ABB, Canara Bank, Ultratech may see long liquidation

The range bound markets prevailing for the last couple of months have led to an increase in leveraged positions by market participants. The stock futures open interest has increased to 202 crore shares, which is relatively high as compared to near term build up of positions. We believe the current jittery market may lead to long liquidation in certain highly leveraged stocks.

PCR-OI at the 5700 strike has declined quite sharply from to 0.43 in the last four or five sessions. This indicates the increasing selling pressure at higher levels and crucial resistance near 5700.

The last two months volume weighted average price of the Nifty is placed at 5690. We believe the Nifty would find it tough to sustain above this level in the current series. Inability to hold this level may lead to closure of long positions in stock futures towards the November settlement.

We have identified stocks where the leverage in the futures segment has increased sharply in the last month. The open interest of October 15 has been considered, when the bullish bias was quite high. It has been compared with the open interest on November 16 when the Nifty moved below the major support of 5600. We expect these stocks to fall on the back of closure of long positions.

High leverage stocks: Likely to remain under selling pressure…
Stock	16- Oct Fut OI	Price	16- Nov Fut OI	Price	%OI Chg	%P Chg
ABB	771	785	1010	722	31.00%	-8.00%
Canara Bank	2544	424	3547	428	39.40%	1.00%
Ultratech Cement	4398	2033	6991	1909	59.00%	-6.10%

 

 

 

 

 

Source: NSE, Seediff, ICICIdirect.com Research

Important spot levels
Stock	S2	S1	CMP	R1	R2
ABB	680	700	717.2	727	739
Canara Bank	393	409	424.4	430	441
Ultratech Cement	1805	1855	1905.7	1935	1975

 

 

 

 

 

Source: NSE, Seediff, ICICIdirect.com Research

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