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Seesaw between bulls and bears
Sensex (16934) / Nifty (5084)
We had mentioned in our previous report that we are witnessing
a candlestick pattern on Weekly chart which resembles a
"Spinning Top". This pattern will be activated ONLY if indices
break and sustain below 16488 / 4942 level. We had also
mentioned that we are observing a "Rising Wedge" pattern which
will get confirmed below 16830 / 5046 level and as a result,
indices would test 16488 / 4942 level. Last week indices opened
with extreme pessimism in-line with weak global cues and made
a low of 16374 / 4911 but buying emerged near this low which
pushed indices higher to close marginally above last week's
close. The Sensex ended with a marginal gain of 0.40%, whereas
the Nifty gained 0.49% vis-à-vis the previous week.
Pattern Formation
We reiterate that Indices face a "Horizontal Line" resistance
at 17300 / 5177 level which was the crucial swing low made in
February 2011
Also, the "Spinning Top" formation mentioned in our last
report is still intact as the high of 17212 / 5169 has not been
violated.
On the Daily chart, we are observing a "Downward sloping
trend line" joining two highs of 18945 and 17212 / 5702 and
5169.
Future Outlook
Markets opened much lower on Monday's session due
to negativity across global indices. Our benchmark
indices registered a Weekly low of 16374 / 4911 after breaching
16488 / 4942 level. However, indices failed to sustain below
the low of the "Spinning Top" as they bounced twice from the
Weekly low. We reiterate our view that as long as the high of
the "Spinning Top" (17212 / 5169) is not violated we may witness
a selling pressure near this resistance levels. Any move beyond
17212 / 5169 level would lead to negation of the pattern and
then indices may rally towards 17250 - 17600 / 5200 - 5300
levels. On the downside, last week low of 16374 / 4911 level
would act as a support and a breach of this level would reinforce
selling pressure. In such a scenario, Indices may test
recent bottom of 15765 / 4720. Broadly speaking,
for the coming week, we expect the trading range to be between
17212 - 16374 / 5169 - 4911 levels.
Though we are in resistance zone of 5050-5150; don't short
Nifty spot closed at 5068 this week, against a close of 5059 last week. The Put-Call Ratio increased from 1.36 to 1.51 levels and the
annualized Cost of Carry is positive 1.85%. The Open Interest of Nifty Futures decreased by 0.49%.
Put-Call Ratio Analysis Implied Volatility Analysis
PCR-OI has significantly increased from 1.36 levels to 1.51
levels and primary reason for the same is increase in
open interest of put options especially in strikes ranging from
5000 to 4700 levels. If we club implied volatility and market
movements we believe its blend of both writing and buying of
puts. We also observed some unwinding in 4900 to 5100 calls
but it's not very significant. 5200 and 5300 calls are emerging
as top built-up strikes.
Implied volatility (IV) has increased from 25.66% to 26.97%
but during the week we saw huge jump in this figure. It did
touch high of 32.29% despite market rising during those
2-3 trading sessions. IV of calls is now at 23.55% and that of
puts is at 30.11%. Counters where IV's have substantially
increased are MLL, DCHL, PATELENG, 3IINFOTECH and
KTKBANK. Stocks where it has declined are KFA, KOTAKBANK,
BHARATFORG, CROMPGREAV and WELCORP.
Nifty futures of current month have closed with premium of
3.35 points against last week's discount of 6.95 points. Next
month futures are trading at a healthy premium of 17.45 points.
This positive cost of carry is due to short covering visible from
intra week pull back. Stocks where CoC is positive are NHPC,
INDIACEM, MTNL, ASIANPAINT and IVRCLINFRA.
