Technical Picks | July 28, 2012

Super Mario delivers, will that suffice?

Sensex (16839) / Nifty (5100)
The week began on a pessimistic note as financial uncertainties in Euro zone continued to haunt the investors. We had mentioned a key support of 17034 / 5159 level in our previous report. As expected, a breach of this level had triggered immense selling pressure and indices plunged drastically on Thursday's session 5041. to test the mentioned support level of 16636 / 5041 On Friday's session, surprisingly, indices opened significantly higher on the back of strong closing from European and US markets after the ECB president, Mario Draghi, said that the European Central Bank would do "Whatever it Takes" to ensure the survival of the Euro. However, indices pared most of their early gains during the second half the session on Friday to close at the 5100 mark. We witnessed strong selling pressure in the Midcap and Small Cap counters during the last two trading sessions of the week. On the sectoral front, Capital Goods, Banking, Metal and realty sectors counters plunged during the week; whereas FMCG was the only sector to close in the positive territory. The Sensex closed with a loss of 1.86%; whereas Nifty lost 2.02% vis--vis the previous week.
Source: Falcon

Exhibit 1: Sensex weekly chart

Exhibit 2: Sensex daily chart

Pattern Formation
The weekly 50% and 61.8% Fibonacci retracement levels of the rise from 15748 / 4770 (June 08, 2012) to 17631 / 5349 (July 13, 2012) are seen at 16690 / 5059 and 16467 / 4991 levels, respectively. On the weekly chart, we are witnessing a "Downward Sloping Trend Line" resistance near 17500 / 5325 formed by joining the highs of 21109 / 6339 (November 5, 2010) - 18524 / 5630 (February 24, 2012). The '20-day EMA' and '200-day SMA' are placed at 17042 / 5169 and 16879 / 5100 levels, respectively. The daily 'Stochastic' oscillator is signaling a positive crossover.

Source: Falcon

strong support zone of '200- day SMA' and 50% Fibonacci retracement level, which is around 5032,respectively. We are also 16879 - 16598 / 5100 - 5032 observing a positive crossover in the daily 'Stochastic' oscillator. Hence, the possibility of a bounce back from current levels cannot be ruled out. The immediate resistance for the market is seen at 16975 / 5150 level. If indices manage to sustain above this level, then the indices may rally further towards 17318 - 17466 / 5257 - 5300 levels. On the downside, last week's low of 16598 / 5032 would act as a strong support level for the markets. A breach of this level would augment pessimism and indices are likely to test 16467 - 16250 / 4991 - 4950 levels The coming week is likely to be volatile on account of RBI Monetary policy announcement on Tuesday's session. Hence, we advise traders to stay light on the positions and avoid taking undue risks prior to the policy announcement.

Future Outlook
Despite strong global cues, our benchmark indices faced immense selling pressure near day's high on Friday's session. The selling pressure was mainly seen in PSU Banks and other midcap counters. Indices are now hovering around the
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Technical Picks | July 28, 2012

Weekly Pivot Levels For Nifty 50 Stocks

SCRIPS
SENSEX NIFTY BANKNIFTY ACC AMBUJACEM ASIANPAINT AXISBANK BAJAJ-AUTO BANKBARODA BHARTIARTL BHEL BPCL CAIRN CIPLA COALINDIA DLF DRREDDY GAIL GRASIM HCLTECH HDFC HDFCBANK HEROMOTOCO HINDALCO HINDUNILVR ICICIBANK IDFC INFOSYSTCH ITC JINDALSTEL JPASSOCIAT KOTAKBANK LT M&M MARUTI NTPC ONGC PNB POWERGRID RANBAXY RELIANCE RELINFRA SAIL SBIN SESAGOA SIEMENS STER SUNPHARMA TATAMOTORS TATAPOWER TATASTEEL TCS WIPRO R2 17,278 5,231 10,546 1,344 195 3,775 1,065 1,646 711 325 233 392 335 336 367 210 1,678 362 2,795 551 689 604 2,129 125 498 974 139 2,265 262 433 80 574 1,424 720 1,156 160 294 854 119 501 738 541 97 2,191 196 700 108 653 230 104 428 1,255 376 R1 17,058 5,165 10,343 1,319 188 3,641 1,031 1,615 680 316 220 374 326 331 360 202 1,650 354 2,748 534 681 595 2,069 121 481 951 134 2,207 259 414 75 552 1,372 704 1,134 156 286 785 117 492 730 508 90 2,066 190 677 105 643 222 99 414 1,240 355 PIVO PIVOT 16,828 5,099 10,200 1,284 177 3,545 1,011 1,574 663 307 213 363 318 328 353 197 1,620 345 2,672 503 675 579 2,024 117 461 926 130 2,154 253 402 72 538 1,340 690 1,104 153 279 746 113 483 718 488 86 1,999 183 663 100 624 212 96 398 1,215 341 S1 16,609 5,033 9,997 1,258 171 3,411 978 1,543 633 298 201 345 309 323 347 189 1,592 337 2,624 486 668 569 1,965 113 445 903 124 2,096 250 382 67 516 1,288 673 1,083 150 271 677 110 473 709 454 79 1,874 177 640 97 614 204 91 383 1,200 321 S2 16,379 4,967 9,854 1,223 160 3,315 958 1,502 615 289 194 334 302 319 340 185 1,562 329 2,549 455 661 553 1,919 109 425 878 121 2,043 244 370 64 502 1,256 659 1,053 146 265 638 106 464 698 434 75 1,806 170 626 92 595 194 87 367 1,175 307

