For Private Circulation
Technical and Derivatives Review
| August 07, 2020
Nifty nearing crucial hurdles, still better to take some money off the table
Sensex (38041) / Nifty (11214)
Source: Trading View
Future outlook
We inaugurated the week on Monday on a flat note; however, right from the word go, markets looked a bit depressed and as a
result, we witnessed sustained selling throughout the day. Eventually, the Nifty marked the weakest session in the recent past.
However, the ‘200-SMA’ level of 10870 acted as a sheet anchor for the bulls and despite the strong selling momentum there, Nifty
managed to hold this sacrosanct support. The optimist traders somehow managed to sail through this difficult session and hence,
with the help of positivity across the globe, our markets too started rebounding sharply. Post the smart recovery on Tuesday, the
index consolidated by maintaining its positive posture to conclude the action-packed week tab above the 11200 mark.
In our opinion, the way markets are placed, the coming week would be quite crucial and hence, one should be keeping a close eye
on few key levels. Although the market has managed to recover well, it would be a daunting task surpassing the sturdy wall of
11300-11350. Till the time it is not conquered successfully, we advocate some caution. Let’s understand, technically, why this should
be considered an important junction. Firstly, the 78.6% retracement of the entire fall from 12430.50 to 7511.10 comes around it.
Secondly, the 100% Price Extension’ of the first up leg (7511.10 - 9889.05) from 8806.75 precisely coincides around 11300-11350.
And now we are standing at the pullback level of the ‘Parabolic SAR’ which has been following the entire uptrend, has finally given
some sign of weakness (due to Monday’s negative close) for the first time in the entire up move. Considering all these observations,
we advise traders to stay light and should ideally take some money off the table. On the downside, a move below 11100 would lead
to immediate correction towards 10950 - 10880.
Markets were on recovery mode first and then remained in a slender range of 150 points for three sessions. Looking at the
benchmark index, it might appear a boring week (especially the second half); but if we meticulously observe the price action in the
broader markets, we would rate it as one of the finest weeks for individual stocks in the last few weeks. Finally, on Friday, the NIFTY
MIDCAP 50 index posted a smart rally to surpass its recent hurdles. Hence, traders are advised to stay focused on individual stocks in
the forthcoming week; but the aggressive positions should be avoided till the time important levels are not surpassed convincingly.
For Private Circulation
Technical and Derivatives Review
| August 07, 2020
11000-11300 seen as immediate trading range
Nifty spot closed at 11214.05 this week, against a close of 11073.45 last week. The Put-Call Ratio has increased from 1.31 to 1.60.
The annualized Cost of Carry is positive at 1.98%. The Open Interest of Nifty Futures has increased by 2.88%.
Derivatives View
Nifty current month future closed with a premium of 12.15 points against a premium of 22.40 points to its spot. Next month future
is trading at a premium of 21.45 points.
As far as Nifty options activities are concerned, 11300-11400 call options witnessed some open interest addition whereas 10800-
10500 put options too added open interest. Maximum open interest for the coming weekly series is at 11500 call; while 11300 call
too have decent open interest outstanding indicating immediate resistance. On the flipside, 11100 and 11000 put options have good
amount of open interest indicating support range.
The indices started the week on a negative note, but it recovered in Tuesday’s session due to long formation in Nifty and short
covering in Bank Nifty. For the rest of the week, both the indices consolidated within a range. FII’s started this series with long
positions in index futures; however they unwound some of their longs in this week and their Long Short Ratio’ now stands at 58.4
percent. Inspite of some consolidation in the indices, there was good stock specific action during the week. The data indicates
continuation of a trading range of 11000-11300 for the coming week and thus, traders are advised to trade with a stock specific
Weekly change in OI
Short Formation
Chg (%)
MUTHOOTFIN 5250000 71.57 1222.90 (4.46)
Long Formation
Chg (%)
RBLBANK 25979200 74.56 192.00 13.48
For Private Circulation
Technical and Derivatives Review
| August 07, 2020
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Technical and Derivatives Team:
Sameet Chavan Chief Analyst – Technical & Derivatives sameet.cha[email protected]g.com
Ruchit Jain Senior Analyst - Technical & Derivatives ruchit.jai[email protected].com
Rajesh Bhosale Technical Analyst rajesh.bhosl[email protected]ng.com
Sneha Seth Derivatives Analyst [email protected]gelbroking.com