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Sensex (18620) / Nifty (5472)
The opening session of the week started off marginally higher considering mixed global cues. During this session, we witnessed range bound and lackluster price activity. The next 2 days were completely dominated by the bears as the Nifty plunged by more than six percent on the back of aggravating concerns over Indian Rupee (INR) depreciation and passage of the food security bill. In the process, INR hit a new all time low below 68 and created a panic selling in equity markets. However, post midsession on Wednesday, we witnessed a strong bounce from the lows. During the same session, Nifty recovered from the lows to close with a very minor loss. Despite the August series derivative expiry, we witnessed a continuation of the upward momentum which eventually lasted till the fag end on Friday's session too. The IT and Healthcare counters soared during the session; whereas the Banking, Realty and Capital Goods sectors ended in the negative territory despite a sharp bounce back from the lows. The Sensex ended the week with a nominal gain of 0.54%; but the Nifty precisely managed to close at the previous week's closing point.
Source: Falcon
Pattern formation:
Source: Falcon
The '89-day EMA' and the '89-week EMA' are placed at 19164 / 5738 and 18609 / 5613 levels, respectively. The '20-day EMA' and the '20-week EMA' are placed at 18647 / 5514 and 19183 / 5743 levels, respectively. The monthly 'RSI-Smoothened' oscillator is still negatively poised; whereas the weekly 'Stochastic' momentum oscillator has given a positive crossover.
overshadowed by the bulls as the recovery from the low of 5118 left everyone flabbergasted. The weekly chart now depicts one more 'Bullish Hammer' Japanese candlestick pattern. The pattern implication remains same and the pattern needs confirmation in the form of a closing above the high of 5529 5529. In this scenario, we can expect an extended bounce towards 5640 - 5720 levels. The price pattern in hourly chart also supports the above mentioned hypothesis. The Nifty has oscillated within a 'Downward Sloping Channel' (please refer exhibit 2) in hourly chart and during Friday's session, a channel pattern breakout has been confirmed. The weekly 'Stochastic' momentum oscillator is also signaling positive crossover. On the lower side, the immediate support levels are seen around 5360 - 5300 levels. Although the current price action indicates a near term bounce in our market, we would like to highlight that the intermediate trend remains bearish as the weekly 'Lower Top Lower Bottom' formation and the Negative crossover in monthly 'RSI-Smoothened' oscillator are still intact. Therefore any up move in the near term can only be construed as a pullback. We would advise traders to adopt stock specific approach and follow strict stop losses.
1
The weekly chart depicts yet another 'Bullish Hammer' Japanese candlestick pattern. The 'Lower Top - Lower Bottom' formation in weekly chart is still intact.
Future Outlook
It was a complete roller-coaster ride for the market participants as we witnessed a 'V' shape recovery from the lows. In our previous report, we had mentioned that if the Nifty stays above 5504, then we might expect some bounce back in our market. However, the Nifty could not close above 5504 and corrected sharply towards our mentioned target of 5100 by Wednesday afternoon. The second half of the week completely
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Cost-of-Carry Analysis
Nifty futures closed at a discount of 15.05 points against the premium of 18.55 points to its spot. Next month future is trading with premium of 12.90 points. Liquid counters where CoC is high are UNITECH, PUNJLLOYD, CHAMBLFERT, FEDERALBNK and IDFC. Stocks with negative CoC are FINANTECH, HDIL, SESAGOA, HEROMOTOCO and AMBUJACEM.
Derivative Strategy
Scrip : NIFTY View: Mildly Bearish Buy/Sell BUY SELL Qty 50 100 Scrip NIFTY NIFTY Strike Price 5400 5200 CMP : 5456.75 Lot Size : 50 Exercise Date (F & O) : 26th. Sept 2013 Expected Payoff
Closing P rice Price (`) Expected Profit/L oss rofit/Loss
Strategy: Ratio Put Spread Series SEPT SEPT Option Type PE PE Buy/Sell Rate (`) 130 75
5400 5525
NO TE : Profit can be booked before expiry if NIFTY moves in favorable direction and time value decays. NOTE TE:
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