Options Trading Report as on 26/05/2012

Extreme volatility will be seen in expiry week, nifty will trade with flat to positive sentiment for the week closing.

In last week we mentioned that nifty will trade with positive bias and will increase for the levels of 4900. And it has actually crossed that. It was a game of rupee dollar term. But for the next week we are having expiry. And no big moments is going to see. There will be flat to positive sentiment are going to seen. Investors have a chance to cut there long position in the next week. June month will be very bearish for the market if euro zone doesn’t get good scenario. If you still want to trade then trade very carefully with strict stop loss

Trading strategy for NIFTY:

Buy nifty call of strike price 5000 at 21

Sell nifty put of strike price at 4800 at 14

Stop loss will be 4820,

Profit will start as soon as nifty crosses 4950 level in futures and if nifty reaches 5050 maximum profit could be double of your investments.

Trading strategy for bank nifty:-

 To increase the nifty bank nifty has to play a very big role. So in this regard we may assume some kind of positive sentiment for bank nifty

Buy bank nifty call of 9800 strike price at 16

Sell bank nifty put of 9200 strike price at 45

Stop loss 9100

Good chance of making profit.

Pair trade: sell HPCL and buy OIL INDIA futures at current market price:

As we are seeing government is pressuring very hard for petroleum companies we might see decline in the prices of petrol as well as in the price of stock but we might see good price discovery in the price of oil India

Short hpcl at 300 and buy oil India future at 450

Stop loss not requires. Less risky strategy.

Buy tata power futures and jsw energy futures.

As such both stocks are very strong. But there is very low liquidity in the options of both of the stocks. So trading in call and put is not recommended. But investors can buy futures of both of the stock for having food gain. No need to put any stop loss

Buy tata power at  89 for the price target of 97 and stop loss 94

Target of jsw energy 44 for week. Target of 49 and stop loss of 42

                                 Performance of the last week call

Nifty call and nifty put prices are rocking with very low investment

Bank nifty call and put prices are also rocking with very low investment

                                             GET BEST STOCK, NIFTY, BANK NIFTY, OPTIONS TRADING, HEDGING STRATEGY AND TIPS FROM HEREShttp://www.meghainvestments.com/options_calls.html, MONTHLY FEE ONLY RS.6000 ONLY.

Options Trading Report as on 19/05/2012

We have seen that Indian stock market is trading at 2 year low points. India is facing only problem regarding devaluating rupee and that is lead to increase in inflation rate and slow down in GDP growth rate. In fact these factor are indicating that our finance minister is going to tighten the monetary steps, which might be negative for the market. Because right now it is important to save the Indian rupee in a macro sense. Moreover we are seeing heavy panic selling in the commodity products too. Then there is no matter whether it is gold, silver, lead, zinc, crude, nickel etc. The prices of crude is going down that might be a happy news but on the other hand India is paying crude import money in international currency, that is dollar and which is become costly. So again there will be no positive news of crude going down. , moreover our crude import should be decrease as well as our Indian rupees should be strong. And for that factors out finance minister is going to take some strict measures.

We have seen a very strong re bound from the level of NIFTY 4775. There was a very strong recovery from that point. Which might be an indication that market can turn from the current level? So in near term we can see some positive triggers in nifty. Nifty was even closed on 4900 level which is indicating that it has made some bottom, but with the same thing nifty should trade near the level of 4900 to 5000 for some time, then we can say that it has made some bottom, but for very near term still positive triggers are there for which we can trade. However, our belief for possible rock bottom for nifty is below 4600 level and not before that.

We also believe that rest of the year 2012 is very attractive from investor’s perspective and I think in next six month investors can earn good money. But in 2013 we are going to have election and that will completely change the picture of the industry. So these seven month it will be very interesting. 

If you are are investors then invest only 25 % of your money, If you are speculator then you can go short in nifty with a stop loss of 4980 for short side. If you want to buy then buy nifty with a strict stop loss of 4780 in nifty for the very short term.

