Technical and Derivatives Review | December 01, 2017
Avoid bottom fishing, index gearing up for sub-10000 levels
Sensex (32833) / Nifty (10122)
Source: Trading View
Future outlook
This has been one of the biggest weekly fall for our markets in the current calendar year. During the week, there were two occasions
when US bourses clocked colossal single day gains; but, quite surprisingly, our markets shrugged of these optimistic cues and
remained under pressure on the following days. Eventually, the Nifty went on to close almost at the lowest point of the week;
courtesy to a massive cut in the latter half.
If we refer to our previous articles, we have been sharing a notable observation that the Nifty was struggling around the 78.6%
retracement level (10405) of the recent down move. The similar incompetence was seen in the initial part of the week. So, in our
sense, if Nifty had to break this level then previous Friday and the initial half had the perfect set up to do so. But, as we generally
see, a failure to surpass particular level results into to some corrective move and this is exactly what we saw in last couple of
sessions. According to us, the complacency increased substantially in traders’ mind (especially Bulls) that markets are not willing to
fall and we are likely to see new highs. And history proves markets have a tendency to give surprising moves in opposite directions in
such kind of environment.
We have been advising caution and expected Nifty to slide towards the immediate junction of 10100. In-line with our anticipation,
the index fell after entering a strong resistance zone of 10270 - 10320 and went on to breach the ‘Upward Sloping Trend Line’
support of 10220. We would continue with our cautious stance on the market as the structure on daily as well as weekly charts is
getting distorted. Considering the recent development, we would not be surprised to see index slipping below the 10000 mark in
days to come. It’s accepted that on last couple of occasions, the index reversed after giving a truncated correction; but, this time, we
do not expect it to be repeated. Traders are advised not to make any kind of bottom fishing and should rather lighten up existing
longs in case of a bounce towards 10200 - 10275.
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Technical and Derivatives Review | December 01, 2017
NIFTY rollovers below three-month averages
Nifty spot closed at 10121.80 this week, against a close of 10389.70 last week. The Put-Call Ratio has decreased to 1.20 from 1.46
levels and the annualized Cost of Carry is positive at 4.33%. The Open Interest of Nifty Futures decreased by 28.13%.
Derivatives View
Nifty current month future closed with a premium of 32.45 points against a premium of 55.65 points to its spot. Next month future
is trading with a premium of 66.95 points.
PCR-OI has decreased from 1.46 to 1.20 on week on week basis. Being start of new series the overall build-up is quite scattered. In
call options, we witnessed open interest addition in the range 10200-10700; wherein, 10400 and 10500 strikes added significant
positions. On the flip side, 10000-10300 strikes added some fresh positions last week. For November series, maximum open interest
concentration is placed at 10500 call and 10000 put option.
We witnessed index tumbling below its support zone of 10300-10350 on the expiry day. Now, Nifty Rollovers is at 63.28% which is
below its 3 month average of 68.61% and in terms of open interest as well; suggesting decent amount of positions have been
lightened up ahead of the upcoming events like RBI policy, US Fed meet and more importantly, Gujarat poll results. FIIs too
refrained from rolling their positions, resulting into a decline in their index futures open interest by 37% series on series. However,
they rolled over good amount of their short positions formed in stock futures last series. Considering the overall rollover activity, we
believe market may remain volatile going ahead and 10300-10350 may now act as an immediate hurdle for the index; while strong
support is placed around the 10000 mark.
Long Formation
Short Formation
Chg (%)
Chg (%)
Chg (%)
Chg (%
Weekly change in OI
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Technical and Derivatives Review | December 01, 2017
Technical and Derivatives Team:
Sameet Chavan
Chief Analyst - Technical & Derivatives
[email protected]
Ruchit Jain
Technical Analyst
[email protected]
Rajesh Bhosale
Technical Analyst
[email protected]
Sneha Seth
Derivatives Analyst
[email protected]
Research Team Tel: 022 - 39357600
For Technical Queries
E-mail: [email protected]
For Derivatives Queries
E-mail: [email protected]
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