Ambuja Cement - Option Strategy

Ambuja Cement showing bullish divergence.  Stock has taken support near 233 leve.

Buy Ambuja Cement 250 call option at 5.3 and sell 260 call at 2.4.   Risk Reward Ratio is 1:2. Maximum loss is 7250 and maximum profit is 17750.

ITC - Option Strategy

Buy 305 Call at 9.5 and Sell 315 Call at 5.85.  Risk / Reward Ratio is : 1:2

Maximum profit on this trade is 15211 and maximum loss is 8760.

Profit will above 308.65 and maximum profit will be above 315.

ITC - Ascending Triangle

ITC has made 4 months long ascending triangle and on last week it made a bullish breakout with a good volume.  Stock can be bought at the level of 296 with a target of 330/331.

Nifty Weekly Analysis for the week ending 26 May 2017

Key Points:

•           World Indices hits fresh record high (S&P, Nasdaq & Kospi)during the week
•           Nifty hits another record high hits 9600 for first time ever.
•           Nifty made weekly bullish hammer.

Nifty opened the week at 9480.25, made a high of 9604.9, low of 9341.65  and closed the week at  9595.1. Thus it closed the week with a gain around 167 points.   Nifty made a weekly hammer candle.

Sector-wise, the top gainers were the Metal, Auto and FMCG indices. The top losers were the Pharma, Telecom, Media and Infrastructure indices

Last week I mentioned Indiavix hit the low of 8.84, so there is a probability of high volatility in coming days. 

As I mentioned in the last week ,  Market witnessed volatile movements in the week.

First three days of the week market made daily lower low and lower high.  On Wednesday Market closed below 20 days moving average and touched low of 9341.65 thus loss of 191 points.  In daily chart Oscillators moved into oversold area and bullish divergence was visible.  On Thursday, last day of May Expiry, Index made a stellar rally and made a strong bullish candle since February 1.  It also retraced previous 5 days in just one day and made a high of  9604.9 and closed at 9595.1, a gain of 250 points.   Positive global cues also boosted sentiment; S&P 500 and Nasdaq hit record closing highs on Thursday.  Kospi hit record high today.

This is the second time Nifty closed below 20 days moving average in this uptrend started from December 2016.  Similar scenario happened in last month.  On  1^st week of April Nifty made an all-time high.   Market didn’t sustain and made a 9 days correction of 198 points and closed below 20 moving average.  On Weekly chart Nifty made two consequent lower low (but that is not happened now).   Market retraced previous 9 days just in 4 days and made a gain of 457 points.   Considering this, target for current upmove can be 9684-9800 level.

Last week I mentioned about P/E ratio. Nifty P/E Ratio reached 25.23on 17th May.  On the same day Nifty high was 9532.6.  25 onwards Market is very expensive.  Same day market made a correction 191 points.  Curiously on 26^th May, Nifty made high of 9604.1 and closed at 9595.1.  But P/E ratio showing 24.32.  There are some valuation changes have been happened in Nifty 50 stocks.  Grasim out from Nifty 50 replaced with Vedanta. 

On the Option front, highest Put OI at strike price of 9300 ad 9400 and highest call OI at 9600 and 9700.

Bank Nifty made all time high and invalidated our previous assumption of Double Top.  PSU Banks not joined the rally and made a big weekly bearish candle. 

CCL - Symmetrical Triangle Bearish Breakout

Yesterday 23rd May, CCL made a bearish breakout from 2 month long symmetrical triangle.   On day chart a huge bearish candle is made with heavy volume.

75% of symmetrical triangles are continuation patterns and the rest mark reversals. The reversal patterns can be especially difficult to analyze and often have false breakouts.

Breakout target is 280 level.

Nifty Weekly Analysis for the week ending 19 May 2017

Nifty made bullish candle on the week ending 12^th May.  

Nifty opened the week at 9433.55, made a high of 9532.6, low of 9390.75 and closed the week at 9427.9. Thus it closed the week with a gain / loss of 27 points.  

On the 2^nd day of the week, Nifty is able to break last week high.   It also achieved 75% price-ratio with the earlier rally from March 2016 to September 2016, in 75% time.  3  times in the week  that Indian benchmarks have closed at new highs.

