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!!

Sell Idea as it reaches resistance zone - 30th June 2013

1) Idea - India's leading telecom company has been the most steady performer among the large telecom stocks.

2) Though, the stock is now facing resistance around 148 levels. It has a long term resistance around that level. It has just been fell down from those levels around a week back (See chart below)

3) Also, the stock has seen steep up rise since April 2013. It has gone up by around 30% from those levels. This gap is likely to be filled.

4) Accumulating all these factors, one may go short around 144 with stop-loss at 148 and target prices of 137 and 131. 

Sell Shriram Transport Finance around 730 with stop-loss of 745 and target levels of 700 and 685.

1) Shriram Transport Finance had been a favorite stock for many institutions for last few months on the backdrop of Banking license which it expects to get from RBI next year.

2) The stock has seen correction with the market in the last few weeks. On Friday though, fresh short positions have been observed.

3) Open Interest has increased in both June and July futures contracts. The trading volume and delivery volumes have increased by 80% and 90% respectively on Friday. Around 50 thousands shares have been added in July and August Futures contracts on Friday.

4) On the charts as well, the short term moving average line (5 Day EMA) has broken long term 34 Day -EMA which indicates weakness. 

5) The stock, though, may take a minor support around 720 and can bounce back to 725-730 Rs levels. These levels can be taken advantage of to sell the stock with stop-loss of 745 and target levels of 700 and 685.