Technical and Derivatives Review | January 12, 2018
Expect volatility to rise as we can see key indices at crucial junction
Sensex (34592 ) / Nifty (10681)
Source: Trading View
Future outlook
Markets kick started on a positive note on Friday owing to decent overnight rally in the US bourses. Subsequently, index
consolidated at record highs for initial couple of hours. However, a sharp decline during the midst of the session spooked intraday
traders as we saw Nifty hastening towards the 10600 mark. By the time, everyone could realize how market corrected, we saw index
taking a complete u-turn in the latter half to eventually close around its opening point at new highs.
Last session panned out exactly the way we had anticipated to. We had highlighted about index not finding similar sort of strength if
manages to breakout in the upward direction. Also, the possibility of volatility increasing was on the cards. All these factors were
seen during the session and due to smart recovery, the Nifty eventually ended the week on a high note. Now, the way index smartly
recovered is generally considered as a good sign; but, due to wild swings, we can now see a copy book formation of ‘Dragonfly Doji’
on daily chart. The said pattern at higher levels does not bode well and hence, one needs to be closely tracking how markets behave
in the first half of the week. Since, markets are reluctant to fall; we would rather wait for a confirmation to happen. The pattern will
get activated below its low i.e. 10597 and hence, any sustainable move below this key support would extend further weakness in
days to come. However, on the higher side, we would reiterate that the market looks a bit tired and hence, it would be a prudent
strategy to keep booking profits and staying light on positions.
Now, due to Friday’s late recovery, the recent laggard ‘Bank Nifty’ is shaped up quite interestingly. We can see a major resistance of
25800 on this index. And the way ICICI bank closed with an uptick of nearly 3% along with the entire PSU banking basket hovering
around major supports; we are likely to see make or break moves in the banking index quite soon. In case of a sustainable move
beyond this crucial point (25800), the Bank Nifty would start outperforming benchmarks; but if it fails to do so, we can see strong
profit booking happening with higher volatility.
For Private Circulation Only
1
Technical and Derivatives Review | January 12, 2018
Options data hinting crucial junction at 10550-10600
Nifty spot closed at 10681.25 this week, against a close of 10558.85 last week. The Put-Call Ratio has increased to 1.74 from 1.58
levels and the annualized Cost of Carry is positive at 1.34%. The Open Interest of Nifty Futures increased by 14.96%.
Derivatives View
Nifty current month future closed with a premium of 5.10 points against a premium of 14.35 points to its spot. Next month future is
trading with a premium of 27.30 points.
PCR-OI has surged from 1.58 to 1.74 on week on week basis. In call options, some build-up was seen in 10700 and 10900 strikes;
followed by unwinding in 10400-10600 call options. On the flip side, we witnessed significant open interest addition in 10500-10700
put options. As a result, maximum open interest in put options shifted higher to 10500 from 10400 strike. At the same time,
maximum open interest concentration in call option is seen in 11000, followed by 10700 strike price.
The benchmark index extended its gains to hit a fresh record high of 10690.40; meanwhile, we witnessed good amount of long
formation in index futures during the week. As far as FIIs activities are concerned, except for some shorts in index futures, they
formed positive bets in F&O space. They added fresh long positions in stock futures and index call options and simultaneously
formed shorts in index put options. If we glance at options activity, Nifty put options added massive positions resulting the PCR-OI
surging to 1.74. We believe this is mainly due to hedging done prior to the budget. Considering the above data points, we expect
market to strengthen going ahead and unless index remains above 10550-10600, traders should avoid any bearish bets.
Long Formation
Short Formation
OI
OI
Price
OI
OI
Pric
Scrip
Price
Scrip
Price
Futures
Chg (%)
Chg (%)
Futures
Chg (%)
Chg (%
IDFCBANK
187218000
29.18
68.05
16.13
DISHTV
55636000
33.31
78.50
(7.5
CAPF
5739200
28.50
841.55
15.36
PAGEIND
54900
42.60
22699.55
(7.3
PCJEWELLER
12325500
24.65
551.90
11.72
RPOWER
67171000
15.59
54.85
(6.9
CHENNPETRO
2922000
12.99
448.00
5.37
IDEA
61677000
34.72
108.95
(6.1
TECHM
15994800
19.85
550.40
4.93
NHPC
62424000
16.18
31.80
(5.7
Weekly change in OI
For Private Circulation Only
2
Technical and Derivatives Review | January 12, 2018
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
Website: www.angelbroking.com
For Technical Queries
E-mail: [email protected]
For Derivatives Queries
E-mail: [email protected]
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and
Portfolio Manager and Investment Adviser with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private
Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources
believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for
general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way responsible for any
loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Pvt.
Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any
representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking
Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance,
or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or
in connection with the use of this information.
For Private Circulation Only
3