Showing posts with label Nifty Outlook. Show all posts
Showing posts with label Nifty Outlook. Show all posts

Sunday, February 28, 2010

Technical Analysis - Nifty Outlook

Nifty (4,922.3)


The Nifty too was confined in a narrow band between 4,850 and 4,900 in the sessions preceding the Budget before Friday's spurt took the index higher to 4,992. That the index was unable to move past 5,000 on the Budget day implies that the medium-term trend in this index continues to be down. If the third leg of the downtrend from the 5,310 peak unfolds now, it can drag the index to 4,599 or 4,357. The 200-day moving average at 4,680 would be the minimum target for a decline. Close above 5,070 is needed to mitigate this bearish view.

The short-term trend in Nifty is up since the trough at 4,675. But it is possible that this uptrend ended on Friday and the index could now decline to 4,870 or even 4,796. Traders can initiate short positions in rallies with stop at 5,025. Target on a move above 5,000 is 5,067.

Global Cues

Globally equities had a tough weak as worse than expected economic readings from the US and resurfacing of the Greece sovereign debt issue dragged stock prices lower. European and Latin American indices end the week 1 to 3 per cent lower. Asian benchmarks were relatively stronger and many of them such as KLSE Composite, Nikkei, Philippines Composite, Shanghai Composite and so on ended the week marginally in the green.

CBOE VIX spiked to 22.6 on Thursday before ending the week down at 19.5 implying that investors continue in a sanguine frame of mind. The dollar index appears to have formed a short-term peak at 81.4 and that should give some relief to emerging market equities and commodities.

The Dow could not move past the key short-term resistance at 10,400 and reversed mildly from there. Support for the week would be available at 10,200 and 10,100. Decline below the second support would mean that the downtrend from January 19 peak is continuing. Conversely rally above 10,400 would send the index to a new 2010 high.

The S&P 500 has also recorded a hanging man pattern in the weekly chart that is a reversal pattern. Key resistance for this index is at 1,110 and it is currently struggling to move over this. The week ahead is critical for defining the short-term trajectory for this index.

— Lokeshwarri S. K.

Source BL


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Sunday, August 23, 2009

NSE Outlook - Volatility before expiry of Aug Series

Derivatives: Nifty may remain firm as further short covering may increase the index

While global market trend, FII activity and the monsoon will continue to influence, we believe that he market may maintain its strength and trade above 4600 level during the next week

Amid excessive volatility the benchmark NSE Nifty closed 73.74 points higher at 4526.90. For the full week however the Nifty closed 73.45 points lower at 4526.90 points during the week ended 21st August 2009 as compare to the previous week amid excess volatility both in the domestic as well as the global market. Worrying China valuation concern and domestically the deficit monsoon continued to exert downward pressure on the domestic market although towards the end of the week the signs of marginal revival in monsoon pulled back the otherwise tanking index.

The monsoon deficit improved to 27% for the period 1st June to 18th August as compared to 29% deficit estimated earlier. India still faces a drought as weak June-September monsoon rains have hit planting of several crops such as rice, sugarcane and oilseeds and raised food prices. On 21st August 2009 the market remained volatile all throughout the day with downward bias till afternoon after which gains in Chinese stocks and healthier opening of the European market improved sentiments. A rebound in US index futures also aided the recovery on the domestic bourses.

The domestic futures & options (F&O) market witnessed significant improvement in volumes, as there was significant increase in trading activity in many of the future counters all throughout the week. As evident from the trading details on the last day of the underlying week the overall F&O market added 2.29 crore shares in open interest (OI). Rather almost all of the additions were contributed by the stock futures segment. (See table OI breakup).

There was aggressive short covering in the Nifty near month, which shed 21.43 lakhshares in OI on this day. The total OI of Nifty August stood at 1.94 crore shares. Thus for the full week the Nifty shed 25.08 lakh shares in OI. During the week however most of the major near month stock futures also shed OI. For e.g. Reliance shed 2.30 lakh shares in OI, whereas Tata Steel and Tata Motors shed 58.12 lakh shares and 22.12 lakh shares in OI during the week under review.

