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Empower your wealth with trading calls & cutting edge strategies DIRECTLY from Dr C K Narayan.
22 February 2019
The week began on soft note and for a while it seemed like the bears would get the upper hand. Pushing strongly downward, a challenge was mounted on the support zone near 10600.
The week began on soft note and for a while it seemed like the bears would get the upper hand. Pushing strongly downward, a challenge was mounted on the support zone near 10600. But apparently, the bulls were up to the challenge and they managed to contain the push and then came up with sufficient resources to push the market back higher, quickly heading towards the monthly balance area around 10800. Looking at the past several months of data, we find that the price zone around 10750-800 has seen a lot of churn and that is the reason why we are terming this to be a kind of balance area for this month.
With earnings season ending now, stock based triggers have dried up. Looking at the options positions build up in the indices, we can see that there isnt much by way any convinced play emerging. The Max pain point has been shifting from 10800-900 in recent days and it seems unlikely that the Feb expiry is going to exceed this. The failed break down below 10600 also ensures that we may not really dip down too much. So, most likely scenario seems to be a range between 10700-10850 until expiry.
Ranges are best traded using options. This is not the skill set for most people but a short strangle of 10900-10600 might work. The attached weekly chart shows the candle to be a Doji- implying indecision. Prices continue within the range of the last many weeks. All these reinforce the view that we may continue in this range unless there were to be some news or event triggers. Since those are not forecast-able we shall roll with the short options strategy.
We have chosen the following stocks for the week.Godfrey Philips (Fut),Yes Bank, Tata steel(Fut),Pidilite(Fut) and MC Dowell(Fut).
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The weekly roundup report will provide detailed insights on the current and future market trends. It will outline the trading opportunities in the week ahead.
A typical newsletter from the Research Analyst - Mr. C.K. Narayan will contain the following
Market analysis: The index column will give a detailed outlook on Nifty and Nifty Futures and the broader market trend. It will detail the important technical levels that traders should pay attention to in the following week while keeping the larger perspective in view.
Stock watch: Stock Watch column analyses investment prospects in stocks, stock futures and options for the following week.
Commodity & Currency watch: This section will give you a perspective on global news and events that impact the commodity and currency markets and will identify trading opportunities within them.
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Brief note on how to interpret the Trading Calls »
Brief note on how to interpret the Mailer »
Brief note on how to interpret the Trading Calls
a) There are four types of calls - Intraday / Investment / BTST-STBT / Option
b) Intraday Calls are for same day, Investment for duration of 0-10 days ,BTST-STBT are overnight trades and Option are for 0-7 days.
c) The entry/stop/targets levels are future price levels.
d) The levels provided for Entry, Stoploss and Target needs to be implemented as received.
e) Any updates to those levels relating to Profit Booking / Stoploss shall be provided if required.
f) In case of calls from the non F&O basket, the entry/stop/targets are as per Cash markets
g) All the future prices are always for current month, unless stated otherwise
h) Calls shall remain open till stop is triggered or target is achieved
i) Any other update for the open calls shall be provided as and when required.
j) If you need any further clarification. You can reach us on the following numbers – Tel no: 022 - 3363 4400/4493/78 (Monday to Friday 9 am to 5 pm IST)
Brief note on how to interpret the Mailer
a) The newsletter is available by Saturday Evening with a weekly perspective .The updates on trades given in the letter shall be available by Wednesday evening.
b) Views on Equity ,Currency and Commodity are covered with suitable recommendations.
c) The entry/stop/targets levels for trade ideas shall be mentioned.
d) Trades are evaluated based on their performance for the week in which recommended. Carry forward of the trade is at the sole discretion of the subscriber.
Bank Nifty: Buoyed by all-round participation
Bank Nifty: Buoyed by all-round participation
The bullish bias never deserted the market , it just went undercover to resurface quite strongly last week. The resumption of the uptrend has brought the docile sector Bank Nifty back into the limelight. After the strong surge in Bank Nifty on the day of the election results way back on May 16 a clear trend could not emerge unlike the Nifty or CNX IT. Despite several attempts the trend slipped into some congestion till last week it managed to shrug the old self and reclaim some lost ground. Nifty had been moving steadily higher but was unable to really show some aggression till it received strong support from all key sectors to positively close above 7900.
The momentum in Nifty is holding steady and is now heading higher beyond 8000 in the coming week. Higher levels attract volatility and with a short week as well as an expiry unfolding this week one can expect markets to witness some robust action. Nifty trades can be pursued at current levels and on decline towards 7875 keeping 7850 as the stop as we step into the week. The market continues to reward a buy on decline approach and hence one should continue to participate in this manner. Bank Nifty offers more room for a trade and in comparison is better placed to move higher and should be considered for a move towards 16100 in the coming week .One could initiate a position in this trade with a stop below 16700.
