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.

Institutional Activity observed in GAIL but direction not clear - 24 June 2013

1) GAIL - India's leading gas exploration company in India - is a part of India's benchmark Index - NIFTY.

2) In the last one week, this stock has taken some major addition in Open Interest which indicates some major positions being taken by Institutions.

3) These positions are taken in July and August Futures. Both the futures contracts have added 10 Lakh shares in Open Interest on Friday. Total Open Interest stands at 20 Lakhs for July futures and August respectively.

4) It is advised to go for Straddle strategy where one may buy both 290 Calls and Puts for the stock for July / August and hold till 10th July.

5) Some major announcement is expected, which is usually precluded by such institutional activity. 

Contra Strategy - Buy Apollo Tyres around 60 with target of 65 Rs and stop-loss of 58.5

1) Apollo Tyres, after announcing the acquisition of Coopers tyres in USA has become the darling stock of shorters. From the levels of 90 Rs, it has declined to 61 Rs in a matter of week or so.

2) The bearish approach is due to the leverage that the company is taking to make this acquisition. Post acquisition, the debt ratio will be 1.9 which is high, considering the market sentiments now a days.

3) But technically and fundamentally, the correction is overdone now and one may see a bit of consolidation around the current levels. This is evident in today's trading, when stock managed to stay afloat among difficult conditions.

4) Derivatives data also indicate shorts being covered. Futures Open Interest has actually declined by 63 Lakh shares which is a positive indication.

5) One may create a favorable strategy in this counter by buying around 60 tomorrow morning and put up a stop-loss of 58.50 and target levels of 64-65 in next week or so. The risk to reward ratio is very attractive for the stock (at 1:2).