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Technical and Derivatives Review | February 07, 2020
Hope turns into reality, markets gives v-shaped recovery
Sensex (41142) / Nifty (12098)
Source: Trading View
Future outlook
What a spectacular week this has been for our markets, especially after seeing a massive knock of more than 300 points on the budget day
(last Saturday). The kind of fall we witnessed post the budget who would have thought of such kind of price move in the subsequent week.
But fortunately, the fear over ‘Coronavirus’ subsided as the week progressed and this eventually had a positive impact on all global markets
to a great extent. We too managed to stabilise from the shocker budget day and witnessed a v-shaped recovery in tandem with the global
peers. With this, the Nifty recouped almost complete losses to end the remarkable week with nearly 4% gains.
Now, it’s easy analysing in hindsight and cheering stupendous recovery but the conviction and emotions were completely shaken last
Saturday after witnessing such a terrible fall. In the midst of all this, we remained a bit hopeful considering the cluster of support around
11600. The ‘200-SMA’ coupled with few Fibonacci ratios acted as a sheet anchor for our markets and played an essential role in the swift
recovery. Eventually, the hope turned into a reality. We are back above 12000 now, considerably in the safer terrain and the way prices are
shaped up now, we expect the northward trajectory to continue. Technically, we have reclaimed the 20-day EMA’ which is now
accompanied by the classical positive crossover in ‘RSI-Smoothened’ oscillator. Hence, one should continue with a ‘Buy on decline’ strategy.
The immediate supports are now placed at 12050 – 11980 and on the higher side, we saw some breather around 12150; but it’s a matter of
time, the index would surpass this minor hurdle to march towards 12250 and beyond.
Last Saturday, although, ‘200-day SMA’ we were seeing as a possible saviour but our real conviction was based only on the overall
positioning of ‘Nifty Midcap 50’ index. It certainly has not disappointed us and from here on, we expect the outperformance to continue
from the broader market.
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Technical and Derivatives Review | February 07, 2020
11950-12000 to act as a strong base now
Nifty spot closed at 12098.35 this week, against a close of 11661.85 last week. The Put-Call Ratio has increased from 0.86 to 1.40.
The annualized Cost of Carry is negative at 0.37%. The Open Interest of Nifty Futures has increased by 0.69%.
Derivatives View
Nifty current month future closed with a discount of 2.45 points against a discount of 6.95 points to its spot. Next month future is
trading with a premium of 19.25 points.
As far as Nifty options activities for the week are concerned, we saw fresh build-up in 12300-12500 call options; followed by
unwinding in 11800-12200. On the flip side, good amount of build-up was seen in 11600-12100 put options. Maximum open interest
for the monthly series now stands at 12000 put and 12500 call option.
Post sharp fall seen on the budget day, we started off slightly lower but 11600-11650 acted as a good support zone. The benchmark
index recovered the same day and managed to close above 11700 mark. This short covering rally continued for next the three
sessions to almost reclaim 12200 mark. However, some profit booking on Friday led weekly closing with the gains of 3.78%.
Surprisingly, the open interest change WoW was merely 0.69%, indicating the blend of short covering and some fresh long
formation. In options from, the base has now shifted higher to 12000, which may now act as a strong support zone. Thus, any dips
towards around this level shall be an opportunity to add-on fresh longs.
Long Formation
Chg (%)
Chg (%)
AMBUJACEM 31827500 70.13 210.50 7.78
CHOLAFIN 6497500 51.02 340.70 7.12
SRF 896250 40.09 4098.30 10.85
MRF 21570 36.52 70962.80 3.39
UBL 2224600 35.23 1324.60 3.27
Weekly change in OI
Short Formation
Chg (%)
Chg (%)
MANAPPURAM 35076000 96.70 167.60 (9.18)
GODREJCP 6480000 36.07 649.65 (2.54)
JUSTDIAL 2629200 30.33 535.95 (2.12)
ZEEL 29557900 19.84 250.50 (1.16)
EXIDEIND 11327400 9.17 182.40 (4.90)
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Technical and Derivatives Review | February 07, 2020
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Technical and Derivatives Team:
Sameet Chavan Chief Analyst – Technical & Derivatives sameet.c[email protected]ngelbroking.com
Ruchit Jain Technical Analyst ruchit.jai[email protected]broking.com
Rajesh Bhosale Technical Analyst rajesh.bhosl[email protected]ngelbroking.com
Sneha Seth Derivatives Analyst sneha.s[email protected]ngelbroking.com