Stock Trader

April 1, 2014

Tata Chemicals
Rationale: Broader markets are witnessing larger participation in the last few sessions after surging towards 6700 levels. Despite a range bound index, stock specific moves, especially in the midcap segment, are witnessing significant buying. In the last two months, the midcap index has witnessed gains of almost 15%. Since the settlement of the March series, the CNX midcap index has gained close to 4% against 1.5% gains seen in the Nifty Even on the F&O front, the open interest in Tata Chemical is the highest in more than a year. Since February itself, the open interest has risen more than 70% in the stock indicating accumulation of fresh long positions Tata Chemical had witnessed quite significant volumes at the start of the March series at | 285. Volumes seen in the stock were highest since December 2012. Afterwards, it moved towards | 300 levels and went sideways thereafter. It seems to be recovering now after spending a month at | 275-280 The stock surpassed the crucial 50 WMA in March after seeing a breakdown below this level in May 2013. For the last four weeks, it has been holding above this average, which shows healthy consolidation Good delivery pick up was seen at | 277 levels and the stock respected the buying level of | 272 seen on March 3 where one-year high volumes were seen. This shows strength coming back in the stock. It may witness good upsides
Fresh longs formed in the stock are likely to continue the momentum

Exhibit 1: Tata Chemicals price vs. open interest relative chart

300 290 280 Open Interest 270 Price 260 250 240 230 14-Feb-14 22-Nov-13 13-Sep-13 27-Sep-13 20-Dec-13 28-Feb-14 8-Nov-13 17-Jan-14 31-Jan-14 11-Oct-13 25-Oct-13 3-Jan-14 14-Mar-14 28-Mar-14 6-Dec-13 500 1500 2500

2000

1000

Price

Open Interest

Source: ICICIdirect.com Research

Recommendation: Buy Tata Chemical in cash in the range of | 284-289 Target: | 333 Stop loss: | 264 on closing basis Time Frame: 3 months Analyst
Amit Gupta amit.gup@icicisecurities.com Raj Deepak Singh rajdeepak.singh@icicisecurities.com Azeem Ahmad azeem.ahmad@icicisecurities.com

ICICI Securities Ltd. | Retail Equity Research

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Allocation Products Daily Derivatives Weekly Derivatives High OI stock Monthly Derivatives Global Derivatives Stock Trader/ Stock in Focus Alpha Trader Volatility Insights ArbitrageOpportunity Positional / Daily Futures Index option & Strategy Stock option & Strategy Product wise allocation 5% 10% 5% 20% 5% 10% 5% 5% 5% 10% 15% 5% Max allocation per stock 2-3% 3-5% 2-3% 3-5% 2-3% 2-3% 2-3% 2-3% 2-3% 2-3% 3-4% 3-4% Number of Calls 2 Stocks 2 Stocks 2-3 Stocks 4-7 Stocks 1-2 index strategy 5-6 Stocks 2-3 Alpha strategy 1-2 Strategy 2-3 Stocks 8-12 Stocks 2-5 Nifty 2-8 Stocks Return Objective Frontline Stocks 1% 3-5% 5-7% 7-10% 7-10% 5% 8-10% > 2.5% 1-3% 2-3% Mid-cap stocks 2-3% 5-7% 7-10% 10-15% 10-15% 10-15% >2.5% 2-5% 3-5% Duration Intraday 1 Week 1-2 Weeks 1 Month 1 Month 3 Months 3 Months 1-2 Month Event Based 1-14 days 1-14 days 1-14 days

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Derivatives Desk

ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC Andheri (East), Mumbai 400 093 research@icicidirect.com

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