All long position in nifty should be cut if nifty trade below 4780 and all short position in nifty should cut if trade above 4980. (all recommendations are subject to daily updates, so please become member of www.meghainvestments.com/subscribe.html  for regular stock trading advice.

Some stock recommendations

Sr No.	Scrip	Cmp	Target price  2012 end	Probable reutrn [in % ]
1	RCOM	65	90	38%
2	GMRINFRA	19.4	27	40%
3	GUJNRECOKE	16	23	45%
4	JSWENERGY	45	58	30%
5	IVRCL	44	60	35%
6	SINTEX	53	70	32%
7	HCC	18	24	33%
8	SUZLON	20	25	30%
9	UNITECH	21.5	28	30%
10	RELCAPITAL	280	364	30%

Nifty is in no trade zone, Indian stock market tried hard to go up. But each try has been laid down by sentiments of the international market. We have seen that everyday market open with positive sentiments and then close with big red mark ticks. Which is indication that speculators are selling in each and every rise of the markets? So it is very risky to be in long side and Bull Run. But at the same time, some of the mid cap stock are looking very attractive. Which are shown above?

Trading strategy for nifty :-

Range of the nifty is seen in the levels of 4750 to 5000                                   

Buy call of nifty 5000 strike price at 38

Sell call of nifty 5100 strike price at 15

Buy put of 4900 strike price at 78

Sell put of nifty 4800 strike price at 43

Premium paid 38 + 78 – 15 – 43 = 58 will be maximum profit

Both side moments covered. Stop loss nifty below 4642 and above 5058

Investors need no tension. If nifty goes up or down they will earn profit.

Trading strategy for bank nifty

To drag down nifty to 4700 to 4800 levels, bank nifty will play big negative role and to increase nifty bank nifty will play a positive role so use below strategy.

Buy call of bank nifty of strike price 9500 at 109

Sell call of bank nifty of strike price 9600 at 80

Sell put of bank nifty of strike price 9100 at 115

No stop loss required. Safe strategy at least no risk for losing money.

Net premium received will be 110 – 80 – 115 = 85.

On expiry profit is sure. As bank nifty will increases 9500 and will give profit and as looking like closes between 9200 to 9500 levels. Premium for 9100 and 9600 will be very low. So again profit.

Pair trade: HPCL & BPCL

We may see a price hike in Petroleum Company very soon. It is must by government. This decision has been delayed by last two months. And Petroleum Company is incurring a big losses and government want to cut the Burdon of the subsidy. So government is going to allow the petroleum company to increase the petrol prices. So either purchase HPCL and BPCL future at any price on Monday. As they both are traded very less in option we can’t give recommendation to buy option for that.

Pair trade: infosys & wipro

Investors can short infosys and buy wipro as infosys are having problems while doing business as well as they are some problem regarding visa of employee. Moreover employees are resigning from the job. So short infosys at …….for the price target of rs 1980 rs in next two month while investors can buy a steady company  like wipro for the price target of rs 430 in next two month. Stop loss for infosys will be 2550 and for wipro it will be 395. Profit is looking sure in this strategy.

HDIL:  REVERSAL BULL PATTERN STRATEGY.

This stock is trading at 50% low of its pick of 130 rs of February May be rebound very fast compare to nifty so following strategy can be used to gain profit. Buy call of hdil of strike price 70 rs at 0.85 and sell call of 75 rs strike price at 0.40 .

GET BEST STOCK, NIFTY, BANK NIFTY, OPTIONS TRADING, HEDGING STRATEGY AND TIPS FROM HERES http://www.meghainvestments.com/options_calls.html, MONTHLY FEE ONLY RS.6000 ONLY.

Politics in AMFI?

Recently AMFI (Association of Mutual Funds in India), the industry association body of asset management companies in India, was in news over politics between clashes amongst its small/new players and the bigger/established ones.

