MOSt Quantitative Outlook

Monthly

April 2017

INDEX

S&P CNX Nifty

Sensex

:

:

9,173.75

29,620.50

Nifty on the prowl.!!

Nifty continued its positive move for third consecutive month and registered a

fresh life time high of 9218 with monthly surge of 3.31%. It made multiple bot-

toms near to 8860 & 9020 and overall trend is positive as supports are shifting

higher and it has been making higher top - higher bottom formation. Significant

flow from Institutional participants has supported the market to cheer the bull-

ish sentiment.

On the weekly scale it has been consolidating in between 9020 to 9200 zone from

last three weeks. Overall trend of the index is positive so every decline is being

bought in the market. Occurrence of bullish candle with highest weekly close

suggests the continuation of the current trend. It partially filled and holding its

positive gap of 8978-9060 zone which is likely to act as a medium term support.

On the Daily scale index has been making higher high - higher lows from last four

consecutive sessions and respecting to its rising support trend line by connect-

ing the lows of 8712, 8903 and 9024. Till the time it holds above this trend line we

are expecting market to stay in bulls grip. Thus, trading longs can be added on a

decline near to 9119-9075 zones for next leg of rally towards 9280 and 9350 zone.

Bank Nifty has been making higher lows from last seven trading sessions and if

immediate lows of 21330 is broken then it may see a profit booking towards

21000 zone where one can again accumulate long position for the next up move

towards 21700 then 22000 zones.

Nifty witnessed below average rollover of 60% V/s 3 MA of 71%. Index gained

2.6% sequentially E-o-E. Banknifty witnessed above average roll-over of 65% viz-

a-viz 3 MA of 61%. Market-wide roll-over were in line at 79%. Overall major

sectors witnessed strong roll-over along with long built-up mainly Engineering,

Pvt Bank, PSU bank, Auto Ancillary and Power. Option activity for April series

depicts highest Put congestion at 9000 indicating strong support in place. How-

ever highest Call congestion is placed at 9200 followed by 9500 providing short

term resistance to the market. PCR OI too is quoting at 1.20 near its higher bound

indicating likely pause. Index could gyrate in the band of 9000-9300 before fresh

momentum picks up. Foreign institution net long/short ratio stands at 0.93 viz-a-

viz 1.14 last expiry depicting their neutral view. As we are expecting consolida-

tion in Nifty, Short Strangle Strategy of 8950PE and 9350CE is recommended.

NIFTY MONTHLY

Support

Resistance

:

:

9020 / 8860

9280 / 9380

Strategy

Data indicates a shift in trading range to

9000-9400 going ahead. Additional longs

recommended on declines so far as 9020

holds.

Option Writer

Scrip Name

Nifty 27-APR 2017 CE 9400

Nifty 27-APR 2017 PE 8900

Confidence 90%

% Higher/ Lower

2.19%

-3.24%

Sector Outlook

SECTOR

NAME

Metals

Energy

Auto

Bank

Media

FMCG

Infra

Pharma

CMP

3096.55

11648.7

9880.2

21444.15

3174.25

23542.3

3096.65

10411.15

MOM

(%)

0.98%

2.54%

2.34%

4.06%

5.94%

5.39%

3.30%

-1.64%

OUTLOOK

FOR THE MONTH

Positive

Positive

Positive

Positive

Positive

Positive

Positive

Neutral

POTENTIAL

MOVERS & SHAKERS

Hindalco, Vedl

Petronet, RIL

Amara Raja, Maruti

SBIN, Kotak Bank

ZEEL, Suntv

Hindunilvr , Pidilitind

LT, BHEL

Biocon, Lupin

1

Dharmesh Kant

Head - Retail Research

Chandan Taparia

Derivatives & Technical Analyst

Tina Gadodia

Equity Derivatives Analyst

MOSt Quantitative Outlook - Monthly

April 2017

NIFTY

USDINR

NIFTY DAILY

The pair has been falling down from last four months

as it broken the multiple support of 66 and triggered

the fresh declines. It has been making lower highs from

last eleven consecutive weeks and trading near to sev-

enteen months lower levels. However it has gone in

to oversold territory but overall appreciating rupee is

supporting the Equity market. At times our index has a

high inverse correlation with the pair and apprecia-

tion in INR would keep the positive momentum for the

market. Traders are suggesting to keep an alert on pair

as a short term reversal in currency might give a pause

in momentum of the equity market.

