Buy Syndicate Bank as it reaches its support zone - 29th July 2013

Syndicate Bank is among India's growing Public Sector Banks. The bank has shown some remarkable growth in the last few quarters and fundamentally, stands at very attractive valuations.

Price Charts

1) Technically, the stock has reached the strong support zone of 84-87 Rs and likely to show some support around it (See Chart below).

2) If it takes the support around this level, then we are likely to see a rebound which can push the stock up till 93 Rs. If that resistance level is breached, then we may see the stock reaching back to 101-103 Rs levels.

Nifty is close to a break out - 24th July 2013

1) Nifty has shown some remarkable progress in the last few sessions, despite adverse economic conditions in Indian economy as RBI tighten noose on financial system to protect currency.

2) Nifty, if corrects from the levels of 6080-6110 on closing basis and breaks 5950 on the downside, can actually then correct further down to 5550-5650 levels as this will confirm the heads & shoulders pattern made by the index (See chart below)

3) Though on the upside, if is able to breach 6190-6210, then can actually move further up to make new highs around 6400-6450. The break out above 6190 is very crucial as this is where the last top has been formed (See Chart below)

4) Amidst such environment, it is advised to buy a bull spread and bear spread strategy for the August series and wait for a breakout till 10th August.

5) Buy 5900 Put and Sell 5600 Put which gives a net outflow of 40 Rs and similarly, Buy 6300 Call and Sell 6500 Call for August series, again leading to net outflow of Rs. 30. The combined net outflow is Rs. 70 which translates to maximum loss of Rs. 3500. 

6) If it corrects, one may exit the bear spread strategy when Nifty reaches 5750. On the inverse, it is goes up, one may exit from bull spread strategy, if Nifty reaches 6420.

Sell Sun Pharma as it shows fatigue signs - 16th July 2013

1) Sun Pharma is India's leading Pharma company in India. The company enjoys the leadership position and demand highest valuations among Pharma stock fraternity.

Price Volume Analysis

2) The stock declined to 970 on June 16th and rebounded since then to close today at 1110 Rs (+14%) without any correction. RSI at around 72 indicates over bought situation (Chart 1)

3) Today though stock has shown fatigues. After making the highs of 1125 Rs today, the stock steadily declined to close at Rs. 1110.

4) Volume has too declined by 23% and Delivery volumes by 30% which also points to consolidation or some correction in the coming days.

5) On the technical charts, the stock shows some support around 1090 Rs and then 1068 Rs.

6) In the midst of it, we may Sell the stock at around 1105-1115 Rs with stop-loss around 1130 and target levels of 1090 and 1068 Rs where support level exists.

7) Derivatives traders can buy 1080 Put and Sell 1060 Put which gives risk to reward ratio of 1:3. As per today's closing price, one may earn maximum profit of Rs. 15 per share and maximum loss exists at 5 Rs per share.

Sell Hindalco as it reaches resistance zone - 11th July 2013

1) Hindalco is India's leading Metals company in India and the flag bearer of Birla group.

2) Today, the metal stocks including Hindalco have gained, as Fed Chairman gave a positive speech aiding stimulus for the next few months.

3) Though technically, the stock has reached a resistance zone where it is likely to face some resistance (See Chart below)

4) Hence, we are betting on this resistance zone to sell the stock on rise tomorrow. Hindalco can be sold around 103.5 Rs with stop-loss at 105.5 and target levels of 101 and 98.

Sell ONGC as derivatives indicate tremendous short positions - 11 July 2013

1) ONGC is India's leading Oil Exploration company and one of govt's "Maha-ratna" company.

Technical Analysis

2) It has corrected steeply by 10% in the last 10 days and has now trading below the short term (5 Day EMA) and long term (34 day EMA).

3) The stock has reached a minor support level from where it is expected to rebound by 2-3%. If it again resumes its downward journey, then we may see levels of 286 Rs. in this stock.

Derivative Analysis

4) The stock has added 8% in Open Interest today and is now standing at maximum Open Interest for the last one month.

5) It has added 6.7 Lacs shares in Open Interest in July futures. Besides, 1.4 Lacs shares have been added in 300 Rs call, 1.9 Lacs in 310 Rs call, 1.24 Lacs in 300 Rs. call. The premium for all three Options have declined by around 30% which indicates the levels of bearishness existing in the counter.

Considering all these factors, we may derive that we may sell ONGC on every rise. If the stock rebounds from the existing support of 296 and reaches 302-305, we may sell it for possible target levels of 286. On the up side, the stop-loss can be maintained around 312.