The matter was related to the proposal that AMFI, allegedly was to make to SEBI, to tell it to form rules abolishing/banning upfront commission by fund houses to its agents.

Fund houses, especially the smaller and newer (among many others) are paying between 1-3% commission from their own pocket to increase investors and their AUM (Asset Under Management- the value of total investment in all schemes with the fund house/amc)

These smaller fund houses/AMCs complaint that the AMFI was acting in favour of the bigger and established players, who can sustain without paying upfront commission to agents as they have established agent network and huge AUM sizes. Persons familiar with developments also said that these smaller AMCs warned AMFI of disassociating themselves from AMFI and forming parallel association. To tackle issue, it is said that AMFI has replied that if SEBI arbitrarily comes up with norms similar norms then they will not be able to help. An indeed diplomatic step suggesting association politics. The smaller fund houses manages 500 to 5000 crore rupees AUMs while the bigger funds have bigger AUMs.

There are 44 registered AMCs which all are members of AMFI. It is noticeable and worrisome that at a time when declining AUMs (down close to 20% at below 6 lakh crore from above 7 lakh crore in less than 3 years) and number of mutual fund investor folios, the industry should in fact unite to bring in more inventives for agents and investors alike to increase participation of common population in Indian equity markets; and not do internal politics.

Why We Said in Our Last Report on 11 March 2012 that Nifty Will Decline?: 500 points down since then in 2 months

Click here http://meghainvestments.blogspot.in/2012/03/indian-stock-market-outlook-as-on.html to read our article of 11 March 2012 where we clearly said that “VIEW CAUTIOUS: EXIT LONG POSITIONS OR LONG NEXT MONTH’S 4800 PUT OPTIONS’ and also distinctly written “MONTHLY PATTERN NOT IN FAVOUR OF BULLS”

On 12 march Nifty was trading above 5400 and went up to 5499 on 14 march, and since then started declining making lower lows and now on 11^th May (in the very last trading session) made low of 4906!!

Our this article is coming almost after 2 months. That is the kind of research we produce. If you want regular updates, and research via phone and sms, email as well as trading and investment advice then you may check out our site www.meghainvestments.com or contact us.

The point is that you will find daily, weekly and endless number of research, and articles and views and reports etc.so on on the internet by several brokerage companies, and advisors/analysts; but from our experience we have known that all these frequent bla-bla only of so-called analysis many times creates chaos and confuses the traders and investors a more, so at MEGHA INVESTMENTS AND RESEARCH we give one opinion to our readers and don’t confuse with upgrades and change in views, we try to give as distinct view as possible and a reasonable timeframe which can give our readers room and meaning to act on that whether they are traders or investors. Today, when people trying to figure out where the markets are headed can find hundreds of charts, and fundamental analysis, and detailed derivatives analysis, and so on; it is time to put simple research, with indeed simple logics that even the readers understands rather than vice versa.

WHAT NOW WITH NIFTY?

As you can see in the chart of nifty spot given here, there are 3 gaps that remain to be filled. Going by that the gap of 4881 (i.e nifty has to tick 4881) can come in next week, while the final downside as per this is nifty touching 4646. Thus, that will become a level to buy, else the index will remain a product to short on rises.

We strongly believe that select stocks from  pharma, fmcg, auto will continue to remain up and strong while leaving those with 30 plus PEs on the way up when realty, infra, power, telecom is starting to do good going forward. The real money will be made here only and not trying to hide behind so called safetyness of ITCs, and HULs. Because market is for making money…when it can be made.

The important thing is that the index consolidated for 2good long months, after what we believed to be a classic bottom our pattern made in January 2012 (see different chart). However this was very pathetic for many stocks, as stocks had to go down even after making this type of classic (where 9 out of 10 times works or deemed or taken to be granted to be so as per the pattern) bottom out pattern, the stocks went lower levels due to big events not providing boost (budget, Euro crisis and politics etc) This was indeed a heightened scenario and one or its kind of phenomena where (many) stocks made 52 week high and 52 week lows in a span of less than 4 months!! For e.g (first high and then low, if it is first low then high scenario it is good, obviously..!) However, when the world economy and domestic economy as well are going through extraordinary situations and happenings, such behavior of market is not completely surprising.

