Technical and Derivatives Review | March 15, 2019
Low hanging fruit is gone now, be very selective in stocks
Sensex (38024) / Nifty (11427)
Source: Trading View
Future outlook
The week started with a bang on Monday as we saw a gap up opening first which was then followed by a massive intraday rally; setting the
tone for the rest of the week. Following days did not disappoint at all, in fact there was strong optimism seen throughout to post massive
intra-week rally. With this, Nifty managed to clock biggest weekly gains in last four months. The major charioteer for this mesmerizing rally
was none other than the heavyweight banking index. What a stellar move we witnessed throughout the week to register fresh highs in the
process. Eventually both indices saw some mild profit booking towards the fag end of the week and it was very much evident also after
seeing such relentless rally.
Let’s dig into a bit of technical now. In our sense, the stage was set for this kind of move when Nifty convincingly surpassed 10900 last
Tuesday. What encouraged us is the outperformance of Midcap and small cap basket which started few days prior to this. And then the
major driver ‘Banking’ started showing its dominance. Considering all these evidences, we were vocal about this rally getting extended
towards 11300 - 11400, which was the higher end of the ‘Megaphone’ pattern. Index has reached this junction and in fact due to strong
exuberance, Nifty extended its march towards the 11500 mark. Now, we are at a kissing distance from this figure and it’s a matter of time,
index would actually see this number. But, the point is, will there be some exhaustion seen or index would continue heading towards all-
time highs.
Honestly speaking, we are at crucial technical ratios and considering the pace of the move, the risk-reward for fresh trader has gone for a
toss now. In our sense, some kind of consolidation would now be seen for a while before unfolding the next leg of the rally. By no means,
one should go short, rather it’s time to be selective when it comes to individual stocks and should be done with a proper money
management. On the higher side, 11500 followed by 11600 would be the immediate levels to watch out for and on the downside, 11370
and 11300 should be seen as important supports in the forthcoming week.
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Technical and Derivatives Review | March 15, 2019
Index futures are now long heavy
Nifty spot closed at 110426.85 this week, against a close of 11035.40 last week. The Put-Call Ratio has increased from 1.60 to 1.77.
The annualized Cost of Carry is positive at 10.71%. The Open Interest of Nifty Futures has increased by 53.42.
Derivatives View
Nifty current month future closed with a premium of 43.60 points against a premium of 40.65 points to its spot. Next month future
is trading with a premium of 97.75 points.
As far as Nifty options activities for the week are concerned, fresh build-up was seen in 10600-10700 call options. On the other side,
huge writing took place in 11100-11400 put options. Maximum open interest for March series now stands at 11500 call and 11000
put options.
It is the fourth consecutive week wherein we have concluded the week on a positive note. Nifty rallied 3.55% last week along with
significant long addition in Futures segment. Since the beginning of March series, we have been witnessing huge amount of long
formation and now it seems we are long heavy. At present, around 11500 is the immediate hurdle; whereas, 11250-11300 shall act
as a support. As we are trading near the higher side of the range, we would advise traders to lighten up their longs and prefer
trading in individual counters for better risk reward ratio.
Long Formation
Short Formation
Chg (%)
Chg (%)
Chg (%)
Chg (%)
Weekly change in OI
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Technical and Derivatives Review | March 15, 2019
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
For Technical Queries
E-mail: [email protected]
For Derivatives Queries
E-mail: [email protected]
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