SECTOR IN DEMAND : BANKING and FINANCIALS
Banks and interest rate sensitive counters will be the beneficiary of the surprise move seen in banking. With the Finance ministry approving a draft for creation of a holding structure for state run banks for their long term capital needs the PSU banks are in demand. With the trends just emerged in this sector one can expect that the momentum shall sustain this week too. SBI and PNB have witnessed some robust volumes amongst the Public Sector Banks while Kotak and HDFC Bank have seen a fair bit of traction amongst the Private Sector. With some cheer spreading to this sector the financial counters too saw some demand picking up.
With bullish momentum play and all declines witnessing steady buying action the stocks are witnessing some robust action. Adopting a mix of breakout and support buy strategy some stocks have been selected for the forthcoming week with a trading mindset.
HAVELLS Cmp 1262.45
After a sharp upthrust few days back this counter did not really continue the trend , however the steady consolidation at higher levels suggests that there is strong possibility of the prices rising higher. The momentum too is not showing any signs of weakness hence we can initiate a buying opportunity above 1270 with a stop below 1250 for a rise towards 1300 in the coming week .
ADANI ENTERPRISES Cmp 504.50
The bullish bias in this setup does not seem to recede. After a strong pullback the strong buying interest emerged at lower levels thereby pushing the prices to test the value area around 510. The daily chart attached show that the value area resistance is being tested. With a bullish sentiment in progress one should watch out for this resistance to be broken which would present a buying opportunity above 510 with a stop below 500 for a rise to 525.
TECH MAHINDRA Cmp 2307.50
CNX IT at a new high and one of its top performing counters TECHM witnessed its best performing week as can be seen from the weekly chart attached. The sharp rise above its previous lackluster weeks suggest that the trend in this counter is getting set for some strong upside . The RSI too has inched up above 70 suggesting that the bullish momentum has gathered pace. Look to go long above 2310 and on decline towards 2275 maintaining a stop below 2250 for arise towards 2375.
SBI Cmp 2522.50
Banks have finally struck a chord and have begun to warm up.With the renewed enthusiasm in PSU banks this PSU banking major seems to be witnessing some strong participation. The long term trensdline support fuelled with the overall bullish sentiment makes this counter a strong banking contender for this week. Look to go long above 2530 and on declines bnear 2490 with a stop below 2460 for a rise to 2650 in the coming days.
The sudden emergence of some trended action in the Commodities space has generated some interest across all counters. The active movement in the global counterparts has also fueled suddenly seems to have produced some trended action.
COPPER : Signs of reversal
Chinese PMI dipped to a 3 month low in August and being a major player in Metals one would have expected the repercussions to take effect on the prices. However the news was totally ignored as prices managed to reclaim the gap region highlighted in the chart below to stage a breakout. The momentum too seems to have revived and with the expiry coming up this week one can expect some rollover action to take place thereby producing some volatility in this commodity. A sustained move above 430 would be an invitation to go long for a rise to 440. Any decline towards 425 levels can also be considered for adding to existing position with a stop below 420.
USDINR: At a tipping point
The measures taken by RBI combined with global decline in gold and oil prices helped the rupee stabilize leading to sharp appreciation in USDINR last week. This resulted in a positive impact on the equities markets as well thereby sustaining the bullish sentiment. On the daily time frame we observe that the prices have declined into the previous congestion area where we observe other sets of supports that could result in USDINR to rally. With intraday timeframes showing divergences one can expect an interim bounce in the coming week . The crucial point on the way down will be around 60.43 a breach of which could see some sharp declines towards 59.70 emerging. One could look to add to the existing short USDINR position if there is breach of the support levels mentioned with a sizeable decline in the offing.
Review of Recommended Trades
Buy above 7800 stop 7730 target 8000
Nifty traded higher to move towards our target and closed at 7930 where one could have booked some profits. Revise stop to 7850 for pending positions
Buy above 290 stop 284 target 301.
Metals saw some revival in trends leading to the targets being achieved.
Buy at current levels and on decline towards 442 with a stop below 438 for a rise to 464.
Sharp momentum in pharma helped this counter move much beyond our targets.
Sell below 2100 for a drop to 2030 .The stop on this position can be maintained above 2130.
This trade did not trigger as the supports managed to push this counter higher.
a short below 2470 with stop above 2505 target 2405.
As IT showed some signs of exhaustion last week this counter did move lower to about 2435 where one could have booked some profits.
Go short at current levels and on rally towards 5950 with a stop above 6000 for a drop towards 5650.
The sharp decline in Crude oil helped us achieve our targets.
Go short at current levels and on rally towards 422 with a stop above 425 for a drop towards 405.
The trade declined marginally and then rebounded triggering our stoploss indicated.
Sell below 60.70 with a stop above 61 for a drop to 60.
USDINR appreciated and went below levels indicated to close at 60.51. One can hold with a revised stop at 60.70
Trades that have moved beyond levels indicated and are in profitable position
Trades that have achieved the targets indicated
Trades that did not been initiated.
Trades that are near the initiation levels
Trades that triggered the stop indicated