NIFTY STILL LOOKS WEAK TILL 4400: GAP OF 4646, NEED TO FILL: TIME TO BUY ATM PUTS

The NSE Nifty spot closed at 4929 down by 37 points and BSE Sensex closed at 16293 down by 0.77% on weekend.  Among the individual stocks, Tata Power, Sun Pharma, Hindalco, Coal India, maruti Suzuki,State Bank of India, Reliance Industries, Infosys, TCS, Wipro, larsen and Toubro were among the top losers. On the other hand, HDFC, ICICI bank, Hero MotoCorp and BHELwere among the gainers. Metal stocks Tata Steel, Sterlite Industries, Jindal Power and Hindalco lost significant ground last week. Several other metal stocks, including SAIL and JSW Steel, also ended weak. IT majors Infosys, Wipro, Tata Consultancy Services and HCL Technologies lost ground amid lingering concerns about the economic situation in Europe.

INTERNATIONAL DIPOSITORIES RATES:

ADR/GDR
	Latest (US$)	Price % chg	% Prem/Disc
Dr. Reddys	31.9	1.1	0.4
HDFC Bk	31.6	0.8	8.7
ICICI Bk	30.8	1.1	0.9
ITC	4.5	0.2	(0.1)
Infosys	44.5	0.1	1.3
Ranbaxy	9.6	(0.5)	2.5
Reliance	26.2	1.7	0.8
Wipro	9.2	0.8	20.3
SBI	70.8	0.6	2.6
Tata Motors	27.2	0.0	0.3
Sterlite	7.3	0.3	2.2
L&T	21.6	0.7	0.1

INTERNATIONAL COMMODITIES QUOTES:

Commodities		% change
	Last close	1 day	3 mth	YTD
Crude (US$/bbl)	96.1	(1.1)	(2.6)	(2.8)
Gold (US$/oz)	1,587	(0.5)	(7.9)	1.5
Copper (US$/mt)	8,207	0.5	(3.0)	8.1
Aluminium (US$/mt)	2,005	(0.2)	(9.1)	0.5
Zinc (US$/mt)	1,966	1.5	(4.8)	7.6

CURRENCY PAIRS:

Currency		% change
	Last close	1 day	3 mth	YTD
Rs/US$	53.43	(0.7)	(7.5)	(0.7)
Rs/EUR	69.10	(1.0)	(5.2)	(0.5)
US$/GBP	1.61	(0.1)	2.3	3.8
US$/EUR	1.29	(0.1)	(2.0)	(0.3)
Yen/US$	79.86	(0.1)	(2.9)	(3.7)

NIFTY SPOT:-

The NSE Nifty spot closed at 4929 down by 37 points on weekend and broken consolidation support of 5115. Investors are advised to be very cautious about more investing. There is a gap between 2nd and 3rd January of 4646 level. Nifty spot will has to fill that gap and on the other hand, if we look in to the lower indicators, MACD is still in cutting downward situation whereas stochastic is making zigzag pattern. This eliminates, more selling pressure can be seen in next days. Buy nifty stocks when nifty index will move nearer 4650 level.

HDFC:-

Fundamentally and economically very good stock, but technically looks weak till 628 and 600 level. HDFC investors are advised to be cautious about more investment in next days. It seems more selling pressure till 600 level. Buy this stock at 600 level would be favorable.

KOTAKBANK:-

Recently made high at 600 level in declining market, Kotak Bank closed at 512 on previous weekend. This stock can make downward trend if it seriously breaks the support of 525 which is nearer to 100 day exponential moving average. Some supports can be considered like 536/525/510 with resistances like 549/560/578.