Total open interest of market has increased from `1,26,490/-
crores to `1,39,079/- crores. Stock futures open interest has
increased from `28,072/- crores to `30,214/- crores. In
frontline stocks, significant open interest got added in
TATAMOTORS, BHEL, ITC, BPCL and HCLTECH. Counters which
saw decline in open interest were UNITECH, CHAMBLFERT,
HDIL, RECLTD and SUZLON.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Seesaw between bulls and bears
Sensex (16934) / Nifty (5084)
We had mentioned in our previous report that we are witnessing
a candlestick pattern on Weekly chart which resembles a
"Spinning Top". This pattern will be activated ONLY if indices
break and sustain below 16488 / 4942 level. We had also
mentioned that we are observing a "Rising Wedge" pattern which
will get confirmed below 16830 / 5046 level and as a result,
indices would test 16488 / 4942 level. Last week indices opened
with extreme pessimism in-line with weak global cues and made
a low of 16374 / 4911 but buying emerged near this low which
pushed indices higher to close marginally above last week's
close. The Sensex ended with a marginal gain of 0.40%, whereas
the Nifty gained 0.49% vis-à-vis the previous week.
Pattern Formation
We reiterate that Indices face a "Horizontal Line" resistance
at 17300 / 5177 level which was the crucial swing low made in
February 2011
Also, the "Spinning Top" formation mentioned in our last
report is still intact as the high of 17212 / 5169 has not been
violated.
On the Daily chart, we are observing a "Downward sloping
trend line" joining two highs of 18945 and 17212 / 5702 and
5169.
Future Outlook
Markets opened much lower on Monday's session due
to negativity across global indices. Our benchmark
indices registered a Weekly low of 16374 / 4911 after breaching
16488 / 4942 level. However, indices failed to sustain below
the low of the "Spinning Top" as they bounced twice from the
Weekly low. We reiterate our view that as long as the high of
the "Spinning Top" (17212 / 5169) is not violated we may witness
a selling pressure near this resistance levels. Any move beyond
17212 / 5169 level would lead to negation of the pattern and
then indices may rally towards 17250 - 17600 / 5200 - 5300
levels. On the downside, last week low of 16374 / 4911 level
would act as a support and a breach of this level would reinforce
selling pressure. In such a scenario, Indices may test
recent bottom of 15765 / 4720. Broadly speaking,
for the coming week, we expect the trading range to be between
17212 - 16374 / 5169 - 4911 levels.
Though we are in resistance zone of 5050-5150; don't short
Nifty spot closed at 5068 this week, against a close of 5059 last week. The Put-Call Ratio increased from 1.36 to 1.51 levels and the
annualized Cost of Carry is positive 1.85%. The Open Interest of Nifty Futures decreased by 0.49%.
Put-Call Ratio Analysis Implied Volatility Analysis
PCR-OI has significantly increased from 1.36 levels to 1.51
levels and primary reason for the same is increase in
open interest of put options especially in strikes ranging from
5000 to 4700 levels. If we club implied volatility and market
movements we believe its blend of both writing and buying of
puts. We also observed some unwinding in 4900 to 5100 calls
but it's not very significant. 5200 and 5300 calls are emerging
as top built-up strikes.
Implied volatility (IV) has increased from 25.66% to 26.97%
but during the week we saw huge jump in this figure. It did
touch high of 32.29% despite market rising during those
2-3 trading sessions. IV of calls is now at 23.55% and that of
puts is at 30.11%. Counters where IV's have substantially
increased are MLL, DCHL, PATELENG, 3IINFOTECH and
KTKBANK. Stocks where it has declined are KFA, KOTAKBANK,
BHARATFORG, CROMPGREAV and WELCORP.
Nifty futures of current month have closed with premium of
3.35 points against last week's discount of 6.95 points. Next
month futures are trading at a healthy premium of 17.45 points.
This positive cost of carry is due to short covering visible from
intra week pull back. Stocks where CoC is positive are NHPC,
INDIACEM, MTNL, ASIANPAINT and IVRCLINFRA.
Total open interest of market has increased from `1,26,490/-
crores to `1,39,079/- crores. Stock futures open interest has
increased from `28,072/- crores to `30,214/- crores. In
frontline stocks, significant open interest got added in
TATAMOTORS, BHEL, ITC, BPCL and HCLTECH. Counters which
saw decline in open interest were UNITECH, CHAMBLFERT,
HDIL, RECLTD and SUZLON.
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