Technical
SPOT NIFTY :
Nifty gained 787 points or 7.01 per cent from the October 9th lows. The index has recovered 90 per cent of the June-September fall and is just at an arms-length to the lifetime highs. Another benchmark index, BSE Sensex, has already crossed the earlier highs and created a new history. Nifty reacted from the earlier swing high and formed an indecisive pattern on Thursday. On the eve of monthly expiry for October, the profit booking took place at the end of the session. The Bank Nifty formed a shooting star pattern. As some indicators reached an overbought condition, it is better to have a cautiously positive approach towards the market.
As the number of stocks hitting the 52-week high is increasing and the market breadth is improving continuously, the conditions in the market look very optimistic for now. The institutional buying support is also improving the sentiments of the market. For fresh long positions in the index, wait until it crosses the 11,945 levels. Since the market is run up by more than 7 per cent, some profit booking may witness. Any dip can be considered as a buying opportunity. In any case, it Nifty falls below 11,500, the bears may take an upper hand. Keep the trailing stop loss at 8EMA (11,710) for the existing long positions.
NIFTY DERIVATIVES:
Nifty Futures gained 267.9 points or 2.31 per cent since the last weekly expiry. The October series gained near about 309.1 points or 2.67 per cent. After taking support at 11,113 levels, the index jumped sharply. Nifty Futures formed a Doji pattern at a swing high, indicating the cautiousness in the market. The rollovers are at 65.91 per cent, which is much higher than the three month average of 52 per cent and indicates that traders believe that the trend is to continue. The Open interest is increased by 74.6 per cent as the new series begins. The Open interest wise Put-Call Ratio (PCR) for November 7 weekly series is at 1.02 and the volume-wise PCR is at 1.17. This is also indicating the overboughtness in the market. The highest open interest was seen at 12,000 call strike with 1,415,550 OI. On the put side, the highest open interest is at 11,800 strikes with 1,344,375 OI. The total Call open interest is at 90,10,725 and the total Put open interest is at 91,57,125. Interestingly, the 120,00 to 12,100 Call strikes witnessed short buildup and the long build-up is seen in 11,650 to 11,950 call strikes. On the put side, from 11,650 to 12,100 strikes witnessed a short build-up. The options data suggests that the Max Pain is at 11,800 for the November 7th series.
STOCK STRATEGY
BAJAJ FINSERV ................................ BUY .......................... CMP Rs8137.10
BSE Code ...... 532978
Target 1 .... Rs8510
Target 2 .... Rs8650
Stoploss .... Rs7850 (CLS)
✓ Current Observation: Bajaj Finserv formed a bullish flag pattern with a receding volume. The current flag can be considered as the handle of 13-week cup formation. The are several similar structures in the stock in the past. The depth of the cup formation is 23.3 per cent. The flag pole height is Rs. 1,566.
✓ Currently, the stock is trading above the 50-DMA and the 50-DMA is trending up clearly. As the price is trading in a narrow range, the Bollinger Bands has narrowed. The price is facing a resistance at 20-DMA for the past three days in a very narrow range. In any case, if the price move above 8,220 with volumes, the bullish flag breakout will take place.
✓ The RSI bouncing from the support of 47 levels. Actually, this leading indicator is broken out of the slopping trend line resistance. The MACD histogram is showing signs of bullish momentum in the stock. The stochastic oscillator has already given a buy signal.
✓ Its relative price strength(RS) is as high as 90 and the EPS strength is quite good at 83. The greater buyers demand and consistent financial performance with 14 per cent Return on Equity (RoE) makes the stocks attractive at current levels. Buy this stock at Rs. 8137.10 with a stop loss of Rs. 7850. The target is open to Rs. 8510 - Rs. 8650 in short term.
