For Private Circulation
Technical and Derivatives Review
| November 07, 2020
Back to pre-COVID levels and knocking doors of record highs
Sensex (41893) / Nifty (12264)
Source: Trading View
Future outlook
It was one of the remarkable weeks of trade for our markets; rather we can say for the entire world. As we stepped into an eventful
week on Monday, things were very much different. We had a lot of uncertainty around us, which spooked markets in the previous
week and were battling around the key supports, which at one time looked like getting breached. But fortunately, the buying
emerged right from the first day and the moment counting started for the race of becoming a US President, markets started reacting
pleasantly. In fact, they just took off in the last couple of days to clock whopping gains over Five percent for the Nifty and more than
Twelve percent for the Bank Nifty on a weekly basis.
Honestly speaking, it was one of the rarest bigger events when markets had a smooth unidirectional move throughout the week and
fortunately, it’s in the northward direction, which is gratifying for market participants across the globe. Yes, we should not ignore
the fact that the actual verdict is yet to come, so you never know how the reaction would be in the forthcoming week. But it seems
that the markets have completely shrugged off / discounted the complexity of this event and have just seen the bright futuristic
picture. Despite some challenging times, we remained hopeful at the start of the week as long as the key support of 11600 11500
is not violated. Market not only defended it but is very much at a comfortable position now with new record highs in sight.
Technically, we can see a ‘Bullish Flag’ breakout happening along with a ‘Breakaway Gap’ on a daily chart. It is considered a strong
development and hence, we are likely to move beyond previous highs soon. So, 12430.50 is the first level to watch and post then the
theoretical target of the ‘Flag’ pattern is around 12700. Further levels can be projected as we move forward.
On the flip side, Thursday’s gap area of 12027.20 11929.65 should act as a strong support. This rally can be considered a healthy
one because almost all sectors have contributed to it and financial space has dominated it along with the late participation from the
broader market. The much awaited breakout in the Midcap index has already been confirmed, which generally happens when the
market feels that the uncertainty is behind us and we are likely to witness some strong rally in the near future. Going by this logic, it
adds more conviction and hence, we expect some encouraging moves to come in the broader market.
For Private Circulation
Technical and Derivatives Review
| November 07, 2020
Falling INDIAVIX hints further strength
Nifty spot closed at 12263.55 this week, against a close of 11642.40 last week. The Put-Call Ratio has increased from 1.46 to 1.77.
The annualized Cost of Carry is negative at 0.31%. The Open Interest of Nifty Futures has increased by 5.44%.
Derivatives View
Nifty current month future closed with a discount of 2.10 points against a premium of 28.30 points to its spot. Next month future is
trading at a premium of 13.65 points.
As far as Nifty options activities are concerned, build-up was scattered between 12100-13000 call and 11800-12200 put options.
Maximum open interest for the monthly series is placed at 12500 call and 11500 put options.
We began the week on a cheerful note and saw Nifty inching higher during the remaining part of the week. After couple of attempts,
the benchmark index finally surpassed the important hurdle of 12000-12050. We concluded the week almost at the highest point. In
recent upmove, Nifty as well as BankNifty added good amount of longs, the open interest surged 5.44% and 15.14% respectively. In
addition, decent amount of longs from last series are also intact in the system. In index options front, good amount of writing was
seen in 11800-12000 put options; whereas, decent build-up was also seen in 12200-13000 call strikes. The volatility index plunged to
20.50, despite the event week. The above data remains positive and hence, we continue with the optimistic stance on market. Going
ahead, 12000-12100 may act as a demand zone and any dips towards these levels shall be an opportunity to re-enter.
Weekly change in OI
Short Formation
Chg (%)
GODREJPROP 1634750 129.26 947.55 (8.29)
PETRONET 11172000 78.78 226.85 (1.03)
CONCOR 6724026 26.05 376.30 (3.49)
INFRATEL 13762000 21.84 180.25 (2.83)
IDEA 361200000 21.24 8.65 (2.26)
Long Formation
Chg (%)
ICICIGI 164050 192.42 1264.60 1.92
VOLTAS 3469000 92.19 755.35 6.86
ADANIPORTS 46957500 66.28 372.20 3.37
CHOLAFIN 6342500 47.84 303.00 11.62
RBLBANK 20238500 42.77 194.00 11.02
For Private Circulation
Technical and Derivatives Review
| November 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