Nifty index continued its positive move for fifth consecutive month and registered a fresh life time

MOSt Quantitative Outlook

Monthly

June 2017

Trend Up, Defying the Sceptics

INDEX

CNX Nifty

Sensex

9616

31137

NIFTY MONTHLY

Support

Resistance

9532 / 9340

9650 / 9800

Strategy

The trend is intact, positive till the Nifty

and Bank Nifty holds 9532 and 22978 lev-

els respectively. Overall trend is up and the

volatility is subdued, so buy on declines is

advised. The recent rally could extend and

may take a new leg if the upcoming RBI

policy is favorable.

Nifty index continued its positive move for fifth consecutive month and regis-

tered a fresh life time high of 9650 with a monthly surge of 3.40%. On the monthly

chart Index made a long green candle suggesting that the bulls are in control and

the longer term players are still playing on the long side. In the fourth week of

the month, the index witnessed a small decline but that was being bought. How-

ever at the same time sharp decline was observed in several mid and small cap

stocks. The index was held higher lead by a strong rally emerging in the FMCG,

Housing Finance and private sector banks. The laggards for the month were PSU

banks and Oil and Gas stocks. This month we have an important RBI policy meet

and market participants will focus on the same, to get the next trigger for the

market. If RBI manages to push down the interest rates then there could be

another round of fresh buying in the market.

On the weekly scale the index witnessed a steady rally and has been making

higher top - higher bottom formation. In this week Nifty remained in a range of

100 points and seems to be taking a pause after the swift rally in the previous

week. The range for the week has shrunk as the index oscillates between 9550-

9650. The overall trend on the weekly chart remains positive till it holds above

the previous high swing in the 9500-9532 zones while on the upside follow up

buying could extend its rally towards 9800 zones.

On the daily time frame the index shows some signs of fatigue but the overall

trend remains positive. The RSI hit the overbought zone and it has caused a

pause in the momentum. There is a negative divergence between price and the

oscillator but still there are no real signs of a reversal in the index as the under-

lying trend is still very strong. Now if it is sustained below 9580 only then a profit

booking could be seen towards 9532 while on the upside index needs to surpass

9635 zone to extend its up move towards the 9700-9750 levels.

Bank Nifty outperformed the Nifty index as it gained by 4.77% compared to Nifty

gains of 3.40%. Bank Nifty registered a new high of 23469 lead by strong buying in

the Private Banking space, even though there was a lot of value deterioration in

PSU banking stocks. This week is very crucial and may turn volatile for Bank Nifty

as RBI policy is to be announced during the month. Bank Nifty has major support

at 22978 and below that short term trend may turn cautious with the next sup-

port at 22750 and 22500 while a hold above 23300 could extend its move towards

23800-24000 zones.

Sector Outlook

SECTOR

NAME

Auto

Bank

Dharmesh Kant

Head - Retail Research

FMCG

Engineering

Pharma

Media

Metals

Energy

CMP

10870.8

23424.8

25841.8

3213.15

9025.25

3066.05

2952.95

11925.65

MOM

(%)

6.00

4.77

9.15

-1.29

-10.82

-5.72

-0.71

-2.76

OUTLOOK

FOR THE MONTH

Positive

Neutral

Negative

POTENTIAL

MOVERS & SHAKERS

Tatamotors, TVS Motors

Yes Bank, PNB

ITC, Asian Paint

Havells, Voltas

Fortis, Cadilahc

ZEEL, Suntv

VEDL, Hindalco

IOC, HPCL

Chandan Taparia

Derivatives & Technical Analyst

MOSt Quantitative Outlook - Monthly

June 2017

NIFTY

USDINR

NIFTY DAILY

Indian Rupee has been in a runaway strengthening

mode for the past several months. In last couple of

weeks the pair is trading in a range of 64.20 to 65.35.

This trading range seems to be a continuation pat-

tern. If the pair trades below 64.20 then we could see

some major declines towards 63.00 - 63.10 levels. If

USD INR declines it augurs well for Nifty as it can fuel

rally in equity markets.

On the daily time frame the index does show some

signs of fatigue but the overall trend remains intact to

positive. The RSI hit the overbought zone and it has

caused a pause in the momentum. There is a negative

divergence between price and the oscillator but still

there are no real sign of a reversal in the index as the

underlying trend is still very strong. Now if it sustained

below 9580 only then a profit booking could be seen

towards 9532 while on the upside index needs to sur-

pass 9635 zone to extend its up move towards 9700-

9750 levels.

NIFTY WEEKLY

On the weekly scale the index witnessed a steady rally and has been making higher top - higher bottom formation. In

this week Nifty remained in a range of 100 points and seems to be taking a pause after the swift rally in the previous

week. The range for the week has shrunk as the index oscillates between 9550-9650. The overall trend on the weekly

chart remains positive till it holds above previous swing high of 9500-9532 zones while on the upside follow up buying

could extend its rally towards 9800 zones.

MOSt Quantitative Outlook - Monthly

June 2017

...NIFTY

NIFTY V/S INDIA VIX

India VIX recorded a fresh low of the past 3 years while Nifty inched higher by ~16% in CY17. Lower VIX indicates "Risk-

Off" situation. However any move beyond 12.50-13 could lead to acceleration in volatility. Thus it's imperative for a

trader to hedge the position adequately in that situation.

NIFTY OI V/S PRICE

Nifty continued its uptrend in May series and gained 1.79% sequentially E-o-E. Volatility index remained at record low

at 10.45% indicating risk-off. Option activity for June series suggests 9700 as immediate hurdle as depicted by highest

Call congestion. Immediate vital support is placed at 9400 zone. PCR OI is near to 1.06 at the beginning of new series

post moving higher to 1.41. Now an up move in PCR OI with decline in India VIX could continue it's up trend.