However ICICI near month added 3.77 lakh shares in OI during the week. Thus short covering in some of the major counters will continue as the market approaches expiry.

Open Interest (OI) break-up as on 21st August 2009
Open Interest (OI)*Change**
Market wide157.642.29
Index Future2.930.08
Stock Future116.282.29
Index Options9.83-0.05
Stock options28.6-0.03
* No of shares in crores
** Change is vis-à-vis previous day
Source: NSE

In the Nifty near month options the 4400 to 4700 strikes remained the most active. The 4500 strike call shed a significant 18.41 lakh shares in OI and the total OI at this strike stood at 29.75 lakh shares, which is a major bullish indicator as this is unwinding of calls wrote at this level. The 4700 and 4800 strike calls also shed 3.91 lakh shares and 1.86 lakh shares respectively in OI.

On the put front there was significant winding-up of OI in 4300 strike, however 4400, 4500 and 4600 strikes witnessed aggressive addition of OI. This indicates fresh put writing at these strikes. Thus the option signals the underlying above 4600. (See most active Nifty options table).

Most active Nifty options (August series)
OI
Call
Nifty 45002975050
Nifty 46004285950
Nifty 47004013000
Nifty 48002765800
Put
Nifty 44004717550
Nifty 45003977450
Nifty 46001828250
Nifty 4700772200
Source: NSE

Volume in the Futures & Options segment of the NSE (Turnover (Rs. Crore.) (August contract)
DateIndex FuturesStock FuturesIndex OptionsStock OptionsTotal
31-Jul-09151941928821272139857151
3-Aug-09122231778219457134250805
4-Aug-09165142099921846150160860
5-Aug-09179031821226134148163729
6-Aug-09211722119529475197873819
7-Aug-09175811697428846183065231
10-Aug-09186561649931773156668493
11-Aug-09180061587828200143563519
12-Aug-09188691810634758161473347
13-Aug-09151821893829578185465552
14-Aug-09154221777628859183563892
17-Aug-09165791626236218192570983
18-Aug-09187581817735111161073656
19-Aug-09218301863640483194882897
20-Aug-09147421514030688131361883
21-Aug-09196521746541630167680422
Source: NSE

The index put call ratio fell to 0.96 on 21st August 2009 as compared to 0.97 during the previous day, whereas the stock put call ratio increased to 0.40 as compared to 0.31 during the previous day. Thus the market wide put call ratio was 0.94 on 21st August 2009.

Top 10 Open Interest (OI) gainers in August series stock futures as on 21st August 2009
Scrip NameOI*Change*% Change
TATATEA246950123200100
YESBANK190740064460051
SINTEX53620012040029
GESHIP95400019200025
HINDUNILVR6585000122700023
DENABANK484575071925017
ABAN214480030440017
BANKINDIA178125023845015
IVRCLINFRA257200033700015
TECHM100620012480014
* No of shares
Source: NSE

Top 10 Open Interest (OI) losers in August series stock futures as on 21st August 2009
Scrip NameOI*Change*% Change
GTL906000-403500-31
CANBK594400-252000-30
UNIONBANK1625400-490350-23
HEROHONDA1176800-339200-22
INDHOTEL3099168-619074-17
ABB872500-174000-17
EDUCOMP532650-103350-16
GAIL2057625-387000-16
AUROPHARMA268800-50400-16
RPOWER11484000-2092000-15
* No of shares
Source: NSE

Although the Nifty option indicators are positive there are domestic monsoon concerns as well as the global market concern, which may act as the dampeners. However as the market approaches the expiry week there could be some upward spike driven primarily by short covering in major counters. The global market trend and the FII activity and the monsoon will continue to influence the domestic trend. The market may maintain its strength and thus trade above 4600 levels during the next week.

Tuesday, July 14, 2009

Technical Analysis - Index Outlook 13-17 July 2009



Index Outlook — Poised on the brink
Sensex (13,504.2)



The Union Budget for 2009-10 was definitely not scary enough to make equities fall off a cliff the way they did. Though the packaging of the Budget and missing road-maps caused a great deal of consternation among market participants, the 1,400 points weekly loss in the Sensex appears to have been largely caused by unwinding of short-term positions built in expectation of a post-election surge in stock prices.

