futures increased by 7.73%.
Put-Call Ratio Analysis Implied Volatility Analysis
Though prices and PCR-OI has remained flat on weekly basis
we have seen lot of action within week. In rising market we
didn't see much of long unwinding but fall on Friday saw
meaningful unwinding in puts. 4900 and 5000 put saw
unwinding while significant built up was observed in 5100 call.
PCR-OI which went up to 1.43 levels has now come down to
1.3.6 levels.
Implied volatility (IV) has inched up from 24.93% to 25.66%
but interestingly last week IV has increased with rise in markets.
It has seen highs of 28.07%. Call IV's are at 22.85% and
that of puts is at 28.19%. There has been substantial jump
in IV's of KSOILS, GTL, SKUMARSYNF, UNIONBANK
and ONMOBILE.
Last week even CoC was quite volatile. After ending last week
with discount of 5.90 points, Nifty futures did go into slight
premium of 1.75 points but ended in discount of 6.95 points.
Next month's future is trading at a premium of 5.35 points
only. Stocks like FSL, GVKPIL, PANTALOONR, ASIANPAINT and
RAYMOND have witnessed increase in CoC.
Total open interest of market has increased from `1,13,807/-
crores to `1,26,490/- crores. Stock futures open interest has
increased from `26,970/- crores to `28,072/- crores.
Considerable open interest was added over the week in counters
like ONGC, DELTACORP, EXIDEIND, JUBLFOOD and KSOILS.
Stocks which reduced OI in same period were HCLTECH, GAIL,
APOLLOTYRE, JETAIRWAYS and RELIANCE.
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