Technical Research Team

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Derivatives Review | July 28, 2012

Dip was here, ride upside now

Nifty spot closed at 5099.65 this week, against a close of 5205.10 last week. The Put-Call Ratio decreased from 1.03 to 1.02 levels and the annualized Cost of Carry is positive 4.99 The Open Interest of Nifty Futures decreased by 20.43 4.99%. 20.43%.

Put-Call Ratio Analysis

PCR-OI has decreased from 1.03 to 1.02 levels. In this series we have observed good amount of buildup in 4700 and 5000 put option, while in call option the buildup is quite scattered ranging from 5100-5500 strike price in the week gone by. The highest buildup in current series is at 5000 put option which will act as the strong support and in call option it's difficult to suggest any strong resistance as the buildup is quite scattered, however 5500 has the maximum open positions as of now.

Implied Volatility Analysis

Implied Volatility (IV) for NIFTY has increased from 14.30% to 16.03%. Historical volatility (HV) is at 19.94% and that for BANKNIFTY is trading at 24.48%. Liquid counters having very high HV are ONMOBOLE, SUNTV, PANTALOONR, LITL and BAJAJHIND. Stocks where HV are on lower side are HDFC, VIDEOIND, M&M, CIPLA and ULTRACEMCO.

Open Interest Analysis

Total open interest of market has decreased from `1,43,500/crores to `1,02,787/- crores. Stock futures open interest has decreased from `34,175/- crores to `27,253/- crores. Some of the liquid counters names which added open interest are CANBK, UNIONBANK, HINDPETRP CHAMBALFERT and BALRAMCHIN. , Open interest was shed in large cap names like MARUTI, CAIRN, HEROMOTOCO, ACC and TATASTEEL .

Cost-of-Carry Analysis
Nifty futures closed at a premium of 23.90 point against the premium of 33.95 points to its spot. Next month future is trading with premium of 49.85 points. Liquid counters where CoC is high are BAJAJHIND, TATACOFFEE, TTML, ASHOKLEY and PANTALOONR. Stocks with negative CoC are KTKBANK, HEROMOTOCO, HINDPETRO, SUZLON and CHAMBALFERT.

Derivative Strategy
Scrip : AXISBANK View: Mildly Bullish Buy/Sell BUY SELL SELL
BEPBEP-`1110.00 Max. Risk: Unlimited
If AXISBANK continues to move above BEP .

CMP : `1002.60

Lot Size : 250

Exercise Date (F & O) : 30th Aug, 2012 Expected Payoff

Price Closing Price (` (`) Expected rofit/Loss Profit/Loss

Strategy: Long Call Ladder Scrip AXISBANK AXISBANK AXISBANK Strike Price 1020 1050 1080 Series AUG. AUG. AUG. Option Buy/Sell Rate Type (`) CE CE CE 28 18 10

Qty 250 250 250

1020 1040 1060

0 `20.00 `30.00 `30.00 `10.00 (`10.00)

Profit: Max. Profit: `7,500/If AXISBANK closes on or between `1050-1080 on expiry.

1080 1100 1120

NOTE : Profit can be booked before expiry if AXISBANK moves in the favorable direction and time value decays. NOTE TE:

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Ratings (Returns) :

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

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