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Tuesday, April 17, 2007

Emkay - Mid-April '07 - F&O Review


Market Outlook:

  • Nifty and Sensex both gained 3.1% during first half of April series.
  • We expect Nifty to remain strong and witness further upside move in the coming days as remarkable build up of positions with improvement in CoC is seen across the board.
  • Implied Volatility of Nifty March options is currently trading in range of 22-23% compared to high levels of 26-28% during the first half of april series; this indicates decline in uncertainty and expectation of stable markets in the coming days.
  • PCR (OI) of Nifty has also improved to 1.18x due to build up in Nifty Put options suggesting development of support in the markets.

F&O Cues:

  • April total futures open interest at Rs 36025 Crs compared to Rs.28780 Crs at the beginning of April series; increase of 25.2%
  • Stock futures's OI for April series currently at Rs.22720 Crs compared to Rs.17460 Crs beginning of series; sharp rise of 30%.
  • Open Interest in April stock futures, in terms of number of shares, is nearly 93.75 Crore shares compared to 79 Crore shares at the beginning of April series; increase of 18.7%.
  • OI in Nifty April futures currently at 3.4 crore shares v/s 2.97 crore shares at the beginning of April series. In value terms, currently Nifty April OI is nearly Rs.13300 crores v/s Rs.11300 crores at the beginning of April series.
  • Huge build up of over 41 lakh shares seen in Nifty 3800 Put options; indicating that players may be looking at 3800 levels to offer strong support in the coming days.

SECTORAL OUTLOOK:

Auto & Auto Ancillary : HeroHonda, M&M & Maruti expected to trade with negative bias.

Banking & Finance: Heavyweights like SBI, ICICI Bank, HDFC Bank, HDFC and other stocks like IFCI, Reliance Capital, Kotak Bank & IDFC look strong.

Cement & Construction : Cement Stocks like ACC, Guj Ambuja and Construction stocks like Parsvnath Developers & Sobha Developers are looking strong.

FMCG: ITC & HLL look strong

IT & Telecom: Infosys, TCS, Satyam, Wipro, RCOM & Bharti are looking strong. Mid-cap IT stocks like I-flex, Polaris & HCL Tech are also looking strong.

Metals: Bullish on Sterlite & SAIL. Jindal Stainless look strong. Short covering seen in TataSteel.

Oil, Gas & Refinery : Bullish on Reliance, ONGC, RPL & GAIL looks strong.

Pharma: Ranbaxy, Orchid Chem, Dr.Reddy, Divis Lab, Cipla, Sun Pharma, Glaxo and Lupin are looking strong.

Power & Engineering : We like BHEL, NTPC, Suzlon, Praj, CESC, ABB and TataPower.

Others: We like Zee, Titan, NDTV, Voltas, BILT and Guj Alkali

Emkay - Mid-April '07 - F&O Review