Volumes tapered off towards the close of the week. Data released by SEBI reveals that foreign institutional investors have bought $603 million in the four sessions from the Budget day.
Domestic institutional investors too were largely net buyers last week.

Retail investors seem to have borne the brunt of the post-budget selling.

A turnover of Rs 96,000 crore, recorded in the derivative segment of NSE on Monday indicates that leveraged positions built up in anticipation of a post-Budget rally could have been the primary factor that pushed stock prices lower on the Budget day.
The 10-day rate of change (ROC) oscillator has declined into negative zone and the 14-day relative strength index is positioned at 38.

Both these readings reflect a bearish short-term outlook. That the Sensex has recorded a close below its 50-day moving average is also a negative.
But investors can take heart from the weekly momentum indicators that are holding in the positive zone.

Interestingly, monthly ROC has risen from the negative zone and is poised on the median line. The inference is that the movement of Sensex over the next few weeks will determine the long-term direction that the index takes.
The third wave of the down-move from 15,600-peak started on the Budget day and this wave has the downward targets of 13,513 and 12,553. Sensex moved to the first target on Friday. There are a cluster of supports around the 13,500 level provided by the trough formed on May 26 and the ceiling of the post-election result gap.
A short-term bounce is possible here that takes index to 14,000. But failure to record a strong close above 14,000 would mean that the weakness would continue in the short-term.

We stay with the view that the medium-term trend will turn conclusively negative only on a close below 13,300. The yawning gap between 12,219 and 13,479 will result in the decline accelerating once the index closes below 13,300. Fibonacci retracement of the up-move from March lows give us the medium-term targets of 12,730, 11,840 and 10,950 in the event of a protracted down-move.
A brief review of the long-term outlook is warranted at this stage. We have adhered to the view that the up-move from March lows was a counter-trend rally in a long-term down-trend (bear market rally in common parlance and B wave in E-wave terminology).
A strong weekly close above 16,200 is needed to alter this view. The behaviour of market participants in May and June had all the hallmarks of the B wave and patterns in the charts of other global indices also support this view. Investors holding short-term positions need to tread carefully at this point since the C wave of the long-term down-trend could have commenced from the 15600 peak. This count will be confirmed on a strong close below 13000. The force and ferocity of the C wave downward is known to all. But bulls need not throw in the towel just yet. A strong rebound next week will mean that the B wave can extend for a few more weeks and maybe help Sensex reach 16,000.
Sensex closed on a very weak note on Friday. But a short-term rebound can take the index to 14,059 or 14,455 early next week. Key resistance zone for the week would be between 14,000 and 14,250. Failure to move beyond this zone will result in the index heading lower towards 13,346 or 12,730 in the short-term.


Nifty (4,003.9)





Nifty moved to the low of 3,976 on Friday. Targets of the down-move from 4,693 peak are 3,930 and 3,590. Since Nifty is close to the first target, a short-term rebound is possible that takes the index higher to 4,181 or 4,296. Short-term traders can use rallies to these levels to initiate fresh short positions. Medium-term targets for the Nifty based on retracement levels are 3,876, 3,624 and 3,371.

A close above 4,450 is needed to make the medium-term view positive again for Nifty.

Global Cues
Global equities began correcting in earnest last week; most of the major indices gave up between 3 to 4 per cent. Asian indices were however resilient, indices such as Jakarta Composite, KLSE Composite, Seoul Composite and so on closed near the upper end of their medium-term trading ranges. CBOE VIX spiked to an intra-week high of 33 before closing at 29 implying that investors are getting just a trifle edgy.

The Dow moved in line with our expectation, declining below the first target of 8,198. Close below 8,200 is a negative from a short-term perspective and implies that the index could decline towards the next target between 7,960 and 8,000. But we stay with the view that a re-test of March lows becomes a possibility only on a strong close below 7,800.

Commodities led by crude pulled the CRB index lower by almost 3 per cent. This index has retraced over 40 per cent of the rally from the March lows and the speed of the current decline implies that the long-term trend in commodities continues to be down.

— Lokeshwarri S.K.
Businessline.com