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!!