For Private Circulation Only
Technical and
Derivatives Review
| December 11, 2020
Mild hiccups at record highs, avoid aggressive longs overnight
Sensex (46099) / Nifty (13514)
Source: Trading View
Future outlook
The merry run continues across the globe and it’s been nearly one and half months now, markets are just continuing their gravity
defying moves. This week, our markets kickstarted the week on a flat note but immediately resumed its upward momentum. For the
subsequent two trading sessions, the rally continued and in the process, Nifty kept posting new record highs one after another. The
similar sort of one sided move was missing in the latter half of the week as markets saw some volatile swings to test the 13400 mark.
Eventually, due to late recovery on both the occasions, Nifty managed to close tad above 13500 on Friday with weekly gains of
nearly two percent.
This week, our markets reached yet another milestone of 13500 with ease and few heavyweight themes did well to guide markets at
new record highs. Since we are trading in an uncharted territory, sky's the limit for our market; but in our sense, we have now
reached the extreme zone, at least for the current vertical move. With a broader view, 14000 and beyond levels are very much
possible, but for a time being; 13500 - 13600 are the extreme levels as per few key Fibonacci ratios. Let's see why these levels are
considered important. The 'Golden Ratio' (161%) on the 'Price Extension' of the recent previous up move is placed at current levels.
This level coincides with the 200% ‘Price Extension’ of the first up leg from March lows. More importantly, if we connect all
important highs from March 2015 on the monthly chart, we can see a 'Multi-year Upward Sloping Trend Line' precisely converging
around the same levels. Hence, some cooling off around this crucial junction cannot be ruled out.
Yes, we agree to the fact that a strong trend up or down, doesn't necessarily follow any theory. But there is no harm being a bit
conservative at times. Hence, since the last 3 - 4 days, we have been continuously advising booking profits in the rally and avoiding
aggressive bets overnight. On the daily chart, we can now see a ‘Dragonfly Doji’ pattern and with the last two day’s intraday swings,
13400 has become a crucial support. The moment Nifty slides and sustains below this point (which is possible anytime soon), we
would see the market experiencing some decent profit booking towards 13100 – 12900 in days to come.
For Private Circulation Only
Technical and
Derivatives Review
| December 11, 2020
FIIs equity buying continues, prefers some profit booking in Futures
Nifty spot closed at 13513.85 this week, against a close of 13258.55 last week. The Put-Call Ratio has decreased from 1.57 to 1.52.
The annualized Cost of Carry is positive at 0.61%. The Open Interest of Nifty Futures has decreased by 0.55%.
Derivatives View
Nifty current month future closed with a premium of 4.50 points against a premium of 53.05 points to its spot. Next month future is
trading at a premium of 43.10 points.
As far as Nifty options activities are concerned, 13500-13800 call options witnessed some open interest addition. On the flipside,
13400-13200 put options too witnessed open interest addition. Maximum open interest for the weekly series is placed at 14000 call
and 12500 put options. In weekly options, 13500 and 13600 call options have good amount of open interest outstanding and has
seen decent writing in last couple of sessions, while 13500 put too has decent open interest outstanding.
We had a positive start for the week and Nifty rallied higher to register new record highs above 13500 mark. In last couple of
sessions, we witnessed some volatility but still, the index managed to end on a strong note above 13500. FII’s were buyers in the
cash segment throughout the week, but they preferred to book some profits in the index futures segment. Also, one of the notable
data was the premium in Nifty futures which reduced sharply on Friday. The overall data indicates that the trend still continued to
be positive, however 13600 would be resistance for the coming week which needs to be surpassed for a continuation of the
upmove. On the flipside, 13400 becomes a crucial support which if breached, it could then result into a decent profit booking.
Traders are advised to keep a watch on the above mentioned levels and lighten up longs if the index breach the support of 13400.
Weekly change in OI
Short Formation
Chg (%)
CONCOR 11674047 50.74 401.95 (3.19)
Long Formation
Chg (%)
PNB 109364000 42.43 39.20 9.50
For Private Circulation Only
Technical and
Derivatives Review
| December 11, 2020
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Technical and Derivatives Team:
Sameet Chavan Chief Analyst – Technical & Derivatives sameet.cha[email protected]ng.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