MOSt Quantitative Outlook - Monthly

June 2017

SECTOR ROTATION OI

Nifty witnessed higher rollover of 74.09% V/s 3 MA of 69%. Index gained 1.79% sequentially E-o-E. Bank Nifty wit-

nessed below average rollover of 60.60% V/s 3 MA of 68%. Market-wide roll over were in line near to 80%. Overall long

built up was witnessed in Banks and selective NBFC stocks, Short covering was seen in Auto and FMCG while short

were seen in Pharma, Metals and Capital Goods stocks.

Auto:

Auto sector witnessed rollover of 82%. Long built-up in Escorts, while short covering in Heromotoco. M&M

witnessed lower rolls in the entire Auto pack.

Cement:

Roll of 83%. Long liquidation in Ambujacem and ACC

Banks :

Lower roll of 60.60%. Long built up with positive price action in stocks like Federalbank and ICICI Bank, Short

covering in HDFC Bank while shorts were added in Yes Bank. In PSU segment shorts added in Bank India and PNB.

Infra:

Rollover of 86% Long liquidation in IRB

Metal:

In line rollover at 82%. Long built up in Jindalstel, Short covering in Tatasteel while shorts added in Jswsteel

and Hindalco

Pharma:

Rollover of 84%. Long in PEL, shorts in Glenmark, Biocon,

NBFC:

Better rollover of 81%. Longs in Lichsgfin while short covering in Ibulhsgfin. Fresh shorts in Srtransfin

OIL & Gas:

Rollover of 82%. Long liquidation in Gail while shorts added in ONGC

IT:

Rollover of 80%. Longs in Infy and NIIT Tech while shorts in KPIT

FMCG :

Long built up in Hindunilvr, Godrecp and Short covering in ITC and Pidilitind

MOSt Quantitative Outlook - Monthly

June 2017

STOCKS

SBI

BUY

CMP : 287

Target : 303

Stop Loss : 280

Managed to hold multiple supports at 280 zones

Respected to its 50% retracement of the previous

up swing from 241 to 315

Double bottom on the daily chart as made two lows

of 281 on 24th and 30th May

Attractive risk reward ratio after the decline of 11%

from recent swing high of 315

Ultratech Cement

BUY

CMP : 4198

Target : 4425

Stop Loss : 4085

Taken support at the rising trend line

Major trend of the stock is up and recent decline

provides a fresh buying opportunity

It formed a Bullish Morning Star pattern on the

daily chart

Negated the lower top - lower bottom on the daily

chart

IOC

BUY

SELL

CMP : 414

Target : 390

Stop Loss : 425

It is breaking down from a rounding top pattern.

It broke below its support at 421 levels with a

strong bearish candle

The rising trend line is also violated with rising

volume activities

Negative sector outlook and recent

underperformance suggests a negative sentiment

MOSt Quantitative Outlook - Monthly

June 2017

OPTION STRATEGIES

VEDL

BullBear Spread

Call Put Spread

BUY

VEDL has failed to surpass its multiple hurdles of

248-250 zones and started to decline with built up

of short positions.

Highest call congestion is at 250 CE and fresh writ-

ing at 240 and 235 CE could restrict its upside

Put unwinding in 230 and 225 strike could propel it

towards 220

Thus low risk Bear Put Spread is recommended

: INR 14000

: INR 7000

Buy 230 PE 1 lot; Sell 220 PE 1 lot

Target

Stop Loss

ARVIND

Bear Put Spread

Call Ladder Spread

BUY

Arvind has respected its rising support trend line

and reversed its down move with the support of

365

Highest Put congestion is at 370 & 380 PE could

provide support

Maximum Call OI is at 400 strike which could re-

strict its upside momentum.

Thus low risk Call Ladder Spread is recommended

Buy 380 CE 1 lot; Sell 400 CE 1 lot; Sell 410 CE 1 lot

Target

Stop Loss

Hedge

: INR 15000

: INR 5000

: Buy Future Above 425

MOSt Quantitative Outlook - Monthly

June 2017

Economic Events Calendar, June 2017

Upcoming Economic Events Calendar

1-Jun-17

India

5-Jun-17

India

Service PMI,

Compositie PMI,

Factory Orders

12-Jun-17

CPI, IIP, Current

Account Balance

CPI, Retail Price

Index, House Price

MBA M ortgage

Application

13-Jun-17

14-Jun-17

WPI

Jobless Claims

CPI, FOMC Rate

decision

19-Jun-17

India

26-Jun-17

India

Pending Home sales

Initial Job less Claims

27-Jun-17

Eight Infra structure

Index

Existing Home sales

28-Jun-17

Initial Jobless Claims

29-Jun-17

New Home sales

30-Jun-17

Fiscal Deficit

Quarterly GDP

20-Jun-17

21-Jun-17

BOE Bank Rate decision,

BOE Asset Puchase and

Initial Jobless Claims,

Industrial Production

22-Jun-17

Housing Starts

23-Jun-17

Initial Jobless Claims

15-Jun-17

16-Jun-17

Service and C

omposite PMI

6-Jun-17

7-Jun-17

RBI Rate decision

Manufacturing PMI

Non-farm Poductivity,

Intial Jobless Claims

8-Jun-17

Change in Privaste

Pay Roll,

Unemployment Rate

9-Jun-17

Trade Balance

2-Jun-17

India

Note- CPI-Consumer Price Index,WPI-Wholesale Price Index, IIP- Index of Industrial Production, PMI-Purchasing Managers Index

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