Bullet Advisory Indian Stocks Weekly— Markets are Marching Towards Crucial Resistance Levels

BSE Sensex (9958.22) and Nifty (3046.75) closed 6.7% and 6.6% up respectively last week.Nifty put-call ratio was 1.11. Support for Sensex is at 9390 and for Nifty 2880.Resistance for Sensex is at 10630 and Nifty is at 3240 Support for Sensex is at 9390 and for Nifty 2880.Resistance for Sensex is at 10630 and Nifty is at 3240 Inflation was at 6.38 v/s 6.61 last week. Crude oil was at 42$..Market gained ground on the hope the  of second stimulus package announcement which was ultimately declared after market hours on Friday. Reserve Bank Of India also reduced Cash Reserve  Ratio by 50 basis points to 5% and Reverse Repo Rate by 100 basis point to 4% on Friday evening which will release 20,000 Cr into the system. Impact of deepening global crisis led RBI to cut the rates to avert downside risk to economy. In second stimulus package ceiling of External Commercial Borrowing was removed and FII investment limit in corporate bonds was increased from $6 billion to $15 billion. CVD was reduced in cement, depreciation for commercial vehicle was increased to 50% till March,2009.NBFC ‘S limits were increased and public sector  banks were given enhanced credit targets. DEPB scheme was extended till 31st December 2009. Satyam was in the limelight after three independent directors had resigned and recovered from lows. Reliance Industries also went up smartly inspite of S & P cutting co’s rating outlook from stable to negative. Small buying from FII was visible. .Nifty 3200  call option  added open interest. RNRL and Unitech added open interest. Satyam and Renuka Sugar  shaded open interest. Huge position was build up at Satyam January put option strike price 170 and RNRL January call option strike price 70.

Tacticsfor Future Option players.

  1)ICICI Bank(471.25) Lot Size-175 Shares

   Buy one call option of January  strike 450@46.50 Rs.

   Sell one call option of January strike price 500@21.50   Rs.

   Premium .Paid=46.50*175=8137.50 Rs.

   Premium Received=21.50*175=3762.50 Rs.

   Net Premium Paid=8137.50-3762.50=4375.00 Rs.

   Maximum Profit=500-450=50*175=8750.00-4375.00=4375.00 Rs.

   Maximum Loss=4375.00 Rs.

   Break-even=475.00  Rs.

2)Nagarjuna Fertilizer(18.20) January  future-Lot Size 3500 shares.

    Buy one lot  January future @18.20

    Sell  one call option of  January strike price 20@0.90 Rs.

    Premium Received=0.90*3500=3150.00  Rs.

    Max Profit==20.00-18.20=1.80*3500=6300.00+3150.00=9450.00 Rs.

    Max loss=Unlimited.

Trading Idea

1)Reliance Capital(567.85)Buy this stock in decline and trade. 

2)JPHydro(32.10)Buy this stock in decline and trade.

Trend of Major Stocks

            STOCK          TREND        Days  WeeklyTrend  MonthlyTrend

ICICIBANK.NS         Bulllish  2          Rising            Rising

INFOSYSTC.NS        Neutral 1          Rising              Falling

ITC.NS                        Bulllish  1          Rising            Rising

MARUTI.NS               Bulllish  4          Rising              Rising

SATYAMCOM.NS    Bulllish  5          Rising              Falling

SBIN.NS                     Bulllish  2          Rising              Rising

TATASTEEL.NS         Bulllish  2          Rising             Rising

Technical indicators of major Stocks

MFI=Money Flow Index

RSI=Relative Strength Index

ADX=Directional Momentum Index

           STOCK                       CLOSE       MFI-21    RSI-14  ADX-14         

            ICICIBANK.NS         471.25          76.1        60.95   20.68

            INFOSYSTC.NS        1132.1          66.16      44.4     15.87

            ITC.NS                        174.5            51.15      52.72   9.39

            MARUTI.NS               544.4            71.83      54.58   26.01

            SATYAMCOM.NS    177.2            42.67      43.02   41.96

            SBIN.NS                     1331.85        76.32      60.84   15.73

            TATASTEEL.NS         229.6            62.94      58.85   19.03

            TCS.NS                       498.3            43.18      48.46   11.92