Sell Union Bank on rise - 10th March 2013

Union Bank of India is Public Sector Undertaking bank. The reasons why it becomes right candidate for "Sell on Rise"

1) After steadily fall from 280 Rs levels from 01st January, it found some support around 210. From these levels, it has risen sharply to 233. 

2) Around 236-238 Rs levels, a resistance is seen. Also the recent rally is not backed by strong volumes which indicate it is more of a short covering rally. (See Chart 1)

3) One may sell the bank stock around 236 with stop-loss placed at 243 - above 241 Rs resistance. One may place target price around 228 and then 224 where it is likely to find some support.

Sell PFC on rise - 10th March 2013

PFC (Power Finance Corporation) is India's premier Power Finance company by Govt of India. It is among Navratranas (Most precious companies by Govt of India). The reasons why these are marked as "Sell on Rise".

1) The stock after re-testing the highs of 222 on around 8th Feb has fallen steeply to 190 where it found a good support. It has revived since then but finds a strong resistance around 206 (Chart 1).

2) The stock is into multiple phases of resistance now- 206, 212 and then 222 Rs (Chart 1).

Chart 1

3) Open Interest has increased by 12% on day-to-day basis. The stock has depreciated by 1% even during favorable market conditions on Friday. 210 Feb Call has seen its premium down by 15% on rising Open Interest which again is a negative trigger for the stock.

3) The only grace factor for PFC is that the decline in stock is not supported with rising volumes which indicates that it could be just a stop-over before the next rise.

4) One may sell PFC around 208 with stop-loss can be placed above 212 Rs resistance levels. The first target can be placed at intermediate support of 196 and second one may be placed at the strong support of 190 from where it bounced back last time around.

Wishing you a great trading week ahead :)

PFC is Sell on Rise - 25th Feb 2013

PFC - govt owned Power finance company is a sell on rise recommendation for next week.

1) Open Interest in the stock has risen by 9% on Friday. The share fell down by 2.5%. Both the indicators together indicate bearishness in the stock.

2) Call Writing in 210 Feb calls were seen which is a negative sign.

3) Technically though, the stock look oversold in the short term (see chart 1 below)

Chart 1

4) On long term chart (Chart-2), the stock has fallen from its long term resistance levels of 220-225 Rs. It has now reached its support trend line from where it may rebound a bit. It has to break 215 Rs levels on closing basis to confirm rebound which can enable it break 222 Rs resistance.

Chart 2

5) The combination of Open Interest Data and Technical Charts make it an attractive trading opportunity to sell on rise.

6) One may sell the stock around 208-210 Rs if it tries to take support around those levels with stop-loss of 217 and short term target of 196 and 190. (Risk-Reward Ratio at 1:2 and 1:3)

7) Those who can wish to take long term view risk can sell around 210-212 with stop-loss of 225 on closing basis with target levels of 190 and 175. (Risk-Reward Ratio at 1:1.83 and 1:2.83)

Best of Luck :)

Buy Jindal Steel as it looks oversold - 20th Feb 2013

Buy Jindal Steel as it looks oversold.

1) Jindal steel has been on downward trend. It fell down from 425 Rs to 370 Rs in two weeks time. The stock looks oversold now.

2) The technical chart indicates that it has a support around 375 Rs.

3) Open Interest has increased by 8.5%. Around 6.5 Lacs shares have been added today.

4) 380 Call and 400 Call for Feb has seen maximum increase in Open Interest, which indicates the upside limited for the stock.

4) 360 Feb Put has less build up which indicates support around these levels.

5) Thus, we recommend to buy Jindal Steel around 375 with stop-loss of 367 and target price of 386.