Stochastics and KST showing clear divergence in weekly as well as daily chart.

      

Indiavix hit the low of 8.84 on 15 May, which is lowest since 2008.  So there is a probability of high volatility  in coming days.

Nifty P/E Ratio reached 25.23on 17^th May.  

Market is made a correction 96 points on 18^th May followed by global sentiments.  On 19^th May,  Nifty tried to recover but failed to hold before noon itself and made another lower low in daily chart In the meantime Sensex made another record high (30712.35 on Friday, 19 May, but failed to hold the high and made another lower low.  A weekly doji is formed in Nifty. 

The highest Put base is at the 9300 strike while the highest Call base is at the 9500 strike.  There is a huge increase in Open Interest on 9500 CE indicate 9500 would stand strong resistance in May series.

Bank Nifty showing clear divergence compared to Nifty.  But Bank nifty is not able to break last week high.   As I have shown in a separate chart Bank Nifty made a double top and negative divergence visible in oscillators.  

Indian market is more expensive in terms of the P/E ratio compared to other major global indices including Dow Jones, S&P 500, FTSE 100, DAX, Shanghai Composite and Nikkei.   

Pease see below the valuation matrix.

Nifty P/E Ratio Valuation Matrix

Valuation	Nifty P/E Ratio Range
Very Expensive	25 to 30
Expensive	20 to 25
Average	15 to 20
Inexpensive	12 to 15
Extremely Inexpensive	Below 12

In October 2010 Nifty P/E reached  25.52.  Nifty made a high of 6284.1.  But in September Market broke that high and made peak of 6338.5.  Then it made a one year correction and made a fall of 1753 points.  

When we look one year back,  in September 2016 Nifty P/E ratio reached 24.54.  In the same month Nifty made a market top at 8968.7 and made a 4 month correction  of 1075 points.   Now it again came in the high expensive area on 17^th May,   Nifty P/E Ratio reached 25.23. 

Using only P/E ratio to buy or sell is dangerous.  The P/E ratio must be interpreted within a context, and it should be used in conjunction with other analytical processes.  So it is not advisable to short the market now using only P/E Ratio.  Investors should be cautious in this bubble territory.   Only selective buying can initiative at this level with strict stop loss and partial profit can be taken those who hold the position. 

FII / DII data: First two days of the week FIIS are become buyers in cash segment.  Remaining days they were sellers.  So overall 987 crores FIIS sold in the cash segment.    DIIs were buyers of 1394 crores.

Upcoming Major Event :

RBI Monetary Policy Review meeting on June 07th

BPCL Bearish Divergence

BPCL is making a H&S pattern and interesting bearish divergence.

BPCL made a high of 753.55 on 3rd May (Head of H&S) and there is very clear bearish divergence is visible in RSI and stochastic.

On 16th May in made right shoulder (735).  But on stochastic it showing higher high and on price chart it is lower high.

Jain Irrigation - Head & Shoulder formation

JISLJALEQS made a head and shoulder pattern.   Left Shoulder high is made on 12th April and broke the Left Shoulder with good volume and made head on 25 April.  Stock went down and took support at 100.1 and made right shoulder on 10th May with less volume and made an evening doji star.  Now the stock took the support at uptrending line.   If  break below the trendline with good volume price has to come down further.  

Bank Nifty Double Top

Bank Nifty made a double top on 17 May.  First top is made on 11 May and 2nd top on 17  May. Also oscillators are showing bearish divergence.   If low of 22578 is broken then Double Top Target is in the range of 22200-22100 area.

Engineers India

After 13 days of flag formation Engineers India a made bullish break out and continue its upward trend.

Unitech Triangle Breakout

After 3 months consolidaton, Unitech made a bullish breakout with volume above falling trendline. This is the among few stock which is not moved up along with other reality stocks.

Stock can be bought with the stoploss of close below 5.5

Kirloskar Electric Company

After the 75% fall to previous upmove KECL consolidated in a sideways range for 4 months and formed a triangle pattern.  On 12th May, stock made a bullish breakout with good volume.  Stock can be initiated for long around 45 rupees with the stoploss of 41.  Now RSI showing overbought and if price comedown to 45 level, it can be initiated long.