Buy Exide as volume, Open Interest and Price increases - 08th July 2013

1) Exide Industries is RPG group company, based out of Calcutta. The company is the leading manufacturer of Auto and Industrial batteries.

Price & Volume Analysis

2) On Friday, the trading volume in the stock has increased by 84%. It is also up by 58% from one week average. The increase in volumes have backed by increase in stock price by 1.5% which is a positive development for the stock.

3) Delivery Volumes have also increased by 85% which further make this rise in stock price more worth while.

Derivative Analysis

4) Open Interest in the stock has increased by 9.5%. 1.6 Lacs new shares have been added in Open Interest. Total Open Interest in the stock stands at 19 Lacs new shares.

Chart Analysis

5) On the charts, there exists a strong support around 121. It has bounced back three times from 20th June and has broken the intermediate top made post that. The support for a buy position can be placed below that.

6) On the upside, the first level of resistance comes at 126 where previous support levels exist. Once this level is breached, the next level of resistance arrives at 131 where intermediate top exists.

Trading Strategy

7) Most indicators above indicates short term uptrend in the coming days. One may buy Exide around 123 with stop-loss at 120 and target levels of 126 and 131.

Buy Cairn India as it takes support - 07th July 2013

1) Cairns India is India's leading private Oil Exploration company. The company has been recently acquired by Vedanta group.

2) The share has not performed as well as analysts all across the world expected it to. Though, it is still maintained on the Buy list of many brokerage houses.

Volume Analysis

3) On Friday, the stock has shown some decline (-0.82%). Though, the volumes were 50% of the weekly average volumes which indicate no major concern in the stock and indicates some kind of consolidation happening in the stock.

4) Delivery Volumes too have been 50% of the weekly average indicates the similar trend to trading volumes.

Derivatives Analysis

4) In the derivatives side, the futures have added 4% new Open Interest which can be expected as it is just the first week of the series. Usually Open Interest increases till the 2nd week of the series.

5) 290, 300 and 310 Strike Calls have seen some Open Interest build-up where one may put short term ceiling on the upside.

Chart Analysis

6) On the charts, the stock seeing taking some support on the short term line which is a positive indication for the stock. 

7) After rebounding from 275 Rs levels, the stock has taken some breather around 290-295.

Trading Call

Collating all the analysis, it is advised to Buy Cairns India around 291 with stop-loss placed at 285 and target levels of 302. Derivatives traders can also adopt straddle strategy buying 290 Calls and Puts with combined premium of 14 Rs. If the stock breaches 285 on the downside, can then aim for 275 Rs where it has a long term support.

Buy Reliance Capital as it picks momentum - 05th July 2013

Reliance Capital - India's leading NBFC and a part of Anil Ambani's group is among the most volatile stocks in Nifty Index.

Yesterday, the stock has added fresh open interest of 14.5 Lacs shares (around 16%) with increase in price by 5% and and volume increase of 1.4 times.

On the charts as well, it shows the momentum pickup as the stock breaches both long and short term averages.

On the options side, Put writing is seen in 340 Strikes (around 1 Lac shares have been added in it) which make a strong base around 340.

Considering all these factors, it is recommended to buy Reliance Capital around 360 with target levels of 380 and 403 where two levels of resistance are seen.

Have a good trading day!

Buy PSU Banks like Bank of India and Sell Bank Nifty

The banking stocks have taken a tremendous beating in the last one month. The maximum brunt is taken by PSU Banks whose stocks capitulated by as much as 25%. Few of them are mentioned below:

• Allahabad Bank - 28%
• Bank of India - 24%
• Union Bank - 22%
• PNB - 18%
• Bank of Baroda - 17.5%
• SBI - 8%

Private Sector banks, though, have performed relatively better. The fall for these banks were in the range of 5-10%.

Considering the given scenario, it is recommended to buy Bank of India and Sell Bank Nifty. The reason why Bank Nifty is considered because the index has equal weightage for Private Banks and PSU banks. So if PSU banks outperform private banks, the chances of getting favorable returns are high. 

Also the deviance between Bank of India and Bank Nifty is huge and this is likely to be filled in the coming days.

Moderate Risk users can adopt the following strategy:

1) Buy Bank of India 230 Call and Sell 240 Call.

2) Buy Bank Nifty 11300 Put and Sell 11000 Put.

The given strategy comes with maximum loss scenario of 6000 Rs and maximum profit of 12000 Rs.

Wishing you a happy trading!!