NIFTY WEEKLY

On the daily scale index has been making higher high

- higher lows from last four consecutive sessions and

respecting to its rising support trend line by connect-

ing the lows of 8712, 8903 and 9024. Till the time it

holds above this trend line we are expecting market

to stay in bulls grip. It made multiple bottoms near to

8860 & 9020 and has been respecting to its 13 DEMA

from last three months. Thus, trading longs can be

added on a decline near to 9119-9075 zones for next

leg of rally towards 9280 and 9350 zone.

On the weekly scale it has been consolidating in between 9020 to 9200 zone from last three weeks. Overall trend of the

index is positive so every decline is being bought in the market. Occurrence of bullish candle with highest weekly close

suggests the continuation of the current trend. It partially filled and holding its positive gap of 8978-9060 zone which is

likely to act as a medium term support as per Gap theory.

2

2

MOSt Quantitative Outlook - Monthly

April 2017

...NIFTY

NIFTY OI V/S PRICE

PCR OI V/S NIFTY

Nifty continued its positive bias in March series and

scaled higher above 9000 towards 9200. Index gained

2.62% sequentially E-o-E. Volatility too was in favour

of bulls as India VIX traded below 13%. Option activity

for April series depicts highest Put congestion at 9000

indicating strong support in place. However highest

Call congestion is placed at 9200 followed by 9500

providing short term resistance to the market. PCR OI

too is quoting at higher bound indicating likely pause.

Index could gyrate in the band of 9000-9300 before

fresh momentum picks up. Foreign institution net long/

short ratio stands at 0.93 viz-a-viz 1.14 last expiry de-

picting their neutral view.

INDEX FUTURE OI

PCROI of Nifty trades near 1.20 near its upper band of

0.8-1.20 indicating likely resistance. The ratio has di-

rect relationship with Index movement. In scenario if

PCR OI falls below 1.05 Index could see sideways ac-

tivity emerging.

STOCK FUTURE OI

Index future open interest continued to witness accu-

mulation m-o-m. It stood at highest level on last day

of expiry. Below average roll in Nifty at 60% indicates

likely consolidation in coming session.

Stock future OI remained robust m-o-m. Market-wide

roll-over from Mar to Apr series was in line 79%. mainly

Engineering, Pvt Bank, PSU bank, Auto Ancillary and

Power. Stock specific activity along with sector rota-

tion could continue to be observed in coming expiry.

2

3

MOSt Quantitative Outlook - Monthly

April 2017

SECTOR ROTATION OI

Nifty witnessed below average rollover of 60% V/s 3 MA of 71%. However it witnessed incremental built-up of open

interest to 38 mn shares in April series. Index gained 2.6% sequentially E-o-E. Banknifty witnessed above average roll-

over of 65% viz-a-viz 3 MA of 61%. Market-wide roll-over were in line at 79%. Overall major sectors witnessed strong

roll-over along with long built-up mainly Engineering, Pvt Bank, PSU bank, Auto Ancillary and Power.

