Technical Picks | December 24, 2011

Bulls defended 4500 - Santa Rally on the cards

Sensex (15739) / Nifty (4714)
As stated in our previous report, indices opened lower on Monday's session in line with expectations, and drifted towards the "Downward Sloping Trend Line" (joining two lows of 15760 - 15479 / 4728 - 4639 support level of 4639) 4540. 15330 / 4540 This level acted as a decent support and markets showed positive momentum with the help of global cues. A sharp bounce in the later part of the week led indices to close marginally above the 4700 mark. On the sectoral front, the FMCG, Auto, Oil & Gas sectors contributed heavily to this week's bounce. The Sensex ended with a marginal gain of 1.60%, while the Nifty gained 1.34%, vis--vis the previous week.
Source: Falcon

Exhibit 1: Sensex weekly chart

Exhibit 2: Sensex daily chart

Pattern Formation
On the Daily chart, we are witnessing a "Downward Sloping Trend Line" joining two lows of 15760 - 15479 / 4728 - 4639 4639. Also, there is a positive crossover in "RSI" momentum oscillator. The 20 EMA on the daily chart is placed at 16020 / 4800 level.

Future Outlook
This week, markets anchored their position near the "Downward Sloping Trend Line" (joining two lows of 4639) 4540. 15760 - 15479 / 4728 - 4639 support level of 15330 / 4540 Thus, the weekly low of 15135 / 4531 would now act a strong and crucial support level for our markets. The positive crossover in the daily "RSI" oscillator is still intact. As a result, positive momentum is likely to resume if indices sustain above Friday's high of 15911 / 4764 4764. In this case, indices may move higher to test the resistance
Source: Falcon

zone of 16020 - 16070 / 4800 - 4820 which also 4820, coincides with the daily 20 EMA. If our markets manage to sustain above these hurdles, then they are likely to rally further towards 16286 - 16421/ 4881 - 4920 levels. On the flip side, only a sustainable move below 15135 / 4531 would reinforce the negative momentum and indices then may drift towards the next support levels of 14870 - 14400 / 4430 - 4300 4300. Year ear. Wishing you all a Merry Christmas and a Happy New Year.

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Technical Picks | December 24, 2011

Weekly Pivot Levels For Nifty 50 Stocks

SCRIPS
SENSEX NIFTY BANKNIFTY ACC AMBUJACEM AXISBANK BAJAJ-AUTO BHARTIARTL BHEL BPCL CAIRN CIPLA DLF DRREDDY GAIL HCLTECH HDFC HDFCBANK HEROHONDA HINDALCO HINDUNILVR ICICIBANK IDFC INFOSYSTCH ITC JINDALSTEL JPASSOCIAT KOTAKBANK LT M&M MARUTI NTPC ONGC PNB POWERGRID RANBAXY RCOM RELCAPITAL RELIANCE RELINFRA RPOWER SAIL SBIN SESAGOA SIEMENS STER SUNPHARMA SUZLON TATAMOTORS TATAPOWER TATASTEEL TCS WIPRO R2 16,371 4,902 8,857 1,207 165 951 1,704 358 261 559 341 343 211 1,640 415 436 712 474 2,030 131 431 801 109 2,805 213 531 62 505 1,113 754 1,043 171 280 880 106 459 75 269 802 391 78 88 1,757 178 688 99 525 21 199 97 377 1,197 423 R1 16,055 4,808 8,577 1,173 161 916 1,651 344 251 533 329 337 203 1,615 403 413 686 456 1,940 126 422 762 104 2,750 209 509 58 481 1,061 725 1,009 165 271 848 103 432 71 258 774 376 75 84 1,702 170 673 95 512 20 192 93 362 1,177 415 PIVO PIVOT 15,595 4,670 8,172 1,128 154 862 1,609 332 237 515 310 331 193 1,580 385 397 643 428 1,853 122 405 701 99 2,700 200 490 55 458 1,015 679 955 159 258 810 100 399 66 244 742 356 72 79 1,637 159 650 91 502 19 181 86 351 1,146 403 S1 15,279 4,576 7,891 1,095 150 827 1,557 318 228 488 298 325 185 1,555 373 373 618 410 1,762 118 395 662 95 2,645 196 468 50 434 963 650 921 153 249 778 98 372 62 232 714 340 69 75 1,582 151 635 87 489 18 174 82 336 1,126 395 S2 14,820 4,437 7,486 1,050 143 773 1,515 306 214 470 279 319 175 1,520 354 357 575 382 1,675 114 379 601 90 2,595 188 449 47 410 917 604 866 148 236 739 94 339 57 218 681 320 66 69 1,516 140 612 82 479 17 162 76 326 1,094 383

Technical Research Team

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Derivatives Review | December 24, 2011

Don't short now. Further upside may be possible

Nifty spot closed at 4714.00 this week, against a close of 4651.60 last week. The Put-Call Ratio decreased from 0.93 to 0.90 levels and the annualized Cost of Carry is positive 8.52 The Open Interest of Nifty Futures decreased by 1.16 8.52%. 1.16%.

Put-Call Ratio Analysis

PCR-OI has declined from 0.93 to 0.90 levels. This fall in ratio was seen due to substantial addition of positions in calls of strikes 4800 and 4900 over last week. Decline in OI of 4700 put was also the contributor for the same. However not very significant change has been observed despite market bouncing from lower levels of sub 4550.

Implied Volatility Analysis

Implied Volatility (IV) for NIFTY has decreased from 28.25% to 24.10%. Historical volatility (HV) is at 31.77% and that for BANKNIFTY is trading at 44.93%. Liquid counters having very high HV are PUNJLLOYD, PANTALOONR, DELTACORP, ESSAROIL and 3IINFOTECH. Stocks where HV are on lower side are VIDEOIND, CIPLA, ABGSHIP PIRHEALTH and ITC. ,

Open Interest Analysis

Total open interest of market has increased from `1,29,958.40 crores to `1,38,800/- crores. Stock futures open interest has increased from `25,511/- crores to `28,822/- crores. Some of the big names which added considerable open interest are HDFC, TATAPOWER, HINDUNILVR, INFY and ITC. Open interest was shed in liquid counters like PUNJLLOYD, RANBAXY, SAIL, ABAN and KOTAKBANK.

Cost-of-Carry Analysis
Nifty futures closed at a premium of 6.60 points against the discount of 8.45 points to its spot. Next month future is trading with premium of 27.35 points. Counters where CoC is high are RUCHISOYA, ABGSHIP VIDEOIND, SKUMARSYNF and , GITANJALI. Stocks with negative CoC are ABAN, PUNJLLOYD, AXISBANK, CAIRN and BANKBARODA.

Derivative Strategy
TA Scrip : TATASTEEL View: Mildly Bullish Buy/Sell BUY
BEP: 363 BEP: `363 Max. Risk: `1500/If TATASTEEL closes on or below the strike price.

CMP : `347.30

Lot Size : 500

Exercise Date (F & O) : 29th Dec, 2011 Expected Payoff

Strategy: Long Call Scrip TATASTEEL Strike Price 360 Series DEC Option Type CE Buy Rate (`) 3.00

Qty 500

Price Closing Price

Expected rofit/Loss Profit/Loss

340 350 360

(`3.00) (`3.00) (`3.00) `7.00 `17.00 `27.00

Profit: Max. Profit: Unlimited

If TATASTEEL continues to move above BEP .

370 380 390

NOTE Profit TE: TA NOTE : Profit can be booked before expiry if TATASTEEL moves in the favorable direction.

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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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