Nifty Weekly Analysis for the week ending 12 May 2017

Nifty made small bearish weekly candle on the week ending 5th May.
Nifty opened the week at 9311.45, made a high of 9450.65, low of 9297.95 and closed the week at 9400.9. Thus it closed the week with a gain of 115.6 points.
On the daily charts, First day of the week  Nifty  has made an inside bullish candle (harami) and closed above 10 day moving average.  
On the next day 9th May Hang Seng, Nikkei 225, NASDAQ-100, S&P500 made a fresh high.  But Nifty stayed in a small range and made small bearish candle.
On 10th May Nifty  made a bullish breakout above Friday’s high and made a fresh record high and managed to closed above 9400.  Metrological Dept. predicted a ‘normal’ Monsoon, expect 100 per cent rainfall instead of 96 per cent as predicted earlier which helped market to move up.  Positive cues from Asian Markets after firm Chinese CPI and PPI data too lifted the market sentiment.  FIIS are buyers in cash segment which also contributed the market move.  FIIS inflow contributed to rupees strength as well.   The breadth of the market deteriorated in the second half of the week on account of profit booking after a surge in the Nifty
The highest Put base is at the 9300 strike while the highest Call base is at the 9500 strike.  Highest put base suggest that Nifty has a good support in the area of 9300 and a Target area of 9500.
Indiavix fell 1.5% closed at 10.9 which is in the low zone area.  After a long time FIIS become net buyers in Cash segment , but in derivative segment they were sellers.
Bearish divergence has been seen in Oscillators.   Nifty P/E ratio above 23.5 indicate market is expensive.

Zee Entertainment

Zee Entertainment made a channel line bullish breakout yesterday after the result.   The move is with good volume.  Oscillators was in oversold area and now it moved away from the oversold area.  Stock can be  initiated long with the stop loss of close below 516

TV18BROADCAST

After one month correction TV18 Broadcast made a trend reversal with volume.  It took 61.8% correction.   Yesterday it closed well above 50d ema with good volume.  Oscillators moved away from oversold region. Weekly MACD already in a buy region and daily macd ready for a cross-over.

Stock can be initiated long with a stop loss of close below 40.

Amara Raja batteries

After 8 months downward trend, Amara Raja batteries made a bullish break out of downward trendline.   Now the stock is trading above 50 day ema.

Stock can initiate buy in the range of 910-912.  Close this trade below 840.

Adani Enterprise gained 10% in 5 days

On 4th May, I have recommended to go long an Adani Enterprise which is now gained 10%.  So I have booked partial profit on this.  

ABB Bullish Breakout

ABB made a bullish breakout with high volume after one month consolidation  which affirming bullishness of the stock.  

Similar consolidation pattern is repeated earlier also in ABB.  In January 2017 and in Feb, March periods as well and both times stock performed very well.

Nifty Weekly Analysis for the week ending 05 May 2017

On the week ending  28 April, Weekly candle made a bullish candle.  This week market again broke all time high, but not able to sustain.  Good result on ICICI Bank helped  Index to hold from falling.   

FIIS are sellers in both cash and derivatives, which is give a question mark to current up trend could sustain.  Investors could be cautious in this level.  Because Nifty PE level is above 23.5.

Market is making higher highs from January onwards.  So until it make lower low, my view will be bullish on the market.  

Adani Enterprise

Adani Enterprise took channel line support.  Oscillators are in oversold zone.  It took support on 50 day ema. Each fall is with less volume.

 This is a good time to initiate long on this stock.

Indian Market Weekly Analysis for the week ending 21st April 2017

On the week ending  07 April, Weekly candle ended with a doji candle.  On week ending 13th April, nifty made a reverse hammer candle and thus it made an evening star.  Market obeyed the technical.  First in this uptrend  market made two weekly bearish candles and 9 days lower lows.
First time in this uptrend market moved below 20days SMA.   This all shows signal of market maturity.
Now  Oscillators are in oversold zone.   Nifty made a hammer type candle on 19th April. Low of the hammer is 9075. If the market break 9075 it invalidate hammer candle bullishness.   On 20th April Market is moved up from oversold zone.  Made the first clear higher high low after 9 days.  Today (21 April) market made another higher high, but not able to sustain.  Broke yesterdays low.
FIIS are become sellers in both cash and derivatives.