Nov 20, 2012, 03.09 PM IST | Source: Moneycontrol.com

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.

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

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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