Auto:

Auto sector witnessed relatively lower rollover of ~75%. Incremental accumulation was witnessed in four wheeler

stocks like Maruti, M&M, Tatamtrdvr Short built up was mainly witnessed in Ashokley. Auto-Ancilliary stocks like Exide,

Amarajabat too witnessed long built with price gain indicating positive bias

Oil & Gas:

In line Rollover at 79%. Long in Reliance and Cairn. Short built-up was noticed in OMC stocks

Metal:

Inline rollover at 80%. Long built-up in VEDL & Sail and Short built up in NMDC. Accumulation in Tatasteeel

Pvt Banks:

In line roll at 79%. Significant Long built-up in Indusindbk, Ktkbank and Dcbbank. Short built-up in Axisbank and

IDFC bank

PSU Banks:

In line roll at 78%. Significant long built-up in PNB, Canbk, Banbaroda and BankIndia. Short covering in SBIN and

Unionbank

Pharma:

In line roll at 81. Longs in Biocon, Ajantpharm, and Sunpharma. Shorts in Drreddy, Lupin and Divislab

NBFC:

Strong roll of 82%. Significant Longs in HDFC, Ibulhsfin, IDFC, Relcapital and M&Mfin. Shorts in Bharatfin. Short

covering in Srtransfin and Bajfinance

Power:

Strong roll of 83%. Significant longs in PFC, RPOWER, Tatapower, and Jswenergy

Engineering:

In line rollover of 80%. Longs in Voltas, Bhel, LT and Siemens. Short covering in Havells

IT:

In line rollover of 79%. Significant accumulation in INFY. Short in Mindtree and Techm. Longs in Hcltech and Wipro

FMCG:

In line rollover of 81%. Significant longs in Jublfood, ITC, Hindunilvr & Tataglobal. Accumulation in Pidilitind.

4

MOSt Quantitative Outlook - Monthly

April 2017

STOCKS

AMARA RAJA

3

BUY

CMP : 890

Target : 950

Stop Loss : 860

Bottomed out with the multiple supports of 820-

830 zone

Reversing its negative trend of last five months

Mechanical indicators have turned from over sold

territory with positive divergence

Positional longs could be added for the potential

target of 950.

3

3

3

LT

3

3

3

BUY

BUY

Bullish Flag pattern on daily chart

Consolidation breakout after 13 trading sessions

Higher top - higher bottom formation on weekly

chart

Positional longs could be added for the potential

target of 1650

CMP : 1575

Target : 1650

Stop Loss : 1545

3

BHARAT FORG

3

3

3

3

BUY

BUY

CMP : 1042

Target : 1111

Stop Loss : 1015

Taken multiple support near to 1000

Surpassed its falling supply trend line

Respecting to its 50 DEMA

Positional longs could be added on a decline for

the potential target of 1111

5

MOSt Quantitative Outlook - Monthly

April 2017

OPTION STRATEGIES

Nifty

3

Bear Put Spread

BUY

Short Strangle Strategy

BUY

3

3

Nifty is in long-long unwinding cycle. Nifty wit-

nessed below average roll of 60% indicating likely

consolidation

Put built-up at 9000 could act as a strong support

while call writing at 9200 & 9300 could provide

immediate resistance.

Index is expected to gyrate in the indicative op-

tion band. Thus Short Strangle Strategy is recom-

mended.

: INR 6650 between 8950-9350

: INR 6650

: Sell future below 8900 or Buy

future above 9400

Sell 9350 CE 1 lot; Sell 8950 PE 1 lot

Target

Initial Inflow

Hedge

ZEEL

3

3

3

Bull Call Spread

Call Ladder Spread

BUY

Buy 540 CE 1 lot; Sell 560 CE 1 lot ; Sell 580 CE 1 lot

3

Zeel is in long- long unwinding cycle

Stock has witnessed strong rollover of 83% along

with OI accumulation in future

Proximity of stock to highest call congestion at

540 raises expectation of a breakout propelling

momentum towards 560-570

Thus Call Ladder Spread is recommended

: INR 20000 between 560-580

: INR 3500

: Buy future above 595

Target

Stop loss

Hedge

6

7

MOSt Quantitative Outlook - Monthly

April 2017

Economic Events Calendar, April 2017

7

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